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HomeMy WebLinkAbout4.A.4. Authorization to execute documents for Bond Redemption issued for the benefit of Recovery Technology Solutions (RTS) Consent Business 4.A. 4. SHAKOPEE TO: Mayor and City Council FROM: William H. Reynolds, City Administrator DATE: 12/15/2015 SUBJECT: Authorization to Execute Documents for Bond Redemption Issued for the Benefit of Recovery Technology Solutions (RTS) (F) Action Sought Approval of Resolution No. 7662 which authorizes the mayor and city administrator to execute all documents related to the potential sale of the RTS facility and the redemption of the RTS bonds. Background On October 21, 2014 city council authorized the issuance, sale and delivery of revenue bonds for the benefit of Recovery Technology Solutions, LLC, which built a facility at 6528 County Road 101 East in Shakopee. RTS had developed a process to recycle asphalt shingles extracting asphalt oil and other ingredients for reuse. The bonds were issued pursuant to Minnesota Statutes, Sections 469.152 through 469.1655, as Solid Waste Revenue Bonds on December 16, 2014 in the amount of $16,000,000. The executed bonds are conduit revenue bonds and secured solely by the revenues derived from the lease agreement and from other security provided by RTS, including a mortgage and security agreement. The bonds do not constitute a general or moral obligation of the city and are not secured or payable from any property or assets of the city (other than the interests of the city in the lease agreement) and are not secured by any taxing power of the city. The issuance of the bonds do not have any adverse impact on the credit rating of the city, even in the event that RTS encounters financial difficulties with respect to the project. The actions on the 21st of October 2014 included the authorization for the city to enter into a Real Estate, Improvements, and Equipment Lease Agreement with RTS, which was executed on December 1, 2015, whereby the company leased the site and the facility to the city. The city then executed an agreement with RTS in which the company leased the site and the facility back from the city, subject to RTS's agreement to pay all rental payments and comply with all other obligations related to the city and the facility. The base lease agreement was designed to be solely for the purposes of financing, with the guarantee that the city would be fully indemnified by the company for any and all matters related to the base rental agreement. RTS has proposed to sell the site and facility and redeem the bonds with the proceeds of the sale. The bondholder has agreed to an early redemption of the bonds. Budget Impact None. Relation to Vision F. Housekeeping item. Recommendation Approval. Requested action Approval of Resolution No. 7662 which authorizes the mayor and city administrator to execute all documents related to the potential sale of the RTS facility and the redemption of the RTS bonds. Attachments: Resolution No. 7662 CITY OF SHAKOPEE,MINNESOTA RESOLUTION NO.7662 AUTHORIZING THE EXECUTION OF DOCUMENTS WITH RESPECT TO THE REDEMPTION OF BONDS ISSUED FOR THE BENEFIT OF RECOVERY TECHNOLOGY SOLUTIONS SHAKOPEE,LLC WHEREAS, the City of Shakopee, Minnesota (the "City") is a statutory city and political subdivision duly organized and existing under the Constitution and laws of the State of Minnesota;and WHEREAS, on December 16, 2014, the City issued its Solid Waste Revenue Bonds (Recovery Technology Solutions Shakopee, LLC Project), Series 2014 (the "Bonds"), in the original aggregate principal amount of$16,000,000, pursuant to Minnesota Statutes, Sections 469.1652 through 469.1655, as amended, and an Indenture of Trust, dated as of December 1, 2014 (the "Indenture"),between the City and UMB Bank,N.A., as trustee; and WHEREAS, the City loaned the proceeds of the Bonds to Recovery Technology Solutions Shakopee, LLC, a Delaware limited liability company (the "Company"), to (i) (mance all or a portion of the acquisition, construction, equipping, installing, and improving of an asphalt shingle recovery facility (the "Facility") to be located at 6528 County Road 101 East in the City (the "Site"); (ii)fund a reserve fund; and(iii)pay the costs of issuance related to the Bonds(collectively,the"Project"); and WHEREAS, in connection with the issuance of the Bonds, the City entered into a Real Estate, Improvements, and Equipment Lease Agreement, dated as of December 1, 2014 (the "Base Lease Agreement"), between the Company and the City, whereby the Company leases the Site and the Facility to the City; and WHEREAS, pursuant to a Lease Agreement, dated as of December 1, 2014 (the "Lease Agreement"),between the City and the Company,the Company leases the Site and the Facility back from the City, subject to the Company's agreement to pay all rental payments and comply with all other obligations related to the Site and the Facility; and WHEREAS, the Company has proposed to sell the Site and the Facility and redeem the Bonds with the proceeds of the sale; and WHEREAS,the holder of 100%of the Bonds has agreed to the early redemption of the Bonds; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE,MINNESOTA,AS FOLLOWS: 1. In the event that the Company sells the Site, the City hereby approves such sale and authorizes the Mayor and the City Administrator, or their designees, to execute and deliver any documents required to carry out the sale of the Site. 2. In the event that the Bonds are redeemed, the City hereby approves such redemption and authorizes the Mayor and the City Administrator, or their designees, to execute and delivery any satisfaction documents required to carry out the redemption of the Bonds, including but not limited to a satisfaction of the Base Lease Agreement,the Lease Agreement, and the Indenture. 472504v1 JAE SH155-303 3. For all actions to be performed by the City under the documents related to the Site and the Facility and the Bonds, the City Administrator is designated as the "Authorized Issuer Representative,"as that term is defined in the Indenture. 4. This resolution shall be in full force and effect following its adoption. Approved by the City Council of Shakopee,Minnesota this 15th day of December,2015. Mayor ATTEST: City Clerk 472504v1 JAE SH155-303 2