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06-004 EDA SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 06-004 A RESOLUTION A WARDING THE SALE OF PUBLIC SAFETY FIRE FACILITY LEASE REVENUE CROSSOVER REFUNDING BONDS, SERIES 2007C (CITY OF DEEPHA VEN, MINNESOTA LEASE OBLIGATION) BE IT RESOLVED By the board of commissioners of the Shorewood Economic Development Authority (the "Authority"), as follows: Section 1. Recitals. 1.01. The City of Deephaven, Minnesota (the "City") is authorized by Minnesota Statutes, Section 465.71, as amended, to acquire real and personal property under lease-purchase agreements. 1.02. The Excelsior Fire District (the "District") leases certain property from the City pursuant to the Ground Lease (East Side) dated as of September 1, 2002, as amended by a First Amendment to Ground Lease (East Side) dated January 1, 2007 (the "East Side Ground Lease"). The Authority has agreed with the District that pursuant to the Subground Lease (East Side) dated as of September 1, 2002 (the "Subground Lease"), as amended by a First Amendment to Subground Lease dated as of January 1, 2007 (the "First Amendment to Subground Lease"), the Authority will acquire certain property from the District, and the Authority will lease such property, together with the buildings, structures or improvements now or hereafter located thereon, to the City pursuant to a Lease Purchase Agreement (East Side) dated as of September 1, 2002 (the "Lease"), as amended by a First Amendment to Lease-Purchase Agreement (East Side) dated as of January 1, 2007 (the "First Amendment to Lease"). Hereafter the term "Lease" includes the First Amendment to Lease unless the context requires otherwise. 1.03. With the Authority's consent, the City has entered into a Sublease Agreement (East Side) with the District dated as of September 1,2002, as amended by a First Amendment to Sublease Agreement (East Side) dated January 1,2007, (the "Sublease Agreement"), under which the District undertakes the City's obligations under the Lease. 1.04. Pursuant to the Trust Indenture dated as of September 1, 2002 (the "Indenture") between the Authority and U.S. Bank National Association, as trustee (the "Trustee"), as modified by a First Supplemental Trust Indenture dated as of January 1, 2007 (the "First Supplemental Indenture"), between the Authority and the Trustee, the Authority will issue its Public Safety Fire Facility Lease Crossover Refunding Revenue Bonds, Series 2007C (City of Deephaven, Minnesota Lease Obligation) (the "Bonds") in an aggregate principal amount of $1,585,000. Hereafter the term "Indenture" includes the First Supplemental Indenture unless the context requires otherwise. 1.05 Pursuant to the original Indenture, the Authority has previously issued its $2,060,000 Public Safety Police Facility Lease Revenue Bonds, Series 2002C (City of Deephaven, Minnesota Lease Obligation) (the "Series 2002C Bonds") in order to pay a portion of the cost of acquisition, construction and equipping of the Facilities described in the Lease. 1.06. The Bonds are being issued under the Indenture as Additional Bonds for the purpose of refunding in advance of maturity the outstanding Series 2002C Bonds. 1.07. Pursuant to an Assignment and Security Agreement dated as of September 1,2002 (the "Assignment), as modified by a First Amendment to Assignment and Security Agreement dated as of January 1, 2007 (the "First Amendment to Assignment"), the Authority assigned to the Trustee all of the Authority's right, title and interest in and to the Ground Lease, the Lease, and the Lease Payments to be made by the City thereunder (other than certain rights to indemnification and payment of expenses) as security for the Series 2007C Bonds. 1.08. Proceeds of the Series 2007C Bonds will be used to pay costs of issuance of the Bonds and to fund the escrow account established to effectuate refunding of the Series 2002C Bonds, all pursuant to the Escrow Agreement (Series 2007C) between the Authority and the Trustee, as escrow agent, dated January 1, 2007 (the "Series 2007C Escrow Agreement"). 1.09. Forms of the First Amendment to Ground Lease, the First Amendment to Subground Lease, the First Amendment to Lease, the First Supplemental Indenture, the First Amendment to Assignment, the Series 2007C Escrow Agreement and the Official Statement for the Bonds have been prepared and submitted to the Authority and are on file with the Authority. Section 2. Sale of Bonds. 2.01. The proposal of Northland Securities, Inc. (the "Purchaser") to purchase the Bonds is hereby found and determined to be a reasonable offer and is hereby accepted, the proposal being to purchase the Bonds at a price of$1,560,855.65 plus accrued interest to date of delivery, for Bonds bearing interest as follows: Year of Interest Year of Interest Maturity Rate Maturity Rate 2010 3.75% 2017 3.85% 2011 3.75 2018 3.90 2012 3.75 2019 4.00 2013 3.75 2020 4.00 2014 3.75 2021 4.05 2015 3.75 2022 4.10 2016 4.00 SJB-302953v.2 SH230-39 2 2.02. The Authority will forthwith issue and sell the Bonds in the total principal amount of $1,585,000 originally dated January 1, 2007, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-1, upward, bearing interest as above set forth, and which mature serially on February 1, in the years and amounts as follows (subject to redemption and prior payment as set forth in the Indenture): Year Amount Year Amount 2010 $ 95,000 2017 $ 125,000 2011 100,000 2018 130,000 2012 105,000 2019 135,000 2013 110,000 2020 140,000 2014 110,000 2021 145,000 2015 115,000 2022 155,000 2016 120,000 2.03. Execution, Authentication and Delivery. The Bonds, substantially in the form provided in the Indenture, will be prepared under the direction of the Authority staff and executed on behalf of the Authority by the signatures of the President and one other officer of the Authority, provided that all signatures may be printed, engraved or lithographed facsimiles of the originals. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution or the Indenture unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Trustee. When the Bonds have been so prepared, executed and authenticated, the Authority will deliver the same to The Depository Trust Company, New York, New York, on behalf of the Purchaser, upon payment of the purchase price, and the Purchaser is not obligated to see to the application of the purchase price. Section 3. Approval and Execution of Documents. The First Amendment to Ground Lease, First Amendment to Subground Lease, the First Amendment to Lease, the First Supplemental Indenture, the First Amendment to Assignment, and the Series 2007C Escrow Agreement described in Section 1 are hereby approved. The President and one other officer of the Authority are authorized and directed to execute and deliver the First Amendment to Ground Lease, the First Amendment to Sub ground Lease, the First Amendment to Lease, the First Supplemental Indenture, the First Amendment to Assignment and the Series 2007C Escrow Agreement on behalf of the Authority, substantially in the forms on file, but with all such changes therein as shall be approved by the officers executing the same, which approval shall be conclusively evidenced by the execution thereof. Copies of all of the transaction documents shall be delivered, filed and recorded as provided therein. The President and other officers of the Authority are also authorized and directed to execute such other instruments as may be required to give effect to the transactions herein contemplated. SJB-302953v.2 SH230-39 3 Section 4. Payment; Security; Pledges and Covenants. The Bonds are payable prior to the redemption date for the Series 2002C Bonds solely from the funds on deposit under the Series 2007C Escrow Agreement, and from and after such redemption date solely from the Lease Payments to be made by the City under the Lease and by the District under the Sublease Agreement and from other moneys realized by the Trustee after default or termination of the Lease by the City as provided therein. No property or funds of the Authority, other than the property pledged pursuant to the Indenture and assigned to the Trustee pursuant to the Assignment, is pledged to the payment of the Bonds. Section 5. Refunding; Findings; Redemption of Refunded Bonds. 5.01. Reduction of Debt Service Cost. It is hereby found and determined that based upon information presently available from the Authority's financial advisers, the issuance of the Bonds is necessary and desirable for the reduction of debt service cost to the Authority, City and District. 5.03. Redemption of Refunded Bonds. The Series 2002C Bonds maturing on February 1, 2011 and thereafter will be redeemed and prepaid on February 1, 2009. The Series 2002C Bonds will be redeemed and prepaid in accordance with their terms and in accordance with the terms and conditions set forth in the Series 2007C Escrow Agreement. The Trustee for the Series 2002C Bonds is authorized and directed to send a copy of the Notice of Redemption to each registered holder of the Series 2002C Bonds. Section 6. Authentication of Transcript; Issuance Costs. 6.01. The officers of the Authority are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records of the Authority relating to the Bonds and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books and records in their custody and under their control, relating to the validity and marketability of the Bonds and such instruments, including any heretofore furnished, may be deemed representations of the Authority as to the facts stated therein. 6.02. The preparation and distribution of the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds is hereby approved. Section 7. Tax Covenants. 7.01. The Authority covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and SJB-302953v.2 SH230-39 4 applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. 7.02. In order to qualify the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b )(3) of the Code, the Authority makes the following factual statements and representations: (a) the Bonds are not "private activity bonds" as defined in Section 141 of the Code; (b) the Authority hereby designates the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b )(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than any private activity bonds that are not qualified 501(c)(3) bonds) which will be issued by the Authority (and all subordinate entities of the City) during calendar year 2007 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the Authority during calendar year 2007 have been designated for purposes of Section 265(b)(3) of the Code. 7.03. The Authority will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. (The remainder of this page is intentionally left blank.) SJB-302953v.2 SH230-39 5 Approved by the Board of Commissioners of the Shorewood Economic Development Authority this 18th day of December, 2006. President ATTEST: SJB-302953v.2 SH230-39 6