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HomeMy WebLinkAboutMinutes - 50th - December 27, 1982 signedr) MINUTES OF A SPECIAL MEETING OF THE ECONOMIC DEVELOPMENT CORPORATION OF LIVONIA A Special Meeting of the Economic Development Corporation of Livonia was called to order by the Chairman, Peter Ventura, at approximately 10:07 a.m., December 27, 1982, in the Council Chambers of the City Hall, 33000 Civic Center Drive, Livonia, Michigan. The Secretary called the roll: Directors Present: Mr. Kenneth Hale Mr. Frank Hand Mr. Alan Helmkamp Mr. Robert Jankowski Ms. Helen Kavanaugh Mr. Ron Mardiros Mr. Angelo Plakas (arrived at 10:10) Mr. Stanley Telman Mr. Peter Ventura Mr. John Hart (Borregard Project) Mr. Donald Leidall (Borregard Project) Directors Absent: Others Present: Ms. Betty Jean Awrey (Gillow Project) Mr. Leo Burton (Gillow Project) Mr. Ross Borregard Mrs. Ross Borregard Mr.; Edward Stanners, Borregard Attorney Mr. Dennis Neiman, Miller/Canfield Ms. Nancy Fisher, Miller/Canfield Mr. Daniel J. Gilmartin, Executive Dir. Ms. Marie E. King, Recording Secretary 0n a motion by Mr. Helmkamp, supported by Mrs. Kavanaugh, it was #82-298 RESOLVED, that the minutes of December 9, 1982, of the Regular Meeting of the Economic Development Corporation of Livonia be approved as submitted. A roll call vote was taken on the foregoing motion with the following results: AYES: Hale, Hand, Helmkamp, Jankowski, Kavanaugh, Mardiros, Telman, Ventura NAYS: None The Chairman declared the resolution adopted. The first item on the agenda was consideration of the resolution authorizing the issuance and sale of economic development limited obligation revenue bonds in the principal amount of $550,000 for the Ross Borregard project. 331 Mr. Dennis Neiman reported that there are no changes in this project from the project plan which the Board approved, except that Mrs. Borregard's name will also appear on all the documents as the "obligor", as well as Mr. Borregard. The closing is scheduled for Wednesday, December 29, 1982, at the offices of Miller, Canfield, Paddock and Stone at 10:00 a.m. The purchaser of the bonds will be the River Forest State Bank, of River Forest, Illinois. 0n a motion by Mr. Hand, supported by Mr. Telman, it was #82-299 WHEREAS the Economic Development Corporation of the City of Livonia (the "EDC") is empowered under Act 338, Public Acts of Michigan, 1974, as amended (the 'Act"), to assist in the financing of certain projects and facilities through the issuance of its economic development limited obligation revenue bonds. Ross Borregard and Nellie Borregard, his wife (the "Obligor") has proposed that the Obligor acquire and construct an office building and the site therefor (the "Project"), and as an inducement therefor, has requested the EDC to assist in the financing of the Project in the following general manner (as detailed in the Loan Agreement (the "Agreement"): The EDC would issue its Economic Development Limited Obligation Revenue Bonds (Borregard Project), Series A, in the principal amount of $550,000 (the "Bonds") under the Act and would loan the proceeds of the Bonds to the Obligor to be used to finance the acquisition, construction and installation of the Project. Under the terms of the Agreement the Obligor would make loan repayments (the "Loan Repayments") in amounts sufficient to pay the principal, premiums, if any, and interest on the Bonds, and would be responsible for paying any Project Costs (as defined in the Agreement) exceeding the amount of the Bonds, maintaining and insuring the Project and paying all taxes and expenses relating to the Project. In addition, the Obligor would execute and deliver to the EDC an Economic Development Note, dates as of December 1, 1982 (the "Note") and a Mortgage, dated as of December 1, 1982 (the "Mortgage") to secure payment of principal and interest on the Bond. The EDC would enter into an Indenture (the "Indenture") with River Forest State Bank, River Forest, Illinois as Secured Party (the "Secured Party") wherein the EDC would assign and pledge its right, title and interest in the Agreement, the Note, and the Mortgage to the Secured Party as security for the Bonds. Upon full payment of the Bonds or provision therefor, the Agreement would be terminated and the Note appurtenant thereto cancelled. The EDC's participation in the financing of the Project is to enable the Obligor to utilize applicable provisions of the United States Internal Revenue Code of 1954, as amended (the "Code"). Section 103 of the Code encourages the construction of certain facilities and the public financing thereof through economic development limited obligation revenue bonds by providing that the interest on such bonds, as contrasted with any bonds issued by the Obligor itself, will be exempt from Federal income tax. This tax exemption enables the bond purchaser to accept a lower rate of interest, and since the Obligor in effect pay the interest on the Bonds, reduces the interest cost of the Project financing to the Obligor. 332 On the basis of representations of the Obligor and the advice of Bond Counsel that the EDC has the authority to issue the Bonds, loan the Bond proceeds to the Obligor; and in order to induce construction of the Project, and thereby serve the purposes of the Act, the EDC has previously determined to issue the Bonds, subject to the following condition: principal and interest on the Bonds and any other cost or liability relating to the Bonds or the issuance or sale thereof the Project or the ownership or financing of the Project and the performance of any obligation of the EDC under the Agreement, the Indenture or the Bond Purchase Agreement between the EDC and River Forest State Bank as Purchaser (the "Purchaser"), shall never be payable from tax revenues or other public or general funds of the EDC or the City of Livonia, Michigan (the "Municipality"), but shall be payable only from the Security (as defined in the Indenture) or otherwise by the Obligor. The Obligor has estimated Project Costs to be not less than $550,000 and has tentatively arranged the financial terms and sale of the Bonds in that amount to the Purchaser. The EDC, the Obligor, and the Secured Party have completed negotiation and drafting of the Agreement, the Indenture, the Mortgage, the Note, the Bond Purchase Agreement between the Obligor and the Purchaser and the Guarantee Agreement between Ross Borregard and Nellie Borregard, and the Secured Party, and have submitted these documents to the EDC for review and action. It is now appropriate for the EDC to act on the proposed documents and the proposed issuance and sale of the Bonds. NOW, THEREFORE, BE IT RESOLVED: SECTION 1. Determination of Necessity. The project creates employment in and stimulates the economy of the Municipality and constitutes a public purpose under the Act. The issuance of the Bonds is necessary to induce the Obligor to locate in the Municipality and thereby obtain the employment and economic benefits. SECTION 2. Issuance of Bonds, Limited Obligation. The Bonds shall be issued by the EDC in the principal amount of $550,000, in such form and denominations as provided in the Indenture. SECTION 3. Approval of Agreement, Mortgage and Note. The forms of Agreement, Mortgage and Note on file with the Secretary of the EDC ("Secretary") are hereby approved. SECTION 4. Approval of Indenture. The form of Indenture on file with the Secretary is hereby approved. SECTION 5. Approval of Bond Purchase Agreement. The form of Bond Purchase Agreement on file with the Secretary is hereby approved. SECTION 6. Execution and Delivery of the Agreement, the Indenture, the Bond Purchase Agreement, the Mortgage and the Note and Changes Therein. The Chairman of the Board ("Chairman") is hereby authorized to execute and deliver and the Secretary is authorized to attest and seal the Agreement, the Indenture, the Bond Purchase Agreement, the Mortgage and the Note all in the forms approved, with such changes and insertions in such documents as may be necessary or desirable, permitted by the Act and otherwise by law and not materially adverse to the EDC 333 SECTION 7. Acknowledgement of the Guarantee Agreement.. The form of the Guarantee Agreement on file with the Secretary is hereby acknowledged. SECTION 8. Sale and Delivery of the Bonds. The Bonds shall be sold by the EDC to the Purchaser under the Bond Purchase Agreement at a purchase price of 100% of the principal amount thereof. Upon compliance with the terms and conditions of the Bond Purchase Agreement, the Chairman and the Secretary shall execute, seal and deliver the Bonds upon receipt by the Secured Party of the proceeds therefor to the credit of the Project Fund (as defined in the Agreement) in accordance with the Agreement. SECTION 9. Approval of Filings and Submissions with Other Governmental Agencies. The Chairman, Secretary, members, staff and counsel for the EDC, or any of them, are authorized on behalf of the EDC to apply for such rulings, orders and approvals and file or submit such elections or other documents to any governmental agency, in order that the Bonds may be validly issued and the interest thereon be exempt from Federal income taxation, and to execute such powers of attorney as may be appropriate in connection with the foregoing. SECTION 10. Authorization of Other Documents. The Chairman, Secretary, members, staff and counsel for the EDC or any of them, are hereby authorized to execute and deliver such other certificates, documents, instruments, and opinions and other papers as may be required by the Agreement, the Indenture, the Mortgage, the Note or the Bond Purchase Agreement or as may be necessary or convenient to effectuate the sale and delivery of the Bonds in accord- ance with the terms of the Agreement, the Indenture, the Mortgage, the Note and the Bond Purchase Agreement. SECTION 11. Conflict and Effectiveness. All resolutions and parts of resolutions or other proceedings of the Issuer in conflict herewith are repealed to the extent of such conflict. This resolution shall become effective upon adoption. SECTION 12. Definitions. The words used herein and in the premises shall have, where not otherwise indicated, those meanings established in the Indenture, dated as of December 1, 1982, by and between the EDC and the Secured Party. A roll call vote was taken on the foregoing motion with the following results: AYES: Hale, Hand, Helmkamp, Jankowski, Kavanaugh, Mardiros, Plakas, Telman, Ventura, Hart, Leidall NAYS: None The Chairman declared the resolution adopted. The next item on the agenda was consideration of the resolution authorizing the issuance and sale of limited obligation revenue bonds in the principal amount of $850,000 for the Gillow Properties Project. 334 Dennis Neiman explained that the Gillow Properties Project is a bit more difficult. The project keeps changing on a daily basis. The First National Capital Corporation of Buffalo, New York has been very difficult to work with. The latest change requires a preference proof. This is to protect the bank against the company going bankrupt. This preference proof would require the obligor (Gillow) to make its payment 90 days ahead of when the money is actually due, and just have it sit there. After the 90 days the payment is made. If the company goes bankrupt after the 90 days, the money cannot be touched. The closing should be made either Wednesday, Thursday, or Friday of this week. Mr. Neiman assured the Board that there was no legal reason why the board should not authorize this resolution. This is not an uncommon request for a bank to make when there is a Letter of credit deal. 0n a motion by Mr. Hale, supported by Mr. Flakes, it was i#82-300 WHEREAS, the Economic Development Corporation of the City of Livonia (the "EDC") is empowered under Act 338, Public Acts of Michigan, 1974, as amended (the "Act"), to assist in the financing of certain projects and facilities through the issuance of its economic development revenue bonds. Gillow Properties, a Michigan copartnership (the "Company") has proposed that the Company acquire and construct an expansion and renovation of an existing commercial building and acquire and install related equipment and furnishings therein (the "Project"), and as an inducement therefor, has requested the EDC to assist in the financing of the Project in the following general manner (as detailed in the Loan Agreement dated as of December 1, 1982 between the EDC and the Company (the "Agreement"): The EDC would issue its Limited Obligation Revenue Bonds (Gillow Properties Project), Series A, in the principal amount of $850,000 (the "Bonds") under the Act and would loan the net proceeds of the Bonds derived by the EDC from the sale of the Bonds, to the Company to be used to finance the acquisition, construction, furnishing and equipping of the Project as the Company causes the Project to be acquired, constructed, furnished and equipped. Under the terms of the Agreement, the Company would make loan payments (the "loan Payments") in amounts sufficient to pay the principal, premium, if any, and interest on the Bonds, and would be responsible for paying any Project Costs (as defined in the Agreement) exceeding the amount of the Bonds, maintaining and insuring the Project and paying all taxes and expenses relating to the Project. In addition, the Company would execute and deliver to the Issuer the Note (the "Note") evidencing the Company's obligation to make loan payments under the agreement. The EDC would enter into a Trust Indenture, dated as of December 1, 1982 (the "Indenture") with Comerica of 335 Bank -Detroit, as Trustee (the "Trustee") wherein the EDC would assign and pledge certain of its rights, title and interest in the Agreement and the Note, as security for the Bonds. Upon full payment of the Bonds or provision therefor, the Agreement would be terminated and the Note appurtenant thereto canceled. As additional security for the Bonds, it is the EDC's understanding that the Company will grant a mortgage on the real property comprising a portion of the Project and certain additional real property and grant a security interest in the personal property comprising the Project and certain additional personal property pursuant to a Mortgage (the "Mortgage") by and between the Company, the Issuer and Manufacturers National Bank of Detroit (the "Bank") and a Security Agreement (the "Security Agreement") by and between the Company, the Trustee and the Bank, both dated as of December 1, 1982. Further, payment of the principal and interest on the Bonds is to be guaranteed under the terms of an irrevocable Letter of Credit dated as of the date of original issuance of the Bonds (the "Letter of Credit"), established by the Bank in favor of the Trustee. The Bank is entitled to be reimbursed by the Company for payments made by it under the Letter of Credit pursuant to the terms of a Reimbursement Agreement dated as of December 1, 1982 between the Bank and the Company (the "Reimbursement Agreement"). The EDC's participation in the financing of the Project is to enable the Company to utilize applicable provisions of the United States Internal Revenue Code (the "Code"). Section 103 of the Code encourages the con- struction of certain facilities and the public financing thereof through economic development revenue bonds by providing that the interest on such bonds, as contrasted with any bonds issued by the company itself, will be exempt from Federal income tax. This tax exemption enables the bond purchaser to accept a lower rate of interest, and since the Company in effect pays the interest on the Bonds, reduces the interest cost of the Project financing to the Company. On the basis of representations of the Company and the advice of Bond Counsel that the EDC has the authority to issue the Bonds, loan the Bond proceeds to the Company; and in order to induce construction of the Project, and thereby serve the purposes of the Act, the EDC has previously determined to issue the Bonds, subject to the following conditions: principal and interest on the Bonds and any other cost or liability relating to the Bonds or the issuance or sale thereof, the Project, or the ownership or financing of the Project and the performance of any obligation of the EDC under the Agreement, the Indenture or the Bond Purchase Agreement between the EDC and First National Capital Corporation (the "Purchaser"),9zhall never be payable from tax revenues or other public or general funds of the EDC or the City of Livonia, Michigan (the "Municipality"), but shall be payable only from the Security, including the loan payments, revenues and receipts (as defined in the Indenture) the Letter of Credit or otherwise by the Company. The Company has estimated Project Costs to be not less than $850,000 and has arranged the financial terms and sale of the Bonds in that amount to the Purchaser. The EDC, the Company, the Bank, the Trustee and the Purchaser have completed negotiation and drafting of the Agreement, the Indenture, the Bond Purchase Agreement and the Mortgage, and have submitted these documents to the EDC for review and action. It is now appropriate for the EDC to act on the proposed documents and the proposed issuance and sale of the Bonds. 336 NOW, THEREFORE, BE IT RESOLVED: SECTION 1. Determination of Necessity. The Project creates employment in and stimulates the economy of the Municipality and constitutes a public purpose under the Act. The issuance of the Bonds is necessary to induce the Company to locate in the Municipality and thereby obtain the employment and economic benefits. SECTION 2. Issuance of Bonds, Limited Obligation. The Bonds shall be issued by the EDC in the principal amount of $850,000, in such form, denominations and with such terms relative to prepayment as are provided in the Indenture. The Bonds shall mature as set forth in the BOND FORMS APPENDIX to the Indenture and shall bear interest at rates per annum as set forth in the Indenture. It is the EDC's under- standing that the Bonds will be purchased by the Purchaser at a price equal to 100% of the face amount of the Bonds. SECTION 3. Approval of Agreement and Note. The forms of Agreement and Note on file with the Secretary of the EDC ("Secretary") on which has been endorsed by the Secretary the date of adoption of this resolution are hereby approved. SECTION 4. Approval of Indenture. The form of Indenture on file with the Secretary on which has been endorsed by the Secretary the date of adoption of this resolution are hereby approved. SECTION 5. Approval of Bond Purchase Agreement. The form of Bond Purchase Agreement on file with the Secretary on which has been endorsed by the Secretary the date of adoption of this resolution is hereby approved. SECTION 6. Approval of Mortgage. The form of the Mortgage on file with the Secretary is hereby approved. SECTION 7. Execution and Delivery of the Agreement, the Indenture, the Bond Purchase Agreement, the Mortgage and Changes Therein. The Chairman of the Board ("Chairman") is hereby authorized to execute and deliver and the Secretary is authorized to attest and seal (if necessary or desirable) the Agreement,the Indenture, the Bond Purchase Agreement, and the Mortgage all in the forms approved, with such changes and insertions in such docu- ments as may be necessary or desirable, permitted by the Act and otherwise by law, and not materially adverse to the EDC. SECTION 8. Acknowledgement of Other Agreements. The forms of the Security Agreement, the Letter of Credit and the Reimbursement Agreement on file with the Secretary are hereby acknowledged. SECTION 9. Sale and Delivery of the Bonds. The Bonds shall be sold by the EDC to the Purchaser under the Bond Purchase Agreement at the purchase price set forth therein. Upon compliance with the terms and conditions of the Bond Purchase Agreement, the Chairman and the Secretary shall execute and seal the Bonds in the manner provided in Section 104 of the Indenture and shall deliver the Bonds upon receipt by the Trustee of the proceeds therefor to the credit of the Project Fund and Bond Fund (both as defined in the Indenture) in accordance with the Indenture. 337 SECTION 10. Approval of Filings and Submissions with Other Governmental Agencies. The Chairman, Secretary, members, staff and counsel for the EDC, including Bond Counsel, or any of them, are authorized on behalf of the EDC to apply for such rulings, orders and approvals and file or submit such elections or other documents to any governmental agency, in order that the Bonds may be validly issued and the interest thereon be exempt from Federal income taxation, and to execute such powers of attorney as may be appropriate in connection with the foregoing. SECTION 11. Authorization of Other Documents. The Chairman, Secretary, members, staff and counsel for the EDC or any of them, are hereby authorized to execute and deliver such other certificates, documents, instruments, and opinions and other papers as may be required by the Agreement, the Indenture or the Bond Purchase Agreement or as may be necessary or convenient to effectuate the sale and delivery of the Bonds in accordance with the terms of the Agreement, the Indenture and the Bond Purchase Agreement. SECTION 12. Conflict and Effectiveness. All resolutions and parts of resolutions or other proceedings of the Issuer in conflict herewith are repealed to the extent of such conflict. This resolution shall become effective upon adoption. SECTION 13. Definitions. The words used herein and in the premises shall have, where not otherwise indicated, those meanings established in the indenture. A roll call vote was taken on the foregoing motion with the following results: AYES: Hale, Hand, Helmkamp, Jankowski, Kavanaugh, Mardiros, Plakas, Telman, Ventura NAYS: None The Chairman declared the resolution adopted. The next item on the agenda was the establishment of the meeting dates for 1983, in accordance with the Open Meetings Act. A schedule was prepared keeping the second Thursday of the month as a Regular Meeting date. 0n a motion by Mr. Telman, supported by Mrs. Kavanaugh, it was 1182-301 RESOLVED, that the meeting schedule as prepared be accepted for the 1983 calendar year. A roll call vote was taken on the foregoing motion with the following results: AYES: Hale, Hand, Helmkamp, Jankowski, Kavanaugh, Mardiros, Plakas, Telman, Ventura NAYS: None The Chairman declared the resolution adopted. 338 On a motion by Mr. Hand, supported by Mr. Telman, it was #82-302 RESOLVED, that the Special Meeting of December 27, 1982 of the Economic Development Corporation of Livonia be adjourned at 10:24 a.m. Respectfully submitted, on Mard •s, Secretary RM/mk