5.1 Issue EDR BondsCITY OF SALINA
REQUEST FOR COMMISSION ACTION DATE TIME
6/16/1986 4:00 P.M.
AGENDA SECTION: Public Hearings and Items ORIGINATING DEPARTMENT: APPROVED FOR
NO- 5 Scheduled for a Certain Time City Clerk AGE%DAi:.}
k'lJv
ITEM
NO. i
~BY: D. L. Harrison BY: ~
At a special meeting of the Board of Commissioners on May 29, 1986 at 8:00 am
the Board of Commissioners adopted Resolution 86-3844, relating to a project
under the economic development revenue bond act; calling for a public hearing
thereon.
The notice of public hearing was published on May 30, 1986.
At the conclusion of the public hearing, Ordinance Number 86-9137 - relating to
$5,800,000 Economic Development Revenue Bond (Omaha Hotel, Inc. Project);
authorizing the issuance thereof pursuant to K.S.A., Section 12-1749 et seq.,
and approving and authorizing the execution of documents in connectio'~-'
therewith, should be introduced for first reading.
Second Reading is scheduled for June 23, 1986, and the ordinance will be
published on June 24th.
COMMISSION ACTION
MOTION BY SECOND BY
TO:
ORDINANCE NO. 86-9137
AN ORDINANCE RELATING TO $5,800,000 ECONOMIC
DEVELOPMENT REVENUE BOND (OMAHA HOTEL, INC. PROJECT);
AUTHORIZING THE ISSUANCE THEREOF PURSUANT TO K.S.A.,
SECTION 12-1749 ET SEQ., AND APPROVING AND AUTHORIZING
THE EXECUTION OF DOCUMENTS IN CONNECTION THEREWITH
BE IT ORDAINED by the governing body of the City of
Salina, Kansas:
Section 1. Definitions
1.01. In this Ordinance the following terms, when
used with initial capital letters, have the following
respective meanings unless the context hereof or use herein
clearly requires otherwise:
Act: the Kansas Economic Development Revenue Bond
Act, K.S.A., Section 12-1749, et seq.;
Assignment: the Assignment of Rents, Leases and Other
Benefits to be given by the Tenant in favor of the Lender;
Bond: the $5,800,000 Economic Development Revenue
Bond (Omaha Hotel, Inc. Project) to be issued by the City
pursuant to this Ordinance;
Building: the three-story hotel facility to be
constructed by the Tenant on the Land and to be located at
1600 West Crawford in the City;
City:
assigns;
Code:
the City of Salina, Kansas, its successors and
the Internal Revenue Code of 1954, as amended;
Escrow Agent: FirsTier Bank, N.A., Omaha, a national
banking association, its successors and assigns;
Escrow Agreement: the Escrow and Disbursing Agreement
to be entered into between the City, the Tenant, the Escrow
Agent and the Lender;
Holder: the registered Holder of the Bond;
Land: the real estate described in Exhibit A to the
Lease Agreement;
Lease Agreement: the Lease Agreement to be executed
by the City and the Tenant;
Lender: Unionmutual Stock Life Insurance Co. of
America, a Maine corporation, its successors and assigns;
Mortgage: the Leasehold Mortgage and Security
Agreement to be given by the Tenant in favor of the Lender;
Ordinance: this ordinance of the City Council,
adopted June 23, 1986, authorizing the issuance of the Bond;
Pledge Agreement: the Pledge Agreement to be given by
the City in favor of the Lender;
Project: the acquisition of the Land and the
acquisition, construction and equipping of the Building;
Project Costs: the costs of the Project and the costs
of the issuance and delivery of the Bond as defined in the
Lease Agreement;
Tenant: Omaha Hotel, Inc., a Kansas corporation, its
successors and assigns; and
Title Company: Ticor Title Insurance Company.
Section 2.
and declared that:
Findinqs.
It is hereby found, determined
(a) the financing of the Project, the authorization
of the Bond in the principal amount of $5,800,000, the
execution and delivery of the Lease Agreement, the Escrow
Agreement and the Pledge Agreement and the performance of
all covenants and agreements of the City contained in the
Lease Agreement, the Escrow Agreement and the Pledge
Agreement and of all other acts and things required under
the Constitution and laws of the State of Kansas to make
the Lease Agreement, the Escrow Agreement, the Pledge
Agreement and the Bond valid and binding obligations in
accordance with their terms, are authorized by the Act;
(b) an information statement has been filed with the
State Board of Tax Appeals as required by Section 12-1744a
of the Act at least seven days prior to the proposed
delivery date of the Bond and the Chairperson of the Board
of Tax Appeals has found, or will, prior to the delivery of
the Bond, find, that the information and documents
submitted are complete and timely filed;
(c) it is desirable that the Bond in the amount of
$5,800,000 be issued by the City upon the terms set forth
herein and that the City pledge and grant to the Lender a
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security interest in certain revenues and payments to be
received by the City under the Lease Agreement as security
for the payment of the principal of, premium, if any, and
interest on the Bond;
(d) the payments contained in the Lease Agreement are
fixed, and are required to be revised from time to time as
necessary, so as to produce income and revenue sufficient
to provide for prompt payment of principal of, premium, if
any, and interest on the Bond when due; and the Lease
Agreement also provides that the Tenant is required to pay
all expenses of the operation and maintenance of the
Project, including, but without limitation, adequate
insurance thereon and insurance against all liability for
injury to persons or property arising from the operation
thereof, and all taxes and special assessments levied upon
or with respect to the Land and payable during the term of
the Lease Agreement;
(e) the execution and delivery of the Lease
Agreement, the Escrow Agreement, the Pledge Agreement and
the Bond will not conflict with, or constitute on the part
of the City a breach of or a default under, any existing
agreement, indenture, mortgage, lease or other instrument
to which the City is subject or is a party or by which it
is bound;
(f) no litigation is pending or, to the best
knowledge of the members of this Commission, threatened
against the City questioning the organization or boundaries
of the City or the right of any officer of the City to hold
his or her office, or in any manner questioning the right
and power of the City to execute and deliver the Bond, or
otherwise questioning the validity of the Bond or the
execution, delivery or validity of the Lease Agreement, the
Escrow Agreement or the Pledge Agreement or questioning the
appropriation of revenues to payment of the Bond or the
right of the City to acquire and construct the Project and
lease it to the Borrower;
(g) all acts and things required under the
Constitution and the laws of the State of Kansas to make
the Lease Agreement, the Escrow Agreement, the Pledge
Agreement and the Bond the valid and binding obligations of
the City in accordance with their terms will have been done
upon adoption of this Ordinance and execution of the Lease
Agreement, the Escrow Agreement and the Pledge Agreement;
(h) the City is duly organized and validly existing
under the Constitution and laws of the State of Kansas and
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is authorized to issue the Bond in accordance with the Act;
and
(i) pursuant to Executive Orders 84-77, 84-78 and
86-85, the State Department of Economic Development has
allocated to the City $6,000,000 of authority to issue
private activity bonds under Section 103(n) of the Code and
H.R. 3838.
Section 3. Authorization and Sale
3.01. Authorization. The City is authorized by the
Act to issue revenue bonds and to use the proceeds thereof to
acquire and construct facilities such as the Project and to
lease such facilities to entities such as the Tenant.
3.02. Preliminary City Approval. The C0mmi$$i~n gave
preliminary approval to the sale of its revenue bonds pursuant
to the Act, the use of the proceeds for the acquisition and
improvement of the Project and the lease of the Project to the
Tenant and authorized the preparation of such documents as may
be appropriate to the Project by adoption of Resolution No.
85-3765, on March 4, 1985.
3.03. Documentation. There have been prepared and
presented, to this C~m~$$i~on~ copies of the following documents,
all of which are now, or shall be, placed on file in the office
of the City Clerk:
(a) the Lease Agreement;
(b) the Pledge Agreement;
(c) the Escrow Agreement;
(d) the Mortgage; and
(e) the Assignment;
Section 4. Approval of Documents. The forms of the
Lease Agreement, Escrow Agreement and Pledge Agreement referred
to in Section 3.03 are approved subject to such modifications
as are deemed appropriate and approved by the attorney for the
City and by the Mayor, which approval shall be conclusively
evidenced by execution of the Lease Agreement, the Escrow
Agreement, the Pledge Agreement and the Bond by the Mayor and
the City Clerk. The Mayor and City Clerk are directed to
execute the Lease Agreement and the Escrow Agreement upon
execution thereof by the Tenant and to execute the Pledge
Agreement. Copies of all of the documents shall be delivered,
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filed and recorded as provided therein. The Mayor and the City
Clerk are also authorized and directed to execute such other
instruments as may be required to give effect to the
transactions herein contemplated.
Section 5. The Bond.
5.01. Form. The Bond shall be issued substantially
in the form set forth in Exhibit A hereto, with such
appropriate variations, omissions and insertions as are
permitted or required by this Ordinance, and in accordance with
the further provisions of this Section 5.
5.02. Bond Terms. The Bond shall be designated the
Economic Development Revenue Bond (Omaha Hotel, Inc. Project),
and shall:
(a) be dated as of the date of delivery thereof to
the Lender;
(b) be in the total principal amount of $5,800,000;
(c) bear interest initially at the rate of 10-3/8%
per annum, subject to adjustment at the times and in the
manner set forth in the form of the Bond contained in
Exhibit A hereto;
(d) be payable in monthly installments of principal
and interest initially in the amount of $52,513.61, subject
to adjustment at the times and in the manner set forth in
the form of the Bond contained in Exhibit A hereto;
(e) mature finally on July 1, 2001; and
(f) be subject to redemption and prepayment upon the
terms and subject to the conditions provided in the form of
the Bond provided in Exhibit A hereto.
5.03. Execution. The Bond shall be executed on
behalf of the City by the signatures of the Mayor and the City
Clerk, and shall be sealed with the corporate seal of the
City. In case any officer whose signature shall appear on the
Bond shall cease to be such officer before the delivery
thereof, such signature shall nevertheless be valid and
sufficient for all purposes.
5.04. Mutilated, Lost and Destroyed Bond. In case
the Bond shall become mutilated or be destroyed or lost, the
City shall cause a new Bond to be executed and delivered of
like outstanding principal amount and tenor in exchange and
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substitution for and upon cancellation of the mutilated Bond,
or in lieu of and in substitution for such Bond destroyed or
lost, pursuant to procedures and requirements as the City shall
deem proper and sufficient fully to protect itself, including
the posting by the Holder of an indemnity bond in form,
substance and amount satisfactory to the attorney for the City
and the Holder's paying the expenses and charges of the City in
connection with such substitution and replacement, and, in case
the Bond is destroyed or lost, its filing with the City
evidence satisfactory to it of compliance with any applicable
provisions of law.
5.05. Registration of Transfer. The City will cause
to be kept at the office of the City Clerk a Bond Register in
which, subject to such reasonable regulations as it may
prescribe, the City shall provide for the registration or
transfer of ownership of the Bond. The Bond shall be
transferable upon the books of the City by the Holder thereof
in person or by its attorney duly authorized in writing, upon
surrender of the Bond together with a written instrument of
transfer satisfactory to _the City Clerk, duly executed by the
Holder thereof or its duly authorized attorney, and upon
payment by the Holder of any expenses of the City incurred by
it in connection with such transfer. Upon such transfer the
City Clerk shall note the date of registration and the name and
address of the new Holder on the books of the City and in the
registration blank appearing on the Bond. Alternatively, the
City shall, at the request and expense of the Holder, issue a
new bond or bonds, in aggregate outstanding principal amount
equal to that of the Bond surrendered, and of like tenor except
as to number, principal amount and the amount of the monthly
installments payable thereunder, and registered in the name of
the Holder or such transferee as may be designated by the
Holder. The City may deem and treat the person in whose name
the Bond is last registered upon the books of the City with
such registration noted on the Bond, as the absolute owner
thereof, whether or not overdue, for the purpose of receiving
payment of or on account of the principal balance, prepayment
price or interest and for all other purposes, and all such
payments so made to the Holder or upon its order shall be valid
and effectual to satisfy and discharge the liability upon the
Bond to the extent of the sum or sums so paid, and the City
shall not be affected by any notice to the contrary.
5.06. Delivery and Use of Proceeds. Prior to
delivery of the Bond, the documents referred to below shall be
completed and executed in form and substance as approved by the
attorney for the City. The City shall execute and deliver the
Bond to the Lender together with the following:
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(a) a duly certified copy of this Ordinance;
(b) original, executed counterparts of the Lease
Agreement, the Escrow Agreement and the Pledge Agreement;
and
(c) such closing certificates, opinions and related
documents as are required by the Lender or by Dorsey &
Whitney, as bond counsel, and which are approved by the
attorney for the City.
Upon delivery of the Bond and the above items to the
Lender, the Lender shall pay the purchase price of the Bond
(which purchase price shall be in an amount equal to the
principal amount of the Bond) to the Escrow Agent, on behalf of
the City, and the Tenant shall pay to the City an amount equal
to the expenses incurred by the City in connection with the
issuance of the Bond, as shown by a statement to be delivered
to the Tenant by the City. The Escrow Agent shall deliver to
the City and the Lender a receipt for such purchase price,
shall hold the proceeds of the Bond in accordance with the
Escrow Agreement and shall disburse such proceeds to the Tenant
in reimbursement of expenditures made by the Escrow Agent for
Project Costs. The Escrow Agent shall provide the City with a
full accounting of all funds disbursed for Project Costs.
Section 6. Waiver of Tax Exemption. The Bond is
issued under the condition that the Lease Agreement will
provide that the Tenant will waive any ad valorem property tax
exemption which would otherwise be available to the Project
under the provisions of K.S.A., Section 79-201(a) Second.
Section 7. Conveyance of Project. Upon receipt by
the City of the purchase price of the Project, computed in
accordance with Section 2.12 of the Lease Agreement, title to
the Project shall be transferred and conveyed to the Tenant as
provided in the Lease Agreement, and the Mayor and City Clerk
are hereby authorized and directed to execute such deeds, bills
of sale and other instruments as may be necessary to effect
such conveyance and transfer in accordance with the provisions
of Section 2.12 of the Lease Agreement.
Section 8. Limitations of the City's Obligations.
Notwithstanding anything contained in the Bond, the Lease
Agreement, the Escrow Agreement, the Pledge Agreement or any
other documents referred to in Section 3.03, the Bond shall not
constitute a debt of the City within the meaning of any
constitutional or statutory limitation, and shall not be
payable from nor charged upon any funds other than the revenues
pledged to the payment thereof, and no Holder of the Bond shall
ever have the right to compel any exercise of the taxing power
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of the City to pay the Bond or the premium, if any, or interest
thereon, or to enforce payment thereof against any property of
the City other than those rights and interests of the City
under the Lease Agreement which have been pledged to the
payment thereof, and the Bond shall not constitute a charge,
lien or encumbrance, legal or equitable, upon any property of
the City other than those rights and interests of the City
under the Lease Agreement which have been pledged to the
payment thereof. The principal of and interest on the Bond
shall be payable solely and only from the revenues pledged to
the payment thereof and the Bond shall not in any respect be a
general obligation of the City nor shall it be payable in any
manner by taxation. The agreement of the City to perform the
covenants and other provisions contained in this resolution or
the Bond, the Lease Agreement, the Escrow Agreement or the
Pledge Agreement and the other documents listed in Section 3.03
shall be subject at all times to the availability of the
revenues furnished by the Tenant sufficient to pay all costs of
such performance or the enforcement thereof, and the City shall
not be subject to any personal or pecuniary liability thereon
other than as stated above.
Section 9. Election. Pursuant to Treasury
Regulations, Section 1.103-10(b)(2)(vi), the City hereby elects
that the provisions of Section 103(b)(6)(D) of the Code apply
to the Bond.
Section 10. Effective Date. This Ordinance shall
take effect and be in force from and after its passage and
publication in the official newspaper of the City.
PASSED AND APPROVED by the governing body of the City
of Salina, Kansas this 23rd day of June, 1986.
Mayor
Attest:
City Clerk
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