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Home My WebLink About9B - New City Hall/Police Sta.H:~BONDSL~genda - Council Lease Approval.doc 16200 Eagle Creek Avenue S.E. Prior Lake, MN 55372-1714 MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: INTRODUCTION: DISCUSSION: STAFF AGENDA REPORT APRIL 18, 2005 9B RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY OF A LEASE WITH OPTION TO PURCHASE AGREEMENT, A GROUND LEASE AGREEMENT AND A CONTINUING DISCLOSURE UNDERTAKING This is the final step in the Redevelopment Plan process that included a public hearing conducted April 4, 2005 whereby the Redevelopment Plan was formally approved. This action requires the City Council to consider approval of a resolution that would authorize the execution of both a lease purchase agreement and a ground lease with the Economic Development Authority (EDA). The EDA at its earlier meeting on April 18th considered approval of $10,000,000 in EDA revenue bonds that will provide the majority of the necessary financing for the city hall/police station project as identified in the Redevelopment Plan. In order for the City to accept delivery of the bond proceeds, the following documents must be executed: 1.) Lease with Option to Purchase Agreement Between the Economic Development Authority and the City of Prior Lake 2.) Ground Lease Agreement Between the City of Prior Lake and the Economic Development Authority Under the conditions of the lease purchase agreement the term extends out 24 years ending on December 15, 2029. This time period matches the bond amortization schedule. In the second lease the City actually lease the ground to the EDA for a period of 44 years until December 15, 2049. This is equal to the length of the bond issue (24 yrs.) plus an additional twenty years. This is a common extension in term length for a ground lease because the City has a non- appropriation clause in the building lease whereby the City can walk away and terminate the lease at any time. While this event has never occurred in Minnesota, it has happened a number of times in other states. Because of this remote possibility, the longer length of the ground lease affords the bond buyers additional time to retrofit the buildings for possible re-sale. Under the terms of the Lease, the City makes annual rental payments that are the equivalent to the principal and interest payments of the EDA revenue bonds. Also under this resolution, the Mayor and City www. cityofpriorlake, com Phone 952.447.4230 / Fax 952.447.4245 H:\BONDS~Agenda - Council Lease Approval.doc ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: Attachments: Manager are authorized to act on behalf of the City of Prior Lake to execute all lease related documents. The following alternatives are available to the City Council: 1. Approve a Resolution Authorizing The Execution And Delivery Of A Lease With Option To Purchase Agreement, A Ground Lease Agreement And A Continuing Disclosure Undertaking. 2. Defer action if additional information is required. Alternative #1. Motion and a second to approve a Resolution Authorizing The Execution And Delivery Of A Lease With Option To Purchase A~gree~ent, A Ground Lease Agreement And A Con~JD~dertaking../] 1. Resolu~/on~uthSrizing The Execution And Delivery Of A Lease With Op io~o Purchase Agreement, A Ground Lease Agreement And A Continuing Disclosure Undertaking EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL OF THE CITY OF PRIOR LAKE, MINNESOTA HELD: April 18, 2005 Pursuant to due call and notice thereof, a regular or special meeting of the City Council of the City of Prior Lake, Minnesota, was duly held at the City Hall on April 18, 2005, at 7:00 P.M. Member introduced the following resolution and moved its adoption: RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY OF A LEASE WITH OPTION TO PURCHASE AGREEMENT, A GROUND LEASE AGREEMENT AND A CONTINUING DISCLOSURE UNDERTAKING WHEREAS, the City of Prior Lake, Minnesota (the "City"), is authorized pursuant to Minnesota Statutes, Section 465.71, to enter into lease purchase agreements; and WHEREAS, the Economic Development Authority of the City of Prior Lake, Minnesota (the "Authority"), has agreed to enter into a Lease With Option to Purchase Agreement, dated as of May 15, 2005 (the "Lease"), with the City pursuant to which the Authority will acquire, construct and improve municipal buildings in the City (the "Project"). NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake, Minnesota, as follows: 1. Authorization of Bonds; Documents Presented. The Authority proposes to issue its $10,000,000 Public Project Revenue Bonds, Series 2005B (City of Prior Lake, Minnesota Lease With Option to Purchase Project) (the "Bonds") payable from rental payments to be made under the Lease. Forms of the following documents relating to the Bonds and the Project have been submitted to the City Council and are now on file in the office of the Manager: (a) the Lease between the Authority and the City which, among other things, provides for the acquisition, construction and improvement of the Project, and pursuant to which the City is required to pay rental payments sufficient to pay the principal and interest on the Bonds when due; and (b) a Ground Lease Agreement, dated as of May 15, 2005 (the "Ground Lease"), between the City and the Authority pursuant to which the City leases the land on which the Project is located to the Authority; and (c) a Revenue Bond Resolution adopted by the Authority (the "Revenue Bond Resolution"), setting forth the form and details of the Bonds and their issuance, and pledging the rental payments derived from the Lease to the payment of the Bonds; and (d) a Continuing Disclosure Undertaking, dated as of the date of delivery of the Bonds (the "Disclosure Undertaking"), entered into by the City as the "obligated person" under the provisions of Rule 15c2-12 (the "Rule") promulgated by the Securities and Exchange Commission pursuant to the Securities and Exchange Act of 1934, as amended, and is therefore subject to continuing disclosure requirements under the Rule. 2. Approval and Execution of Lease, Ground Lease and Disclosure Undertaking. The Mayor and the Manager are hereby authorized and directed to execute, and deliver the Lease, the Ground Lease and the Disclosure Undertaking, in substantially the forms on file with the Manager. All of the provisions of the Lease, the Ground Lease and the Disclosure Undertaking when executed and delivered as authorized herein shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated herein and shall be in full force and effect from the date of execution and delivery thereof. 3. Approval of Revenue Bond Resolution. The City hereby approves the form ofthe Revenue Bond Resolution and the terms of the Bonds described therein. 4. Authorized to Execute. The Mayor and Manager are hereby designated and authorized to act on behalf of the City to execute the Lease, the Ground Lease and the Disclosure Undertaking, or other documents relating thereto. 5. Furnishing of Certificates and Proceedings. The Mayor and Manager and other officers of the City are authorized and directed to prepare and furnish to the Purchaser and Bond Counsel, certified copies of all proceedings and records of the City relating to the Bonds, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bonds as such facts appear from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute representations of the City as to the truth of all statements contained therein. 6. Modifications to Documents. The approval hereby given to the various documents referred to above includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the City Attorney and the City officials authorized herein to execute the documents. The City officials are hereby authorized to approve changes on behalf of the City. The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. In the absence of the Mayor or Manager, any of the documents authorized by this resolution to be executed may be executed by the Acting Mayor or the Acting Manager, respectively. 7. Severability. If any section, paragraph or provision of this resolution shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this resolution. 8. Headings. Headings in this resolution are included for convenience of reference only and are not a part hereof, and shall not limit or define the meaning of any provision hereof. 1752296vl 2 The motion for the adoption of the foregoing resolution was duly seconded by member ., and upon vote being taken thereon the following voted in favor thereof: and the following voted against the same: Passed and adopted this 18th day of April, 2005. YES NO Haugen Haugen Fleming Fleming LeMair LeMair Petersen Petersen Zieska Zieska {Seal} City Manager City of Prior Lake 1752296vl