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HomeMy WebLinkAboutIssuance & Sale $6,400,000 Economic Development Revenue Bonds One Michiana Square AssociatesORDINANCE No. 7386 -84 Passed by the Common Council of the City of South Bend, Indiana September 24, 1984 IRENE K. GAMMON Presented by me to the Mayor of the City of South Bend, Ind'ana Approved and signed by September 25, 19 84 A-- i, Clerk of Common Council City Clerk IRENE K. GAMMON 19 ORDINANCE NO. Y3 V,� -&4 AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF $6,400,000 ECONOMIC DEVELOPMENT REVENUE BONDS OF THE CITY OF SOUTH BEND, INDIANA FOR THE PURPOSE OF MAKING A LOAN TO ONE MICHIANA SQUARE ASSOCIATES IN ORDER TO FINANCE THE ACQUISITION, CONSTRUCTION AND INSTALLATION OF CERTAIN ECONOMIC DEVELOPMENT FACILITIES LOCATED IN THE CITY OF SOUTH BEND, ST. JOSEPH COUNTY, INDIANA; AUTHORIZING EXECUTION OF A LOAN AGREEMENT; PROVIDING FOR THE DELIVERY OF A NOTE AND ASSIGNMENT THEREOF AS SECURITY FOR SAID BONDS; AUTHORIZING AN INDENTURE OF TRUST APPROPRIATE FOR THE PROTECTION AND DISPOSITION OF THE REVENUES FROM SUCH NOTE; AND AUTHORIZING THE TERMS AND SALE OF SAID BONDS AND THE EXECUTION OF THE BOND PURCHASE AGREEMENT; AND APPROVING THE TERMS OF THE MORTGAGE, THE ASSIGNMENT OF RENTS AND L.EASES,AND RELATED MATTERS. STATEMENT OF PURPOSE AND INTENT The City of South Bend, Indiana (hereinafter called the "Issuer ") is a municipal corporation and political subdivision of the State of Indiana and by virtue of Indiana Code 36 -7 -12, as amended (hereinafter call the "Act ") is authorized and empowered to adopt this ordinance (the "Bond Ordinance ") and to carry out its provisions; and One Michiana Square Associates (the "Borrower ") is a limited partnership duly organized and existing under and '-by virtue of the laws of Indiana, having John T. Phair, Wallace F. Holladay and Charles G. Clark as its sole general partners, with its principal office in South Bend, Indiana, and duly qualified to conduct business in the State of Indiana; and The Borrower intends to and has entered into contracts to acquire, construct and install certain economic development facilities within the corporate limits of the City of South Bend, Indiana, constituting a five -story commercial office building with related improvements, including underground parking (the "Project "), and .the Issuer is willing to issue its economic development revenue bonds to finance a portion of the costs and expenses of such acquisition, construction and installation; and It is estimated that the costs of the Project, including costs relating to the preparation and the issuance of the economic development revenue bonds, will be in excess of $6,400,000; and The South Bend Economic Development Commission has performed all action .required of it by the Act preliminary to the adoption by the Common Council of this Bond Ordinance, and.has approved and forwarded to this Common Council the forms of (1) Bond Purchase Agreement- (the "Bond Purchase Agreement ") dated as of September 1, 1984 among the Issuer, the Borrower, NBD, as issuer of the Letter of Credit (the "Bank ") and Capital Holding Corporation (the "Purchaser ") providing for the sale of the Bonds by the Issuer to the Purchaser, (2) Indenture of Trust (the "Indenture ") dated as of September 1, 1984, between the Issuer and 1st Source Bank, with principal offices in South Bend, Indiana (the "Trustee "), containing the form of economic development revenue bond, (3) Loan Agreement (the "Loan Agreement ") dated as of September 1, 1984, between the Issuer and the Borrower, containing a form of Note from the Borrower to the Issuer, which shall be endorsed to the Trustee, (4) Mortgage and Security Agreement (the "Mortgage ") dated as of September 1, 1984, from the Borrower to the Trustee, (5) Assignment of Rents and Leases (the "Assignment of Rents and Leases ") dated as of September 1, 1984, from the Borrower to the Trustee, and (6) this Bond Ordinance (all of the documents set forth above hereinafter collectively called "Bond Documents "). NOW, THEREFORE, BE IT ORDAINED BY THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, AS FOLLOWS: Section 1. Findings; Public Benefits. The Common Council of the Issuer hereby finds and determines that the Project to be acquired, constructed and installed with the proceeds of the Economic Development Revenue Bonds herein authorized are "economic development facilities" as that phase is used in the Act; that acquisition, construction and installing of the Project will increase employment opportunities and increase diversification'-of economic development facilities in and near the Issuer, will improve and promote the economic stability, development and welfare of the area in and near the Issuer and will encourage and promote the expansion of industry, trade and commerce in the area in and near the Issuer and the location of other new industries in such area; and that the public benefits to be accomplished by this Bond Ordinance, in tending to overcome insufficient employment opportunities and insufficient diversification of industry, are greater than the cost of public services (as that phrase is defined in the Act) which will be required by the Project. The issuance of the Bonds identified in Section 2 hereof, comply with the purpose and provisions of Indiana Code 36 -7 -12. Section 2. Authorization of Economic Development Revenue Bonds. In order to pay a portion of the cost of acquiring, constructing and installing the Project, there are hereby authorized to be issued, sold and delivered $6,400,000 aggregate principal amount of Economic Development Revenue Bonds (One Michiana Square Project) of the Issuer (the "Bonds "). Any additional Costs of the Project will be paid for by the Borrower. Section 3. Terms for the Bonds. The total principal amount of Bonds that may be issued is hereby expressly'-limited to $6,400,'000. The Bonds (a) shall be issued in fully registered form (without coupons) in any denomination, (b) shall be le-tered and numbered R -1. and upward, (c) shall be executed by the off_cial manual signatures of the Mayor and the Clerk of the Issuer, and the corporate seal shall be impressed 'or printed thereon, (d) shall be dated as of the date of issue and delivery, and (e) shall have a final maturity of October 1, 2009 (a term of approximately 25 years). The Bonds shall be due and payable as follows: Commencing on the first day of the month following the date the Bonds and on the first day of each month thereafter to and including October 1, 2009, an installment ec::a: to interest only at the Adjusted Rate (as hereinafter defined) shall be payable, subject to the following: (a) except as provided in paragraph (c) below, the amount of such monthly installment shall not exceed an amount equal to 1/12 times 12.25% times the outstanding principal amount of the Bond (the "Maximum Monthly Installment "); (b) if the Maximum Monthly Installment is insufficient to pay the interest accrued at the Adjusted Rate, then the difference between the amount of the Maximum Monthly Install- ment and the interest accrued shall constitute deferred interest and shall bear interest, to the extent legally enforceable, for each day until paid at the Adjusted Rate; such deferred interest shall be added to the amount of interest payable on the next monthly payment date; and the monthly installment payable on such date shall be applied first to deferred interest and the interest thereon, and if sufficient to pay such deferred interest and the interest thereon, then the balance shall be applied to accrued interest. The Borrower shall not be deemed to be in default solely by reason of the deficiency between the payment of each monthly installment and the actual amount of interest accrued on such date at the Adjusted Rate; (c) if the sum of the outstanding principal amount of the Bonds plus the total amount of deferred interest and interest thereon, shall at any time exceed 110% of the original principal amount of the Bonds, then, beginning on the next monthly payment date, the Maximum Monthly Installment shall be increased to an amount equal to 1 /12th of the product of (a) the Adjusted Rate, multiplied by (b) the sum of (i) the deferred interest and interest thereon, plus (ii) the outstanding principal amount of the Bonds (except that, on the first monthly payment date on which such installment is so increased, such installment shall also include an amount equa= to the difference between (a) the sum of (i) the outstanding principal amount of the Bonds alss (ii) the total amount of deferred interest and interest thereon, and (b) 110% of the original principal amount of the Bonds), and thereafter, subsequent monthly installments shall remain fixed at such amount until the next following quarterly interest rate adjustment, at which time the pavment adjustment procedure described above shall be repeated and the payment adjusted either upward or downward, as required; (d) if the Adjusted Rate is at any time less than 12.25% per annum, the amount of the monthly installments shall nevertheless continue in the amount of the Maximum Monthly Installment, and each such monthly installment shall be applied first to deferred interest and interest thereon, and if sufficient to pay such deferred interest and interest thereon, then the balance shall be applied to accrued interest. When all such deferred interest and interest thereon shall have been paid, the amount of the monthly installments shall be. reduced to accrued interest only at the Adjusted-Rate; (e) the outstanding principal amount of the Bonds and any other amounts due thereon, to the extent not paid in full from a portion of each monthly installment as set forth above, shall be due and payable on October 1, 2009. The "Adjusted Rate" shall be equal to 11.25% from the date of issuance and delivery to and including December 31, 1984, and thereafter shall be adjusted on a quarterly basis, commencing January 1, 1985, and on each April 1, July 1, October 1 and January 1 thereafter, to a rate equal to 75% (the "Index Percentage ") of the rate on new issue long -term A -rated utility bonds as reported by Salomon Brothers, Inc. in its weekly "Bond Market Round -up" report issued in the last full calendar week prior to the week in which the applicable quarter begins. In the event Salomon Brothers, Inc. or its successor no longer publishes said report or the reporting frequently is changed so that such determination cannot be made as required above, Capital Holding Corporation, a Delaware corporation, as agent on behalf of the holders of the Bonds (the "Agent "), shall designate the most nearly similar nationally published index reporting rates on new issue long -term A -rated utility bonds which index shall thereafter be used for the rate adjustment. In no event shall the Adjusted Rate exceed the maximum lawful rate of interest.which may be borne by the Bonds. In the event the Adjusted Rate would (but for the limitation thereon) exceed on any effective date described above the maximum permissible rate according to Indiana law, the holders of the Bonds may (as provided in Section 301(d) of the Indenture and Section 7.1(d) of the Loan Agreement) require that the Bonds be prepaid in full, without premium or penalty. under certain circumstances set forth in the Indenture relating to taxability for federal income tax purposes of interest on the Bonds, the interest rate on the Bonds shall be increased according to a formula set forth in the = ndenture and in the Bonds, and the holders of the Bonds may be entitled to additional interest and other payments. Books fir the registration and transfer of -he Bonds shall be kept by the Trustee. Principal and interest and premium, if any, shall be payable in any coin or currency in the United States of America which, at the respective payment date is legal tender for the payment of public and private debts, at the prin- cipal office of the Trustee in South Bend, Indiana. The Bonds shall be in such form, and shall have such optional and mandatory redemption provisions, and shall be subject to such other terms and conditions as set froth in the Indenture. The Bonds and the interest thereon do not and shall never constitute an indebtedness of or a charge against the general credit or taxing power of the Issuer:, the County of St. Joseph, the State of Indiana or any political subdivision thereof, but are limited obligations of the Issuer payable solely from revenues and other amounts derived from the Note, the Loan Agreement and the Assignment of Rents and Leases and shall be secured as provided in the Indenture. Forms of the Loan Agreement, the Indenture, the Bond Purchase Agreement, the Mortgage, and the Assignment of Rents and Leases are before this meeting and are by this reference incorporated in this Bond Ordinance, and the City Clerk is hereby directed to insert them into the minutes of the Common Council and to keep them on file. Section 4. Sale of the Bonds. The Mayor and the City Clerk of the Issuer are hereby authorized and directed to sell the Bonds to or upon the order of the Purchaser or its designated affiliates and registered assigns, pursuant to the Bond Purchase Agreement at a price of $6,400,000, 100% of par vague. Section 5. Bond Purchase Agreement. In order to provide for the commit ments of the Issuer to sell the Bonds and of the Purchaser to purchase the Bonds, the Mayor and the City Clerk shall execute and deliver in the name of and on behalf of the Issuer, a Bond Purchase Agreement in substantially the form submitted to this Common Council, which is hereby approved in all respects. Section 6. Indenture. In order to secure the payment of the principal of and interest on the Bonds, the Mayor and City Clerk shall execute, acknowledge and deliver, in the name and on behalf of the Issuer, an Indenture of Trust in substantially the form submitted to this Common Council, which is hereby approved in all respects.. Section 7. Loan Agreement. In order to provide for the loan of the proceeds of the Bonds to acquire, construct and install the Project and the paymenttby the Borrower o£ an amount sufficient to pay the principal of and premium, if anv, and interest on the Bonds, the Mayor and City Clerk shall execute, acknowledge and deliver in the name and on behalf of the Issuer a Loan Agreement in substantially the form submitted to this Common Council, which is hereby approved in all respects. Section 8. Acceptance of Note. In connection with the Bonds, the Issuer accepts as security for such Bonds the Note of the Borrower. The Note shall be in substantially the form attached as Exhibit B to the Loan Agreement. The Mayor and City Clerk shall endorse the Note to the Trustee. Section 9. Additional Approval. The forms of the Mortgage and the Assignment of Rents and Leases before this meeting, to be signed by parties other than the Issuer in connection with the issuance of the Bonds and the security therefor, are hereby approved in form and content, with such changes and revisions as may be necessary and agreed upon by the parties thereto. Section 10. Execution. The Common Council understands that there may be revisions in the forms of documents before Common Council prior to the actual issuance of the Bonds. Execution and sealing by Mayor and the City Clerk of the Bonds, the Bond Purchase Agreement, the Indenture, the Loan Agreement, and endorsement by the Mayor and the City Clerk of the Note shall constitute conclusive evidence of their approval of any and all changes or revisions therein from the forms of such documents before this meeting. Section 11. TEFRA Hearing. The Issuer hereby approves and confirms and consents to the location and time of the public hearing to be held on September 28, 1984 (and the published notice with respect thereto) by the Economic Development Commission, such hearing being held to comply with Section 103(k) of the Internal Revenue Code of 1954. The Mayor is authorized to approve this Bond Ordinance after such public hearing. Section 12. General. The Mayor and the City Clerk and other officials and employees be and they are each hereby authorized and directed, in the name and on behalf of the Issuer, to execute any and all agreements, documents, and instruments, perform any and all acts, approve any and all matters, and do any and all things deemed by them, or any of them, to be necessary or desirable in order to carry out and comply with the intent, conditions and purposes of this Bond Ordinance (including the preambles hereto and the documents mentioned herein), the financing of the acquisition, construction and installation of, the Project by the Borrower, the issuance-and sale of the Bonds, and the securing of the Bonds under the Indenture. Section 13. Section 103(b)(6)(D) Election. The Issuer elects to have the provisions of Section iO3(b)(6)(D) of =he Internal Revenue Code of 1954, as amended, apply to the issue of the Bonds and the Mayor and Ci:y `_erk are hereby authorized, empowered, and directed to file sucr. election with the Internal Revenue Service for and on behalf of the Issuer. Section 14. Copies of Bond Documents. As required by Indiana Code office of the City copies t B Cle k, and available for public inspection. Section 15. Effective Date. This Bond Ordinance shall be in full force and effect immediately upon its adoption by the Common Council and approval by the Mayor. j ��- ✓. er of the on Counci . BUTLER & SIMERI ATTORNEYS AT LAW 405 WEST WAYNE .STREET SOUTH BEND, INDIANA 46601 JOSEPH V. SIMERI 219 233 -3303 KEVIN J. BUTLER MELAMMK.MORGAN September 19, 1984 South Bend Common Council 4th Floor County -City Building South Bend, Indiana 46601 Dear Members of the Council: Re: South Bend Economic Development Revenue Bonds One Michiana Square Project Enclosed for your consideration is the Bond Ordinance for the above - project. One Michiana Square Associates, an Indiana limited partner- ship, has filed an application with the Economic Development Commission for the issuance of $6,400,000.00 revenue bonds to be used for the construction of new Class A office space in the central downtown urban renewal area. The project will result in approximately 250 construction jobs for each of the two phases of the construction project, each phase lasting for one year. The project will result in at least 450 new permanent jobs with an annual payroll of approximately $6,000,000.00. The Economic Development Commission adopted its Inducement Resolution on March 2, 1984, and will adopt its final Resolution on September 24, 1984. The Common Council adopted its Inducement Resolution on March 12, 1984, and we ask that you adopt the final Bond Ordinance at your meeting on September 24, 1984. Thank you for your consideration of this matter. Sincerel , Kevin Butler Attorney for.Applicant KJB :1 j h Enclosure cc: Mr. Kenneth P. Fedder With Enclosure ea Section 13. Section 103 (b) (6) (D) Election. The Issuer elects to ave he provisions of ection ) (D) of the Internal Revenue 'Code of 1954, as amended, (the 'Code') read in conjunction with Section 103 (B)(6)(I) of the Code, apply to the issue of the Bonds and the Mayor and City Clerk are hereby authorized, empowered, and directed to file such election with the Internal Revenue Service for and on behalf of the Issuer. Section 14. Copies of Bond Documents. As required by Indiana Code 36- 1 -5 -4, two copies of the Bond Documents are on file in the office of the City Clerk, and available for public inspection. Section 15. Effective Date. This Bond Ordinance shall be in full force and effect immediately upon its adoption by the Common Council and approval by the Mayor. Member of the Common Council Economic Development Commission Jerry Hammes, President Walter Szymkowiak, Vice President Walter A. Mucha, Secretary Kenneth P. Fedder, Councel Alice Neddo, Asst. Sec. Mrs. Irene City Clerk County -City South Bend, Gammon Building IN 46601 CITY Of SOUTH BEND ROGER O. PARENT, Mayor September 24, 1984 Re: One Michiana Square Associates Dear Mrs. Gammon: Alice Neddo Staff Administrator 230 W. Jefferson Boulevard P.O. Box 1677 South Bend, Indiana 46634-1677 (219) 234 -0051 The South Bend Economic Development Commission has received an Application from One Michiana Square Associates for an Industrial Revenue Bond for the construction of a new economic development facility to be located in downtown South Bend. On March 2, 1984, the Economic Development Commission passed an Inducement Resolution and on September 24, 1984, after a public hearing, passed its formal Resolution approving the proposed financing of the economic development facility for One Michiana Square Associates. We are transmitting a true, correct and complete copy of the originals on file with the Commission of the aforementioned Resolutions, for purposes of the information of the Common Council when it considers the passage of an Ordinance to authorize the issuance of South Bend Economic Revenue Bonds. Yours very tr 7, �2°"� S President South Bend Economic Development Commission JH:ram enc .