01-10031 Issue IRBconem�aeieasaima
GILMORE & BELL, P.C.
May 10, 2001
ORDINANCE NO. 01-10031
OF THE
CITY OF SALINA, KANSAS
AUTHORIZING THE ISSUANCE OF
NOT TO EXCEED $1,500,000 INDUSTRIAL REVENUE BONDS
SERIES A, 2001 AND SERIES B, 2001
(OVATION CABINETRY, INC.)
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(Published in The Salina Journal, May 16, 200 1)
Co,Wia&ddS m
ORDINANCE NO. 01-10031
AN ORDINANCE AUTHORIZING THE CITY OF SALINA, KANSAS TO ISSUE
ITS INDUSTRIAL REVENUE BONDS, SERIES A, 2001 AND SERIES B, 2001
(OVATION CABINETRY, INC.) IN THE AGGREGATE PRINCIPAL AMOUNT
OF NOT TO EXCEED $1,500,000 FOR THE PURPOSES OF ACQUIRING,
CONSTRUCTING AND EQUIPPING A MANUFACTURING FACILITY;
AUTHORIZING EXECUTION OF A BOND AGREEMENT AMONG THE CITY,
OVATION CABINETRY, INC. SECURITY SAVINGS BANK, F.S.B., SALINA,
KANSAS, EDWARD CLARKE GARNETT AND ELIZABETH JEAN GARNETT;
AUTHORIZING THE CITY TO LEASE SUCH FACILITY TO OVATION
CABINETRY, INC. AND AUTHORIZING EXECUTION OF A LEASE BETWEEN
SAID CITY AND OVATION CABINETRY, INC.; AND APPROVING THE FORM
OF A GUARANTY AGREEMENT BY AND AMONG THE TENANT, JOSEPH F.
LORENTZ, BRADLEY J. BASSETT, WILLIAM A. GRAY AND DANIEL R.
GOODEN AND SECURITY SAVINGS BANK, F.S.B.
THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HAS FOUND AND
DETERMINED:
A. The City of Salina, Kansas (the "Issuer") is authorized by the Kansas Economic
Development Revenue Bond Act, as amended, as codified in K.S.A. 12-1740 et seq. (the "Act"), to
acquire, construct, improve and equip certain facilities (as defined in the Act) for commercial,
industrial and manufacturing purposes, to enter into leases and lease -purchase agreements with any
person, firm or corporation for such facilities, and to issue revenue bonds for the purpose of paying the
costs of such facilities; and
B. The Issuer's governing body has determined that it is desirable in order to promote,
stimulate and develop the general economic welfare and prosperity of the Issuer and the State of
Kansas that the Issuer issue its Industrial Revenue Bonds, Series A, 2001 and Subordinated Industrial
Revenue Bonds, Series B, 2001 (Ovation Cabinetry, Inc.) dated May 1, 2001 in the aggregate principal
amount of not to exceed $1,500,000 (jointly, the "Bonds"), for the purpose of paying the costs of
acquiring, constructing and equipping a certain manufacturing facility (the "Project"), as more fully
described in the Bond Agreement and in the Lease authorized in this ordinance for lease to Ovation
Cabinetry, Inc. (the "Tenant"); and
C. The Issuer's governing body finds that it is necessary and desirable in connection with
the issuance of the Bonds to execute and deliver the following documents (collectively, the "Bond
Documents"):
(i) a Bond Agreement dated as of May 1, 2001 (the "Bond Agreement"), among the Issuer, the
Tenant, Security Savings Bank, F.S.B., Salina, Kansas (the "Bank"), Edward Clarke Garnett
and Elizabeth Jean Garnett (jointly, the "Series B, 2001 Bondowner") prescribing the terms
and conditions of issuing and securing the Bonds;
(ii) a Lease dated as of May 1, 2001 (the "Lease"), with the Tenant, under which the Issuer
will acquire, construct and equip the Project and lease it to the Tenant in consideration of Basic
Rent and other payments; and
(iii) an Agreement for Payment in Lieu of Taxes (the "Agreement for Payment in Lieu of
Taxes") with the Tenant, under which the Tenant will make certain payments in lieu of taxes
for each year after issuance of the Bonds that the Project is exempt from ad valorem taxation.
D. The Issuer's governing body has found that under the provisions of K.S.A. 79-201a
Second, the Project purchased or constructed with the proceeds of the Bonds is eligible for exemption
from ad valorem property taxes for up to 10 years, commencing in the calendar year following the
calendar year in which the Bonds are issued, if proper application is made. The Issuer's governing
body has further found that the Project should be exempt from ad valorem property taxes for a period
of 10 years, subject to a payment in lieu of taxes for each year of the exemption, as more particularly
described in the Agreement for Payment in Lieu of Taxes. Prior to making this determination, the
governing body of the Issuer has conducted the public hearing and reviewed the analysis of costs and
benefits of such exemption required by K.S.A. Supp. 12-1749d.
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NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE
CITY OF SALINA, KANSAS:
Section 1. Definition of Terms. All terms and phrases not otherwise defined in this ordinance
will have the meanings set forth in the Bond Agreement and the Lease.
Section 2. Authority to Cause the Project to Be Purchased and Constructed. The Issuer is
authorized to cause the Project to be acquired, constructed and equipped in the manner described in the
Bond Agreement and the Lease.
Section 3. Authorization of and Security for the Bonds. The Issuer is authorized and
directed to issue the Bonds, to be designated "City of Salina, Kansas Industrial Revenue Bonds, Series
A, 2001 and Series B, 2001 (Ovation Cabinetry, Inc.)" in the aggregate principal amount of not to
exceed $1,500,000. The Bonds will be in such principal amounts per series, will be dated and bear
interest, will mature and be payable at such times, will be in such forms, will be subject to redemption
and payment prior to maturity and will be issued according to the provisions, covenants and
agreements in the Bond Agreement. The Bonds will be special limited obligations of the Issuer
payable solely from revenues from the Lease of the Project. The Bonds will not be general obligations
of the Issuer, nor constitute a pledge of the faith and credit of the Issuer, and will not be payable in any
manner by taxation.
Section 4. Authorization of Bond Agreement. The Issuer is authorized to enter into the
Bond Agreement with the Bank, the Series B, 2001 Bondowner and the Tenant in the form approved
in this ordinance. The Issuer will issue and sell the Bonds and provide for payment of the Bonds and
interest thereon from the revenues derived by the Issuer under the Lease and other moneys as
described in the Bond Agreement, all on the terms and conditions in the Bond Agreement.
Section 5. Authorization of Lease of the Project. The Issuer will acquire, construct and
equip the Project and lease it to the Tenant according to the provisions of the Lease in the form
approved in this ordinance.
Section 6. Approval of the Guaranty Agreements. The form of the Guaranty Agreements
dated as of May 1, 2001 among the Tenant, the other guarantor(s) named therein and (i) the Bank, for
the benefit of the owners of the Series A, 2001 Bonds and (ii) the Series B, 2001 Bondowner, are
approved.
Section 7. Execution of Bonds and Bond Documents. The Mayor of the Issuer is authorized
and directed to execute the Bonds and deliver them to the Bank for authentication on behalf of the
Issuer in the manner provided by the Act and in the Bond Agreement. The Mayor or member of the
Issuer's governing body authorized by law to exercise the powers and duties of the Mayor in the
Mayor's absence is further authorized and directed to execute and deliver the Bond Documents on
behalf of the Issuer in substantially the forms presented for review prior to final passage of this
ordinance, which forms are approved, with such corrections or amendments as the Mayor or other
person lawfully acting in the absence of the Mayor may approve, as evidenced by his or her signature.
The authorized signatory may also sign and deliver such other documents, or certificates as may be
necessary or desirable to carry out the purposes and intent of this ordinance and the Bond Documents.
The City Clerk or the Deputy City Clerk of the Issuer is hereby authorized and directed to attest the
execution of the Bonds, the Bond Documents and such other documents, certificates and instruments
as may be necessary or desirable to carry out the intent of this ordinance under the Issuer's corporate
seal.
Section 8. Tax Exemption; Payment in Lieu of Taxes. The Project will be exempt from ad
valorem property taxes for 10 years, commencing in the calendar year after the calendar year in which
the Bonds are issued. The Tenant will prepare the application for exemption and submit it to the
Issuer for its review. After its review, the Issuer will submit the application for exemption to the
Saline County Appraiser for review and transmittal to the State Board of Tax Appeals. The Issuer is
authorized to enter into the Agreement for Payment in Lieu of Taxes in substantially the form
presented for review prior to final passage of this ordinance.
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ConwliEd�eM1Selina
Section 9. Pledge of the Project and Net Lease Rentals. The Issuer hereby pledges the
Project and the net rentals generated under the Lease to the payment of the Bonds in accordance with
K.S.A. 12-1744. The lien created by the pledge will be discharged when all of the Bonds have been
paid under the Bond Agreement.
Section 10. Election Under Section 144(a)(4) of the Internal Revenue Code. The Issuer
elects that Section 144(a)(4) of the Internal Revenue Code of 1986, as amended, will apply to the
Bonds, and the Mayor or City Clerk is hereby authorized and directed to file evidence of said election
with any appropriate officer of the United States, including the Secretary of the Treasury or his or her
delegate, and to take such other action as may be necessary to make effective such election.
Section 11. Further Authority. The officials, officers, agents and employees of the Issuer are
authorized and directed to take whatever action and execute whatever other documents or certificates
as may be necessary or desirable to carry out the provisions of this ordinance and to carry out and
perform the duties of the Issuer with respect to the Bonds and the Bond Documents.
Section 12. Effective Date. This ordinance shall take effect after its final passage by the
governing body of the Issuer, signature by the Mayor and publication once in the Issuer's official
newspaper.
PASSED by the governing body of the City of Salina, Kansas this 14th day of May, 2001.
SIGNED by the Mayor of the City of Salina, Kansas this 14th day of May, 2001.
[SEAL] l �""'
Kristen M. Siaton, Mayor
Attest:
Lieu Ann Nicola, City Clerk
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