HomeMy WebLinkAbout16. 16-322JUNE 28, 2016 16-322 RESOLUTION
(CARRIED 7-0 LOST _______ LAID OVER _______ WITHDRAWN _______)
PURPOSE: RESOLUTION AUTHORIZING THE REDEMPTION OF $6,360,000
TAXABLE REDEVELOPMENT LEASE REVENUE BONDS,
SERIES 2006 OF THE REDEVELOPMENT AUTHORITY OF THE
CITY OF OSHKOSH, WISCONSIN
INITIATED BY: CITY ADMINISTRATION
W,on June 28,2006,the Redevelopment Authority of the City of Oshkosh,
HEREAS
Wisconsin (the “Authority”) issued $6,360,000 of its Taxable Redevelopment Lease Revenue
Bonds, Series 2006 (the “Bonds”), all of which are currently outstanding, pursuant to an Indenture
of Trust dated as of June 1, 2006 (the “Indenture”) between the Authority and U.S. Bank National
Association, as trustee (the “Trustee”); and
W,pursuant to Section 3.03 of the Indenture, the City of Oshkosh, Winnebago
HEREAS
County, Wisconsin (the “City”) is authorized to call the Bonds for optional redemption on any date
on or after September 1, 2016, at the redemption price of 100% of the principal amount thereof,
plus accrued interest to the redemption date, upon prepayment of the rentals by the City in
accordance with Section 3.13 of the Lease dated as of June 1, 2006 (the “Lease”) from the
Authority to the City; and
W, the City Council of the City has determined to call all of the outstanding Bonds
HEREAS
for redemption and to prepay the rentals under the Lease; and
W, Section 6.10 of the Lease grants the City an option to purchase (the “Purchase
HEREAS
Option”) all of the Authority’s right, title and interest in and to the Leasehold Property (as
identified in the Lease) for a price of $100, upon full payment of the Bonds;
THEREFORE, BE IT RESOLVED by the City Council of the City of Oshkosh, Winnebago
County, Wisconsin, that all of the outstanding Bonds be called for redemption on September 1,
2016, and
BE IT FURTHER RESOLVED by the City Council of the City of Oshkosh, Winnebago County,
Wisconsin, that the Director of Finance/City Treasurer is authorized to exercise the Purchase
Option upon a determination that such Purchase Option is in the best interests of the City; and
BE IT FURTHER RESOLVED by the City Council of the City of Oshkosh, Winnebago County,
Wisconsin, that the City Manager, the City Clerk, the Director of Finance/City Treasurer and all
other officers of the City are hereby authorized to execute all documents and certificates and to
take all such actions as may be necessary in connection with the redemption of the Bonds, the
prepayment of the Lease rentals, the exercise of the Purchase Option and the performance of the
obligations of the City hereunder and to carry out and comply with the terms of this resolution.
BE IT FURTHER RESOLVED that the City Clerk is hereby directed to request that the
Trustee send notice of redemption on or before August 2, 2016, such notice to be in substantially
the form as follows:
NOTICE OF FULL REDEMPTION TO THE OWNERS OF
$6,360,000 Redevelopment Authority of the City of Oshkosh,Wisconsin
Taxable Redevelopment Lease Revenue Bonds, Series 2006
NOTICE IS HEREBY GIVEN that that the outstanding above-captioned bonds(the"Bonds")have
been called for full redemption on September 1, 2016 (the"Redemption Date") at a redemption price equal
to 100%of the principal amount of the Bonds plus interest accrued to the Redemption Date, as listed below:
PRINCIPAL AMOUNT REDEMPTION
MATURITY CALLED RATE PRICE CUSIP:
September 1, 2031 $6,360,000 6.25% 100% 68825P AA2
The Bonds have been called for redemption pursuant to Section 3.03 of the Indenture of Trust dated
as of June 1, 2006 between the Redevelopment Authority of the City of Oshkosh, Wisconsin (the
"Authority") and U.S. Bank National Association, as trustee (the "Trustee").
Payment of the redemption price (as described above) will be made on or after the Redemption
Date upon the presentation of the Bonds at the offices of the Trustee at the following addresses:
U.S. Bank
Global Corporate Trust Services
By Hand: By Mail:
U.S. Bank U.S. Bank
Global Corporate Trust Services Global Corporate Trust Services
111 Fillmore Ave E 111 Fillmore Ave E
St.Paul, MN 55107 St.Paul, MN 55107
Registered or certified insured mail or overnight delivery is suggested when submitting Bonds for
payment. Interest on such Bonds to be redeemed will cease to accrue from and after September 1, 2016.
When inquiring about this redemption,please have the Bond number available.
The CUSIP number is included solely for the convenience of the holders. None of the City, the Authority or the
Trustee shall be responsible for the correctness of the CUSIP number on the Bonds or as indicated in this redemption
notice.
Each owner of any Bond so called for redemption prior to maturity must also submit a completed
IRS Form W-9, certifying his or her tax identification number, to the Trustee with such Bond. An IRS
Form W-9 is available, and may be obtained from any local bank or broker. Failure to submit such an IRS
Form W-9 with any Bond so called for prior redemption and presented for payment will result in a
withholding of 28% of the interest due to such owner pursuant to the Internal Revenue Code of 1986, as
amended.
CITY OF OSHKOSH,WISCONSIN
By: U.S. Bank Global Corporate Trust Services,
as Trustee
Date: August 2, 2016
City of Oshkosh
Finance Department
215 Church Ave., PO Box 1130 Trena Larson
O1HKOfH Oshkosh, WI 54903 -1130 Director
ON THE wnrea (920) 236 -5005 (920) 236 -5039 FAX
TO: Honorable Mayor and Members of the Common Council
FROM: Trena Larson, Finance Director
DATE: June 23, 2016
RE: Resolution Authorizing the Redemption of $6,360,000 Taxable Redevelopment Lease
Revenue Bonds, Series 2006 of the Redevelopment Authority of the City of Oshkosh,
Wisconsin
BACKGROUND
In 2006 the Redevelopment Authority issued $6,360,000 of taxable redevelopment lease
revenue bonds. In order to facilitate development within the Marion Road / Pearl Avenue
Redevelopment Area, the City contributed property and improvements in the area to the RDA
and the RDA issued the redevelopment lease revenue bonds.
The proceeds of the bonds were used to finance the purchase of property in the redevelopment
area and improvements. At that time the City had negotiated the purchase of one portion of the
Mercury Marine property located on the south side of Marion Road and east of the Wisconsin
Street Bridge which was known as Plant 24. This parcel is located to the east of the remaining
Mercury Marine facility which is known as Plant 33. The proceeds of the bonds were used to
facilitate this purchase as well as other improvements in the redevelopment area.
The RDA leased the property back to the City of Oshkosh and the City agreed to pay rental
payments in an amount sufficient to pay the debt service on the lease revenue Bonds which the
RDA had issued. From the issuance of the Bonds to the present, the City has paid only an
amount equal to the amount of the interest payments. However, while the Bonds initially allowed
these interest only payments, they also included a provision for the delayed payment of principle
that operates much like a balloon payment. Beginning in 2025 the City would have to increase
its payment on the lease to cover both the continuing interest payments plus repayment of the
principle which calls for $735,000 to be paid on the principle in 2025 and escalates over the
remaining life of the Bonds to $1,050,000 in principle to be paid in 2031, the final year of the
Bond payments.
Under the terms of the Bonds, Trust Agreement and Lease that were entered into at the time,
the City is permitted to call the Bonds for early redemption on or after September 1, 2016. The
City also has the option to repurchase the property from the RDA for $100 after the redemption
of the Bonds.
The Marion Road / Pearl Avenue Redevelopment Area is located within Tax Incremental Finance
District (TID) # 13. The Common Council by previous resolution has designated TID #7 as a
Donor TID for TID #13. Sufficient funds currently exist with the assistance available from TID
#7 to redeem the outstanding bonds.
ANALYSIS
City Staff together with the City's financial advisors and bond counsel have reviewed the current
outstanding obligations, specifically in relation to TID #7's designated recipient TID districts,
including TO #13, and determined that there is sufficient funding available and that it is
financially prudent at this time to redeem the outstanding Lease Revenue Bonds issued in 2006
by the RDA for the Marion Road Redevelopment area. Redemption of the Bonds and payment
of the outstanding obligation at this time allows the City to take advantage of the TID #7 funding
as well as allowing the City to avoid the financial impact to the City's budget from the upcoming
delayed principle payments.
FISCAL IMPACT
In evaluating project priorities for TO #13, 20, 21 it was determined that it would be most
financially prudent to obligate and transfer funding for this bond redemption. Funds in the
amount of $6,360,000 would be transferred from TID #7 to TO #13 to fund this redemption.
RECOMMENDATION
It is recommended that the Council approve the proposed resolution and direct the redemption
of the Bonds at this time.
Respectfully Submitted,
X- en a arson
Trena Larson
Finance Director
Approved:
ark A. Rohloff
City Manager