Loading...
HomeMy WebLinkAbout09-407OCTOBER 27, 2009 09 -407 RESOLUTION (CARRIED 7 -0 LOST LAID OVER WITHDRAWN ) PURPOSE: INITIAL RESOLUTION REGARDING INDUSTRIAL DEVELOPMENT REVENUE BOND FINANCING TO BENEFIT DERMATOLOGY ASSOCIATES OF WISCONSIN, S.C. WHEREAS, Section 66.1103 of the Wisconsin Statutes (the "Act ") authorizes the City of Oshkosh, Wisconsin (the "City "), to authorize the issuance and sale of bonds by the City to construct, equip, re- equip, acquire by gift, lease or purchase, install, reconstruct, rebuild, rehabilitate, improve, supplement, replace, maintain, repair, enlarge, extend or remodel industrial projects in the City; and WHEREAS, Section 66.1103(3)(f) of the Wisconsin Statutes provides that a municipality also may finance an industrial project which is located entirely outside the geographic limits of the municipality, but only if the revenue agreement for the project also relates to another project of the same eligible participant, part of which is located within the geographic limits of the municipality; and WHEREAS, DAW Buildings LLC, a Wisconsin limited liability company, and /or Dermatology Associates of Wisconsin, S.C., a Wisconsin corporation, and /or a related limited liability entity to be formed (the "Borrower "), desires to complete a multi - jurisdictional project consisting of financing the (i) remodeling and refurbishment of an existing approximately 5,000 square foot clinic facility located at 1515 Randolph Court in the City of Manitowoc, Wisconsin, (ii) construction of an approximately 50,000 square foot addition to an existing approximately 5,000 square foot facility located at 801 York Street in the City of Manitowoc, Wisconsin, (iii) acquisition of approximately 2.5 acres of land located at Lots 3 and 5 of the Universal Business Park in the City of Oshkosh, Wisconsin and construction of an approximately 8,000 square foot clinic and surgery facility and (iv) payment of certain costs related to the issuance of the bonds (collectively, the "Project "), all of which would contribute to the well -being of the City and the City of Manitowoc; and WHEREAS, the cost of the Project is presently estimated to be greater than $10,000,000, and the amount proposed to be financed with one or more series of tax - exempt and /or taxable industrial development revenue bonds does not exceed $10,000,000; and WHEREAS, the proposed Project is a multi - jurisdictional project which is located in the City and the City of Manitowoc, and the Borrower has requested that the City and the City of Manitowoc each approve an initial resolution providing for the financing of the Project in an amount not to exceed $10,000,000; and WHEREAS, on October 19, 2009, the City of Manitowoc adopted an initial resolution providing for the financing of the multi - jurisdictional Project, a portion of which is located in the City and in the City of Manitowoc, in an amount not to exceed $10,000,000; and WHEREAS, it shall be determined at a future date whether the City and /or the City of Manitowoc shall be the issuer of said industrial development revenue bonds; and WHEREAS, the City is a municipality organized and existing under and pursuant to the laws of the State of Wisconsin, and is authorized to enter into revenue agreements with eligible participants with respect to the Project whereby eligible participants agree to cause said Project to be constructed and to pay the City an amount of funds sufficient to provide for the prompt payment when due of the principal and interest on said industrial development revenue bonds; and WHEREAS, the Borrower has requested that the City now approve an initial resolution providing for the financing of the multi - jurisdictional Project. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Oshkosh, Wisconsin, as follows: 1. Based upon representations of the Borrower, it is the finding and determination of the City Council that the Project is a qualified "project" within the meaning of the Act and that the Borrower is an "eligible participant" within the meaning of the Act. The City and /or the City of Manitowoc shall: (a) Finance the Project in an amount not to exceed $10,000,000; and (b) Issue industrial development revenue bonds in one or more series of tax - exempt and /or taxable bonds (the "Bond(s) "), in an amount not to exceed $10,000,000 in order to finance costs of the Project, located in both the City and the City of Manitowoc, pursuant to Section 66.1103(3)(f) of the Wisconsin Statutes. 2. The aforesaid plan of financing contemplates, and is conditioned upon, the following: (a) The Bonds shall never constitute an indebtedness of either the City or the City of Manitowoc within the meaning of any state constitutional provision or statutory limitation; (b) The Bonds shall not constitute or give rise to a pecuniary liability of either the City or the City of Manitowoc or a charge against its general credit or taxing powers, including but not limited to: 1. Liability for failure to investigate or negligence in the investigation of the financial position or prospects of the Borrower, a user of the Project or any other person or for failure to consider, or negligence concerning, the adequacy of terms of, or collateral security for, the Bonds or any related agreement to protect interests of holders of the Bonds; and 2. Any liability in connection with the issuance or sale of the Bonds, for representations made, or for the performance of the obligation of any person who is a party to a related transaction or agreement except as specifically provided in the Act or by an express provision of the Bonds or a related written agreement to which the City is a party. (c) The Project shall be subject to property taxation in the same amount and to the same extent as though the Project were not financed with industrial development revenue bonds; (d) The Borrower shall find a purchaser for all of the Bonds; and (e) The City's and the City of Manitowoc's out -of- pocket costs, including but not limited to legal fees, in connection with the authorization, issuance and sale of the Bonds shall be paid by the Borrower, whether or not the Bonds are issued; (f) A notice of public hearing (the "TEFRA Hearing ") required by federal law for purposes of Section 147(f) of the Internal Revenue Code of 1986, as amended, shall be published in a newspaper or newspapers of general circulation in the City and the City of Manitowoc, and public hearings shall be held by both the City and the City of Manitowoc to provide interested individuals or parties the opportunity to testify with respect to the nature and locations of the Project and the issuance of the Bonds to finance the Project. 3. The aforesaid plan of financing shall not be legally binding upon the City or the City of Manitowoc nor be finally implemented unless and until: (a) If the Bonds are issued by the City, the details and mechanics of the same shall be authorized and approved by a further resolution of the City Council, and, if the Bonds are issued by the City of Manitowoc, the details and mechanics of the same shall be authorized and approved by a further resolution of the Common Council of the City of Manitowoc; (b) The City Clerk shall cause notice of adoption of this Initial Resolution, in the form attached hereto as Exhibit A, to be published once in a newspaper of general circulation in the City, and the electors of the City shall have been given the opportunity to petition for a referendum on the matter of the aforesaid Bond issue, all as required by law; (c) Either no such petition shall be timely filed or such petition shall have been filed and said referendum shall have approved the Bond issue; (d) The City Clerk of both municipalities shall have received an employment impact estimate issued under Section 560.034 of the Wisconsin Statutes; (e) All documents required to consummate the financing have been duly authorized and delivered; (f) The City, the City of Manitowoc and the Borrower have resolved all land use and special use issues with respect to the affected property and the Project; and (g) Either the City of Manitowoc, or both the City and the City of Manitowoc (if the Bonds are ultimately issued by both municipalities for the respective projects), have approved the issuance of the Bonds following the public hearings required by Section 2(f) above. 4. Pursuant to the Act, all requirements that the Project be subject to the contracting requirements contained in Section 66.1103 are waived, the Borrower having represented that it is able to negotiate satisfactory arrangements for completing the Project and that the City's interests are not prejudiced thereby. 5. The City Clerk is directed, following adoption of this Initial Resolution (i) to publish notice of such adoption not less than one time in the official newspaper of the City, such notice to be in substantially the form attached hereto as Exhibit A and (ii) to file a copy of this Initial Resolution, together with a statement indicating the date the Notice to Electors was published, with the Secretary of Business Development of the State of Wisconsin within twenty (20) days following the date of publication of such notice. 6. If the Bonds are issued by the City of Manitowoc and the City of Oshkosh is not the ultimate issuer of the Bonds, after the TEFRA Hearing has been properly noticed and held by the City, the Mayor is authorized to execute an Approval of Highest Elected Official for the purposes of Section 147(f) of the Internal Revenue Code of 1986, as amended, with respect to the issuance of the Bonds. Adopted: October 27, 2009. Attest: Paul J. Esslinger, Mayor Pamela Ubrig, City Clerk *AV :I1 W 1 NOTICE TO ELECTORS OF THE CITY OF OSHKOSH, WISCONSIN TAKE NOTICE that the City Council of the City of Oshkosh, Wisconsin (the "City "), at a regular meeting held at City Hall, 215 Church Avenue, Oshkosh, Wisconsin, on October 27, 2009, adopted an Initial Resolution pursuant to Section 66.1103 of the Wisconsin Statutes, as amended, expressing the intention to issue not to exceed $10,000,000 of industrial development revenue bonds of the City (the "Bonds ") on behalf of DAW Buildings LLC, a Wisconsin limited liability company, and /or Dermatology Associates of Wisconsin, S.C., a Wisconsin corporation, and /or a related limited liability entity to be formed (the "Borrower "), to finance a multi - jurisdictional project consisting of (i) remodeling and refurbishment of an existing approximately 5,000 square foot clinic facility located at 1515 Randolph Court in the City of Manitowoc, Wisconsin, (ii) construction of an approximately 50,000 square foot addition to an existing approximately 5,000 square foot facility located at 801 York Street in the City of Manitowoc, Wisconsin, (iii) acquisition of approximately 2.5 acres of land located at Lots 3 and 5 of the Universal Business Park in the City of Oshkosh, Wisconsin and construction of an approximately 8,000 square foot clinic and surgery facility and (iv) payment of certain costs related to the issuance of the bonds (collectively, the "Project "). The Borrower expects that (i) the net number of full -time equivalent jobs which will be created at the City of Manitowoc project site is 124 and (ii) the net number of full -time equivalent jobs which will be created at the City of Oshkosh project site is 28. Pursuant to the terms of Section 66.1103 of the Wisconsin Statutes, all requirements that the Project be subject to the contracting requirements contained in Section 66.1103 are waived, the Borrower having represented that it is able to negotiate satisfactory arrangements for completing the Project and that the City's interests are not prejudiced thereby. THE BONDS SHALL NEVER CONSTITUTE AN INDEBTEDNESS OF THE CITY, NOR SHALL THE BONDS GIVE RISE TO ANY PECUNIARY LIABILITY OF THE CITY, NOR SHALL THE BONDS BE A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS OF THE CITY. RATHER, THE BONDS SHALL BE PAYABLE SOLELY FROM THE REVENUES AND OTHER AMOUNTS TO BE DERIVED PURSUANT TO THE REVENUE AGREEMENT RELATING TO SAID PROJECT TO BE ENTERED INTO BETWEEN THE CITY AND THE BORROWER. The Initial Resolution may be inspected in the office of the City Clerk at 215 Church Avenue, Oshkosh, Wisconsin, during business hours. TAKE FURTHER NOTICE THAT THE ELECTORS OF THE CITY OF OSHKOSH MAY PETITION FOR A REFERENDUM ON THE QUESTION OF THE BOND ISSUE. Unless within thirty (30) days from the date of the publication of this Notice a petition signed by not less than five percent (5 %) of the registered electors of the City of Oshkosh is filed with the City Clerk requesting a referendum on the question of the issuance of the Bonds, the City will issue the Bonds without submitting the proposition for the electors' approval. If such petition is filed as aforesaid, then the Bonds shall not be issued until approved by a majority of the electors of the City of Oshkosh voting thereon at a general or special election. EXHIBIT A NOTICE TO ELECTORS OF THE CITY OF OSHKOSH, WISCONSIN TAKE NOTICE that the City Council of the City of Oshkosh, Wisconsin (the "City "), at a regular meeting held at City Hall, 215 Church Avenue, Oshkosh, Wisconsin, on October 27, 2009, adopted an Initial Resolution pursuant to Section 66.1103 of the Wisconsin Statutes, as amended, expressing the intention to issue not to exceed $10,000,000 of industrial development revenue bonds of the City (the "Bonds ") on behalf of DAW Buildings LLC, a Wisconsin limited liability company, and /or Dermatology Associates of Wisconsin, S.C., a Wisconsin corporation, and/or a related limited liability entity to be formed (the "Borrower "), to finance a multi - jurisdictional project consisting of (i) remodeling and refurbishment of an existing approximately 5,000 square foot clinic facility located at 1515 Randolph Court in the City of Manitowoc, Wisconsin, (ii) construction of an approximately 50,000 square foot addition to an existing approximately 5,000 square foot facility located at 801 York Street in the City of Manitowoc, Wisconsin, (iii) acquisition of approximately 2.5 acres of land located at Lots 3 and 5 of the Universal Business Park in the City of Oshkosh, Wisconsin and construction of an approximately 8,000 square foot clinic and surgery facility and (iv) payment of certain costs related to the issuance of the bonds (collectively, the "Project "). The Borrower expects that (i) the net number of full -time equivalent jobs which will be created at the City of Manitowoc project site is 124 and (ii) the net number of full -time equivalent jobs which will be created at the City of Oshkosh project site is 28. Pursuant to the terms of Section 66.1103 of the Wisconsin Statutes, all requirements that the Project be subject to the contracting requirements contained in Section 66.1103 are waived, the Borrower having represented that it is able to negotiate satisfactory arrangements for completing the Project and that the City's interests are not prejudiced thereby. THE BONDS SHALL NEVER CONSTITUTE AN INDEBTEDNESS OF THE CITY, NOR SHALL THE BONDS GIVE RISE TO ANY PECUNIARY LIABILITY OF THE CITY, NOR SHALL THE BONDS BE A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS OF THE CITY. RATHER, THE BONDS SHALL BE PAYABLE SOLELY FROM THE REVENUES AND OTHER AMOUNTS TO BE DERIVED PURSUANT TO THE REVENUE AGREEMENT RELATING TO SAID PROJECT TO BE ENTERED INTO BETWEEN THE CITY AND THE BORROWER. The Initial Resolution may be inspected in the office of the City Clerk at 215 Church Avenue, Oshkosh, Wisconsin, during business hours. TAKE FURTHER NOTICE THAT THE ELECTORS OF THE CITY OF OSHKOSH MAY PETITION FOR A REFERENDUM ON THE QUESTION OF THE BOND ISSUE. Unless within thirty (30) days from the date of the publication of this Notice a petition signed by not less than five percent (5 %) of the registered electors of the City of Oshkosh is filed with the City Clerk requesting a referendum on the question of the issuance of the Bonds, the City will issue the Bonds without submitting the proposition for the electors' approval. If such petition is filed as aforesaid, then the Bonds shall not be issued until approved by a majority of the electors of the City of Oshkosh voting thereon at a general or special election. CITY HALL 215 Church Avenue P.O. Box 1130 Oshkosh, Wisconsin 54903 -1130 City of Oshkosh onHKOnH TO: Honorable Mayor and Members of the Common Council FROM: Lynn A. Lorenson, City Attorney DATE: October 22, 2009 RE: Initial Resolution Regarding Industrial Development Revenue Bond Financing to Benefit Dermatology Associates of Wisconsin, S. C. BACKGROUND Dermatology Associates of Wisconsin, S.C. is requesting the City of Oshkosh pass an initial resolution regarding Industrial Development Revenue Bond Financing. ANALYSIS The Initial Resolution would support the issuance of Industrial Development Revenue Bonds to finance Dermatology Associates of Wisconsin, S.C.'s proposed acquisition of land within the Universal Business Park and the construction of an approximately 8000 square foot clinic and surgery facility. The proposed project would also include remodeling and refurbishment of an existing facility in Manitowoc, Wisconsin. State law would allow a municipality to finance an industrial project outside of the geographic limits of the municipality if the revenue agreement for the project also relates to another project within the geographic limits of the municipality. At this time the Borrower has requested both the City of Oshkosh and the City of Manitowoc to consider Initial Resolutions for the issuance of the Industrial Development Bonds and will determine at a later date which City it will ask to be the issuer of the bonds. Attached to this Memorandum is a Summary prepared by the Borrower's Bond Counsel which explains the requested action. C Memo re: Dermatology Assoc. of WI: 10/22/09: Page 2 FISCAL IMPACT There is no anticipated fiscal impact from the proposed borrowing. The initial resolution would provide the property owner with the opportunity to secure lower interest rate, tax - exempt bonds in support of the proposed projects. As noted in the attached Summary, the bonds would not be general obligations of the City of Oshkosh and do not count against the City's borrowing capacity. The City of Oshkosh would not be liable for payment of principal or interest on the Bonds and would not have ongoing responsibilities for monitoring or reporting with regard to the bonds or the proposed projects. Re ectfully Submitt i , L Lorens City orney Approved: Mark A. Rohloff City Manager Summary Conduit Tax- Exempt Bond Financing To Benefit Dermatology Associates of Wisconsin, S.C. Industrial Revenue Bonds (IRBs) The City of Oshkosh, Wisconsin (the "City ") is being asked to consider an Initial Resolution to benefit DAW Buildings LLC, a Wisconsin limited liability company, and /or Dermatology Associates of Wisconsin, S.C., a Wisconsin corporation, and /or a related limited liability entity to be formed (the "Company "), through the conduit issuance of industrial revenue bonds ( "IRBs "), to finance a multi - jurisdictional project consisting of (i) remodeling and refurbishment of an existing approximately 5,000 square foot clinic facility located at 1515 Randolph Court in the City of Manitowoc, Wisconsin, (ii) construction of an approximately 50,000 square foot addition to an existing approximately 5,000 square foot facility located at 801 York Street in the City of Manitowoc, Wisconsin, (iii) acquisition of approximately 2.5 acres of land located at Lots 3 and 5 of the Universal Business Park in the City of Oshkosh, Wisconsin and construction of an approximately 8,000 square foot clinic and surgery facility and (iv) payment of certain costs related to the issuance of the bonds (collectively, the "Project"). In an IRB transaction, a state or local governmental entity, such as a community development authority, issues Bonds and loans the proceeds from the sale of the bonds to a private entity for an authorized project. In Wisconsin, cities, villages and towns, as well as duly constituted redevelopment authorities and community development authorities may issue IRBs. Federal Law. MDA Bonds Previously under Federal law, IRBs could only be issued for small manufacturers, 501(c)(3) organizations or for certain exempt facilities. In October of 2008, Congress passed the Heartland. Disaster Tax Relief Act following the severe storms, tornadoes and flooding experienced throughout the Midwest. This act allows tax - exempt bonds (Midwestern Disaster Area Bonds or MDA Bonds) to be issued for a business for a wider range of purposes including projects like the one proposed by the Company. MDA Bonds (which are IRBs) must finance a project located in one of the 30 southern affected counties of Wisconsin which were declared federal disaster areas, including Winnebago County and Manitowoc County. City as Conduit Issuer/Muldr ; jurisdictional Project As provided in the Project description above, the Project is a multi jurisdictional Pr jea, a portion of which is located in the City of Manitowoc and a portion of which is located in the City of Oshkosh. Pursuant to Section 66.9 903(3)0 of the Wisconsin Statutes, a municipality may finance an industrial project which is located entirely outside thegeographic limits of the municipality, but only if the revenue agreement for thepr ject also relates to anotherproject of the same eligible participant, part of which is located within the geographic limits of the municipality. Because the proposed Project is currently located in the City of Manitowoc and the City of Oshkosh, the Borrower is requesting both municipalities to consider an Initial Resolution. It=// be determined at a future date whether the City and /or the City of Oshkosh mill be the issuer of the bonds. These IRBs are municipal bonds; however, they are not general obligations of the City of Oshkosh. If the City agrees to issue Bonds to benefit the proposed Project: WHD/6727819.1 1. The Cif will not be liable for payment of the principal and interest on the Bonds; 2. T he City will not have ongoing responsibilities of monitoring or reporting with regard to the Bonds or the Project. 3. The Bonds do not count against the City's borrowing capacity The City will not levy a tax for payment of the Bonds. The City acts strictly as a conduit, which enables the Company to borrow at a lower rate of interest. Because the Bonds are issued by a governmental entity, the holder of the Bond may exclude the interest on the Bonds from gross income for federal tax purposes. Inducement / Reimbursement Companies considering IRB financing must obtain an Initial Resolution, also sometimes referred to as an "inducement resolution" or "qualified reimbursement resolution" from the municipality in which the Project being financed is located in order to preserve the option to use IRBs. The Initial Resolution is preliminary approval only and is non - binding as to the City or the Company but is required by Federal tax law and State law. If the Initial Resolution is adopted by the City, this will assure that when and if Bonds are issued, all eligible project costs incurred no more than 60 days prior to the date of the Initial Resolution (including reimbursement of equity contributions or refunding of conventional financing), may be included in the ultimate IRB financing. Failure to have a qualified resolution may result in disqualifying certain costs. The Company will benefit from the tax - exempt financing by owning and /or using the Bond financed- facilities and will enjoy a lower interest rate as a result of using a bond structure. A lending institution will secure payment of the Bonds pursuant to a direct pay Letter of Credit and the Bonds will be sold to the public market, or a lending institution will directly purchase the Bonds. The Trustee for the Bonds will look solely to the Company for repayment. Bondholders will not look to the City for payment. The City will assign all of its rights, liability and responsibilities under the Bonds to a third party fiduciary Trustee for administration for the benefit of the Bondholders. The Company will be fully responsible for repaying the loan and must make the arrangements with the Trustee for the payment on the Bonds. If the Company is not able to meet its payment obligations, the Bank will realize on its collateral and enforce its rights against the Company. The City is not liable for payment. The foregoing is just a brief discussion of tax - exempt financing. The key point to remember is that the City will be considering from a policy standpoint whether to encourage the location of the Company in the City. By issuing the Bonds, the City will give the Company an interest rate benefit, because the tax- exempt Bonds will be tax - exempt in the hands of the Bondholders. It must be emphasized that the City will not be liable in any way on the Bonds; the Bonds are special, limited obligations of the City. 2 WHD/6727819.1