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CCR2016081-GO Notes COMMON COUNCIL – CITY OF MUSKEGO RESOLUTION NO. 081-2016 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF A $2,866,170 TAXABLE GENERAL OBLIGATION PROMISSORY NOTE WHEREAS, the Common Council hereby finds and determines that it is necessary, desirable and in the best interest of the City of Muskego, Waukesha County, Wisconsin (the "City") to raise funds for the public purpose of paying project costs of the City's Tax Incremental District No. 11 (the "Project"), and there are insufficient funds on hand to pay said costs; WHEREAS, the Common Council hereby finds and determines that the Project is within the City's power to undertake and therefore serves a "public purpose" as that term is defined in Section 67.04(1)(b), Wisconsin Statutes; WHEREAS, cities are authorized by the provisions of Section 67.12(12), Wisconsin Statutes, to borrow money and issue general obligation promissory notes for such public purpose; WHEREAS, it is the finding of the Common Council that it is necessary, desirable and in the best interest of the City to sell its general obligation promissory note (the "Note") to First Business Bank - Milwaukee (the "Purchaser"), pursuant to the proposal attached hereto as Exhibit A and incorporated herein by this reference (the "Proposal"); and WHEREAS, due to certain provisions contained in the Internal Revenue Code of 1986, as amended, it is necessary to issue the Note on a taxable rather than tax-exempt basis. NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City that: Section 1. Authorization and Sale of the Note. For the purpose of paying the cost of the Project, there shall be borrowed pursuant to Section 67.12(12), Wisconsin Statutes, the principal sum of up to TWO MILLION EIGHT HUNDRED SIXTY-SIX THOUSAND ONE HUNDRED SEVENTY DOLLARS ($2,866,170) from the Purchaser in accordance with the terms and conditions of the Proposal. The Proposal is hereby accepted. To evidence the obligation of the City, the Mayor and City Clerk/Treasurer are hereby authorized, empowered and directed to make, execute, issue and sell to the Purchaser for, on behalf of and in the name of the City, a general obligation promissory note in the maximum principal amount of TWO MILLION EIGHT HUNDRED SIXTY-SIX THOUSAND ONE HUNDRED SEVENTY DOLLARS ($2,866,170) (the "Note"). Section 2. Terms of the Note. The Note shall be designated "Taxable General Obligation Promissory Note"; shall be issued in the maximum principal amount of $2,866,170; shall be registered as to both principal and interest in authorized denominations of $0.01 or any whole multiple thereof; shall be dated the date of delivery; and shall be numbered R-1. Principal of the Note may be drawn by the City as needed to the full principal amount of the Note, or so much thereof as the City may require; and shall be payable on December 1, 2019. The Note shall bear QB\\41740352.1 interest at a rate per annum equal to the Applicable Interest Rate (defined below) (but only on such amounts as shall have been drawn under the Note from the dates such amounts are drawn). The "Applicable Interest Rate" shall be equal to the lesser of (a) 30-Day LIBOR plus 1.10% or (b) 5.00%. The “30-Day LIBOR” shall mean the One Month London Interbank Offered Rate (LIBOR) published in the Wall Street Journal on the last business day of the month to be adjusted on the first day of the following month (each an "Interest Rate Determination Date") and any change in 30-Day LIBOR or the Applicable Interest Rate shall be effective as of that date. In no event will the 30-Day LIBOR rate be less than 0.00%. Interest shall be payable semi-annually on June 1 and December 1 of each year commencing on June 1, 2017. Interest is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under the Note is computed using this method. This calculation method results in a higher effective interest rate than the numeric interest rate stated in the Note. Section 3. Redemption Provisions. The Note shall be subject to redemption prior to maturity, at the option of the City, on any date. Said Note shall be redeemable as a whole or from time to time in part, at the principal amount thereof, plus accrued interest to the date of redemption. Section 4. Form of the Note. The Note shall be issued in registered form and shall be executed and delivered in substantially the form attached hereto as Exhibit B and incorporated herein by this reference. Section 5. Tax Provisions. (A) Direct Annual Irrepealable Tax Levy. For the purpose of paying the principal of and interest on the Note as the same becomes due, the full faith, credit and resources of the City are hereby irrevocably pledged, and there is hereby levied upon all of the taxable property of the City a direct annual irrepealable tax in an amount and at the times sufficient for that purpose, which tax shall be in such amounts as are necessary to provide for payment of the principal of and interest on the Note when due. The debt service schedule for the maximum principal amount of the Note, assuming the entire principal amount was drawn on October 11, 2016, is set forth on Exhibit C and incorporated herein by this reference. The actual debt service schedule shall vary based on the principal amount drawn and the dates said amount is drawn, and changes in the Applicable Interest Rate. (B) Tax Collection. So long as any part of the principal of or interest on the Note remains unpaid, the City shall be and continue without power to repeal such levy or obstruct the collection of said tax until all such payments have been made or provided for. After the issuance of the Note, said tax shall be, from year to year, carried onto the tax roll of the City and collected in addition to all other taxes and in the same manner and at the same time as other taxes of the City for said years are collected, except that the amount of tax carried onto the tax roll may be reduced in any year by the amount of any surplus money in the Debt Service Fund Account created below. (C) Additional Funds. If at any time there shall be on hand insufficient funds from the aforesaid tax levy to meet principal and/or interest payments on said Note when due, -2- QB\\41740352.1 the requisite amounts shall be paid from other funds of the City then available, which sums shall be replaced upon the collection of the taxes herein levied. Section 6. Segregated Debt Service Fund Account. (A) Creation and Deposits. There be and there hereby is established in the treasury of the City, if one has not already been created, a debt service fund, separate and distinct from every other fund, which shall be maintained in accordance with generally accepted accounting principles. Debt service or sinking funds established for obligations previously issued by the City may be considered as separate and distinct accounts within the debt service fund. Within the debt service fund, there hereby is established a separate and distinct account designated as the "Debt Service Fund Account for Taxable General Obligation Promissory Note (TID No. 11)" (the "Debt Service Fund Account") and such account shall be maintained until the indebtedness evidenced by the Note is fully paid or otherwise extinguished. The City Clerk/Treasurer shall deposit in the Debt Service Fund Account (i) all accrued interest received by the City at the time of delivery of and payment for the Note; (ii) any premium which may be received by the City above the par value of the Note and accrued interest thereon; (iii) all money raised by the taxes herein levied and any amounts appropriated for the specific purpose of meeting principal of and interest on the Note when due; (iv) such other sums as may be necessary at any time to pay principal of and interest on the Note when due; (v) surplus monies in the Borrowed Money Fund as specified below; and (vi) such further deposits as may be required by Section 67.11, Wisconsin Statutes. (B) Use and Investment. No money shall be withdrawn from the Debt Service Fund Account and appropriated for any purpose other than the payment of principal of and interest on the Note until all such principal and interest has been paid in full and the Note canceled; provided (i) the funds to provide for each payment of principal of and interest on the Note prior to the scheduled receipt of taxes from the next succeeding tax collection may be invested in direct obligations of the United States of America maturing in time to make such payments when they are due or in other investments permitted by law; and (ii) any funds over and above the amount of such principal and interest payments on the Note may be used to reduce the next succeeding tax levy, or may, at the option of the City, be invested by purchasing the Note as permitted by and subject to Section 67.11(2)(a), Wisconsin Statutes, or in permitted municipal investments under the pertinent provisions of the Wisconsin Statutes ("Permitted Investments"), which investments shall continue to be a part of the Debt Service Fund Account. (C) Remaining Monies. When all of the Note has been paid in full and canceled, and all Permitted Investments disposed of, any money remaining in the Debt Service Fund Account shall be transferred and deposited in the general fund of the City, unless the Common Council directs otherwise. Section 7. Proceeds of the Note; Segregated Borrowed Money Fund. The proceeds of the Note (the "Note Proceeds") (other than any premium and accrued interest which must be paid at the time of the delivery of the Note into the Debt Service Fund Account created above) shall be deposited into a special fund separate and distinct from all other funds of the City and disbursed solely for the purpose for which borrowed or for the payment of the principal of and -3- QB\\41740352.1 the interest on the Note. Monies in the Borrowed Money Fund may be temporarily invested in Permitted Investments. Any monies, including any income from Permitted Investments, remaining in the Borrowed Money Fund after the purpose for which the Note has been issued has been accomplished, and, at any time, any monies as are not needed and which obviously thereafter cannot be needed for such purpose shall be deposited in the Debt Service Fund Account. Section 8. Execution of the Note and Requisitions; Closing; Professional Services. The Note and any requisition of Note proceeds required by the Purchaser (the “Requisition”) shall be issued in printed form, executed on behalf of the City by the manual or facsimile signatures of the Mayor and City Clerk/Treasurer, authenticated, if required, by the Fiscal Agent (defined below), sealed with its official or corporate seal, if any, or a facsimile thereof, and delivered to the Purchaser upon payment to the City of the purchase price of the first draw on the Note, plus accrued interest to the date of delivery (the "Closing"). The facsimile signature of either of the officers executing the Note or Requisition may be imprinted on the Note or Requisition in lieu of the manual signature of the officer but, unless the City has contracted with a fiscal agent to authenticate the Note, at least one of the signatures appearing on the Note shall be a manual signature. In the event that either of the officers whose signatures appear on the Note shall cease to be such officers before the Closing, such signatures shall, nevertheless, be valid and sufficient for all purposes to the same extent as if they had remained in office until the Closing. The aforesaid officers are hereby authorized and directed to do all acts and execute and deliver the Note and all such documents, certificates and acknowledgements as may be necessary and convenient to effectuate the Closing. The City hereby authorizes the officers and agents of the City to enter into, on its behalf, agreements and contracts in conjunction with the Note, including but not limited to agreements and contracts for legal, trust, fiscal agency, disclosure and continuing disclosure, and rebate calculation services. Any such contract heretofore entered into in conjunction with the issuance of the Note is hereby ratified and approved in all respects. Section 9. Payment of the Note; Fiscal Agent. The principal of and interest on the Note shall be paid by the City Clerk/Treasurer (the "Fiscal Agent"). The Fiscal Agent shall also pay all additional amounts required in connection with the documentation of the Note, including all legal fees incurred by the Purchaser, as provided in the Proposal. Section 10. Persons Treated as Owners; Transfer of Note. The City shall cause books for the registration and for the transfer of the Note to be kept by the Fiscal Agent. The person in whose name the Note shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes and payment of either principal or interest on the Note shall be made only to the registered owner thereof. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Note to the extent of the sum or sums so paid. The Note may be transferred by the registered owner thereof by surrender of the Note at the office of the Fiscal Agent, duly endorsed for the transfer or accompanied by an assignment duly executed by the registered owner or his attorney duly authorized in writing. Upon such transfer, the Mayor and City Clerk/Treasurer shall execute and deliver in the name of the transferee or transferees a new Note or Notes of a like aggregate principal amount, series and maturity and the Fiscal Agent shall record the name of each transferee in the registration book. No registration shall be made to bearer. The Fiscal Agent shall cancel any Note surrendered for transfer. -4- QB\\41740352.1 The City shall cooperate in any such transfer, and the Mayor and City Clerk/Treasurer are authorized to execute any new Note or Notes necessary to effect any such transfer. Section 11. Record Date. The fifteenth day of each calendar month next preceding each interest payment date shall be the record date for the Note (the "Record Date"). Payment of interest on the Note on any interest payment date shall be made to the registered owners of the Note as they appear on the registration book of the City at the close of business on the Record Date. Section 12. Record Book. The City Clerk shall provide and keep the transcript of proceedings as a separate record book (the "Record Book") and shall record a full and correct statement of every step or proceeding had or taken in the course of authorizing and issuing the Note in the Record Book. Section 13. Conflicting Resolutions; Severability; Effective Date. All prior resolutions, rules or other actions of the Common Council or any parts thereof in conflict with the provisions hereof shall be, and the same are, hereby rescinded insofar as the same may so conflict. In the event that any one or more provisions hereof shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provisions hereof. The foregoing shall take effect immediately upon adoption and approval in the manner provided by law. Adopted, approved and recorded October 25, 2016. _____________________________ Kathy Chiaverotti Mayor ATTEST: ____________________________ Sharon Mueller City Clerk/Treasurer (SEAL) -5- QB\\41740352.1 EXHIBIT A Proposal To be provided by First Business Bank and incorporated into the Resolution. (See Attached) QB\\41740352.1 Term Sheet Prepared for Mr. Paul Thompson and Sharon Mueller October 18, 2016 First Business Bank – Milwaukee (the “Bank”) is pleased to deliver the following Term Sheet to City of Muskego (the “Borrower”) as an outline of the proposed note. This term sheet is not a commitment to lend but serves as a basis for discussion. Thank you for the opportunity! Draw Note: Borrower: City of Muskego Amount: $2,866,170 Purpose: Draw note to fund project costs within Tax Incremental District No. 11 Terms: Note written to mature December 2019 with semi-annual payments of interest. All unpaid principal and interest due at maturity. Borrower shall request Note proceeds in accordance with the Requisition attached hereto and incorporated herein as Exhibit A. Rate:  30 day Libor plus 1.10% variable, adjusted monthly (currently 1.63%) up to an interest rate cap of 5%; provided the 30 day Libor is never less than 0.00% Security: Unsecured Guarantors: None Funding Preconditions: Funding Preconditions:  Bank Counsel’s review and approval of all documentation to be drafted by Borrower’s Counsel as well as supporting documentation required by Bank Counsel including an opinion letter issued by Borrower’s Counsel  Approval by Bank’s Loan Approval Committee Fees: Documentation fee of $450.00 plus any out of pocket costs incurred by Bank (legal, etc.) Reporting: Annual audited financial statements provided to Bank within 45 days of completion by auditing firm. This Term Sheet is not a commitment to lend and should not be interpreted as a commitment to lend. This Term Sheet is provided for discussion purposes. *Rates indicated are subject to change from time to time based on market conditions and the Bank’s cost of funds. QB\\41740352.1 EXHIBIT A FORM OF REQUISITION (See Attached.) QB\\41740352.1 REQUISITION NO. ______ Dennis Sampson Senior Vice President First Business Bank - Milwaukee 18500 West Corporate Drive Brookfield, WI 53045 RE: $2,866,170 City of Muskego, Waukesha County, Wisconsin Taxable General Obligation Promissory Note This Requisition is delivered to First Business Bank – Milwaukee (the “Purchaser”) pursuant to a Resolution adopted by the Common Council of the City of Muskego, Waukesha County, Wisconsin (the “City”) on October ______, 2016 authorizing the issuance and sale of $2,866,170 City of Muskego, Waukesha County, Wisconsin Taxable General Obligation Promissory Note dated ________________, 2016 (the “Note”). The Purchaser is the sole owner of the Note. The City hereby requisitions an aggregate amount of $_______________ from Note proceeds. 1. In support of this Requisition, the undersigned hereby certify as follows: (a) All amounts for which payment is being requisitioned have been incurred and paid (or are presently due and owing) for the public purpose of paying project costs of the City’s Tax Incremental District No. 11; and (b) No Requisition has previously been submitted in respect of the costs which form a basis for this Requisition; and (c) The City is not in default under the Note. 2. The Purchaser is requested to pay to the City the amount(s) requisitioned in the following manner: (a) To the City by check; or (b) To the City by deposit in its general account (No. _________) maintained at First Business Bank – Milwaukee; or (c) Other: . QB\\41740352.1 Executed by the undersigned on ____________________, 20_____. CITY OF MUSKEGO, WAUKESHA COUNTY, WISCONSIN By: _________________, Mayor By: _________________, City Clerk/Treasurer Approved and funded by the transfer of $____________________ to the City of Muskego, Waukesha County, Wisconsin by the undersigned on _______________, 20______. FIRST BUSINESS BANK – MILWAUKEE, as Purchaser By: Its Authorized Officer QB\\41740352.1 SCHEDULE A Description Amount QB\\41740352.1 EXHIBIT B (Form of Note) UNITED STATES OF AMERICA NUMBER STATE OF WISCONSIN DOLLARS WAUKESHA COUNTY CITY OF MUSKEGO R-1 TAXABLE GENERAL OBLIGATION PROMISSORY NOTE $2,866,170 MATURITY DATE: ORIGINAL DATE OF ISSUE: INTEREST RATE: December 1, 2019 __________, _____ Applicable Interest Rate (as defined below) REGISTERED OWNER: FIRST BUSINESS BANK - MILWAUKEE PRINCIPAL AMOUNT: TWO MILLION EIGHT HUNDRED SIXTY-SIX THOUSAND ONE HUNDRED SEVENTY DOLLARS ($2,866,170) FOR VALUE RECEIVED, the City of Muskego, Waukesha County, Wisconsin (the "City"), hereby acknowledges itself to owe and promises to pay to the registered owner identified above (or to registered assigns), on the maturity date identified above, the principal amount not to exceed TWO MILLION EIGHT HUNDRED SIXTY-SIX THOUSAND ONE HUNDRED SEVENTY DOLLARS ($2,866,170) (but only so much as shall have been drawn hereunder), and to pay interest thereon at the Applicable Interest Rate (defined below) (but only on amounts as shall have been drawn hereunder from the dates the amounts are drawn hereunder), all subject to the provisions set forth herein regarding redemption prior to maturity. The "Applicable Interest Rate" shall be equal to the lesser of (a) 30-Day LIBOR plus 1.10% or (b) 5.00%. The “30-Day LIBOR” shall mean the One Month London Interbank Offered Rate (LIBOR) published in the Wall Street Journal on the last business day of the month to be adjusted on the first day of the following month (each an "Interest Rate Determination Date") and any change in 30-Day LIBOR or the Applicable Interest Rate shall be effective as of that date. In no event will the 30- Day LIBOR rate be less than 0.00%. Interest is payable semi-annually on June 1 and December 1 of each year commencing on June 1, 2017, until the aforesaid principal amount is paid in full. Both the principal of and interest on this Note are payable in lawful money of the United States by the City Clerk/Treasurer. This Note is payable as to principal upon presentation and surrender hereof at the office of the City Clerk/Treasurer. Payment of each installment of interest shall be made to the registered owner hereof who shall appear on the registration books of the City maintained by the th City Clerk/Treasurer at the close of business on the 15 day of the calendar month next QB\\41740352.1 preceding the semi-annual interest payment date (the "Record Date") and shall be paid by check or draft of the City mailed to such registered owner at his address as it appears on such registration books or at such other address as may be furnished in writing by such registered owner to the City Clerk/Treasurer. For the prompt payment of this Note together with interest hereon as aforesaid and for the levy of taxes sufficient for that purpose, the full faith, credit and resources of the City are hereby irrevocably pledged. This Note is issued in the maximum principal amount of $2,866,170, issued by the City pursuant to the provisions of Section 67.12(12), Wisconsin Statutes, for the public purpose of paying project costs of the City's Tax Incremental District No. 11, all as authorized by a resolution of the Common Council duly adopted by said governing body at a meeting held on October 25, 2016. Said resolution is recorded in the official minutes of the Common Council for said date. The Note is subject to redemption prior to maturity, at the option of the City, on any date. Said Note is redeemable as a whole or from time to time in part, at the principal amount thereof, plus accrued interest to the date of redemption. Before the redemption of any of the Note, unless waived by the registered owner, the City shall give notice of such redemption by registered or certified mail, overnight express delivery, electronic transmission or facsimile transmission, at least thirty (30) days prior to the date fixed for redemption to the registered owner of each Note to be redeemed, in whole or in part, at the address shown on the registration books. Any notice provided as described herein shall be conclusively presumed to have been duly given, whether or not the registered owner receives the notice. The Note shall cease to bear interest on the specified redemption date, provided that federal or other immediately available funds sufficient for such redemption are on deposit with the registered owner at that time. Upon such deposit of funds for redemption the Note shall no longer be deemed to be outstanding. The Note is issued in registered form in the denomination of 0.01 or any integral multiple thereof. This Note may be exchanged at the office of the City Clerk/Treasurer for a like aggregate principal amount of Notes of the same maturity in other authorized denominations. This Note is transferable by a written assignment duly executed by the registered owner hereof or by such owner's duly authorized legal representative. Upon such transfer a new registered Note, in authorized denomination or denominations and in the same aggregate principal amount, shall be issued to the transferee in exchange hereof. The City may deem and treat the registered owner hereof as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof, premium, if any, hereon and interest due hereon and for all other purposes, and the City shall not be affected by notice to the contrary. QB\\41740352.1 2 It is hereby certified and recited that all conditions, things and acts required by law to exist or to be done prior to and in connection with the issuance of this Note have been done, have existed and have been performed in due form and time; that the aggregate indebtedness of the City, including this Note and others issued simultaneously herewith, does not exceed any limitation imposed by law or the Constitution of the State of Wisconsin; and that a direct annual irrepealable tax has been levied sufficient to pay this Note, together with the interest thereon, when and as payable. No delay or omission on the part of the owner hereof to exercise any right hereunder shall impair such right or be considered as a waiver thereof or as a waiver of or acquiescence in any default hereunder. IN WITNESS WHEREOF, the City of Muskego, Waukesha County, Wisconsin, by its governing body, has caused this Note to be executed for it and in its name by the manual or facsimile signatures of its duly qualified Mayor and City Clerk/Treasurer; and to be sealed with its official or corporate seal, if any, all as of the original date of issue specified above. CITY OF MUSKEGO WAUKESHA COUNTY, WISCONSIN By: _____________________________ Kathy Chiaverotti Mayor (SEAL) By: _____________________________ Sharon Mueller City Clerk/Treasurer QB\\41740352.1 3 ASSIGNMENT FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto ____________________________________________________________________________ (Name and Address of Assignee) ____________________________________________________________________________ (Social Security or other Identifying Number of Assignee) the within Note and all rights thereunder and hereby irrevocably constitutes and appoints __________________________, Legal Representative, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises. Dated: _____________________ Signature Guaranteed: ____________________________ _____________________________ (e.g. Bank, Trust Company (Registered Owner) or Securities Firm) NOTICE: This signature must correspond with the name of the registered owner as it appears upon __________________________ the face of the within Note in every particular, (Authorized Officer) without alteration or enlargement or any change whatever. *The Internal Revenue Code of 1986 (IRC Section 149) requires that for interest on a municipal obligation with a term greater than one year to be exempt from federal income tax, the obligation must be issued and remain in registered form. Section 67.09, Wisconsin Statutes provides that the City Clerk of the City when acting as the registrar shall record the registration of each note or bond in its bond registrar. Therefore, if this Note is to be assigned, the City Clerk of the City should be notified and a copy of this Assignment should be sent to the City Clerk of the City for his or her records. QB\\41740352.1 4 EXHIBIT C DEBT SERVICE SCHEDULE WITH MAXIMUM PAYMENTS QB\\41740352.1