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HomeMy WebLinkAboutR-1997-129 Non-recourse revenue bondsRESOLUTION NO. R - 97 -1 2 9 A RESOLUTION approving issuance by the State of Washington Economic Development Finance Authority of non-recourse revenue bonds to finance development of a facility for Trail Wagons/Chinook, Inc., and providing for other matters properly relating thereto. WHEREAS, on September 23, 1996, the Washington Economic Development Finance Authority ("WEDFA") considered and unanimously approved proposed Resolution No. W-96-009 (the "Resolution"), a copy of which is attached hereto as Exhibit A, relating to the issuance of non-recourse revenue bonds, the proceeds of which would be loaned to Trailwagons/Chinook, Inc. ("the Company") for the construction and equipping of a facility for the manufacture of recreational vehicles and motor homes (the "Project"), all as authorized by the Economic Development Finance Authority Act of 1989, R.C.W. Title 43, Chapter 63, as amended (the "Act"); and WHEREAS, WEDFA has requested the City of Yakima, as the jurisdiction with statutory land use planning authority and responsibility within which the proposed industrial development facility would be located, to consider whether or not to approve the issuance of non-recourse revenue bonds by WEDFA for the Project; and WHEREAS, the Project, if assisted by the issuance of non-recourse revenue bonds by WEDFA, will bring substantial economic and general benefit to the City of Yakima, and is in the City's best interests; now therefore. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: Section 1: The Yakima City Council (the "Council"), pursuant to the request of the Washington Economic development Finance Authority, does hereby approve the issuance of non-recourse revenue bonds (the "Bonds") by the Washington Economic Development Finance Authority, for the purposes provided in the Act, and on the terms described below. Section 2: The Bonds shall be issued in the aggregate principal sum of not to exceed $2,500,000.00 pursuant to a Resolution of WEDFA. The proceeds of the Bonds are to be lent to Trail Wagons/Chinook, Inc., pursuant to a loan agreement or other appropriate financing agreement, and used for the purpose of constructing and equipping a facility for the manufacture of recreational vehicles and motor homes, including the necessary appurtenances, located within the boundaries of the City of Yakima and to pay certain costs of issuance of the Bonds. Section 3: The Bonds shall not constitute an obligation of the City of Yakima, and no tax funds or revenues of the City of Yakima shall be used to pay the principal or interest on the Bonds. Neither the faith and credit nor any taxing power of the City of Yakima shall be pledged to pay the principal or interest on the Bonds. 1 Section 4: The City of Yakima hereby approves the issuance of Bonds by WEDFA for the purpose of financing the Project as described herein, a project which WEDFA has determined is qualified under applicable laws. �._. OCel1V11 u. she l talo effect immediately upon adoption. 1111.7 1\1..7%.././ vaa vaauaa a.cu... va....... ...�.. - -------J —'r --- -----a ADOPTED BY THE CITY COUNCIL this {moi day of October, 1997. ynn Buchanan, Mayor ATTEST: City Clerk lap\comm&econ development\WEDFA Trailwagons funding res 10/16/97 12:19 PM 2 RESOLUTION NO. W-96-009 A RESOLUTION OF THE WASHINGTON ECONOMIC DEVELOPMENT FINANCE AUTHORITY DECLARING OFFICIAL INTENT TOWARD THE ISSUANCE OF NONRECOURSE ECONOMIC DEVELOPMENT REVENUE BONDS IN ONE OR MORE SERIES IN A MAXIMUM AMOUNT NOT TO EXCEED $2,500,000 AND AUTHORIZING THE EXECUTION OF AN INDEMNIFICATION AND COMPENSATION AGREEMENT BY AND BETWEEN THE WASHINGTON ECONOMIC DEVELOPMENT FINANCE AUTHORITY AND TRAIL WAGONS/CHINOOK, INC. (the "Borrower"). WHEREAS, the Washington Economic Development Finance Authority (the "Issuer") is established as a public body corporate and politic, with perpetual corporate succession, constituting an instrumentality of the State of Washington authorized and empowered by the provisions of RCW Chapter 43.163 (the "Act") to issue nonrecourse revenue bonds for the purpose of financing economic development activities as defined in the Act, and WHEREAS, the Borrower has informed the Issuer that it wishes to acquire, construct, equip, and improve the manufacturing facilities to be located in Yakima, Yakima County, Washington, as more fully described in Exhibit A attached hereto and incorporated herein (the "Site"), all of which are located within the territorial limits of the State of Washington, and the Borrower has requested the Issuer to issue nonrecourse revenue bonds (the "Bonds") as special obligations of the Issuer in a maximum amount not to exceed two million five hundred thousand dollars ($2,500,000) pursuant to the Act to carry into effect the acquisition, construction, equipping, and improving or real and personal property at the Site to be used in the manufacturing facilities of the Borrower, as more fully described in Exhibit A hereto (the "Project"), to loan the proceeds of the Bonds to finance Project costs, as defined in the Act, and WHEREAS, the Bonds, when and if issued, would be payable solely out of the special fund or funds established for their repayment and would be secured by a financing document, as defined by the Act; and WHEREAS, a form of agreement designated as an "Indemnification and Compensation Agreement" has been prepared setting forth the respective agreements and undertaking of the Issuer and the Borrower with respect to the Bonds and the Project; and WHEREAS, it is considered necessary and desirable for the best interest of the Issuer that the Indemnification and Compensation Agreement be executed for and on the behalf of the Issuer; and Resolution No. W-96-009 Page 1 of 6 Agreement the WHEREAS, the Indemnification and Compensation Agreement requires the Borrower to pay all reasonable and necessary costs incurred by the Issuer in connection with the Bonds or in connection with the Project; and WHEREAS, the Issuer finds that the Project constitutes economic development activities, as defined under the Act; and WHEREAS, it is intended that this resolution shall constitute a declaration of official intent to reimburse Project expenditures within the meaning of Sections 1.103- (8)(T)(a)(5) and 1.150-2 of the Federal Income Tax Regulations. NOW THEREFORE, be it resolved by the Washington Economic Development Finance Authority as follows: Section 1. It is hereby determined that (a) the acquisition, construction and installation of the Project and their operation as an economic development facility; (b) the issuance of the bonds of the Issuer in one or more series and in a maximum amount not to exceed $2,500,000, to finance costs of the Projects, such total costs to be financed by the Bonds presently estimated to be approximately $2,500,000; and (c) the execution and delivery of such contracts and agreements with the Issuer as are necessary to provide for the payment by the Issuer of amounts sufficient to pay the principal of, premium, if any, and interest on the Bonds, together with certain costs of the Issuer, will all be in furtherance of the Act Section 2. Subject to the conditions listed in Section 3 below, including such other conditions as in the judgement of the Issuer and bond counsel are necessary to insure the validity of the Bonds and the tax-exempt status of the Bonds, it is the intent of the Issuer to proceed toward the issuance and sale of the Bonds pursuant to the provisions of the Act Nothing in this resolution shall be construed as legally binding the Issuer to authorize, issue, or sell the Bonds Section 3. The authorization, issuance, and sale of the Bonds by the Issuer are subject to the following conditions (a) the Borrower shall have caused secured a bond purchase agreement (the "Bond Purchase Agreement") from an Accredited Investor, as such term is defined in 17 CFR 230.501(a), acceptable to the Issuer, for the purchase of the Bonds; (b) the Borrower shall enter into such contracts and loan agreements with the Issuer as shall be necessary to secure payment of the principal of, premium, if any, and interest on the Bonds as when the same shall come due and payable, Resolution No VV -96-009 Page 2 of 6 (c) on or before two (2) years from the date hereof (or such later date as shall be mutually satisfactory to the Issuer and the Borrower) the Issuer and the Borrower shall have agreed to mutually acceptable terms and conditions of the contracts and agreements referred to in paragraph (b) of this Section 3; (d) the Issuer shall have received a preliminary opinion of bond counsel that, with certain customary exceptions, the Bonds may be issued as tax-exempt obligations pursuant to the provisions of the Internal Revenue Code of 1986; (e) the Issuer shall have received an allocation of the State ceiling on private activity bonds imposed by Section 146 of the Internal Revenue Code of 1986 in an amount equal to the aggregate face amount of the Bonds, and shall have allocated such amount to the Bonds, (f) the Issuer shall have received evidence that the county, city, or town within whose planning jurisdiction the Project lies has approved the Project and the Bonds; and (g) such other conditions as in the judgement of the Issuer and bond counsel are necessary to insure the validity of the Bonds and the tax-exempt status of the Bonds Section 4. The proper officials of the Issuer are hereby authorized to take such further action as is necessary to carry out the intent and purposes hereof under the terms and conditions stated herein and in compliance with the applicable provisions of law. Section 5. That it is deemed necessary and advisable that the Indemnification and Compensation Agreement be approved and executed for and on behalf of the Issuer. Section 6. That an Indemnification and Compensation Agreement by and between the Issuer and the Borrower be, and the same is hereby, approved and authorized and the Chair of the Issuer is hereby authorized to execute the Indemnification and Compensation Agreement on behalf of the Issuer Section 7. Each Bond, when and if issued, shall substantially state the following language on the face thereof THE OBLIGATIONS OF THE ISSUER HEREUNDER SHALL NOT BE DEEMED TO BE A DEBT, LIABILITY, OBLIGATION, OR PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF WASHINGTON, OF ANY MUNICIPALITY, OR OF ANY MUNICIPAL CORPORATION, QUASI MUNICIPAL CORPORATION, SUBDIVISION, OR AGENCY OF THE STATE OF WASHINGTON, OR TO PLEDGE ANY OR ALL OF THE FAITH AND CREDIT OF ANY OF THESE ENTITIES. NEITHER THE STATE OF WASHINGTON, THE ISSUER, ANY MUNICIPALITY, OR ANY OTHER MUNICIPAL CORPORATION, QUASI MUNICIPAL CORPORATION, SUBDIVISION, OR AGENCY OF THE Resolution No. W-96-009 Page 3 of 6 STATE OF WASHINGTON IS OBLIGATED TO PAY THE PRINCIPAL OR THE INTEREST THEREON. NO TAX FUNDS OR GOVERNMENTAL REVENUE MAY RE USED TO PAY THE PRINCIPAL OR INTEREST THEREON. NEITHER ANY OR ALL OF THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF WASHINGTON, THE ISSUER, IF ANY, OR ANY MUNICIPAL CORPORATION, QUASI MUNICIPAL CORPORATION, SUBDIVISION, OR AGENCY THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR OF THE INTEREST ON THE BONDS. Section 8. This Resolution shall be effective after its adoption. ADOPTED by the Washington Economic Development Finance Authority this 23rd day of September, 1996 WASHINGTON ECONOMIC DEVELOPMENT FINANCE AUTHORITY Resolution No W-96-009 Page 4 of 6 EXHIBIT A DESCRIPTION OF PROJECT AND SITE The Project will consist of: A 60,000 sq ft. facility and new equipment for manufacturing recreational vehicles and motor homes to be located at 34001 North 4th Street and P Street, Yakima, Yakima County Resolution No. W-96-009 Page 5 of 6 CERTIFICATE I, the undersigned, Secretary of the Washington Economic Development Finance Authority (herein called the "Issuer"), DO HEREBY CERTIFY: 1. That the attached Resolution No W-96-009 (herein called the" Resolution) is a true and correct copyof a resolution of the Issuer as finally adopted at a special meeting of the Board of Directors of the Issuer held on the 23rd day of September, 1996, and duly recorded in my office. and all aspects in with law. 2. That said meeting was duly convened held in a,9 .,, accordance law, and, and, to the extent required by law and the by-laws of the Issuer, due and proper notice of such meeting was given, that a legal quorum was present throughout the meeting and a legally sufficient number of' members of the Washington Economic Development Finance Authority voted in the proper manner for the adoption of the Resolution, that all other requirements and proceedings incident to the proper adoption of the Resolution have been duly fulfilled, carried out, and otherwise observed, and that I am authorized to execute this certificate IN WITNESS THEREOF, I have hereunto set my hand this 23rd day of September, 1996 Secretary Resolution No. W-96-009 Page 6 of 6 C., ` F? ' 2 1997 V[ � L 1'f 'r`F� STATE OF WASHINGTON WASHINGTON ECONOMIC DEVELOPMENT FINANCE AUTHORITY 1000 Second Ave., Suite 2700 • Seattle, Washington 98104-1046 • (206) 587-5634/5640 • FAX (206) 389-2819 4 September 18, 1997 Mr. Richard Zais, Jr. City Manager City of Yakima 129 North Second Street Yakima, WA 98901 Re Washington Economic Development Finance Authority (WEDFA) Exempt/Taxable Economic Development Revenue Bond Programs $2,500,000 Trail Wagons/Chinook, Inc. Project Dear Mr Zais RECEIVED i 1997 1 , AKIMA COMMLJNTY DEVELOPMENT Tax - Trail Wagons/Chinook, Inc. is planning to construct an equip a new facility for the manufacture of recreational vehicles and motor homes in Yakima. They intend to finance this project through the issuance of WEDFA's tax-exempt nonrecourse economic development revenue bonds. Ms. Carolyn Seth at Trail Wagons/Chinook would be happy to provide you with any further information that you might find helpful regarding the project. Her telephone number is. (509) 574-3889 It is the policy of the WEDFA board only to issue bonds in support of projects which would be welcomed by the local community. As part of the issuance process, therefore, we would like the Yakima City Council as the planning jurisdiction, to consider passage of a Planning Jurisdiction Approval resolution, in form substantially as attached, in behalf of the Washington Economic Development Finance Authority (WEDFA) to issue tax-exempt economic development revenue bonds. We are planning to issue the bonds toward the first of the year. It would greatly assist our timing if the City Council could consider this approval at their next convenient meeting. Mr. Richard ?ais, Tr. i''4., 11fnr,n rr.r filly 11/1(111G15. V1 September 18, 1997 Page two Please let me know how we can work together to facilitate this process. If you have any questions, please do not hesitate to give me a call. My telephone number is: (206) 587-5634. I look forward to working with you on this project. Sincerely yours, Jonathan A. Hayes Executive Director cc• Carolyn Seth - Trail Wagons/Chinook "WHO WE ARE" The Washington Economic Development Finance Authority (WEDFA) is an independent agency within the executive branch of state government, created by the legislature to "...develop innovative approaches to the problem of unmet capital needs" for small and medium-sized businesses in the state. WEDFA has the authority to issue nonrecourse economic development bonds on both a taxable and tax-exempt basis in support of qualifying projects - primarily manufacturing and processing facilities; WEDFA cannot assist commercial or retail projects. The Authority is staffed by an Executive Director and has a seventeen member board chaired by William Glassford, SVP & head of the International Division at Seafirst Bank. There is no governmental financial support, either direct or indirect, for WEDFA bonds. Payment of principal and interest is solely the responsibility of the borrowing company. The ability to borrow at tax-exempt rates makes this type of financing very attractive, however. The all -in annual borrowing cost for companies in the past has averaged 1'%% below prime! WEDFA is not supported by government funding in any way; the Authority is prohibited by statute from receiving any appropriation of state funds. WEDFA is solely dependent upon fee income derived from its bond issuance programs to pay all its staffing and other operational expenses. We not only assist Washington businesses; we are a Washington business! 1 WEDFA - "Who We Are" WEDFA currently has developed and is implementing three bond issuance programs: (1) "TEMPS" manufacturing and processing tax-exempt equipment financing; these are "mini" industrial revenue bonds for equipment projects between $250,000 and $1 million, (2) "Taxable Tail" taxable bonds in conjunction with a tax-exempt bond issuance to finance costs which either are not eligible for tax-exempt financing (such as Ling capital or R&D) or for which sufficient bond volume cap is not available to vwiJresiea�, capital permit them to be financed on a tax-exempt basis, (3) issuance of tax-exempt industrial revenue bonds and "exempt facilities" bonds for eligible projects. "TMPS" bond financing is a new program not only for Washington state, but also for the Pacific Northwest. It opens up the financial advantages of tax-exempt financing to a large category of projects which could not previously effectively take advantage of this type of bond finance. Bayou Brewing would not have considered tax-exempt financing prior to "TMP "'s introduction; it would not have been cost-effective for their $550 thousand financing. "Taxable Tail" bonds also broaden the scope of industrial revenue bonds and "exempt ,. additional cost elements to included in the facilities" bonds by enabling auui�i0;,ai categories of �., be total bond finance package. For example, the cost of warehousing space can't be included in the tax-exempt part of a financing. Issuing a "Taxable Tail" bond m conjunction with the tax-exempt portion enabled Tonkin, Inc. to efficiently complete their total financing in a single package. Both of these programs are unique to WEDFA and can provide significant value to eligible companies around the state. Please contact: Jonathan Hayes Executive Director Washington Economic Development Finance Authority (WEDFA) 1000 Second Ave., Suite 2700 Seattle, WA 98104-1046 tel: (206) 587-5634 fax: (206) 389-2819 for further information on these or other WEDFA programs. - Tax -Exempt Industrial Revenue & "Exempt Facilities" Bonds WASHINGTON ECONOMIC DEVELOPMENT FINANCE AUTHORITY (WEDFA) Tax Status Bond interest is exempt from federal income tax (subject to AMT). Eligible Manufacturing and processing project located in Washington. Feedstock Projects for "exempt facilities" projects must be classified as at least 65% solid waste. Eligible Land acquisition, building construction and acquisition of new equipment. Costs Used equipment can be financed only if purchased as part of an existing plant. For "exempt facilities" projects, only that part of the project which either qualifies as "solid waste disposal" or is functionally related can be financed on a tax-exempt basis. Project For industrial revenue bonds, maximum total capital expenditure for the Size project - including the proposed and any existing bond issues - of $10 million measured over a period beginning three years before and ending three years after bond issuance For "exempt facilities" projects, no set dollar limit, however, bond cap allocation is currently restricted to 30% of initial category allocation (approx. S17 million) in a given year Financing National tax-exempt credit markets; no governmental funds or guarantees Source are involved Bonds must be either sold on the open market or privately placed with qualified institutionaVindividual investors Security No governmental financial support, either direct or indirect, is provided. for the Payment of interest and principal is solely the responsibility of the borrowing Bonds company. Publicly sold bonds must be credit enhanced by a letter of credit from an investment grade -rated bank . Issuing Washington Economic Development Finance Authority (WEDFA), a public Authority corporation of the state authorized by the legislature to issue nonrecourse tax- exempt/taxable economic development revenue bonds. Contact: Jonathan Hayes, Washington Economic Development Finance Authority, 1000 Second Ave., Suite 2700, Seattle, WA 98104-1046, tel: (206) 587- 5634, fax: (206) 389-2819, or local economic development agency. BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. / For Meeting Of: 10/21/97 ITEM TITLE: Adopt a resolution approving the issuance of State of Washington Economic Development Finance Authority (WEDFA) non-recourse revenue bonds to finance an economic development facility for Trail Wagons/Chinook, Inc. SUBMITTED BY: Glenn J. Valenzuela, Director of Community & Economic Develop CONTACT PERSON/TELEPHONE: Vaughn McBride/576-6649 SUMMARY EXPLANATION: Trail Wagons/Chinook, Inc. proposes to construct and equip a new 60,000 sq. ft. facility for the manufacture of recreational vehicles and motor homes in Yakima. Project financing will be provided through the issuance of WEDFA's tax-exempt nonrecourse economic development revenue bonds. The bonds shall be issued in the aggregate principal sum of not to exceed $2,500,000. The Washington Economic Development Finance Authority (WEDFA), an independent agency within the executive branch of state government, created by the legislature, has the authority to issue nonrecourse economic development bonds on both a taxable and tax-exempt basis in support of qualifying small and medium-sized business projects -- primarily manufacturing and processing facilities; WEDFA cannot assist commercial or retail projects. WEDFA is not supported by government funding in any way. WEDFA is solely dependent upon fee income derived from its bond issuance programs to pay all its staffing and other operational expenses. Payment of principal and interest is solely the responsibility of the borrowing company. It is the policy of the WEDFA board only to issue bonds in support of projects that would be welcomed by the local community. Therefore, Council support has been requested. Neither the faith and credit nor any taxing power of the City of Yakima shall be obligated to pay the principal or interest on the bonds. The bonds shall not constitute an obligation of the City of Yakima; no tax funds or revenues of the City of Yakima shall be used to pay the principal or interest on the bonds. The City of Yakima is not compromised financially by this action, and could gain the benefits associated with the investment in economic development. Resolution _X_ Ordinance_ Contract _ Other (Specify) Funding Source APPROVAL FOR SUBMITTAL: Manager STAFF RECOMMENDATION: Approve resolution. BOARD RECOMMENDATION: COUNCIL ACTION: Council Committee on Economic Development recommended approval at October 17, 1997 meeting. Memorandum DATE: August 5, 1997 TO: John. Hanson, Director of Finance and Budget FROM: Cindy Epperson, AccountantC RE: Washington Economic Development Finance Trail Wagons/Chinook, Inc. Project I have reviewed the proposal regarding the Washington Economic Development Finance Authority (WEDFA) which is requesting Council to approve an economic development project. Upon that approval, the WEDFA would loan the project tax-exempt nonrecourse industrial development revenue bonds. There is no governmental financial support, either direct or indirect, for these bonds, and the WEDFA resolution specifically states that the obligation is NOT in any way construed to be a debt of the State or any municipality. This statement is also repeated on the face of the bonds. The benefitted company is responsible for all the bond costs and legal opinions. It appears that the municipality is asked for their approval so that the project is acknowledged by the community as providing some benefit, thereby allowing the private debt to be tax-exempt. The City is not compromised financially by this situation, and could gain the benefits associated with the investment in economic development.