HomeMy WebLinkAboutResolutions - R-01-003 - 01/31/2001 - APPROVING IRBS 5.5 MILLION KINGSBURY LPRESOLUTION NO. R-01-003
A RESOLUTION authorizing an agreement by and between the City
of McHenry, McHenry County, Illinois, and Kingsbury Limited
Partneship, with respect to negotiations with the Internal Revenue
Service and authorizing a closing agreement with respect to certain
matters with the Internal Revenue Service.
WHEREAS, the City of McHenry, McHenry County, Illinois (the "City"), was the issuer
of certain revenue bonds called "Industrial Project Revenue Bonds, Series 1998", initially issued
in the amount of $5,500,000, (the "Bonds"), and the KINGSBURY LIMITED PARTNERSHIP (the
"Partnership "), was the principal user of the facilities financed with the proceeds of the Bonds.
WHEREAS, the City issued its Bonds on or about March 19, 1998, as variable ' rate
demand obligations backed by a remarketing agreement and a bank letter of credit, pursuant to a
Trust Indenture dated as of March 1, 1998, with Amalgamated Bank of Chicago, as trustee (the
"Indenture"), and loaned the proceeds of the Bonds to Partnership pursuant to a Loan Agreement
dated as of March 1, 1998 (the "Loan Agreement').
Whereas, the Partnership has represented to the City that it discovered during the
calendar year 2000 that it had exceeded, on or about November 24, 1999, the $10,000,000
limitation applicable under the Federal tax law to tax exempt industrial development bonds, such
as the Bonds, and the Bonds were fully redeemed and retired on October 1, 2000, at a price of
100% of the principal amount thereof plus accrued interest to the date of redemption pursuant to
the optional redemption provisions contained in the Indenture.
WHEREAS, in order to avoid any Federal income tax problems for the bondholders or the
City with respect to the violation of the $10,000,000 limitation, representatives of the Partnership
have entered into discussions with the Internal Revenue Service (the "IRS") for the purpose of
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negotiating a Proposed IRS Closing Agreement with the IRS pursuant to which the IRS would
agree not to tax the interest paid on the Bonds prior to their redemption (the "Proposed IRS
Closing Agreement").
WHEREAS, the City will be treated by the IRS as the "taxpayer" in connection with the
Proposed IRS Closing Agreement, but the City and the Partnership believe that it is appropriate
for the Partnership, as the beneficiary of the financing and the original principal user of the
facilities financed with the proceeds of the Bonds, and pursuant to its indemnification contained
in the Loan Agreement, to assume the responsibility for negotiating the Proposed IRS Closing
Agreement and therefore propose to enter into a Joint Response Agreement with Respect to
Internal Revenue Service Municipal Bond Closing Agreement (the "Joint Response
Agreement"), a copy of which has been present t o this meeting.
Now, THEREFORE, Be It Resolved by the City Council of the City of McHenry,
McHenry County, Illinois, as follows:
1. The form of the Joint Response Agreement presented to this meeting is hereby
authorized and approved, and the Mayor or the City Administrator is hereby authorized and
directed to cause such Joint Response Agreement, in substantially the form presented to this
meeting with such changes and modifications therein as are approved by the person executing
the Joint Response Agreement to be executed and delivered on behalf of the City.
2. Pursuant to the Joint Response Agreement the execution and delivery of a Power of
Attorney form is authorized, approved, ratified and confirmed, which Power of Attorney form
empowers attorneys for the Partnership to communicate with the IRS for purposes of obtaining
the Proposed IRS Closing Agreement.
3. Upon completion of negotiations with the IRS, the execution and delivery of the
Proposed IRS Closing Agreement, by the Mayor or the City Administrator, in a form acceptable
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to counsel for the City, and upon terms consistent with the Joint Response Agreement is hereby
authorized and approved.
ADOPTED by the Corporate Authorities on January 31, 2001.
AYES: BOLGER, GLAB, MCCLATCHEY, MURGATROYD, BAIRD.
NAYS: NONE.
ABSENT: NONE.
APPROVED on January 31, 2001.
/J�ayor, City, ofMcHenry,
McHenry County, Illinois
Attest:
City Clerk, City of McHen
McHenry County, Illinois
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