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HomeMy WebLinkAboutS4-85 . ORDINANCE NO. S4-85 AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE BY THE CITY OF ELGIN, KANE AND COOK COUNTIES, ILLINOIS OF AN INDUSTRIAL DEVELOPMENT REVENUE BOND (ELGIN LUMBER & SUPPLY CO. , INC. PROJECT) IN THE PRINCIPAL AMOUNT OF $1,850, 000 TO FINANCE AN INDUSTRIAL PROJECT FOR ELGIN LUMBER & SUPPLY CO. , INC. ; AUTHORIZING THE EXECUTION AND DELIVERY BY THE CITY OF ELGIN, KANE AND COOK COUNTIES, ILLINOIS OF AN AGREEMENT, ASSIGNMENT AND ARBITRAGE REGULATION AGREEMENT IN CONNECTION THEREWITH; CONFIRMING THE SALE OF SUCH BOND TO THE PURCHASER THEREOF; AND RELATED MATTERS. WHEREAS, the City of Elgin, Kane and Cook Counties, Illinois (the "Issuer" , also sometimes referred to herein as the "City" ) a municipality duly organized and validly existing under the Constitution and laws of the State of Illinois is a home rule unit of government pursuant to Section 6(a) of Article VII of the Constitution of the State of Illinois; and WHEREAS, the Issuer is authorized by Ordinance No. S2- 80, as amended ( the "Act" ) , to issue its revenue bonds to finance the costs of industrial projects to the end that the Issuer may be able to relieve conditions of unemployment , to maintain existing levels of employment and to encourage the increase of industry and commerce within the State of Illinois, thereby reducing the evils attendant upon unemployment and provide for the public safety, benefit and welfare of the residents of the State of Illinois; and WHEREAS, as a result of negotiations between the Issuer and Elgin Lumber & Supply Co. , Inc. , an Illinois corporation ( the "Company" ) , and in reliance upon a resolution duly adopted by the City Council of the Issuer on June 10, 1985, and a Memorandum of Agreement between the Issuer and the Company dated June 10, 1985, contracts have been or will be entered into by the Company for the planning, developing, engineering, design, building and equipping of an approximately 37 , 500 square foot Seigle ' s Home and Building Center and accompanying 9,000 square foot warehouse ( the "Project" ) , on real property owned by the Company in the City, which Project will be of the character and will accomplish the purposes of the Act , and the Issuer is willing to issue its revenue bond to finance the cost of the acquisition, construction and installation of the Project, all as set forth in the details and provisions of the Agreement hereinafter identified; and WHEREAS, it is estimated that the costs of the Project , including costs relating to the preparation and issuance of the revenue bond, will be not less than $1,850, 000; and WHEREAS, the Issuer proposes to sell the revenue bond hereinafter authorized upon a negotiated basis to American National Bank and Trust Company of Chicago ( the "Purchaser" ) ; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ELGIN, KANE AND COOK COUNTIES, ILLINOIS, AS FOLLOWS: Section 1 . The form presented to this meeting of the Agreement, dated as of August 1 , 1985 (the "Agreement" ) , by and among the Issuer , the Company, the Purchaser and American National Bank and Trust Company of Chicago, as registrar (the "Registrar" ) , providing for the Issuer to issue its $1,850 , 000 Industrial Development Revenue Bond (Elgin Lumber & Supply Co. , Inc. Project) ( the "Bond" ) be, and the same is hereby authorized and approved; and the Mayor of the City be, and he is hereby authorized to execute the Agreement and the City Clerk of the City be and she is hereby authorized to attest and affix the official corporate seal of the City thereto; and each of such officers is hereby authorized to deliver the Agreement , together with such changes in and additions thereto as shall be approved by the officers signing the same, including without limitation, such changes as shall be necessary to conform to the terms of the Bond hereinafter authorized, such approval to be conclusively evidenced by such execution. Section 2 . The form presented to this meeting of the Arbitrage Regulation Agreement, dated as of August 1, 1985 ( the "Arbitrage Regulation Agreement" ) , by and among the Issuer , the Company and American National Bank and Trust Company of Chicago, as Depositary ( the "Depositary" ) , providing for the deposit of the proceeds of the Bond hereinafter authorized be, and the same is hereby authorized and approved; and the Mayor of the City be, and he is authorized to execute the Arbitrage Regulation Agreement and the City Clerk of the City be and she is hereby authorized to attest and affix the official corporate seal of the City thereto; and each of such officers is hereby authorized to deliver theg RegulationAgreement, Arbitrage A reement, together with such changes in and additions thereto as shall be approved by the officers signing the same, such approval to be conclusively evidenced by such execution. Section 3. The form presented to this meeting of the Assignment and Security Agreement, dated as of August 1 , 1985 ( the "Assignment" ) , from the Issuer to the Purchaser be, and the same is hereby authorized and approved; and the Mayor of the City be, and he is hereby authorized to execute the Assignment and the City Clerk of the City be and she is hereby authorized to attest and affix the official corporate seal of the City thereto; and each of such officers is hereby authorized to deliver the Assignment, together with such changes in and additions thereto -2- as shall be approved by the officers signing the same, including without limitation such changes as shall be necessary to conform to the terms of the Bond hereinafter authorized, such approval to be conclusively evidenced by such execution. Section 4 . The Bond shall be payable in eighty equal principal installments of $23,125 each on November 1, 1985 , and quarterly thereafter on the first day of each February, May, August and November through and including August 1 , 2005. The Bond shall bear interest from its date at a rate per annum equal to 72% of the Commercial Base Rate (as defined in the Agreement ) in effect on each principal payment date, but in no event less than the Floor Rate, nor more than the Ceiling Rate (as each such term is defined in the Agreement) . Interest on overdue installments of principal and premium, if any, and ( to the extent that the payment of such interest shall be legally enforceable) on any overdue installment of interest on the Bond will be payable at a rate per annum 2% in excess of the Commercial Base Rate from its due date until paid, together with such additional amounts as may be due pursuant to Section 1. 3 of the Agreement . Interest on the Bond shall be calculated on the basis of a year of 360 days and actual days elapsed. Interest on the Bond shall be due and payable in arrears on November 1 , 1985, and quarterly thereafter on the first day of each February, May, August and November until the aforesaid principal amount is paid in full ; provided, however , that on August 1, 2005, the entire unpaid principal balance of the Bond plus all interest accrued thereon shall be paid in full . In the event of ( i ) a Determination of Taxability (as defined in the Agreement ) the interest rate on the Bond shall be 9 ) increased to the Taxable Rate for the Inclusion Period (as each such term is defined in the Agreement ) , which Taxable Rate shall not be subject to the Ceiling Rate or the Floor Rate, and ( ii ) any change in the treatment of interest on the Bond for federal income tax purposes, to the extent described in Section 1 .4 of the Agreement, the interest rate on the Bond shall be adjusted as described in said Section 1. 4. Section 5 . The Bond is subject to prepayment in whole or in part if the Company exercises its option to prepay its Promissory Note ( the "Note" ) pursuant to Section 4. 1 of the Agreement . Section 6 . The Bond is subject to mandatory prepayment in the circumstances set forth in the Agreement requiring prepayment of the Note. -3- Section 7 . The issuance of the Bond, in the form and having the content set forth in the Agreement be, and the same is hereby authorized and approved; and the Mayor of the City and City Clerk of the City are hereby authorized and directed to execute the Bond, to affix the official corporate seal of the City thereto and to deliver the same to the Purchaser upon payment of the purchase price as provided in the Agreement. Section 8 . The proper officials, agents and employees of the Issuer and each of them is hereby authorized and directed to do and perform all such acts and things and to sign all such instruments, documents and certificates as may be necessary or advisable or convenient and proper to carry out the intent of this Ordinance, the Agreement, the Arbitrage Regulation Agreement and the Assignment and the transaction contemplated thereby. Section 9 . That the provisions of this Ordinance are hereby declared to be separable, and if any section, phrase or provision shall , for any reason, be declared to be invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions . Section 10 . That all ordinances, resolutions, orders or parts thereof in conflict with the provisions of this Ordinance are, to the extent of such conflict , hereby repealed. Section 11 . That this Ordinance shall be in full force and effect upon its approval by the City Council . Introduced and read for the first time: August 12 , 1985 . Adopted: August 12, 1985. Ayes : rrmnr-ilmPn Edgar Andersen, Susan Moylan, Marlene Shales. f;PnrgP van DP Vonrde, Donald Waters and Mayor Verbic Nays: NnnP Absent: rnnnrilman Rnhert Gilliam s/ Richard L. Verbic Mayor s/ Ma 'iP Yearman City Clerk (SEAL) -4- EXHIBIT A MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT is between the City of Elgin, Illinois (the "Issuer") and Elgin Lumber & Supply Co. , Inc. , an Illinois corporation (the "Company") . 1. Preliminary Statement. Among the matters of mutual inducement which have resulted in this Agreement are the following : (a) The Issuer is by population a home rule unit of local government and is authorized by Ordinance S2-80 , as amended (the "Act") , to issue industrial development bonds for the purpose of financing, in whole or in part, the cost of the acquisition, purchase, lease, construction, reconstruction, improvement, betterment or extension of industrial and commercial projects and to enter into a loan agreement with the Company or its designee pursuant to which the proceeds of such industrial development bonds may be loaned to the Company or its designee to finance the costs of such an industrial and commercial project. (b) The Company wishes to obtain satisfactory assurance from the Issuer that the proceeds of the sale of the industrial development bonds of the Issuer will be made available to it or its designee to finance the costs of planning, developing, engineering , designing , building and equipping of a 40 , 000 square foot Seigle ' s Home and Building Center and accompanying 12 ,000 square foot warehouse (the "Project") . (c) The proposed financing will contribute to increased employment opportunities, and provide other benefits for the Issuer . The Issuer finds that the financing as herein described will further the governmental purposes of the Issuer . (d) Subject to the conditions contained herein and the due compliance with all requirements of law and such procedures as the Issuer may hereafter adopt, the Issuer , by virtue of such authority as may now or hereafter be conferred , will issue and sell industrial development bonds in a principal amount of up to $1, 850 ,000 (the "Bonds") to finance the costs of the Project. (e) The Bonds shall be limited obligations of the Issuer payable solely out of the revenues and receipts derived with respect to the Project, which shall be financed by a loan of the proceeds to the Company or its designee, which shall be repaid by the Company or such designee in an amount sufficient to pay the principal of, redemption premium, if any, and interest on such Bonds. No owner of any such Bonds shall have the right to compel any exercise of the taxing power of the Issuer or any political subdivision of the State of Illinois and such Bonds shall not constitute an indebtedness or a loan of credit of the Issuer . 2. Undertakings on the Part of the Issuer . Subject to the conditions above stated, the Issuer agrees as follows : (a) That it will authorize the issuance and sale of the Bonds pursuant to all applicable laws, ordinances and procedures as then in force. (b) That it will, at the proper time and subject in all respects to the terms of all applicable laws , ordinances and procedures, and with the prior advice, consent and approval of the Company, have the Bonds purchased and will adopt, or cause to be adopted, such proceedings and authorize the execution of such documents as may be necessary and advisable for the authorization, issuance, and sale of the Bonds and the completion of the Project, and that it will enter into a loan agreement whereby the Company or its designee will pay to or on behalf of the Issuer such sums as shall be sufficient to pay the principal and interest and redemption premium, if any, on the Bonds as and when the same shall become due and payable. (c) The Issuer agrees that, at the option of the Company, it will enter into such loan agreement with a land trust or other entity designated by the Company to own the Project and lease the Project to the Company. 3 . Undertakings on the Part of the Company. The Company agrees as follows : (a) That it will use all reasonable efforts to find one or more purchasers for the Bonds. (b) That contemporaneously with the delivery of the Bonds, the Company or its designee will enter into a loan agreement with the Issuer under the terms of which the Company or its designee will be obligated to pay to the Issuer sums sufficient in the aggregate to pay the principal of and interest and redemption premium, if any, on the Bonds as and when the same shall become due and payable. In the event a designee enters into a loan agreement rather than the Company, the Company may guarantee performance of all obligations of the designee under such loan agreement. (c) That it is recognized that additional instruments, guaranties and agreements to provide additional -2- security for the purchaser of the Bonds may be necessary or desirable in order to successfully market the Bonds, and that the Company will execute or will cause to be executed such instruments, guaranties and agreements on its own, or its designee ' s behalf, as appropriate and necessary. 4. General Provisions. (a) All commitments of the Issuer under Paragraph 2 hereof and of the Company or its designee under Paragraph 3 hereof are subject to the condition that on or before 90 days from the date hereof (or such other date as shall be mutually satisfactory to the Issuer and the Company) , the Issuer and the Company or its designee shall have agreed to mutually acceptable terms and conditions of the loan agreement and of the Bonds and other instruments or proceedings relating to the Bonds. Such documents shall provide that the Bond proceeds are to be retained in an appropriate escrow account to be paid out only upon presentation of all proper and conforming documentation. (b) If the events set forth in (a) of this Paragraph 4 do not take place within the time set forth or any extension thereof and the Bonds in an amount of approximately the amount stated above are not sold within such time, the Company agrees that it will reimburse the Issuer for all expenses which the Issuer may reasonably incur at the Company's or the Company' s designee 's request or as a result or arising out of the procedures for issuance of said industrial development bonds. (c) The Company agrees to pay all fees and expenses in connection with the issuance of the industrial development bonds and the costs of the Project including but not limited to title charges, stamp taxes, administrative financing fees of the Issuer , fees and expenses of counsel to the Issuer and of bond counsel, recording fees, fees and expenses of architects and engineering fees. (d) The Company shall provide the Issuer on the date of delivery of any Bonds with an opinion of nationally recognized bond counsel that interest on the Bonds is excludable from federal income taxation. -3- IN WITNESS WHEREOF, the parties hereto have entered into this Agreement by their officers thereunder duly authorized as of the jr;4= day of OLx.) , 1985. CITY OF ELGIN Mayor (SEAL) ATTEST: City Cl k ELGIN LUMBER & SUPPLY CO. , INC. , an Illinois corporation By Its President (SEAL) ATTEST: Its Qay cretary -4- EXHIBIT B NOTICE OF PUBLIC HEARING THE CITY OF ELGIN, KANE AND COOK COUNTIES, ILLINOIS Public notice is hereby given that on July 8 1985 , at 8:00 p .m. , at the City Council Chambers of the Municipal Building at 150 Dexter Court, Elgin, Illinois, the City Council of the City of Elgin (the "City") will conduct a public hearing to consider a plan of financing for the planning , developing , engineering , designing, building and equipping of a 40,000 square foot Seigle 's Home and Building Center and accompanying 12,000 square foot warehouse (the "Project") to be operated by Elgin Lumber & Supply Co. , Inc. (the "Company") . The facilities will be located at the intersection of Big Timber Road and McLean Blvd. , Elgin, Illinois. Pursuant to the plan of financing , the City proposes to authorize financing of the Project through the issuance of the City' s Industrial Development Revenue Bond in an amount not exceeding $1, 850 , 000 . The City, in the exercise of its home rule powers, is authorized by Ordinance S2-80, as amended (the "Act" ) , to issue revenue bonds to finance, among other things, the acquisition, purchase, lease, construction, reconstruction, improvement , betterment or extension of industrial and commercial projects of a type similar to the Project and to sell such bonds to others. The bonds are limited obligations of the City and shall not be deemed to constitute an indebtedness of the City, the State of Illinois or any political subdivision thereof or a loan of credit or a charge against the general credit or taxing powers of any of them within the meaning of any Constitutional or statutory provision. The City' s obligation to pay principal of or interest on the bonds is limited to amounts received by the City under an agreement to be entered into with the Company or its designee . This Public Hearing is required by the Tax Equity and Fiscal Responsibility Act of 1982 . All interested persons will be given an opportunity to be heard on the matter . Written comments received prior to the hearing will be given equal consideration to oral testimony. Written comments should be submitted to: City Clerk, Municipal Building , 150 Dexter Court , Elgin, Illinois 60120. Additional information can be obtained from the City at the address shown above. Subsequent to the Public Hearing , the City Council will meet to consider a resolution approving the issuance of bonds for the above- described activity. CITY OF ELGIN, KANE AND COOK COUNTIES, ILLINOIS By City erk May 15, 1985 MEMORANDUM TO: Roger Dahlstrom Gary Miller Robert Maim Erwin Jentsch FROM: James Bolerjack RE: Industrial Revenue Bond Application For $1,850,000 By Seigle's Home and Building Center Attached are copies of the IRB application of the above mentioned firm for your review. Comments should be directed to Edward Kelly, Executive Vice President of the Elgin Area Chamber of Commerce within one week. These comments can then be incorporated into the recommendation of the Elgin Economic Development Commission to the City Council. If you have any questions regarding this matter, please do not hesitate to contact me. JHB/daw Attachment • 01111 AND Wss 7 , NOcENTERS APPLICATION TO CITY OF ELGIN AND ELGIN ECONOMIC DEVELOPMENT COMMISSION FOR THE ISSUANCE OF $ 1 , 850, 000 INDUSTRIAL REVENUE BONDS TO FINANCE DEVELOPMENT OF A SEIGLE'S HOME & BUILDING CENTER COMPLEX IN ELGIN, ILLINOIS 5/15/85 Page 1 WHO WE ARE Operating under its new trade name "Seigle 's Home and Building Centers , " Elgin Lumber & Supply Co. , Inc. (and its affiliated companies Elgin Wholesale Corporation , St . Charles Wholesale Corporation , and Geneva Wholesale Corporation ) , operate five home and building centers and one millwork component plant . These operations , employing over 260 people , are situated in Elgin , St . Charles , Geneva , and Aurora, Illinois . With 1985 sales projected in excess of $44 million , Seigle ' s has enjoyed record growth and profits since the end of the 1981- 82 recession . Sixty-five percent of the Company' s business involves the supply of lumber, millwork , and related building materials to the residential construction industry. Nearly 30 percent of the Company' s business is with the burgeoning do-it- yourself, retail markets in the communities where Seigle ' s Centers are located . The balance of the Company's business is done with industry, and governmental entities . The Company' s stated corporate purpose is : "It is our corporate purpose to remain the dominant provider of building materials in our market in a manner that our customers receive the best value and service , our ownership a premium return on their investment , our employees fair and rewarding incentive , and our commu- nities the benefits of quality corporate citizenship. " Although the Company is owned exclusively by the Seigle family of Elgin, company policy and planning is administered by a Board of Directors . Page 2 Operational management of the Company is handled by a small group of corporate officers and general managers . Corporate and administrative services including purchasing, credit administra- tion , bookkeeping and data processing, and personnel adminstra- tion are performed at the Company' s corporate headquarters at 1331 Davis Road , Elgin , which is also the location of Seigle ' s Millwork Center. The business plan of the Company includes expansion into the Barrington market in 1986 and the development of a roof truss and wall panel manufacturing facility in 1986 or early 1987 . The Company' s long term goal is to remain the pre-eminent supplier in its markets and to grow consistent with prudent business practice . Page 3 Officers General Managers Name Title Name Center Harry Seigle President Rick Yaeger Douglas Ave Mark Seigle Vice President Steve VanDeVoorde McBride St . Scott Hartmann Vice President Tim Kessler St . Charles Charles Scheckel Vice President Terry Johnson Geneva Daniel Vahey Treasurer Bernie Moe Aurora Ken Harris Millwork Directors Legal Counsel Name Position Chapman & Cutler Chicago, IL Thomas Heenan Partner Chapman & Cutler Chicago, IL Accountants Daniel Campbell President Alexander Grant & Co. Seacoast Industries (formerly Fox & Co. ) South Carolina Elgin, IL Robert Joshel Consultant Geneva , IL Insurance Jeffrey Herr Senior Vice President Arthur J. Gallagher & Co. Chicago Corporation Rolling Meadows , IL Chicago, IL Harry Seigle President Seigle 's Mark Seigle Vice President Seigle 's Harold Seigle Chairman Seigle 's Page 4 ABOUT OUR PROJECT The Seigle ' s project , for which application for $ 1 , 850 , 000 in industrial revenue bonds is made , envisions the development and construction of a 40 , 000 square foot Seigle ' s Home and Building Center and a 12, 000 square foot warehouse. (See attached site plan and elevation . ) The site of this project is the intersection of Big Timber Road and McLean Blvd . on Elgin ' s growing northwest side . This will be the largest Seigle Center and is intended to be the "flag ship" operation of the Seigle ' s chain. This unusual and modern building material sales operation will include kitchen , bath, floor covering, hardware , tools , paneling, millwork and building material sales . Consistent with contemporary retail practice , large displays of these products will be located throughout the facility together with the accompanying stock of the displayed materials. Though not part of the revenue bond project , current plans call for the construction of a 16, 000 square foot shopping center adjacent to the Seigle ' s Center and a Burger King. This shopping center will uniquely be offered only to tenants engaged in the sale of home improvement related products . This will create one of the nation ' s largest sites (at the Big Timber/McLean intersec- tion) devoted entirely to residential improvement , construction, and rehabilitation . Page 5 BENEFITS AND HIGHLIGHTS OF THE SEIGLE CENTER The salient highlights and benefits of the new Seigle Center for which industrial revenue bonds are requested include : * Preserving at least 30 jobs and the creation of 30 to 40 more . * The new generation of $8 , 000, 000 - $ 10, 000, 000 in taxable sales . * The beginnings of development on Big Timber Road West by users of the already in place and newly constructed water mains and sanitary sewer intercepters . * This location will lessen some of the vehicular and truck traffic now congesting Elgin ' s eastside downtown area wherein Seigle ' s - McBride Street and Douglas Avenue Centers are located . * The presence of a new Seigle ' s Center - particularly the flagship store - will foster home improvement as an important community value . * Seigle ' s Centers complement the large and dynamic Fox Valley construction industry. * The Seigle ' s store water drainage plan relates well with municipal engineering plans now under study for future growth on Elgin' s northwest side . * In the future (though not immediately) , this facility will lessen rail traffic in Elgin's downtown. Page 6 ABOUT OUR FINANCING To plan , develop, engineer, design , and build the 40 , 000 square foot Seigle ' s Center and accompanying 12, 000 warehouse will involve the expenditure of $ 1 , 850 , 000 . The American National Bank & Trust Company of Chicago is Seigle ' s lead bank and depository institution . Mr. Michael Clawson , Vice President of that Bank , has agreed to purchase that amount of industrial revenue bonds issued by the City of Elgin and Elgin Lumber & Supply Co. , Inc. (See attachment ) Bond counsel for the transaction will be the law offices of Chapman and Cutler, Chicago, Illinois . Ms. Wendy Binder of that office is familiar with and will be handling this transaction . N _ b.,,.- . . I. -- ---- 3 I- ! FUTURE EXPANSION '.'t'' W i DETENTION AREA I Y �u — V VW i ! ' I FUTURE EXPANSION I ..... _ = c' U I I I I I I I I (1 ill Q rTIII Il ! 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