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HomeMy WebLinkAboutResolutions - R-84-20 - 06/11/1984 - Bonds for Professional Spectacle Makers R-84-20 PRELIMINARY BOND RESOLUTION WHEREAS , PROFESSIONAL SPECTACLE MAKERS , LTD. , an Illinois corporation ( the "Company" ) wishes to finance the acquisition of Lots 7 through 14 inclusive in Block 3 in Meadow Lane Subdivision in the City of McHenry, Illinois ( with frontages on Illinois Route 31 , Kane Avenue and Oak Street ) , construction and equipping of a commercial building facility thereon , consisting of one or more store or office units , ( ( the "Project " ) and wishes to have the City of McHenry , Illinois ( the "City" ) issue its revenue bonds to provide financing for such Project ; and WHEREAS , a Memorandum of Agreement has been presented to the City under the terms of which the City agrees , subject to the provisions of such agreement , to issue its revenue bonds and lend the proceeds thereof to the Company to finance such Project ; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF McHENRY , McHENRY COUNTY, ILLINOIS AS FOLLOWS : 1 . That the Mayor and City Clerk of the City are hereby authorized to execute a Memorandum of Agreement with the Company in substantially the form of such agreement as was presented at this meeting or with such changes therein as shall be approved by the officers executing the same . 2 . That the officers and employees of the City are hereby authorized to take such further action as is necessary to carry out the intent and purpose of the Memorandum of Agreement as executed and to cause its revenue bonds to be issued upon the terms and conditins stated in such Memorandum of Agreement with respect to the Project described in the Memorandum of Agreement , which Memorandum of Agreement is hereby made a part of this Resolution . 3 . That a public hearing on the Project in compliance with Section 103 ( b ) of the Internal Revenue Code of 1954 , as amended by the Tax Equity and Fiscal Responsibility Act of 1982 shall be held by the City Council on July 16, 1984 at 7 : 45 P. M. at their regular meeting place and the City Clerk is hereby authorized and directed to cause notice of such public hearing to be published in a newspaper of general circulation within the City not less than 14 days prior to said hearing date. PASSED this 11th day of June, 1984 . AYES : Nolan , Bolger , Datz, Busse, Smith, McClatchey, Serritella , Snell NAYS : None ABSTAINED : None ABSENT: None NOT VOTING : None APPROVED this 11th day of June , 1984. MAYOR Joseph B. Stanek ATTEST: CITY CLERK Barbara E. Gilpin MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT is between the City of McHenry, McHenry County, Illinois ( the "City" ) and Pro- fessional Spectacle Makers , Ltd . , an Illinois corporation ( the "Company" ) . 1 . Preliminary Statement . Among the matters of mutual inducement which have resulted in this Agreement are the following : ( a) The Tax Reform Act of 1984 , is currently pending in the United States Congress . H. R . 4170, if enacted in its present form as passed by the United States House of Representatives on April 11 , 1984 , would generally be applicable to all industrial revenue bonds issued after December 31 , 1983 and would provide among other things that the State of Illinois , including all of its agencies and political subdivisions , may issue "private activity bonds " during calendar year 1984 , the interest on which will be exempt from federal income taxation , in an amount not exceeding $1 , 714 , 112 , 100 (which is $150 x the population of 11 , 427 , 414 as established by the 1980 census ) . Under such proposed legislation , the maximum amount of tax exempt private activity bonds which may be issued by the Issuer is $896 , 175 and the issuance of the Bond is not within such limit . On April 14 , 1984 , the United States Senate passed an amendment to H .R . 2163 pertaining to such private activity bonds which does not contain any annual volume limitation . If H. R . 4170 is enacted in the above form , interest on the Bond will be includible in the federal gross income of the owner of the Bond as of the date of issuance. There can be no assurance that H. R . 4170 will or will not be enacted in its present form or that any legislation enacted by Congress will preserve the exemption of interest on the Bond from federal income taxation . ( b ) On April 16 , 1984 the City passed a resolution authorizing the issuance of a $2 . 6 million economic development revenue bond (Chroma Corporaton Project ) , Series 1984 which was issued on May 17 , 1984; in addition , the City has heretofore on various occasions , entered into Memorandum of Agreements with other industrial bond applicants , which have not yet been issued and which may be entitled to priority over the subject of this Memorandum of Agreement if H. R . 4170 , or similar legislation , is enacted into law. ( c ) Subject to such restrictions and limitations that may be imposed upon the City by H.R . 4170 afore- said , or other enactments , and any claims of priority of previous industrial revenue bond applicants , the City is authorized to issue its revenue bonds to finance certain industrial facilities under the provisions of the Industrial Project Revenue Bond Act of the State of Illinois , Illinois Revised Statutes , Chapter 24 , Section 11-74-1 , et . seq . ( the "Act " ) . ( d ) The Company intends to acquire lots 7 through 14 inclusive in Block 3 , in Meadows Lane Sub- division in the City of McHenry, Illinois (with front- ages on Illinois Route 31 , Kane Avenue and Oak Street ) , and to construct and equip a commercial building facility thereon consisting of one or more store or office units ( the "Project" ) with the resulting public benefits to the Issuer . The Project is expected to cost the Company approximately $1 , 200 ,000 . The Company has requested that the City assist the Company in financing the costs of constructing the Project by issuing its revenue bonds and lending the proceeds thereof to the Company. ( e ) The proposed financing will serve to main- tain and increase employment , encourage the increase of industry and commerce , increase the tax base and provide other benefits for the City. ( f ) The revenue bonds of the City shall be limited obligations of the City payable solely out of the revenues and receipts derived from the financing of the Project . No holder of any such bonds shall have the right to compel any exercise of the taxing power of the City or any political subdivision of the State of Illinois and such bonds shall not constitute an indebtedness or a loan of credit of the City. ( g ) The City finds that the financing as herein described will further the public purposes of the Act . 2 . Undertakings on the Part of the City. Subject to due compliance with all requirements of law, the provis- ions and requirements of the Act , possible priorities of previous industrial revenue bond applicants , and the other conditions stated herein , including execution of a con- tract to sell the bonds on terms satisfactory to the City and the Company , the City agrees as follows : -2- ( a ) That it will authorize the issuance and sale of its revenue bonds in an amount necessary to finance the construction and equipping of the Project, includ- ing costs and expenses incidental thereto and to the issuance of the bonds pursuant to its lawful and constitutional authority; the City has no obligation hereunder to find any purchaser or purchasers for said bonds . ( b ) That it will enter into a loan agreement or other financing arrangement with the Company whereby the Company wi l l pay to or on behalf of the City such sums as shall be sufficient to pay the principal of and interest and redemption premium, if any, on the bonds as and when the same shall become due and payable . 3 . Undertaking on the Part of the Company. Subject to the conditions stated herein , the Company agrees as follows : ( a) That it will use all reasonable efforts to find one or more purchasers for the bonds . ( b ) That contemporaneously with the delivery of the bonds they will enter into a loan agreement or other financing arrangement with the City, under the terms of which the Company will obligate itself to pay for or on behalf of the Issuer an amount sufficient to pay the principal of and interest and redemption premium, if any, on the bonds as and when the same shall become due and payable , and which shall contain such other provisions as are mutually acceptable to the City and the Company. ( c ) Company will pay the City for any and all professional fees , City Council salaries and other City expenses directly or indirectly incurred by , or charged to, the City in connection with the subject matter of the proposed bonds . Company will immediately deposit with the City Clerk the sum of $4 ,000. 00 to be used by the Ctiy toward defraying such expenses and fees . At any time that payments from said fund by the City have reduced the balance therein to less than $1 , 800 . 00 , Company shall , immediately upon request from the City Clerk , deposit such additional sum as will restore the fund balance to the sum originally deposited . Within 90 days after the closing of the sale of said bonds , any unobligated balance remaining in said fund shall be repaid to the Company or assigns . -3- ( 4) General Provisions ( a ) All commitments of the City under paragraph 2 hereof and of the Company under paragraph 3 hereof are subject to the conditions that on or before one year from the date hereof (or such other date as shall be mutually satisfactory to the City and the Company) , the City and the Company shall have agreed to mutually acceptable terms and conditions of the loan agreement or other financing arrangement referred to in paragraph 3 and of the bonds and other instruments or proceedings relating to the bonds including a contract for the sale of the bonds . ( b ) All costs and expenses in connection with the financing and completion of the Project , including the fees and expenses of bond counsel and counsel to the City, and any agent or underwriter for the sale of the bonds , shall be paid from the proceeds of the bonds or by the Company. If the events set forth in ( a) of this paragraph do not take place within the time set forth or any extension thereof and the bonds in an amount of approximately the amount stated above are not sold within such time , the Company agrees that it will reimburse the City for all expenses which the City may incur as a result of the execution of this Agreement and the performance by the City of its obligations hereunder , and this Agreement shall thereupon terminate. ( c ) The decision not to approve or agree to any term or condition of any documents or not to take any action prior to the issuance of the bonds shall rest solely within the complete discretion of the parties to this Agreement . If , for any reason the bonds are not issued , the City shall not in any way be liable for damages or otherwise to any party for such failure of consummation of the financing . -4- IN WITNESS WHEREOF , the parties hereto have entered into this Agreement by their officers thereunto duly authorized as of the IIT1# day of June , 1984. PROFESSIONAL SPECTACLE MAKERS , LTD. , an Illinois Corporation ( the "Company" ) By: �( G ft- .. if Its President CITY OF McHENRY , McHENRY COUNTY, ILLINOIS By: Mayor [SEAL] Attest: City Clerk -5-