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HomeMy WebLinkAbout10-69MARCH 9, 2010 10 -69 RESOLUTION (CARRIED 7 -0 LOST LAID OVER WITHDRAWN PURPOSE: APPROVE CONSIDERATION OF AN INITIAL RESOLUTION REGARDING INDUSTRIAL DEVELOPMENT REVENUE BOND FINANCING FOR NASHCO HOSPITALITY GROUP, LLC (Information with respect to the impact of the Project will be available at the time of consideration of the Initial Resolution) INITIATED BY: CITY ADMINISTRATION WHEREAS, Section 66.1103 of the Wisconsin Statutes (the "Act ") authorizes the City of Oshkosh, Wisconsin (the "Issuer"), to authorize the issuance and sale of bonds by the Issuer 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; and WHEREAS, Nashco Hospitality Group, LLC, a Wisconsin limited liability company, and /or a related entity (collectively, the "Borrower "), desires to complete a project consisting of financing the (i) renovation and remodeling of an 8- story, 179 room hotel, restaurant and conference center located at One North Main Street in the City of Oshkosh, Wisconsin (the "Facility "), (ii) acquisition of furniture, fixtures and equipment at the Facility and (iii) payment of certain costs of issuance (collectively, the "Project "), all of which would contribute to the well -being of the City of Oshkosh, Wisconsin; and WHEREAS, the cost of the Project is presently estimated to be greater than $5,500,000, 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 $5,500,000; and WHEREAS, it is in the public interest of the Issuer to promote, attract, stimulate, rehabilitate and revitalize commerce, industry and manufacturing, to promote the betterment of the environment and the economy of the Issuer; and WHEREAS, the Borrower has requested that the Issuer now approve an initial resolution (the "Initial Resolution ") providing for the financing of the Project in an amount not to exceed $5,500,000; and WHEREAS, the Issuer 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 Issuer an amount of funds sufficient to provide for the prompt payment when due of the principal and interest on said industrial development revenue bonds. wHDi6996197. z 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 Issuer shall: (a) Finance the Project in an amount not to exceed $5,500,000; 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 $5,500,000 in order to finance costs of the Project. 2. The aforesaid plan of financing contemplates, and is conditioned upon, the following: (a) The Bonds shall never constitute an indebtedness of the Issuer 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 the Issuer 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 Issuer 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; (e) The City's out -of- pocket costs, including but not limited to reasonable legal fees and Trustee's fees, in connection with the issuance and sale of the Bonds shall be paid by the Borrower; and (f) A notice of public hearing required by federal law for purposes of Section 147(f) of the Internal Revenue Code, as amended, shall be published in a wHDi6996197. z newspaper of general circulation in the City of Oshkosh to provide interested individuals or parties the opportunity to testify. 3. The aforesaid plan of financing shall not be legally binding upon the Issuer nor be finally implemented unless and until: (a) The details and mechanics of the same are authorized and approved by a further resolution of the City Council which shall be solely within the discretion of the City Council; (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 of Oshkosh, and the electors of the City of Oshkosh 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 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; and (f) The Issuer and the Borrower have resolved all land use and special use issues with respect to the affected property and the Project. The allocation of authority to issue tax - exempt recovery zone facility bonds may be limited to an amount less than the proposed principal amount of the Bonds. Approval and issuance of the Bonds shall be contingent upon the Issuer having received verification that the Borrower has received the necessary allocation of volume cap to issue Midwestern Disaster Area Bonds and /or Recovery Zone Facility Bonds. 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 Issuer's interests are not prejudiced thereby. 5. The Issuer hereby finds that the Project will significantly increase the number of persons traveling to the City of Oshkosh for business or recreation. 6. 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 of Oshkosh, Wisconsin, 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 Commerce of the State of Wisconsin within twenty (20) days following the date of publication of such notice. wHDi6996197. z 7. This Initial Resolution is an "initial resolution" within the meaning of the Act and official action toward issuance of the Bonds for purposes of Sections 103 and 144 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. Furthermore, it is the reasonable expectation of the Issuer that proceeds of the Bonds may be used to reimburse expenditures made on the Project prior to the issuance of the Bonds. The maximum principal amount of debt expected to be issued for the Project on the date hereof is $5,500,000. This statement of official intent is made pursuant to Internal Revenue Code §1.150 -2. 8. The Issuer meets certain conditions specified in The American Recovery and Reinvestment Tax Act of 2009 (the "ARRA ") required to designate the Project location as a Recovery Zone, those conditions being a significant increase in the unemployment rate, an increase in the rate of home foreclosures, and general distress. The City Council hereby finds and determines that conditions exist to designate the Project site a Recovery Zone pursuant to the provisions of the ARRA and the City Council hereby designates the Project site as within a Recovery Zone. Adopted: March 9, 2010 Paul J. Esslinger, Mayor Attest: Pamela R. Ubrig, City Clerk wHDi6996197. z EXHIBIT A NOTICE TO ELECTORS OF THE CITY OF OSHKOSH, WISCONSIN TAKE NOTICE that the City Council of the City of Oshkosh, Wisconsin (the "Issuer"), at a regular meeting held at City Hall, 215 Church Avenue, Oshkosh, Wisconsin, on March 9, 2010, adopted an Initial Resolution pursuant to Section 66.1103 of the Wisconsin Statutes, as amended, expressing the intention to issue not to exceed $5,500,000 of industrial development revenue bonds of the Issuer (the "Bonds ") on behalf of Nashco Hospitality Group, LLC, a Wisconsin limited liability company, and /or a related entity (collectively, the "Borrower "). The Borrower desires to complete a project consisting of financing the (i) renovation and remodeling of an 8- story, 179 room hotel, restaurant and conference center located at One North Main Street in the City of Oshkosh, Wisconsin (the "Facility "), (ii) acquisition of furniture, fixtures and equipment at the Facility and (iii) payment of certain costs of issuance (collectively, the "Project "). The Borrower has represented that the net number of full -time equivalent jobs which the Project is expected to maintain on the Project site is 23 and that the net number of full - time equivalent jobs which the Project is expected to create on the Project site is 23. The Project will significantly increase the number of persons traveling to the City of Oshkosh for business or recreation. 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 Issuer's interests are not prejudiced thereby. THE BONDS SHALL NEVER CONSTITUTE AN INDEBTEDNESS OF THE ISSUER, NOR SHALL THE BONDS GIVE RISE TO ANY PECUNIARY LIABILITY OF THE ISSUER, NOR SHALL THE BONDS BE A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS OF THE ISSUER. 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 ISSUER 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 Issuer 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. Pamela R. Ubrig, City Clerk wHDi6996197. z CITY HALL 215 Church Avenue P.O. Box 1130 Oshkosh, Wisconsin 54903 -1130 City of Oshkosh 0 OIHKQlH TO: Honorable Mayor and Members of the Common Council FROM: Lynn A. Lorenson, City Attorney DATE: March 4, 2010 RE: Initial Resolution for Industrial Development Revenue Bond Financing for Nashco Hospitality Group, LLC BACKGROUND Nashco Hospitality Group LLC is requesting that the City of Oshkosh pass an initial resolution regarding Industrial Development Revenue Bond Financing for the purpose of financing the renovation and remodeling of the hotel, restaurant and conference center located at One North Main Street in the City of Oshkosh. ANAI YSIS The Initial Resolution would support the issuance of Industrial Development Revenue Bonds in an amount not to exceed five million five hundred thousand dollars ($5,500,000.00) to finance the renovation and remodeling of the hotel, restaurant and conference center located at One North Main Street in downtown Oshkosh, the acquisition of furniture, fixtures and equipment and the payment of certain bond issuance costs. The Initial Resolution is not a commitment to issue bonds. The Initial Resolution states the City's "official intent" to issue bonds pending the satisfactory negotiation of the terms of the bonds. Neither the Borrower, nor the City, is committed to issue the bonds by passing the Initial Resolution. However, under federal regulations, reimbursement of the Borrower's expenditures from bond proceeds, if bonds are issued, can only occur if the Initial Resolution is adopted. The bonds, once issued, can repay expenditures made by the Borrower within sixty (60) days prior to the adoption of the Initial Resolution and, in general, the reimbursement must be made no later than three (3) years after the original expenditure. co Memo: IDRB's for Nashco Hospitality Group, LLC: 3/4/10: Page 2 As part of the Initial Resolution, the Council is being asked to make the finding that the project location meets certain conditions specified in The American Recovery and Reinvestment Tax Act of 2009, under the Recovery Zone Economic Development Bonds Section ( "the ARRA "), specifically a significant increase in the unemployment rate, an increase in the rate of home foreclosures or general distress. This finding is included in this case to allow the Borrower to include expenditures for furniture and equipment, which are allowed under the Recovery Zone Economic Development Bonds but not under other types of bonding which limit bonding expenditures to land and structural improvements. FISCAL IMPACT There is no anticipated fiscal impact on the City from the proposed borrowing. The initial resolution would provide the property owner with the opportunity to secure lower interest rate bonds in support of the proposed projects. 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. Even in the case of a default, the City of Oshkosh would not be liable for payment on the bonds. Res ctfully Submitted, L ' . Lorenso City Attorney A roved: J hn Fitzpatric Assistant City OMana r