8.4 Intent to Issue IRB CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
11/27/00 4:00 P.M.
AGENDA SECTION: ORIGINATING DEPARTMENT: APPROVED FOR
NO. 8 AGENDA:
CITY ATTORNEY
NO. 4 BY: Greg Bengston BY
Item:
Resolution of Intent to Issue Industrial Revenue Bonds for Ovation Cabinetry, Inc.
Background:
Ovation Cabinetry, Inc. ("Ovation") has filed an application for industrial revenue bonds in the amount of
$1,200,000. Ovation manufactures custom cabinetry for distribution throughout the mid-west, Colorado, and
Wyoming. According to the application, an increase in business has caused the company to outgrow its present
facility at 2804 Arnold. Ovation incorporated in 1995 and is a privately held Kansas corporation.
With the bond proceeds Ovation plans to purchase the 3.67 acre lot at 1750 Wall Street from the Salina Airport
Authority and construct a new 25,000 square foot manufacturing facility. According to the application, Ovation
has recently expanded its number of employees by 13 and plans to add 17 new jobs in year 1 and 10 new jobs in
year two of the proposed project.
City staff has been advised that the bonds will be purchased by a local lending institution and a local private
investor. Ordinarily city staff would work with the City Commission to conduct a certain level of"due diligence"
in scrutinizing the financial information ordinarily required with an industrial revenue bond application. By the
time of the City Commission meeting, city staff is to have in hand a letter signed by the private investor and a
representative of the lending institution waiving any due diligence requirements of the City and indemnifying and
holding the City harmless for any due diligence obligation the City may have.
Ovation is requesting partial property tax abatement under the City's tax abatement policy. Evaluation of the cost-
benefit analysis and consideration of partial tax abatement will be addressed by the City Commission at a
subsequent public heating. The matter presently before the City Commission is strictly an expression of intent
to issue the industrial revenue bonds. Approval of the resolution will allow the necessary work to go forward that
will ultimately result in the City Commission's consideration of an ordinance authorizing the issuance of the
bonds. According to the application, February 1, 2000 is the proposed date for issuance of the bonds.
Sarah Steele of the Wichita office of Gilmore & Bell will serve as bond counsel for the bond issue. Bond counsel
prepared the proposed resolution of intent.
Recommendation
Adopt Resolution No. 00-5663