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HomeMy WebLinkAboutCity Council Committees - Economic Development Corporation - 12/06/1984 CITY OF KENT ECONOMIC DEVELOPMENT CORPORATION MEETING DECEMBER 6, 1984 The regular meeting of the Kent Economic Development was called to order at 8:10 a.m. by Chairman of the Board Tim Leahy. Present: BOARD MEMBERS: Councilman Tim Leahy, Chairman Councilman Tom Bailey Councilman Berne Biteman Leo Powers Mike Miller OFFICERS: City Attorney P. Stephen DiJulio, General Counsel Finance Director Tony McCarthy, Treasurer Bill Tonkin of Roberts and Shefelman, Bond Counsel City Clerk Marie Jensen, Secretary CITY OFFICIALS: Dick Cushing, City Administrator DiJulio noted that he had had an inquiry from an applicant for industrial revenue bond financing about using the firm of Preston, Thorgrimson as bond counsel since the applicant had worked with this firm in the past. He noted that the City of Kent used the firm of Roberts and Shefelman exclusively as bond counsel and that the Economic Development Corporation had also determined to do so. He introduced Larry Carter and Cynthia Weed of Preston, Thorgrimson and noted that Carter had sent a letter stating that the City of Seattle and the King County Economic Development Corporations put out a list of approved and qualified bond counsel firms and the applicants then choose from that list. Mr. Carter noted that his firm could spend time and effort in advising a client about Industrial Revenue Bonds, and then if the site was determined to be in Kent, the firm of Roberts and Shefelman would take over. He noted that his firm was experienced in IRB work and asked that his firm be listed also so that they could be considered by applicants for IRBs. It was noted that the State also has a list of approved bond counsel firms. DiJulio noted that both firms had been working with the banks on IRB issues. He noted that if the Board decides to continue exclusively with Roberts and Shefelman, he would so notify Olympia so that applicants for projects in Kent would be advised to contact him or the Roberts and Shefelman office. Powers moved to direct DiJulio to analyze the proposal of Mr. Carter and to report back. Bailey seconded, and the motion carried. Miller moved to approve the minutes of the regular meeting of September 14, 1984. Bailey seconded, and the motion carried. DiJulio introduced Resolution 1984-10, adopting a system of bonds and obliga- tions of the City of Kent Economic Development Corporation. Bailey moved to adopt Resolution 1984-10. Miller seconded, and the motion carried. DiJulio introduced Resolution 1984-11 , amending the Industrial Development • Bond Policy and Eligibility Standards, to eliminate the requirement that the trustee be an in-state bank or trust company. He explained that Tonkin's letter of November 16, 1984 referred to this and noted that in the Associated Grocers' project, such would be the case, so the standards should be amended- Tonkin explained the roles of the bank, the trustee, and the registrar. He noted that the transaction for Associated Grocers was unusually complicated and that he would not expect this in future bond issues. He noted that this change would provide more flexibility and clarified for Bailey that the City has no liability, that this was covered in the indemnification clauses. Powers moved to adopt Resolution 1984-11 . Miller seconded, and the motion carried. Tonkin gave a status report on Associated Grocers noting that the transaction was scheduled to close on December 18. ffe­_s_ta_t_eUthat his firm had been working on the documents with Sea-First National Bank's counsel . He noted that the corporation would issue $9,500,000 worth of bonds which he thought would be a single bond, which Sea-First would sell to a New York corporation called Daily Taxfree Income Fund Inc. , an investment company. They in turn will hold the bond until March 1 , 1985 until Sea-First can obtain a rating from Moodys or Standard and Poors, after which Daily may hold the bond, or may, within seven days, require that the bond be repurchased. In this case, Sea-First would look for a market and adjust the interest rate and the proceeds from the sale will pay the original holder. He pointed out that this process could be repeated. He noted that the interest was determined on a weekly basis and was paid monthly. • Tonkin stated that a publication by Kenny Information Systems shows a list of 20 tax exempt issues which is used to determine what the short-term tax exempt interest rate will be. He noted that this process will allow a very low rate for the Associated Grocers' transaction. He stated that if, within the seven day period, Sea-First is unable to find another purchaser, the trustee will be instructed to draw on the letter of credit. He pointed out that this bond issue was for a 20 year period and that such bonds were called floating/fixed rate industrial development bonds because the company does have the option to convert the bonds to a fixed rate. Tonkin noted further that payments to the City for its expenses were outlined in the cost reimbursement agreement and that the City should have a bill for its expenditures ready for the December 18 closing meeting. The Chairman of the Board and the Secretary should be available for the closing and possibly for the pre-closing meeting on December 17. Tonkin noted that a meeting next week would be necessary to adopt the bond resolution for Associated Grocers which will authorize the Chairman and Secretary to execute the legal documents. This meeting was set for Friday, December 14, at 8:00 a.m. DiJulio noted that this was a tight schedule inasmuch as the Kent City Council had to approve the issuance of the bonds at the December 17 Council meeting. Upon Cushing's question, it was determined that the City of Kent Corporation costs would be dispersed by the trustee and that the annual administration fee to the City of two-tenths of one percent was based on the annual debt service but was to be not less than $2,500 for a privately placed issue or $5,000 for a publicly placed issue. DiJulio noted that on this project the debt service would not be known because of the floating rate. Cushing asked if the two-tenths of one percent could apply to the face amount of the bonds, and Tonkin noted that he had seen such an arrangement. DiJulio noted that the two-tenths of one percent was established to be consistent with the Port, so that there would not be competition among the agencies and that he understand that the County was also using this rate. Cushing suggested that if this Corporation ►ranted to become proactive, we would need more money and therefore we might pursue applying the two-tenths of one percent to the face amount of the bond issue. Upon DiJulio's question, Tonkin noted that draft documents were under prepara- tion in his office for H & H Corporation but that the tentative closing date of December 21 might not—Fe—met. He stated he would know more by the next meeting of this corporation on December 14. It was noted that the bonds for this project would be $1 ,200,000. An application from Cascade Development Company, a partnership, was distri- buted by DiJulio. ug erguson, partner, noted that the company had entered into an agreement with United Warehouse Inc. to purchase property and to build a 153,000 square foot office/warehouse to lease out at Southcenter Corporate Park to be used as a commercial warehouse. It was determined that the owners of United Warehouse would not be involved in the application. Resolution 1984-12, the inducement resolution for Cascade, was introduced by DiJulio. Biteman moved to adopt Resolution 1984-12. Miller seconded, and the motion carried. DiJulio stated that he had recently sent an application to Alaska Freight and Consolidaters noting that their original plan had been to lease space in the Port of Ta—coma but that did not work out so they plan to locate in Kent. They are anxious to have their application considered, and if it is received in time, the inducement resolution could be passed at the December 14 meeting. Upon Biteman's question, it was determined that the following applications have been received: H & HCo. Associated Grocers Northwest Aluminum Cascade Development The meeting was adjourned at 9:15 a.m. Marie Jen City Clerk Secretary of the Board 23C-lC