Loading...
Adams Co. G.O. Bonds IssueTO: FROM: SUBJECT: MEMORANDUM January 13, 2004 The Honorable Mayor and City Council Members Michael C. Van Milligen, City Manager Authorization to Issue $500,000 General Obligation Loan Note for Adams Company On October 20, 2003, the City Council held a public hearing on the proposed issuance of not to exceed $500,000 General Obligation Capital Loan Notes, in order to provide funds to pay the costs of an urban renewal project in Dubuque Industrial Center West, specifically funding an economic development grant to the Adams Company under the Development Agreement dated May 19, 2003. With no objections from the public, the Council adopted a resolution to institute proceedings and take additional action for the authorization of a Loan Agreement and the issuance of notes not to exceed $500,000. On December 15, 2003 the City Council approved an agreement with the Adams Company to provide the Economic Development Grant on or before February 15, 2004. The amount of the Grant will equal the difference between the purchase price paid by the City for the Adams Company property, and the cost of the new manufacturing facility located in the Dubuque Industrial Center West. Current estimate of this difference is $500,000. When the cost of the new facility is complete, the final cost of the new facility will be determined. The agreements also provide that the total payments to the Adams Company for acquisition, relocation, and this economic development grant will not exceed $3,500,000. At the closing of this economic development grant, the total payments equal $2,907,500. Economic Development Director Bill Baum recommends City Council approval to purchase a $500,000 General Obligation Loan Note for the Adams Company from American Trust and Savings Bank at a 4.07% fixed rate over 11 years. I concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager William Baum, Economic Development Director CITY OF DUBUQUE, IOWA MEMORANDUM January 13, 2004 TO: FROM: SUBJECT: Michael Van Milligen, City Manager Adams Company INTRODUCTION This memorandum presents for City Council approval a resolution accepting a proposal to purchase a $500,000 General Obligation Loan Note for the Adams Company. BACKGROUND On October 20, 2003, the City Council held a public hearing on the proposed issuance of not to exceed $500,000 General Obligation Capital Loan Notes, in order to provide funds to pay the costs of an urban renewal project in Dubuque Industrial Center West, specifically funding an economic development grant to the Adams Company under the Development Agreement dated May 19, 2003. With no objections from the public, the Council adopted a resolution to institute proceedings and take additional action for the authorization of a Loan Agreement and the issuance of notes not to exceed $500,000. On December 15, 2003 the City Council approved an agreement with the Adams Company to provide the Economic Development Grant on or before February 15, 2004. The amount of the Grant will equal the difference between the purchase price paid by the City for the Adams Company property, and the cost of the new manufacturing facility located in the Dubuque Industrial Center West. Current estimate of this difference is $500,000. When the cost of the new facility is complete, the final cost of the new facility will be determined. The agreements also provide that the total payments to the Adams Company for acquisition, relocation, and this economic development grant will not exceed $3,500,000. At the closing of this economic development grant, the total payments equal $2,907,500. DISCUSSION Ken TeKippe, City Finance Director, and I have worked with the City's bond attomey, Bill Noth to solicit quotes from local lenders to finance this note. Attached is a recap of all proposals received. After reviewing the proposals with the City's investment advisor, David Dirks with Public Financial Management and Mr. Noth, we are recommending the City accept the proposal from American Trust and Savings Bank for a locked in rate of 4.07% for the term of the note. A letter is attached from the bank outlining their proposal for the note. The note will be repaid over an eleven year period. Mr. Noth has provided the City with the appropriate proceedings to approve the proposal. The final loan agreement will be acted upon at the City Council meeting of February 2, 2004. RECOMMENDATION I recommend that the City Council adopt the attached resolution accepting the proposal of American Trust and Savings Bank. ACTION STEP The action step for the City Council is to adopt the attached resolution and authorize and direct the negotiating of the loan agreement with American Trust and Savings Bank. Attachments F;~U,%ERS~VR~rn\EDA APPIJCAT[ON FOR ADAMS CO MPANY~TIFBO ND MEMO.doc City of Dubuque $500,000 Adams Company GO Capital Loan Note Recap of Proposals Fixed Interest Variable Total Interest =inancial Institution Rate interest Rate (over life of loan Origination Fee Principal ~.merican Trust & Savings Bank 4.07% 128,148.47 1,000.00 45,454.54 each year 1.25% over one 79,345.02 1,000.00 45,454.54 each year · ~ear Treasury (assumes no Bill weekly rate increase in currently 2.52% current rate) American Trust & Savings Bank 4.22-5.10% 149,614.88 500.00 laddered annual ~ncreasing payments 41,412.17 - throughout the 50,682.74 life of the loan Dubuque Bank & Trust Dupaco Community Credit Union Declined to bid per phone call from Bob Hoefer DuTrac Community Credit Union 5.75% not provided not provided prime rate minus 110,250.02 45,454.54 each year .50% - current (assumes no rate 3.5% increase in East Dubuque Savings Bank current rate) prime rate minus not provided not provided .75% - current rate 3.25% Liberty Bank FSB 3.75% five year fixed adjusting at 133,669.43 semi-annual P&I the end of the initial five year assumes payments will be period to a rate equal to the five change to adjusted at the end of year fixed advance rate for the 5.50% after lhe initial five year period Federal Home Loan Bank of Des 5 years Liberty Bank FSB Moines 4.125%1 136,850.00 45,000 each year w/ Premier Bank I~inal payment 50,000 U.S. Bank No response State Central Bank 4.25%1 I 133,697.88 I I 45,454.54 each year Fidelity Bank & Trust No response Janua~ 12,2004 ' American Trust Simply belier banking: 895 Main Street P.O. Box 938 Dubuque, Iowa 52004-0938 563.589.0827 Fax 589.0860 trichter@amedca ntrust.com vcww. americantrust, com Victoria J. (Tod) Richter Vice President Commercial Banking January 5, 2004 Mr. Kenneth TeKippe, Finance Director City of Dubuque Finance Department, City Hall 50 West 13th Street Dubuque, tA 52001-4864 Dear Ken: American Trust & Savings Bank is pleased to offer the following loan proposal regarding the $500,000 General Obligation Capital Loan Note as outlined in your request for loan agreement proposal dated December 15, 2003. Bo~ower: City of Dubuque. Lender: Amedcen Trust & Savings Bank. Amount: Five hundred thousand dollars ($500,000). Purpose: Costs associated with the Dubuque Industrial Center West Urban Renewal Area as a result of the Adams Company expansion. Interest Rate: Amedcan Trust is offering twa interest rate options. The first , option is a weekly vadable interest rate equal to 125 basis points over the 1-year Treasury Bill Weekly Rate. Based on this week's rate, if funding today, the initial interest rate would be 2.52 percent. A~nedc~n Trust will also offer a fixed-rate option equal to 4.07 percent. Interest, in both cases, will be computed on a 30/360- day basis. We understand that interest on the Note and loan agreement will be excluded from gross income for federal income tax purposes, and be designated by the City as a "qualified tax- exempt obligation" (i.e.: "bank qualified"). Funding: The loan will be fully funded on or about February 13, 2004. American Trust & Savings Bank Mr. Kenneth Te~ppe January 5,2004 Page 2 Repayment: Interest will first be payable on June 1, 2004, and payable semiannually thereafter on the first day of June and December of each subsequent year. Principal will be due in equal annual installments of approximately $45,454.54 commencing June 1, 2005, through June 1, 2015. There will be no prepayment penalty on the note. Origination fee: An origination fee equal to $1000 shall be paid to Lender at the time of closing. Closing Costs: All direct dosing costs associated with the transaction will be the responsibility of Borrower. Lender will be reimbursed by the Borrower for all out-of-pocket costs and expenses incurred by the Lender in connection with the General Obligation Capital Loan Note. Documents: Prior to closing, the Lender shall receive copies of such organizational documents of the Borrower as the Lender may request. The Lender will receive a copy of the resolutions of the Borrower authorizing the execution, delivery, and performance of any and all documents related to the proposed loan transaction. Lender will receive the approving opinion of Ahlers & Cooney, P.C., Des Moines, Iowa, at no cost to the lender. Security: The loan will be secured by a pledge of general taxes to be levied under the Debt Service Fund of the City. Covenants: Borrower will supply Lender annual audited financial statement prepared in accordance with general accepted accounting practices within 120 days of fiscal year end. This letter shall not be deemed as evidence of a binding agreement on the part of either the Lender of the Borrower. Important terms may remain to be negotiated. Even if agreement in principal should be reached on the terms of financing at a subsequent date, neither party to the financing shall be legally bond until definite loan documents are signed by Lender and Borrower. This loan is subject to final approval of the Lender's Credit Committee. Such approval will be obtained upon acceptance of the proposal. The rates and terms stated in this letter are subject to change if the foregoing terms and conditions are not accepted in wdting by January 31, 2004. The rates and terms may also change if the loan is not funded pdor to February 28, 2004. American Trust & Savings Bank Mr. Kenneth TeKippe January 5, 2004 Page 3 We, at Amedcan Trust & Savings Bank, appreciate the opportunity ~3 bid on this loan proposal. We look forward to hearing from you soon regarding the financing of the $500,000 General Obligation Capital Loan Note. Sincerely, '~ictoda J. Ric~l/ter Vice President The foregoing terms and conditions are hereby accepted and agreed upon this day of ,2004. The undersigned acknowledges receipt of a copy of this instrument. City of Dubuque By:. Kenneth TeKippe, Finance Director (This Notice to be posted) NOTICE AND CALL OF PUBLIC MEETING Governmental Body: The City Council of Dubuque, Iowa. Date of Meeting: January 19, 2004. Time of Meeting: Three o'clock P.M. Place of Meeting: Five Flags Civic Center, 405 Main, Dubuque, Iowa. PUBLIC NOTICE IS HEREBY GIVEN that the above mentioned governmental body will meet at the date, time and place above set out. The tentative agenda for said meeting is as follows: Resolution directing the acceptance of a proposal to purchase $500,000 General Obligation Capital Loan Notes Such additional matters as are set forth on the additional page(s) attached hereto. (number) This notice is given at the direction of the Mayor pursuant to Chapter 21, Code of Iowa, and the local rules of said governmental body. City Clerk, Dubuque, Iowa January 19, 2004 The City Council of the City of Dubuque, in the County of Dubuque, State of Iowa, met in regular session, in the Five Flags Civic Center, 405 Main, Dubuque, Iowa, at Three o'clock P.M., on the above date. There were present Mayor Duggan, in the chair, and the following named Council Members: Absent: -1- Council Member Markham introduced the following Resolution hereinafter set out entitled "RESOLUTION DIRECTING THE ACCEPTANCE OF A PROPOSAL TO PURCHASE $500,000 GENERAL OBLIGATION CAPITAL LOAN NOTES", and moved its adoption. Council Member Connors seconded the motion to adopt. The roll was called and the vote was~ AYES: Buol, Cline, Connors, Markham, Duggan, Michalski, Nicholson NAYS: None Whereupon, the Mayor of the Council declared the Resolution duly adopted as follows: RESOLUTION 33-04 RESOLUTION DIRECTING THE ACCEPTANCE OF A PROPOSAL TO PURCHASE $500,000 GENERAL OBLIGATION CAPITAL LOAN NOTES WHEREAS, the City of Dubuque, in the County of Dubuque, State of Iowa, sometimes hereinafter referred to as the City, is a municipal corporation duly incorporated, organized and existing under and by virtue of the Constitution and laws of the State of Iowa; and WHEREAS, it is deemed necessary that the City should enter into a Loan Agreement and borrow the mount of $500,000 as authorized by Sections 384.24A and 384.25, Code of Iowa, as amended, for the purposes of paying costs of aiding in the planning, undertaking and carrying out of urban renewal project activities under the authority of Chapter 403 of the Iowa Code and the Amended and Restated Urban Renewal Plan for the Dubuque Industrial Center Economic Development District, including those costs associated with the funding of an economic development grant to the Adams Company under the Development Agreement dated May 19, 2003 between the City and said developer; and WHEREAS, proposals have been requested and received from fmancial institutions offering to enter into such Loan Agreement; and WHEREAS, after a review of all the proposals received, it has been determined that the best and most favorable proposal is that of American Trust & ;and Savings Bank WHEREAS, it is the intention of this Council to enter into a Loan Agreement in accordance with said proposal. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That this Council does hereby accept the attached proposal of Ameri can Trus~: & Sari ngs Bani<of Dubuque, Iowa, and takes additional action to permit the entenng into of a Loan Agreement. Section 2. The Mayor and City Clerk are authorized and directed to proceed on behalf of the City to acknowledge the acceptance of said proposal, to negotiate the final terms of a Loan Agreement, to take all action necessary to permit the entering into of a Loan Agreement on a basis favorable to the City and acceptable to the Council, and to proceed to meet the conditions of this accepted proposal. PASSED AND APPROVED this 19th day of January, 2004. 19th dayof January ,2004. Terrance M. Duggan, Mayor ATTEST: Jeanne F. Schneider, City Clerk ~,/~ity Clerk -3- CIG-3 9/91 CERT~ICATE STATE OF IOWA COUNTY OF DUBUQUE ) ) ss ) I, the undersigned City Clerk of Dubuque, Iowa, do hereby certify that attached is a true and complete copy of the portion of the corporate records of said Municipality showing proceedings of the Council, and the same is a tree and complete copy of the action taken by said Council with respect to said matter at the meeting held on the date indicated in the attachment, which proceedings remain in full force and effect, and have not been amended or rescinded in any way; that meeting and all action thereat was duly and publicly held in accordance with a notice of meeting and tentative agenda, a copy of which was timely served on each member of the Council and posted on a bulletin board or other prominent place easily accessible to the public and clearly designated for that purpose at the principal office of the Council (a copy of the face sheet of said agenda being attached hereto) pursuant to the local rules of the Council and the provisions of Chapter 21, Code of Iowa, upon reasonable advance notice to the public and media at least twenty-four hours prior to the commencement of the meeting as required by said law and with members of the public present in attendance; I further certify that the individuals named therein were on the date thereof duly and lawfully possessed of their respective city offices as indicated therein, that no Council vacancy existed except as may be stated in said proceedings, and that no controversy or litigation is pending, prayed or threatened involving the incorporation, organization, existence or boundaries of the City or the right of the individuals named therein as officers to their respective positions. WITNESS my hand and the seal of said Municipality hereto affixed this day of ., 2004. City Clerk, Dubuque, Iowa SEAL DCOKNELLk397573\l\10422065 F:\USERS\WBaumkEDA APPLICATION FOR ADAMS COMPANY~esolution accepting proposal.doc