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HomeMy WebLinkAboutCity Council Committees - Economic Development Corporation - 04/22/1985 8- CITY OF KENT • ECONOMIC DEVELOPMENT CORPORATION April 22, 1985 A special meeting of the City of Kent Economic Development Corporation was called to order by Chairman Tim Leahy at 6:30 p.m. Proper legal notice of the meeting has been given by the Secretary. Present: BOARD MEMBERS: Councilman Tim Leahy, Chairman Council Tom Bailey Councilman Berne Biteman Michael Miller, Vice-Chairman OFFICERS: City Attorney P. Stephen DiJulio, General Counsel Deputy City Clerk Betty Gray, Acting Secretary CITY OFFICIALS: City Administrator Dick Cushing ALSO PRESENT: Bill Tonkin of Roberts & Shefelman, Bond Counsel DiJulio,noted that the first item of business would be for the Board to accept the resignation of Mike Miller, noting that his term was a two-year term which would expire in August or September. BAILEY MOVED to accept the resignation, Biteman seconded. It was not determined whether a replacement would be appointed for the unexpired term or if the Board would wait to appoint a replace- ment. Motion carried. • Bill Tonkin was in attendance to discuss the two items before the meeting, one being the application of Northwest Aluminum Products and the other Cascade Develop- ment Corporation. Referring to the Northwest Aluminum Products application, Tonkin noted that the action required would be for the Corporation to adopt a Bond Resolution for the purpose of issuing and selling $2,300,000 Floating Rate Demand Revenue Bonds for the Northwest project and also approving the various financing documents which provide for the issuance of the bonds. Tonkin referred specifically to the Indenture of Trust between the Economic Development Corpora- tion and Seattle Trust & Savings Bank, as Trustee, and United States Trust Company of New York, as Paying Agent of the bonds. He explained that the New York paying agent was required to fulfill statutory requirements if the bonds were purchased by investment companies. Tonkin also referred to the Loan Agreement between the Corporation and Northwest Aluminum Products for the proceeds of the sale, and a Bond Purchase Agreement between the Economic Development Corporation and E. F. Hutton & Company, the underwriter. Also included was a Remarketing Agreement between the Corporation and E. F. Hutton & Company who will act as Marketing Agent to sell the bonds to a new purchaser in the event the bonds are put back by an existing purchaser. Tonkin referred to the Pledge & Security Agreement under which the bonds which might be put back are pledged as security to the bank that will be issuing a Letter of Credit to guarantee payment of the purchase price of the bonds, principal and interest. Deeds of Trust and Security Agreements covering the property of Northwest Aluminum Products and an assign- ment of their interest in several leases as further security were referred to by Tonkin. He also referenced a form of official statement which would provide additional information to the purchaser of the bonds. Tonkin explained that the • - 1 - April 22, 1985 Northwest transaction was similar to that of Associated Grocers in that the bonds are floating rate demand bonds, but that the floating rate would be slightly different if the bonds are put back to the Remarketing Agent. He clarified that at that time the bonds would be resold on the basis of the remarketing survey to determine the interest rate at that time for which they could be resold, with the interest rate being adjusted monthly. He explained that E. F. Hutton & Co. was of the opinion that this method provided more stability as far as the bond sales were concerned. In response to Bailey's question Tonkin explained that as of this afternoon, it appeared that the bonds would not be rated before they are sold, although an attempt was made to obtain the rating from Standard & Poor's. He explained that in all probability the bonds would be purchased by E. F. Hutton & Company and held by them until the rating is received. Mike Miller explained that the bond rating would be determined by the Letter of Credit Bank, in this case the U.S. National Bank of Oregon. It was explained that the bond interest rate could be as low as 5.2% if the bank has a triple A rating. In response to Cushing's questions, Tonkin noted that the low interest rate resulted from the bonds being on a short term rate with the ability to liquidate the investment on very short notice. Tonkin clarified for Bailey that it was the responsibility of the Marketing Agent (E. F. Huton & Co.) to exercise their best efforts to find another purchaser should the bonds be turned back. He noted, however, that if a new purchaser is not found by the time the funds are required to pay off the existing purchaser, the Trustee is then instructed to draw on the Letter of Credit to provide the necessary funds. There was no further discussion on this item and BITEMAN MOVED for the adoption of Resolution 1985-21 authorizing the execution of the various documents and the issuance and sale of $2,300,000 Floating Rate Demand Revenue Bonds. Bailey seconded. Motion carried. DiJulio noted that the next item on the agenda was the consideration of the Cascade Development Corporation financing documents by the Economic Development Corporation for the issuance and sale of $3,750,000 floating fixed rate industrial revenue bonds and the loan of the proceeds from the sale of those bonds to Cascade Development Company. Tonkin noted that this transaction also is modeled very closely to that of Associated Grocers transaction, particularly in that Seattle First National Bank will be acting as placement agent on the bonds for the initial placement and will also be acting as Remarketing Agent to resell the bonds if they are put back. He noted that the obligation of the company to repay the loan is backed by a letter of credit from Seattle-First National Bank and that a standby Letter of Credit would be issued by Bank of America. Tonkin noted that these bonds also would not be rated when they are issued but will be placed initially with First Hawaiian Bank as the initial holder for the initial interest rate which will be 60% of the Seattle First National Bank prime rate. Tonkin referred to the various documents, including the Indenture of Trust from the Economic Development Corporation to California First Bank, as Trustee, and then to J. Henry Schroeder Bank & Trust Company of New York. He made note of the Loan Agreement between the Economic Development Corporation and Cascade Development Company, a partnership. Tonkin clarified that Cascade Development Company will construct a warehouse facility which will then be leased to United Warehouse, Inc. and that the matter had been discussed at the December 6, 1984 EDC meeting. He reviewed other documents, namely the Placement • Agreement between the Economic Development Corporation as well as a Remarketing Agreement with Seattle-First as the placement agent. Also referred to was a Deed of Trust and Security Agreement given by Cascade Development on the ware- - 2 - April 22, 1985 house to be constructed and a Private Placement Memorandum used to provide arrangements for information on the bonds. Tonkin noted that the Company does not have title to the land on which the project is to be built, although it has a contract to purchase the land from Uplands Industrial Development Company. Tonkin clarified that these documents will provide, except for an agreement of the costs of issuance and payment of the amount necessary to acquire the land, which amount will be paid into escrow about July 1, there would not be any further disbursement of the bond proceeds until the land is acquired. When that happens the company will begin to construct the warehouse and the remaining construction funds will be disbursed in the normal way. In response to questions, Tonkin noted that this procedure is all right so long as less than 25% of the proceeds are used. DiJulio clarified that the Cascade Development matter would be before the Council at a special meeting on April 29. BAILEY MOVED to adopt Resolution No. 1985-22, Biteman seconded. Motion carried. DiJulio noted that the next regular meeting would be on Thursday, May 2, at which time the Brotherton-Pleas application will be heard. The meeting was adjourned at 7:00 o'clock p.m. Betty Gr y, CPS Deputy City Clerk - 3 -