HomeMy WebLinkAbout10-182JUNE 8, 2010
10 -182 RESOLUTION
(CARRIED 7 -0 LOST LAID OVER WITHDRAWN )
PURPOSE: RESOLUTION APPROVING $1,400,000 REDEVELOPMENT
AUTHORITY OF THE CITY OF OSHKOSH, WISCONSIN
DEVELOPMENT REVENUE BONDS, SERIES 2010 (524 N
KOELLER STREET, LLC PROJECT)
WHEREAS, the Redevelopment Authority of the City of Oshkosh, Wisconsin (the
"Authority "), held a public hearing on May 26, 2010 with respect to $1,400,000
Redevelopment Authority of the City of Oshkosh, Wisconsin Redevelopment Revenue
Bonds, Series 2010 (524 N Koeller Street, LLC Project) (the "Bonds ").
WHEREAS, no persons objected to the project or the issuance of the Bonds or
otherwise responded to the notice of the public hearing.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Oshkosh, Winnebago County, Wisconsin, that the issuance of the Bonds is approved
for the purposes of Section 147(f) of the Internal Revenue Code of 1986, as amended.
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O.IHK lH
ON THE WATER
TO: Honorable Mayor and Members of the Common Council
FROM: Allen Davis
Community Development Director
DATE: June 3, 2010
RE: Consideration of Resolution Approving $1.4 Million Redevelopment Authority of
the City of Oshkosh, Wisconsin Redevelopment Revenue Bonds, Series 2010
(524 N Koeller Street, LLC Project)
BACKGROUND /SUBJECT PROPERTY
In 2009 the Redevelopment Authority (RDA) and Council approved of the spot blighting of the
property at 524 North Koeller Street to facilitate the issuance of tax exempt revenue bonds under
the Midwestern Disaster Area Bond Program authorized by Congress in October 2008.
ANALYSIS
The owner is ready to proceed with construction of two 10,000 sq. ft. buildings to be completed
in phases. A tenant of the first phase will be the accounting firm of Schenck S.C. The owner is
requesting approval of bonds in an amount not to exceed $1,400,000. Neither the RDA, nor the
City, will be liable for payment of principal or interest on the bonds and neither would be liable
if there were any default on the bonds. The RDA /City is only assisting the owner in obtaining
favorable financing.
It should be noted the ownership of the property has not changed; only the name has changed
from River Valley One LLC to 524 N Koeller Street LLC.
FISCAL IMPACT
None. The RDA/City is only assisting the owner in obtaining favorable financing.
RECOMMENDATION
At its May 26th meeting, the RDA approved issuing $1.4 million in tax exempt revenue bonds.
Approved,
City Manager
Summary Conduit Tax - Exempt Bond Financing for
524 N Koeller Street, LLC Project
Conduit Redevelopment Revenue Bonds
The Redevelopment Authority of the City of Oshkosh, Wisconsin (the "RDA") and the
Oshkosh Common Council is being asked to consider a final Resolution to benefit 524 N Koeller
Street, LLC (the "Company "), through the conduit issuance of redevelopment revenue bonds
( "IRBs "). The project consists of the (i) acquisition of land, (ii) construction of an approximately
10,000 square foot building, to be located at 524 Koeller Street in the City of Oshkosh, Wisconsin
and (iii) payment of financing fees (the "Project "), which Project will be constructed by the
Borrower and leased to Schenck S.C. and other tenants for office /retail space.
In a conduit bond transaction, a state or local governmental entity 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. The City of Oshkosh has been a conduit issuer for
several such IRBs. 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 ones proposed by the Companies.
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.
Regardless of the underlying Federal basis for tax - exemption, the RDA is being asked to be the
conduit issuer for an IRB which will operate just as other City /RDA bonds have in the past.
RDA as Conduit Issuer
These IRBs are municipal bonds; however, they are not general obligations of the
RDA or the City. If the RDA agrees to issue bonds to benefit the proposed projects:
1. The RDA nor the City will be liable for payment of the principal and interest
on the bonds;
2. The RDA nor the City will have ongoing responsibilities of monitoring or
reporting with regard to the bonds or the projects.
3. The bonds do not count against the City's or the RDA's borrowing capacity
The City will not levy a tax for payment of the bonds.
The RDA acts strictly as a conduit, which enables the Companies to borrow at a
lower rate of interest.
W HD /7150318.1
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. If the RDA issues the
Bonds, interest will also be exempt from State income tax and will further increase debt service
savings to the Companies, thereby enhancing the likelihood of success of the projects in the City.
Inducement/ Reimbursement
We have now documented the Bond transaction — a "Bank Purchase Bond," to be purchased
by U.S. Bank. The RDA held a public hearing on May 26th as required by federal tax law (the
"TEFRA ") and approved the final Resolution for the Bonds. Council is now being asked to approve
the Final Resolution for the Bonds.
Please be advised that your City Attorney and the City's Bond Counsel have received copies
of all documents and have provided comments, as appropriate.
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WHD/7150318.1
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DISCLAIMER
This map is neither a legally recorded map nor
524 N Koeller St
City of Oshkosh Wisconsin
a survey and it is not intended to be used as one.
Community Development
This drawing is a compilation of records, data
and information located in various city, county
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and state offices and other sources affecting
111 _ 2001
the area shown and it is to be used for reference
5/19/10
purposes only. The City of Oshkosh is not re
sponsible for any inaccuracies herein contained.
If discrepencies are found, please contact the
City of Oshkosh.
Created by - D