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HomeMy WebLinkAbout05. 16-493OCTOBER 25, 2016 16-493 RESOLUTION (CARRIED 7-0 LOST________LAID OVER________WITHDRAWN________) PURPOSE: CONSIDERATION OF AN INITIAL RESOLUTION REGARDING REVENUE BOND FINANCING FOR PAINE ART CENTER & GARDENS, INC. PROJECT. INFORMATION WITH RESPECT TO THE JOB IMPACT OF THE PROJECT WILL BE AVAILABLE AT THE TIME OF THE CONSIDERATION OF THE INITIAL RESOLUTION INITIATED BY: PAINE ART CENTER & GARDENS, INC. 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, Paine Art Center & Gardens, Inc., a Wisconsin nonstock, nonprofit corporation (the “Borrower”), desires to complete a project to be owned by the Borrower consisting of financing the construction, creation, and remodeling of certain indoor and outdoor spaces at the Borrower’s historic estate located at 1410 Algoma Boulevard and 1313 Elmwood Avenue in the City of Oshkosh, Wisconsin (the “Facilities”) including but not limited to (i) the construction and/or rehabilitation of surface parking and driveways and accessibility improvements, (ii) creation of formal gardens and repair of garden walls, (iii) technology upgrades, (iv) signage updates, (v) historic preservation and general maintenance of the Facilities and (vi) payment of professional fees and costs (collectively, the “Project”), all of which will advance the Borrower’s exempt purpose and mission to provide educational programs and public enjoyment of the historic estate’s botanic gardens, public art galleries and Facilities, and would contribute to the well-being of the City of Oshkosh, Wisconsin; and WHEREAS, the cost of the Project is presently estimated not to exceed $2,500,000 and the amount proposed to be financed with one or more issues or series of tax-exempt and/or taxable revenue bonds (the “Bonds”) issued under the Act does not exceed $2,500,000; and WHEREAS, it is the public interest of the Issuer to promote, attract, stimulate, rehabilitate and revitalize commerce, industry and manufacturing, to promote the betterment of 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 $2,500,000; 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 to issue revenue bonds 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 revenue bonds; and WHEREAS, the Issuer and Borrower will enter into a Memorandum of Agreement under the terms of which the Issuer agrees, subject to the provisions of the Memorandum of Agreement, to issue its revenue bonds to provide financing of all or a portion of the costs of the Project. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Oshkosh, Wisconsin, as follows: 1. The form, terms and provisions of the attached Memorandum of Agreement are hereby approved. The City Manager of the Issuer is hereby authorized to execute, and the City Clerk of the Issuer is hereby authorized to attest and to affix the official seal of the Issuer to, and to deliver a Memorandum of Agreement with the Borrower in substantially the same form as the attached Memorandum of Agreement, any changes in the execution copy being approved by their signatures, which Memorandum of Agreement is hereby made a part of this Initial Resolution. 2. 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 Section 66.1103(2)(k) the Act and that the Borrower is an “eligible participant” within the meaning of the Act. The Issuer intends to: (a) Finance the Project in an amount not to exceed $2,500,000; and (b) Issue revenue bonds in one or more series of tax-exempt and/or taxable revenue bonds (the “Bond(s)”), in an amount not to exceed $2,500,000 in order to finance costs of the Project, upon the terms and conditions set forth in the Memorandum of Agreement. 3. 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 as contemplated by the Act in the same amount and to the same extent as though the Project were not financed with 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 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 newspaper of general circulation in the City of Oshkosh and a public hearing shall be held to provide interested individuals or parties the opportunity to testify as to the Project and the issuance of the Bonds. 4. The aforesaid plan of financing shall not be legally binding upon the Issuer nor be finally implemented unless and until: (a) The terms and provisions 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 238.11 of the Wisconsin Statutes; (e) All documents required to consummate the financing have been duly authorized and delivered; (f) The Issuer and the Borrower have resolved all land use and special use issues with respect to the affected property and the Project; and (g) All provisions of the Act shall have been satisfied. 5. 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. 6. The Issuer hereby finds, based on information provided by the Borrower, that the Project will significantly increase the number of persons traveling to the City of Oshkosh for business or recreation. 7. 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 Wisconsin Economic Development Corporation within twenty (20) days following the date of publication of such notice. 8. 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, based on information provided by the Borrower, 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 $2,500,000. This statement of official intent is made pursuant to Treasury Regulations §1.150-2. Passed and adopted at a regular meeting of the City Council of the City of Oshkosh, Wisconsin this 25th day of October, 2016. APPROVED: Steve Cummings, Mayor ATTEST: Pamela R. Ubrig, City Clerk 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 October 25, 2016, adopted an Initial Resolution pursuant to Section 66.1103 of the Wisconsin Statutes, as amended, expressing the intention to issue not to exceed $2,500,000 of revenue bonds of the Issuer (the “Bonds”) on behalf of Paine Art Center & Gardens, Inc., a Wisconsin nonstock, nonprofit corporation (the “Borrower”). The Borrower desires to complete a project consisting of financing the construction, creation, and remodeling of certain indoor and outdoor spaces at the Borrower’s historic estate located at 1410 Algoma Boulevard and 1313 Elmwood Avenue in the City of Oshkosh, Wisconsin (the “Facilities”) including but not limited to (i) the construction and/or rehabilitation of surface parking and driveways and accessibility improvements, (ii) creation of formal gardens and repair of garden walls, (iii) technology upgrades, (iv) signage updates, (v) historic preservation and general maintenance of the Facilities and (vi) payment of professional fees and costs (collectively, the “Project”), all of which will advance the Borrower’s exempt purpose and mission to provide educational programs and public enjoyment of the historic estate’s botanic gardens, public art galleries and Facilities. 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 15. Based on information provided by the Borrower, 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 City of Oshkosh, Wisconsin 13135482.1 Summary Request for City of Oshkosh, Wisconsin to Serve as Conduit Issuer for Not to Exceed $2,500,000 Revenue Bonds to Benefit Paine Art Center & Gardens, Inc. Project This will summarize the request of Paine Art Center & Gardens, Inc., a Wisconsin nonstock, nonprofit corporation (the “Organization”), asking that the City of Oshkosh, Wisconsin (the “City”) consider an Initial Resolution to benefit the Organization through the conduit issuance of industrial development revenue bonds (“IRBs”) to finance a project located in the City consisting of the construction, creation, and remodeling of certain indoor and outdoor spaces at the Organization’s historic estate located at 1410 Algoma Boulevard and 1313 Elmwood Avenue in the City of Oshkosh, Wisconsin (the “Facilities”) including but not limited to (i) the construction and/or rehabilitation of surface parking and driveways and accessibility improvements, (ii) creation of formal gardens and repair of garden walls, (iii) technology upgrades, (iv) signage updates, (v) historic preservation and general maintenance of the Facilities and (vi) payment of professional fees and costs (collectively, the “Project”), all of which will advance the Organization’s exempt purpose and mission to provide educational programs and public enjoyment of the historic estate’s botanic gardens, public art galleries and Facilities. In an IRB 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. These IRBs are municipal bonds; however, they are not general obligations of the City. If the City agrees to issue bonds to benefit the proposed Project: 1. The City will not be liable for payment of the principal and interest on the bonds; 2. The 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 Organization 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 13135737.1 Organization 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 Organization 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 directly purchase the bonds. The lender for the bonds will look solely to the Organization 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 the lender as the bondholder. The Organization will be fully responsible for repaying the loan and must make the arrangements with the lender for the payment on the bonds. If the Organization is not able to meet its payment obligations, the lender will realize on its collateral and enforce its rights against the Organization. The City is not liable for payment. The foregoing is just a brief discussion of tax-exempt financing. By issuing the bonds, the City will give the Organization an interest rate benefit, because the tax-exempt bonds will be tax-exempt in the hands of the bondholders and, therefore, the cost savings passed along to the Organization. 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. The Organization respectfully asks that the City Council consider the Initial Resolution at its meeting on October 25, 2016. For agenda purposes, the City should please describe the Initial Resolution as follows: “Consideration of an Initial Resolution Regarding Revenue Bond Financing for Paine Art Center & Gardens, Inc. Information with respect to the job impact of the project will be available at the time of consideration of the Initial Resolution.” Someone from the Organization will attend the City Council meeting on October 25, 2016 to answer any questions. 13135737.1