Loading...
3. Resolution 4505 - Amends Industrial Development Revenue Noteof Kalispell Post Office Box 1997 • Kalispell. Montana 59903-1997 - Telephone (406) 758-7700 • FAX (406) 758-7758 REPORT TO: FROM: SUBJECT: MEETING DATE: Mayor Boharski and City Council Members Amy Robertson, Finance Director Chris Kukulski, City Manager Industrial Development Revenue Note - Kalispell Center Limited Partnership Project September 7, 1999 BACKGROUND: The original note was issued on December 17, 1984 to finance the acquisition of land and the construction of the Kalispell Center Mall. The project is currently owned -by the Cavanaughs Hospitality Limited Partnership successor to the Kalispell Center Limited Partnership. The primary purpose of the refinancing is to lower the interest rate. The outstanding amount of the note is $7,027,917. RECOMMENDATION: Adoption of this resolution authorizing issuance of a first amended and restated note and the execution of documents related thereto. FISCAL EFFECTS: The City fee for the refunding is $2.50 per thousand which will generate $17,570 for the General Fund. ALTERNATIVES: As suggested by Council. Amy . Robertson Finance Director Report compiled: September 3, 1999 C � "- /,t !'Z�- Chris A. Kukuuljski City Manager RESOLUTION NO.4 5 0 5 RESOLUTION RELATING TO INDUSTRIAL DEVELOPMENT REVENUE NOTE (KALISPELL CENTER LIMITED PARTNERSHIP PROJECT); AUTHORIZING ISSUANCE OF A FIRST AMENDED AND RESTATED NOTE AND THE EXECUTION OF DOCUMENTS RELATING THERETO BE IT RESOLVED by the City Council of the City of Kalispell, Montana (the "City"), as follows: Section 1. Recitals. 1.1. Pursuant to Montana Code Annotated, Title 90, Chapter 5, Part 1, as amended (the "Act"), and a resolution adopted by the City Council of the City on December 3, 1984 (the "Original Resolution'), the City authorized the issuance of its Industrial Development Revenue Note (Kalispell Center Limited Partnership Project), in the original principal amount of $10,000,000, and dated_ December 17, 1984 (the "Original Note"); and executed and delivered a Loan Agreement, dated December 17, 1984 (the "Loan Agreement'), between the City and Kalispell Center Limited Partnership, a Washington limited partnership (the "Original Borrower'); a Disbursing Agreement, dated December 17, 1984 (the "Disbursing Agreement"), between the City, the Original Borrower and Washington Trust Bank, as purchaser of the Original Note (the "Lender"); and an Assignment of Loan and Disbursing Agreement, dated December 17, 1984 (the "Assignment"), from the City to the Lender. The Original Note was issued to finance the acquisition of certain land in the City and the acquisition, construction and equipping thereon of an approximately 171,000 square foot commercial shopping mall, a 134- room motor inn, restaurant, cocktail lounge, banquet facility and related facilities (collectively, the "Project'). 1.2. The Original Borrower has conveyed its interest in the Project and its rights, duties and obligations under the Loan Agreement, the Mortgage and the Disbursing Agreement to Cavanaughs Hospitality Limited Partnership, a Delaware limited partnership (the "Borrower"), which has assumed such rights, duties and obligations, all with the consent of the Lender. A Guaranty Agreement, dated December 17, 1984, from Barbieri Hospitality, Inc. to the Lender expired at the Completion Date (as defined in the Loan Agreement) and no longer secures the Original Note. 1.3. The Lender and representatives of the Borrower have requested that the City amend the Original Note to fix and, initially reduce, the interest rate thereon and to eliminate provisions of the Original Note that require its purchase from the holder by the Borrower. 1.4. As required by the Internal Revenue Code of 1986, as amended, in order to preserve the tax exemption of interest on the Original Note, the City Council on August 16, 1999, conducted a public hearing on the proposed amendment of the terms of the Original Note. All parties who appeared, at the hearing were given an opportunity to express their views with respect to the proposal to amend the terms of the Note and interested persons were given the opportunity to submit written comments to the Finance Officer before the time of the hearing, which if so submitted were considered by this Council. 1.5. Draft forms of the following documents relating to the amendment of the Original Note have been prepared and submitted to this Council, and are hereby directed to be filed with the Clerk of Council: (a) a form of the First Amended and Restated Note (the "First Amended and Restated Note'); and (b) an Agreement as to Note Amendment (the "Amending Agreement"), which amends the Loan Agreement, the Disbursing Agreement, the Assignment and the Mortgage. Section 2. Approval and Authorization. 2.1. Based on the public hearing, such written comments (if any) and such other facts and circumstances as this Council deems relevant, the City hereby agrees to the amendment of the terms of the Original Note as described herein and in the First Amended and Restated Note and the Amending Agreement and the City hereby authorizes the issuance of the First Amended and Restated Note to the Lender in exchange for the Original Note. The First Amended and Restated Note shall be subject to registration, transfer and exchange as provided in the Original Resolution. 2.2. The forms of the First Amended and Restated Note and the Amending Agreement referred to in Section 1.5 are hereby approved, subject to such modifications thereto, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the City - Manager and the City Attorney, which approval shall be conclusively evidenced by execution of the First Amended and Restated Note and the Amending Agreement by appropriate officers of the City. The First Amended and Restated Note and the Amending Agreement are directed to be executed in the name and on behalf of the City by the Mayor, the City Manager and the Finance Director. Copies of all of the documents shall be delivered, filed and recorded as provided therein. In the absence or disability of the Mayor, any of the documents authorized by this resolution to be executed, may be executed by the acting Mayor and in the absence or disability of the City Manager or the City Clerk by such officer of the City who, in the opinion of the City Attorney, may execute such documents. The Mayor, the City Manager and the Finance Director are also authorized and directed to execute such other instruments as may be required to give effect to the transactions herein contemplated. -2- Section 3. Authentication of Proceedings. The Mayor, the City Manager, the Finance Director and other officers of the City are authorized and directed to furnish to the Lender and bond counsel certified copies of all proceedings and records of the City relating to the First Amended and Restate Note, and such other affidavits and certificates as may be required to show the facts relating to the legality and marketability of the First Amended and Restated Note 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 of fact contained therein. Section 4. Tax Matters Relating to First Amended and Restated Note. The Mayor, the City Manager and the Finance Director, being the officers of the City charged with the responsibility for issuing the First Amended and Restated Note pursuant to this resolution, are authorized and directed to execute and deliver to the Lender a certificate, based on representations to be made by the Borrower, in accordance with the provisions of Section 148 of the Code, and Section 1.148-2(b) of the Regulations, stating that on the basis of facts, estimates and circumstances in existence on the date of issue and delivery of the First Amended and Restated Note, it is reasonably expected that the proceeds of the First Amended and Restated Note will be used in a manner that would not cause the Note to be an "arbitrage bond" within the meaning of Section 148 of the Code and the Regulations. The City shall file with the Secretary of the Treasury no later than November 15, 1999, a statement concerning the First Amended and Restated Note containing the information required by Section 149(e) of the Code. Passed and duly adopted by the City Council of the City of Kalispell this 7`' day of September, 1999. Attest: Clerk of Council -3- Mayor CAVANAUG HS HOSPITALITY CORPORATIONS August 16,3999 Chris Kukulski City Manager City of Kalispell P.O. Box 1997 Kalispell, MT 59903 Dear Mr. Kukulsld This letter is in response to our recent phone conversations and the letter we received from the Interim City Manager, Mr. Al Thelen. Please be advised that we are working diligently on the Kalispell Curter Expansion. We are very much aware of the obligations we have from the Development Agreement dated July, 21, 1997 between the City of Kalispell, Equity Supply Company and Cavanaughs Hospitality Corporation (successor to Barbieri Investment Company). In reference to Section S of the Development Agreement Cavanaughs Rospitality Corporation's purchase of the Equity Supply property closed on March 2, 1998. As you know real estate development is impacted by many internal and external fords. The refinancing of the Industrial Development Revenue Note to the current fair market interest rate is certainty a positive event in our efforts for the project. We have a staff of seasoned professionals actively working on the expansion project. In addition we are pleased to be in discussion with other national -retailers who are motivated to- become apart of the existing Kalispell Center Mail. We look forward to sharing our progress with you as the project moves forward. Sincerely, Thomas M. Barbieri Executive Vice President Cavanaughs Hospitality Corporation - ----- — Hossn7Al.17V a ENTERTALNM. EA'r • MANAriEMENr SPItVICES C 11C: Ri tLta: vc: 20, W NOATli klVeR OWK SPOKA,",£. WA 99.701 K VOXZ /SU91-IS9-6700 FAX (.S09) .f25J323 ww►v.r.:tt,nwrr,�gs.t ,�t CAUANAUGHS. AT KALISPELL CENTER August 27, 1999 The Honorable Mayor Boharski City of Kalispell 312 First Avenue East Kalispell MT 59901 Dear Mayor: I would like to take this opportunity to update you on Cavanaughs Hospitality Corporation's involvement in our community. Our company culture is strongly committed to family and active involvement in the communities we serve. We do provide encouragement to our associates to grow within our organization by communicating openly and providing opportunities for advancement. Let me share an example of a real success story we are proud of. We have an associate who is a Kalispell native, part of a third generation family of Montanans, who 3-1/2 years ago joined our company as an hourly paid deposit clerk at a wage 18% above minimum wage. She is now our Director of Hotel Operations, earning a salary triple her starting wage, enjoying stock options and a full benefit package. There are many other stories similar to this in our organization we take great pride in seeing realize their dreams. Our recent acquisition of the Outlaw Hotel has been exciting. We are investing considerable funds in the renovation of the physical plant, trying to improve the facility. We have successfully completed and implemented two separate bargaining unit agreements in good faith within nine months of our ownership. You should know that we are committed as a company to conducting business honestly and with the highest level of ethical conduct. We DO treat our associates fairly, with respect, and great appreciation. 20 North Main Street • Kalispell, Montana 59901 • (406) 752-6660 • FAX (406) 752-6628 4 www.cavanaughs.com CVH IY I Washington • Idaho • Montana • Oregon + Utah For Reservations c2ll:1-800-32S-4000