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HomeMy WebLinkAboutS35-04 , CITY OF ELGIN ORDINANCE NO. S35-04 ORDINANCE ESTABLISHING THE POLICY AND PROCEDURAL GUIDELINES FOR THE ISSUANCE OF EDUCATIONAL FACILITIES REVENUE BONDS FOR PRIVATE EDUCATIONAL FACILITIES PASSED BY THE CITY COUNCIL OF THE CITY OF ELGIN ON THIS 15TH DAY OF DECEMBER 2004 Published in pamphlet form by authority of the City Council of the City of Elgin, Kane and Cook Counties, Illinois, on this 16th day of December 2004. STATE OF ILLINOIS ) ) ss. COUNTY OF KANE ) CERTIFICATE I, Dolonna Mecum, certify that I am the duly appointed and acting municipal clerk of the City of Elgin, Cook and Kane Counties, Illinois. I further certify that on December 15, 2004, the Corporate Authorities of such municipality passed and approved Ordinance No. S35-04, which provided by its terms that it should be published in pamphlet form. The pamphlet form of Ordinance No. S35-04, including the Ordinance and a cover sheet thereof, was prepared, and a copy of such Ordinance was posted in the municipal building commencing on December 16, 2004, and continuing for at least ten days thereafter. Copies of such Ordinance were also available for public inspection upon request in the office of the municipal clerk. DATED at Elgin, Illinois, on December 16, 2004. Municipal Clerk (SEAL) r ORDINANCE No. S35-04 ORDINANCE ESTABLISHING THE POLICY AND PROCEDURAL GUIDELINES FOR THE ISSUANCE OF EDUCATIONAL FACILITIES REVENUE BONDS FOR PRIVATE EDUCATIONAL FACILITIES WHEREAS, the City of Elgin, Kane and Cook Counties, Illinois (the "City") is a home rule unit under the provisions of Article VII, Section 6A of the 1970 Constitution of the State of Illinois, and may, under the powers granted by Section 6A of Article VII, "exercise any power and perform any function pertaining to its government and affairs. . ."; and WHEREAS, it is necessary and in the best interests of the City that all the people of the City and other Illinois communities be given the fullest opportunity to learn and to develop their intellectual and mental capacities and skills; that to achieve these ends it is of the utmost importance that private educational institutions within the City, or within ten miles of the City, be provided with appropriate additional means to assist the people of the City and of the State of Illinois in achieving the required levels of learning and development of their intellectual and mental capacities and skills and that it is the purpose of this Ordinance to provide a measure of assistance and an alternative method of financing to enable private educational institutions to provide educational facilities, whether or not constructed or acquired prior to the effective date of this Ordinance; and WHEREAS, the issuance of educational facility revenue bonds to finance in whole or in part the cost of the acquisition, purchase, construction, reconstruction, improvement, equipping, betterment or extension of any educational facility within, or under certain conditions within ten miles of the City, in order to promote the purposes referenced above is for a public purpose and is a function pertaining to the government and affairs of the City; and WHEREAS, the establishment of basic procedures for the issuance of educational facility revenue bonds is necessary and desirable to provide clarity and direction for subsequent actions and to explicitly document the City's intent to offer such assistance neutrally, without discrimination, amongst educational institution applicants which meet the criteria set forth herein; Now, THEREFORE, BE IT ORDAINED by the City Council of the City of Elgin, Kane and Cook Counties, Illinois, in the exercise of its home rule powers, as follows: Section 1. Short Title. This ordinance may be referred to as the City of Elgin, Illinois, Educational Facility Revenue Bond Enabling Ordinance. Section 2. Definitions. Whenever used in this Ordinance unless a different meaning clearly appears from the context: (1) "Bonds" means any bonds, notes, or other obligations of the City issued pursuant to the authority of this Ordinance. (2) "Bond Ordinance"means an ordinance authorizing a specific issue of bonds adopted by the City Council of the City in accordance with the policies and procedures set forth in this Ordinance. (3) "City"means the City of Elgin, Kane and Cook Counties, Illinois. (4) "Code"means the Internal Revenue Code of 1986, as amended. (5) "Educational Facility" means any land, interest in land, building, structure, facility, system, fixture, improvement, addition, appurtenance, machinery, or equipment or any combination or portion thereof, and all real and personal property deemed necessary or desirable in connection therewith, for use by any Educational Institution located within the City or, subject to the following sentence, within ten miles of the corporate limits of the City, constructed, renovated or acquired before or after the effective date of this Ordinance which is suitable for the instruction, feeding, recreation or housing of students, the use by an Educational Institution in connection with any educational, research, related or incidental activities then being or to be conducted by it, or any combination of the foregoing, including, without limitation, any such property suitable for use as or in connection with any one or more of the following: an academic facility, administrative facility, agricultural facility, assembly hall, athletic facility, auditorium, boating facility, communication facility, computer facility, continuing education facility, classroom, dining hall, dormitory, exhibition hall, food service and ribk preparation facility, gymnasium, greenhouse, instructional facility, laboratory, library, maintenance facility, medical facility, parking area, physical education facility, recreational facility, research facility, stadium, storage facility, student union, study facility, theatre or utility, or other property related to any of the foregoing. If the Educational Facility to be financed or refinanced is not located within the corporate limits of the City, the Educational Facility must either (a) be owned or operated by an Educational Institution which also owns or operates an Educational Facility located within the corporate limits of the City, or (b) in the judgment of the City, bear a substantial nexus to the City. An Educational Facility, to the extent financed or refinanced with proceeds of Bonds, shall not include any property used or to be used primarily as a place for devotional activities or religious worship nor any property which is used or to be used primarily in connection with any part of the program of a school or department of divinity for a religious denomination or the training of ministers, priests, rabbis or other professional persons in the field of religion. (6) "Educational Institution" means a not-for-profit educational institution which is an organization described in Section 501(c)(3) of the Code (or any successor provision) exempt from federal income taxes under Section 501(a) of the Code (or any successor provision), which is authorized to provide a program of pre-school, primary, middle or secondary education or education beyond the high school level. Educational Institution shall include any related entities to an Educational Institution which meet the requirements of this definition. (7) "Financing Agreement" means any agreement, including, without limitation, a lease agreement, sale agreement, use agreement or loan agreement, entered into by the City with any Educational Institution which provides that the City shall issue its Bonds to finance or refinance all or a portion of the costs of an Educational Facility for an Educational Institution. (8) "Indenture" means a trust indenture or agreement between the City and either a corporate trustee (which may be any entity within or without the State of Illinois authorized to exercise trust powers in the State of Illinois) or the Bond purchaser under which the City assigns to such trustee or Bond purchaser all of its rights, title and interest in the Financing Agreement as security for the Bonds (other than the City's rights to payment of fees, expenses and indemnification, to inspection of the Educational Facility and other rights which the City wishes to retain unrelated to the payment of amounts on the Bonds). (9) "Project Costs" means and includes the sum total of all reasonable or necessary costs incidental to the acquisition, construction, or reconstruction, renovation, alteration, improvement, extension and equipping of an Educational Facility, or the refinancing of debt incurred to finance an Educational Facility, including without limitation, the cost of studies and surveys; plans, specifications, architectural and engineering services; legal, audit, financial, marketing or other special services; financing, acquisition, demolition, construction, equipment and site development of new and rehabilitated buildings, rehabilitation, reconstruction, repair or remodeling of existing buildings and all other necessary and incidental expenses including an initial bond and interest reserve, provisions for working capital, startup costs, interest on Bonds issued to finance an Educational Facility during construction and for up to one year thereafter; and any and all other costs related thereto authorized to be financed or refinanced with Bond proceeds pursuant to a Bond Ordinance, Indenture or Financing Agreement. Section 3. Legislative Declaration of Purpose. It is hereby determined and declared that the purpose of this Ordinance is to provide a financing device which will aid in financing or refinancing the cost of Educational Facilities; that the Educational Facilities to be assisted under the provisions of this Ordinance perform the essential public purpose of educating pre-school, primary, middle, secondary and/or post high school students; that the provision of such Educational Facilities by the Educational Institutions assisted hereby substantially relieves the burden on state and local governments and the taxpayers located in the City to provide for the education of such students; that the Code provides for the exclusion of interest on bonds issued by state or local governments from the gross income of the owners thereof for federal income tax purposes to finance facilities owned by entities which are exempt organizations under Section 501(c)(3) of the Code, and this Ordinance is intended to provide a mechanism for the effectuation by the City of such Code provisions as they relate to Educational Facilities owned by Educational Institutions; and the same are hereby declared and determined to be public purposes and functions pertaining to the government and affairs of the City. Section 4. Additional Powers. In addition to powers which it may now have, the City shall have the power: r (a) To issue its Bonds to defray in whole or in part the Project Costs of any Educational Facility or to refinance any indebtedness incurred to pay Project Costs of any Educational Facility, which Bonds shall be issued pursuant to a Bond Ordinance authorizing the same and designating an appropriate name therefor. (b) To enter into a Financing Agreement with any Educational Institution in order to secure the City's Bonds;provided, however, that each Financing Agreement must provide that the Educational Institution shall pay to, for or on behalf of the City, (1) an amount sufficient to pay all principal, interest, redemption premium, if any, tender price, if any, and any other amounts payable on the Bonds, (2) the costs and expenses of the City in connection with the Bonds, and (3) amounts generally sufficient to indemnify the City for any costs, losses or damages incurred by the City pursuant to any claims or lawsuits related to the Bonds. (c) Subject to Section 9 hereof, to pledge to the punctual payment of the principal, interest and redemption premium, if any, on the Bonds, the revenue and receipts to be received pursuant to the Financing Agreement and other amounts specified in the Indenture or Bond Ordinance. (d) To enter into an Indenture to provide for the terms of and security for the Bonds and the holders thereof. (e) To issue Bonds to refund in whole or in part, bonds heretofore issued by the City or by another state or local governmental entity to finance or refinance Project Costs of Educational Facilities for Educational Institutions. Section S. Exercise of Powers — Bonds. The exercise of all powers granted by this Ordinance shall be authorized, and Bonds shall be authorized, by the Bond Ordinance which may be adopted at the same meeting at which it is introduced and shall take effect immediately upon adoption. The Bonds may bear interest at such rate or rates, whether fixed or variable, and whether determined pursuant to a pre-determined formula or established by a third-party agent, may be payable at such times, may be in one or more series, may bear such date or dates, may mature at such time or times not exceeding 40 years from their respective dates, may be payable in such medium of payment at such place or places, may carry such registration privileges, may be subject to such terms of redemption at such premiums, may be subject to optional or mandatory purchase or tender, may be convertible from one interest rate mode to another, may be executed in such manner, may contain such terms, covenants and conditions, and may be in such form, either coupon or registered, as the Bond Ordinance or Indenture shall provide. Subject to Section 6 hereof, the Bonds may be sold at public or private sale in such manner and upon such terms as shall be set forth in the Bond Ordinance or the Indenture. r Section 6. Conditions to Issuance of Bonds. No Bonds shall be issued by the City under this Ordinance unless: (a) The City Council of the City make the following findings in the Bond Ordinance (which findings shall be final, conclusive and binding on all parties): (i) that the Financing Agreement is between the City and an entity which is an Educational Institution and the facilities to be financed or refinanced thereby are Educational Facilities; (ii) that one or more public purposes set forth in Section 3 hereof are being met by the issuance of the Bonds; (iii) that the expenses incurred by or on behalf of the City in connection with the issuance of the Bonds or the financing or refinancing of the Educational Facilities are being paid or reimbursed by the Educational Institution, or provision for such payment or reimbursement by the Educational Institution has been made to the satisfaction of the City; and (iv) that, based on information supplied by the Educational Institution, the Educational Institution is financially able to pay the full amount of debt service on the Bonds or has provided adequate credit enhancement for the Bonds (provided that no such finding may be used or relied upon by prospective purchasers of the Bonds in determining whether to purchase the Bonds); (b) To the extent that the City could reasonably lose the benefit of its ability to issue its own obligations which constitute "qualified tax-exempt obligations" under Section 265(b) of the Code (or any successor provision) because of its issuance of the Bonds, the Educational Institution has agreed to compensate the City for such loss pursuant to such compensation arrangement as the City shall deem reasonable; (c) The Bonds are either being: (i) sold in a private placement to one or more institutional investors which have each executed a letter to the City indicating that it is an accredited investor under Regulation D of the Securities and Exchange Commission and acknowledging that the Bonds are special limited obligations of the City as provided in Section 9 hereof; or (ii) (A) sold or placed to public investors with an initial Bond long-term rating by one or more nationally recognized rating agencies of A- (or its equivalent) or better and, if the Bonds are issued as variable rate demand bonds, with an initial short-term rating of A-1 (or its equivalent) or better, or(B) if not so rated, credit enhanced by a credit enhancer whose own ratings meet the criteria specified in(A) above; (d) If the interest on the Bonds is intended to be tax-exempt, the City receives an opinion of nationally recognized bond counsel acceptable to the City generally to the effect that interest on the Bonds is not includable in the federal gross income of the owners thereof; and (e) If deemed necessary or desirable by the City, a report of the City's financial advisor as to compliance with the conditions set forth in this Section 6, or any of them. Section 7. Other Terms of Bonds. The Bond Ordinance or the Financing Agreement, Indenture and/or other documents and agreements approved by the Bond Ordinance shall set forth all of the terms and covenants pertaining to the issue of Bonds approved thereby and the security therefor, not in any event inconsistent with the provisions of this Ordinance, as amended from time to time. Section 8. Neutral Application of This Ordinance. The City recognizes that many Educational Institutions which seek assistance in the form of tax-exempt Bonds are faith-based institutions. The City declares and covenants that it will not discriminate amongst Educational Institutions seeking the issuance of Bonds to finance or refinance Educational Facilities on the basis of whether or not an Educational Institution is faith-based or, if an Educational Institution is faith-based, on the basis of the particular faith represented. Nothing herein, however, shall be construed as requiring that the City issue Bonds for any particular Educational Institution or Educational Facility. Section 9. Liability of Bonds. All Bonds issued under and pursuant to this Ordinance shall be limited obligations of the City payable solely out of the revenues and receipts derived from or provided for by the Financing Agreement, from Bond proceeds or from any credit enhancement provided by the Educational Institution as security or support for the Bonds. No holder of any Bond issued under this Ordinance has the right to compel any exercise of the taxing power of the City to pay the Bonds, the interest or premium, if any, thereof or any other amount with respect thereto, and the Bonds shall not constitute an indebtedness of the City or a loan of credit thereof within the meaning of any constitutional or statutory provision. It shall be plainly stated on the face of each Bond that it does not constitute an indebtedness of the City or a loan of credit within the meaning of any constitutional or statutory provision and does not create any legal or moral obligation on behalf of the City to repay the same except out of the revenues as defined in the Bond Ordinance authorizing its issue. The City shall not in any event pay any amounts due on the Bonds from taxpayer moneys or general governmental revenues and the Bonds shall be payable solely from the sources specified above. Neither the members of the City Council of the City nor any person executing the Bonds nor any other City official or officer shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. Section 10. Fees and Expenses. The City may charge the Educational Institution a financing fee in connection with each issuance of Bonds as provided in this Ordinance as rik reimbursement to the City for its internal administrative costs in reviewing, evaluating and administering any Bond issue. The financing fee shall be in addition to the fees of any financial advisor, outside legal counsel or other outside consultants or experts retained by the City in connection with the issuance of Bonds, which fees, together with all Bond costs of issuance, shall be payable by the Educational Institution (from Bond proceeds or otherwise). Section 11. Powers Conferred as Additional and Supplemental—Limitations Imposed— Effect. The powers conferred by this Ordinance are in addition and supplemental to, and the limitations imposed by this Ordinance shall not affect, the powers conferred by any law or any other ordinance. Educational Facilities may be acquired, purchased, constructed, reconstructed, renovated, bettered, equipped, extended and financed, and Bonds may be issued under this Ordinance for such purposes, notwithstanding that any law or any other ordinance may provide for the acquisition, purchase, construction, reconstruction, renovation, equipping, betterment, extension and financing of a like Educational Facility; or the issuance of Bonds for like purposes, and without regard to the requirements, restrictions, limitations or provisions contained in any law or any other ordinance. Section 12. Severability. 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 and provisions. Section 13. Repeal of Inconsistent Proceedings. All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. Section 14. Effective Date. This Ordinance shall become effective immediately upon passage. PASSED,APPROVED AND RECORDED IN CITY RECORDS this 15th day of December, 2004. AYES: COUNCILMEMBERS FIGUEROA, GILLIAM, RODGERS, SANDOR, WALTERS, AND MAYOR SCHOCK NAYS: ABSENT OR NOT VOTING: r Published in pamphlet form by the City Council on December 16, 2004 CITY OF ELGIN,KANE AND COOK COUNTIES,ILLINOIS Mayor [SEAL] ATTEST: 5r)E0.47 titer City Clerk Clerk