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HomeMy WebLinkAboutCity Council Committees - Economic Development Corporation - 12/01/1986 (5) • CITY OF KENT ECONOMIC DEVELOPMENT CORPORATION December 1 , 1986 This special meeting was called to order at 6:30 p.m. by Chairman Berne Biteman. It was determined that proper legal notice had been given by the Secretary. Present: BOARD MEMBERS: Berne Biteman, Chairman of the Board Tom Bailey, Vice-Chairman Steve Dowell Ted Knapp OFFICERS: Marie Jensen, Secretary of the Board Tony McCarthy, Treasurer Also Present: Bill Tonkin of Roberts & Shefelman, Bond Counsel Brent McFall , City Administrator Bill Williamson, Acting City Attorney MINUTES Bai ey moved to approve the minutes of the meeting of November 13, 1986. Dowell seconded and the motion carried. NORTHWEST ALUMINUM PRODUCTS INC. BOND RESOLUTION 1986-45 Tonkin presented the bond resolution approving the documents necessary for the . issuance and the sale of $700,000 floating rate demand revenue bonds for Northwest Aluminum Products, Inc. The resolution also authorizes the execution and delivery of these documents by the chairman and secretary of the corporation. He presented also the following related documents: indenture of trust, loan agreement, bond purchase agreement, remarketing agreement, pledge and security agreement, deeds of trust, the official statement, and the Roberts & Shefelman legal opinion state- ment. He pointed out that the Roberts & Shefelman approving legal opinion state- ment determined that interest on the bonds would be exempt from federal income tax with certain exceptions as noted in the opinion since the tax reform act has made it necessary for more exceptions. Tonkin explained that this project is related to the September 1985 bond issue for Northwest Aluminum Products in the amount of $2,300,000. This corporation had adopted an inducement resolution for a total project cost of $3,000,000. This issue is the remaining amount for the original $3,000,000 application. The payment schedules were explained by Tonkin as having similar structure to the former loan. Tonkin noted that industrial development bonds are now called qualified small issue private activity bonds and are the least favored under the tax laws. As an example, he noted individuals with more than $30,000 of tax preference items or a couple with more than $40,000 would be subject to minimum tax in tax preference items above that amount, including bonds such as these. For an individual , this would be a rate of 21 percent with corporations having a rate of 20 percent. Banks are not buying these bonds as they no longer get the interest deduction for money that they borrow to buy bonds like these. E. F. Hutton is willing to buy these and underwrite them so they do have a market, probably individuals or • corporations which would not be subject to the minimum tax. Upon questions, Tonkin explained that this issue would come under the lower cap as part of the $330 million available and that this issue has already been allo- cated. The cap is figured at $75 per capita, so in 1987 another $330 million will be available. He pointed out that if the bonds became totally taxable for any reason, they would have to be redeemed and the trustee would draw upon the letter of credit to redeem the bonds, but that this corporation would not be liable in any way. Upon Bailey's question, Tonkin explained that the only reason that Northwest Aluminum could now request the additional $700,000 was because the original appli- cation and inducement resolution was for $3,000,000 and only $2,300,000 was issued. Bailey moved to adopt Resolution 1986-45 approving the bonds for Northwest Aluminum Products, Inc. in the amount of $700,000. Dowell seconded and the motion carried. NEXT MEETING t was determined that the regular meeting of December 4, 1986 would be held as usual at 7:30 a.m. to approve the contract with the Kent Development Center Foundation for the incubator program and to receive a financial statement from the corporation treasurer. The Secretary will call to ascertain that a quorum would be present, inasmuch as Dowell and Knapp serve as board members of the Kent Development Center Foundation. The meeting was then adjourned at 6:55 p.m. Marie Jens Secretary of the Board 24C-lC - 2 -