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HomeMy WebLinkAbout95-115 r Resolution No. 95-115 RESOLUTION EXPRESSING THE INTENTION OF THE CITY OF ELGIN, ILLINOIS, TO ASSIST IN FINANCING THE ACQUISITION, CONSTRUCTION, RENOVATION, EXTENSION AND EQUIPPING OF AN ECONOMIC DEVELOPMENT PROJECT TO BE USED BY GIBSON GUITAR CORP. , A DELAWARE CORPORATION, AND APPROVING THE EXECUTION OF A MEMORANDUM OF AGREEMENT RELATING TO THE PROJECT WHEREAS, the City of Elgin, Illinois (the "City" ) is a duly organized and existing municipal corporation and home rule unit of government within the meaning of Section 6 of Article VII of the 1970 Constitution of the State of Illinois (the "State" ) ; and WHEREAS, the City is authorized to issue its revenue bonds to finance in whole or in part the cost of the acquisition, construction, renovation, extension and equipping of economic development projects; and WHEREAS, Gibson Guitar, Corp. , a Delaware corporation (the "Borrower" ) , wishes to secure financing for the acquisition, construction, renovation, extension and equipping of an economic development project to consist of the acquisition of land located in the Fox Bluff Corporate Center, Elgin, Illinois, the construction thereon of a building approximately 70, 000 square feet in size and the purchase machinery and equipment, such land, building, machinery and equipment to be used by the Borrower in its business of manufacturing guitar strings, parts and accessories (the "Project" ) ; and WHEREAS, the Borrower has requested that the City issue its revenue bonds to provide funds for the acquisition, construction, renovation, extension and equipping of the Project; and WHEREAS, this City Council considers it necessary and desirable to finance the Project in order (a) to provide increased employment opportunities and relieve conditions of unemployment and underemployment within the City, (b) to encourage the increase of industry and commerce within the City, and (c) to increase the tax base within the City, and thus to enhance the public health, safety and general welfare of the City and its inhabitants; and WHEREAS, the Borrower, in reliance upon the intention of the City to finance the cost of constructing, acquiring, renovating, extending and equipping the Project through the issuance of its revenue bonds, has determined to locate the Project within the corporate limits of the City; and r 4 WHEREAS, such revenue bonds, when issued in one or more issues or series, shall not be a charge against the general revenues or the taxing powers of the City but shall be payable solely from the proceeds of the revenue bonds issued to financing the Project and the earnings on such proceeds and revenue derived from the Project and the financing of the Project; and WHEREAS, a form of Memorandum of Agreement with respect to the proposed issuance of such revenue bonds for the Project has been presented to this meeting of this City Council ; and WHEREAS, it is intended that this resolution shall constitute an official action toward the issuance of the revenue bonds within the meaning of Section 1 . 103-8 (a) ( 5) of the Income Tax Regulations (the "Regulations" ) issued pursuant to the Internal Revenue Code of 1986 as amended (the "Code" ) and that the bonds issued for the benefit of the Borrower shall be reimbursement bonds for the purpose of Section 1 . 150-2 of the Regulations . NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS : 1 . That this City Council finds that (a) the lack of employment opportunities within the City is harmful to the public health, safety, and general welfare of the City and its inhabitants and (b) assisting the Borrower through the issuance of revenue bonds of the City, the proceeds of which will be loaned to the Borrower or its nominee and used to finance all or a portion of the cost of the Project, will provide increased employment opportunities and relieve conditions of unemployment and underemployment within the City, will encourage the increase of industry and commerce within the City and will increase the tax base within the City. 2 . That the Mayor of the City is authorized to execute and the City Clerk is authorized to attest and to affix the seal of the City to a Memorandum of Agreement with the Borrower in substantially the form as was presented to this meeting or with such changes in it as shall be approved by the officers executing the same, their approval to be evidenced by their execution of the Memorandum of Agreement. 3 . That upon final determination of the details of the financing, and subject to the terms and conditions of the Memorandum of Agreement and to the availability to the City of sufficient private activity bond volume cap to permit the bonds to be issued, the City will take all further steps necessary to issue its revenue bonds on behalf of the Borrower or its nominee to finance all or a portion of the Project in an amount now estimated at $2 , 300 , 000; provided, that on or before June 1 , 1996 (or such other date as shall be mutually satisfactory to the City and the Borrower) , the City and the j } Borrower shall have agreed to mutually acceptable terms for said revenue bonds and the contracts, agreements and proceedings related to the bonds and referred to in the Memorandum of Agreement. 4 . That said revenue bonds be reimbursement bonds for the purpose of Section 1 . 150-2 of the Regulations and that the proceeds of the bonds be used, in whole or in part, to reimburse expenditures made prior to the issuance of the bonds . 5 . That pursuant to the provisions of Section 147 ( f) of the Code, the City Council (as the "applicable elected representative" of the City) approves the issuance of such revenue bonds in the maximum aggregate principal amount of $2 , 300, 000 and the plan of financing of —the Project for the purpose of financing the costs of acquiring, constructing, renovating, extending and equipping the Project. 6 . That the officers and employees of the City are authorized to take such further action as is necessary to carry out the intention and purpose of this resolution and of the Memorandum of Agreement as executed and, subject to the terms and conditions of this resolution and of the Memorandum of Agreement, to cause revenue bonds of the City to be issued to finance the Project, now estimated to cost approximately $2 , 300 , 000, upon the terms and conditions stated in the 1 Memorandum of Agreement with respect to the economic development project described in the Memorandum of Agreement, which Memorandum of Agreement is made a part of this resolution. 7 . That all resolutions and parts thereof in conflict with this resolution are hereby superseded to the extent of such conflict, and this resolution shall be in full force and effect from and after its passage as provided by law. s/ Kevin Kelly Kevin Kelly, Mayor Presented: May 24 , 1995 Adopted: May 24 , 1995 Omnibus Vote : Yeas 6 Nays 0 Attest : s/ Dolonna Mecum Dolonna Mecum, City Clerk MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT is between the City of Elgin, a municipal corporation and home rule unit of the State of Illinois (the "City"), and Gibson Guitar Corp., a Delaware corporation (the "Borrower"). 1. Preliminary Statement. Among the matters of mutual inducement which have resulted in this Agreement are the following: (a) The City is authorized and empowered to issue revenue bonds and to loan the proceeds thereof for the purpose of financing an economic development project. (b) The Borrower proposes to finance the acquisition, construction and equipping of an economic development project to be located within the corporate limits of the City (the "Project"), which Project is to be used by the Borrower in its business of manufacturing guitar strings, parts and accessories. The Project is expected to cost approximately $2,300,000. The Borrower wishes to obtain satisfactory assurance from the City that the proceeds from the sale of revenue bonds issued by the City will be made available to finance all or a portion of the cost of the Project. (c) The City has determined that (i) the lack of employment opportunities within the City is harmful to the public health, safety and general welfare of the City and its inhabitants and (ii) assisting the Borrower through the issuance of revenue bonds of the City, the proceeds of which will be loaned to the Borrower or its nominee and used to finance all or a portion of the cost of the Project, will provide increased employment opportunities and relieve conditions of unemployment and underemployment within the City, will encourage the increase of industry and commerce within the City and will increase the tax base within the City. (d) The City finds that the financing as herein described will further the public purposes of the City. Subject to (i) due compliance with all requirements of law, (ii) the availability to the City of sufficient private activity bond volume cap under Section 146 of the Internal Revenue Code of-1986, (as amended (the "Code") and the Illinois Private Activity Bond Allocation Act, (iii) public approval as required by Section 147 (f) of the Code, (iv) agreement by the City and the Borrower upon terms for the bonds and the form of all agreements and proceedings related to the bonds, and (v) receipt of adequate assurance from the Borrower that there are one or more purchasers for the bonds, the City, by virtue of such authority as may now or hereafter be conferred, will issue and sell its revenue bonds in an amount not to exceed $2,300,000 to pay all or a portion costs of the Project. It is the intention of the City that the bonds be reimbursement bonds for the purpose of Section 1.150-2 of the Income Tax Regulations issued pursuant to the Code and that the proceeds of the bonds be used, in whole or in part, to reimburse expenditures made prior to the issuance of the bonds. (e) The revenue bonds of the City shall be limited obligations of the City payable solely out of the revenues and receipts derived with respect to the Project; the Project shall be financed upon terms so that the payments shall be sufficient to pay the principal of and 1 , -2- premium, if any, and interest on such revenue bonds. No holder of any such bonds shall have the right to compel any exercise of the taxing power of the City, the State of Illinois or any political subdivision of the State of Illinois and such bonds shall not constitute an indebtedness or a loan of credit of the City, the State of Illinois or any political subdivision of the State of Illinois. 2. Undertakings on the Part of the City. Subject the conditions herein stated, the City agrees as follows: (a) That it will authorize the issuance and sale of an issue of its revenue bonds in an aggregate principal amount equal to the then estimated cost of the Project, not to exceed $2,300,000. (b) That it will cooperate with the Borrower to endeavor to find a purchaser or purchasers for the bonds, and if purchase arrangements satisfactory to the City and to the Borrower can be made, it will adopt, or cause to be adopted, such proceedings and authorize the execution of such documents as may be necessary or advisable for the authorization, issuance and sale of the bonds and the loan of bond proceeds to the Borrower, all as shall be authorized by law and mutually satisfactory to the City and the Borrower. (c) That the aggregate basic loan repayments (i.e. the amount to be used to pay the principal, interest and premium, if any, on the bonds) payable under the loan or financing agreement whereby the bond proceeds shall be loaned to the Borrower or its nominee shall be such sums as shall be sufficient to pay the principal of and interest and premium, if any, on the bonds as and when the same shall become due and payable. (d) That subject to the condition set forth in Section 4(a) hereof, the City will not authorized the issuance of, or enter into any agreement obligating the City to issue, any revenue bonds which will reduce the private activity bond volume cap available to the City under Section 146 of the Code during 1996 so that the bonds contemplated by this Agreement cannot be issued. (e) That it will take or cause to be taken such other acts and adopt such further proceedings as may be required to implement the aforesaid undertakings or as it may deem appropriate in pursuance thereof. 3. Undertakings on the Part of the Borrower. Subject to the conditions herein stated, the Borrower agrees as follows: (a) That it will use all reasonable efforts to find one or more purchasers for the bonds in an aggregate principal amount not to exceed the amount as above stated. (b) That it will enter into or cause to be entered into a contract or contracts for the acquisition and construction of all items constituting the Project. -3- (c) That contemporaneously with the sale of the bonds it will enter into a loan agreement or other financing agreement with the City under the terms of which the Borrower or its nominee will obligate itself to pay to the City sums sufficient in the aggregate to pay the principal of and interest and premium, if any, on the bonds as and when the same shall become due and payable, such agreement to contain other provisions required by law and such other provisions as shall be mutually acceptable to the City and the Borrower. (d) That it is recognized that additional instruments and agreements to provide additional security for the purchasers of the bonds, including a mortgage on the Project, may be necessary or desirable in order to successfully market the bonds. (e) That it will take such further action and adopt such further proceedings as may be required to implement its aforesaid undertakings or as it may deem appropriate in pursuance thereof. 4. General Provisions. (a) All commitments of the City under paragraph 2 hereof and of the Borrower under paragraph 3 hereof are subject to the condition that on or before June 1, 1996, the City and the Borrower shall have agreed to mutually acceptable terms for the bonds and of the sale and delivery thereof, and mutually acceptable terms and conditions for the contracts and agreements referred to in paragraph 3 and the proceedings referred to in paragraphs 2 and 3 hereof. (b) If the events set forth in subparagraph (a) of this paragraph do not take place within the time set forth or any extension of that time and the revenue bonds of the City in an amount approximately equal to the amount stated above are not sold within such time, the Borrower (i) acknowledges that certain fees and expenses will have accrued by reason of the execution and performance of this Agreement and (ii) agrees that it will promptly upon request reimburse the City for all reasonable and necessary direct out-of-pocket expenses which the City may incur at its request arising from the execution of this Agreement and the performance by the City of its obligations under this Agreement, and will pay the fees and out-of-pocket expenses of bond counsel and counsel to the City, and this Agreement shall thereupon terminate. (c) The action of the City in executing and delivering this Memorandum of Agreement, in fulfilling its obligations under this Memorandum of Agreement, in issuing or in refusing to issue the bonds on behalf of the Borrower or in taking or omitting or refusing to take, any other action whatsoever shall not result in any pecuniary liability on the part of the City, members of its governing body, its officers, its employees and its counsel, except as may be provided in the bonds or any instruments relating thereto. • -4- IN WITNESS WHEREOF the parties hereto have enter into this Agreement by their officers thereunto duly authorized as of the a Lay of .^Q , 1995. CITY OF ELGIN, ILLINOIS :BY �i,�•-� Mayor Attest: City Clerk GIBSON GUITAR CORP. B : 3027229