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HomeMy WebLinkAboutOrdinance #2043 e / ~ CITY OF CANTON COUNTY OF FULTON STATE OF ILLINOIS ORDINANCE NO. ~~~T AN ORDINANCE APPROVING LETTERS OF ENGAGEMENT FOR ISSUANCE OF ALTERNATNE REVENUE TAX INCREMENT FINANCE BONDS by and between THE CITY OF CANTON, ILLINOIS and ICE MILLER LLP D.A. DAVIDSON & CO. JACOB & KLEIN, LTD; THE ECONOMIC DEVELOPMENT GROUP, LTD; ANIERICAN BOND CORPORATION, LTD. ADOPTED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF CANTON, FULTON COUNTY, ILLINOIS ON THE 4 DAY OF OCTOBER, 2011. t ~ ORDINANCE NO. a~ AN ORDINANCE APPROVING LETTERS OF ENGAGEMENT FOR ISSUANCE OF ALTERNATIVE REVENUE TAX INCREMENT FINANCE BONDS BY AND BETWEEN THE CITY OF CANTON, ILLINOIS AND ICE MILLER LLP, D.A. DAVIDSON & CO., JACOB & KLEIN, LTD; THE ECONOMIC DEVELOPMENT GROUP, LTD; AND AMERICAN BOND CORPORATION, LTD. BE IT ORDAINED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF CANTON, AN ILLINOIS MUNICIPALITY, THAT: 1. The City of Canton desires to issue up to $7.0 million in Alternative Revenue Tax Increment Finance Bonds to fund certain infrastructure improvements within the Canton IH Downtown TIF District and to refund existing Debt Certificates due December 1, 2011; and 2. The City Administrator, Mayar and City Council of the City of Canton has evaluated and recominended that the City retain the assistance of Ice Miller LLP, D.A. Davidson & Co., Jacob & Klein, Ltd; The Economic Development Group, Ltd; and American Bond Corporation, Ltd, to assist in that bond issuance; and 3. The Mayor is hereby authorized and directed to enter into and execute on behalf of the City said Letters of Engagement attached hereto (Exhibit A, B, and C), and the City Clerk of the City of Canton is hereby authorized and directed to attest such execution; and 4. The Agreement shall be effective on the date set forth in the Agreement; and 5. This Ordinance shall be in full farce and effect from and after its passage and approval as required by law. PRESENTED, PASSED, AND ADOPTED at a regular meeting of the City Council of the City of Canton, Illinois, by an aye and nay roll call vote, with / voting aye, ~voting nay, ~ absent, and Mayor Kevin R. Meade not voting, which meeting was held on the ~ day of C~C j"' , A.D., 2011. AP V• O ber 4, 2011 Kevin eade, Mayor (CORPORATE SEAL) ATTEST: Diana ucker, City Clerk CORPORATE AUTHORITIES AYE VOTE NAY VOTE ABSTAIN / ABSENT David Pickel James Hartford Jeffre Fritz Crai West Gerald Ellis Justin Nelson Eric Schenck Jerem Pasle TOTAL VOTES: / H: Jacob/Canton /Ord - Apprv Ltrs of Engagement_draft 9-9-1 l.doc EXHIBIT A ENGAGEMENT LETTER OF ICE MILLER LLP ~ I C~ M I L L~E~~~~ L E 0 A l C Q U N s E L 200 wesT MNnesrna s~xx~r SUTr6 35U0 CHICAQlO. IId3N015 606D6 Wa~rs~'s Dt~T Nunaa~; {312} 725-7127 A1RflC7'PAX: (7l2j726269b Ir~rtrxr~sr:lamea.Snyder rQiaemilkr.cam September lb, 2011 Honorable Kevin R. Meade City af C~nton 2 North Main Street Cai~tan, Iitinois 61520 RE: G~aexal ~bligadon Bonds (Tax Increment Alternate Revenu~ Source), 2011 (the "Bonds") Dear Mayor Meade: We appreciate the oppoztunity ta serve as Bond Caunsel to the City, and, if requested, Tlisclosure Counsel to the City for the issuance of its above referenced Bonds. We want to tlsa.nlc yau for the apporlunity to wark wi#h the City in connectian with the proposed financing and to propose the terms of our engagement as Band Counsel and Disclosure Counsel, if requested, to the City. ke Miller I.LP values lang term relativnships with clieints and lool~s forward to wvrking with the City an the currei~t and future financings. As Bond Counsel, our job is principally to render eertain approving opinians regarding the validity of the financing under applicable state and federal laws and to render certain ~pinions conceming the tax status of the Bonds and other matters. Li order to perforrn those fiinction~ we wilt be requir~ to perfonn tlae following fiuictions: (a} Preparation or review of all documentation (e.g., ordinance4, resolutions, agreements, leases, uidcntures, Bonds, nntices and other forms) requisite to the authorizafiian, issuance, aud sale of the Bonds (including tl~e docu~nents previouslY prepa~'ed); (b) Attendance at me~tings af the City, when necessary, at which praeeedings affecting the transaction will be cflnsidered or voted upon; (c) Consuitations with the various parties tridrinally t~e fin8nG1a1 ac~ViSOr, other consultar~ts, if any, you and the City's attorney), including bond insurers, ra~ing agencies, or letter of credit issuers, involved ~ the transaction regarding the details and problems of the tr~nsactian and the legal proceedings required fvr the transaction; (d) Arranging for the printing of the Bonds, if required; CFIICAGO ~ DUPAGE CQUNIY, ILLINQlS ~ INDIANAPOLIS ~ WASHIIVGTON OC www.icemifier.corn (e) Responding to inquiries from prospective pwrchasers af the Bands; (f~ Attendance at az~d supervisian of the closing of the financing; (g) F~saminatian of the executed transcript documents; {h) Furnislling to the City and to the purchasers of the Bonds an approving opinion as to Che legality of the issue and the exalusion from gross income of interest on the Bonds; a~.ad (i) Assembling, duplicating, and binding the transcript docwn~nts for delivery to the parties to the transaction. 't~Ve will continue to draft documents (or re~view documents drafted by other parties) and generally supervise the praceedings as tkzey move toward closing. ~hile aur primary responsibility is to the City as the issuer, we also have a responsibility to those persons or entities who wi~l ultimately hold ths Bonds to render an independen~, objective apinion on the Bonds. Our rnain fuz~ct;ions are to opine objectively that the Bonds have been lawfully issued, that their tax status is that for which the purchasers have bargained and agreed, and that certain 1ega1 steps have been undertaken regarding timely payment af the Bonds , and tl~e interest on the Bonds. Unless the City decides to ma.ke special arrangements, our engagement does not include post issuance advic~ ar any obligation to monitor or give advic~: on the City's c~ntinuing compliance with any tax r~uirements, as set forth in the Bonds and the closiag documen~, which must be followed after issuanc~ of #he Boi~ds in order to preserv~ the exclusioxi from grass income ~f interest on the Bonds or to give advice on eontinuing eompliance with securities law requirements. As indicated above, if Bonds are issued, we will be re~uired ta give an opinion a.s ta certa~in federal tax matters, VVe will make inquiries of yau and the City regarding matters relating to this compliance with spplicable federal tax laws during the course of this transactian, and we will alsc~ be preparing documents containing cove~ants with which the City must comply in order to enable us to deliver these opinians. Alsa, as noted abave, one Qf our tasks is ta give an opinion as to the validity and enforeeabiliry af the Bonds u:nder state laws, We will be makang inyuiries of the City d~.uing the wtxrse of'these transactions regarding steps talcen to cornply with applicable state laws. We will also be prepfuing documents from Nme to time which assure or den~onstrate such eomplianee and, in some cases, reviewing documents prepared by yaur attorney or other parties to the same effect. Issuers of municipal or other gov~rnttent~.1 sacuri#ies must also comply with applieabte federai and stato s~curities laws. The City shouid earnpile certain information in an Official Staternent or Limited Offerirlg Mernorandum and prepare certain accoun~ing rnaterials related th~reto. As Disclosure Counsel, aur firm would work with your advisors ar underwritex to provide materi~.ls ~or use in the Official Sta.tement ar Lirnited Offering Mera~randum, including a secti~n an fetieral ta~c matters, the certificate ordinance, the trust indenture or a summary of it, a -2- remedies section, and our apinion. ~or a private place~nent such a~~ with the developer or owner of the project, the purchas~r will be expected tv familiar~ze itself with information about the City and the fin~ncing as ~ao O£fieial Statement is prepared in a private placement. In that case, tza Disclosure Counsel is necessary, but we will be ava'tiable as Bond Counsel ta answer any questions frain the purcl~aser that arise prior to the cornpletion of the financing. This engagement Ietter will also serve to give express written natice to the City that (a) from tirne to tirne we repre.sent in a variety of capac~ities and consult with mosl ~~derwriters, investment bankers, financial advisors and other persons a~tive in the Iilinois public fmance market on a wide range of issues; and (b) prior to your exacution of this engagement letter we may have consul#ed with a number of such firms regarding the Bands. Our fee for this matter wi11 not exceed $45,000 for Bond Counsel and shall be payable upon completion af #he financing (or each phase therea fl when we deliver the appraving apinion. If an official staternent is required and we are requested to act as Disclosure Caunsel, an additional fee not to excaed $ i O,b00 would be payable. Tf no financing is consummated, our fee for time and expenses incur~'~'ed t~ the date of terrnination of the financing would be payable at that time, Following the closing, we wili provide ths City with a final transcript. With respect ta maintenance of docume~tation subsequent to the clasing, our Firrn will retain our currespondence ~le and a final transcript with the originals {ar copies thereo fl of' the documents that are nece,ssary for clasing the issue. When the Bonds have been retired, we will destroy the e~ltire file other than au~r approving opinion. The purpose far advising you of our internal pracedures is ta a11aw yau and yaw attanaey to make an independent determmation as to which other materials or drafts need to be maintained in your files and which may be discarded. -3- If the terms af this e~gagement are consistent with yaur understanding of our employment and are acceptable ta you, please execute the acceptance clause at the end hereof and return an executed cop~ to me for our file. If you have any questions, piease feel free to call Jim Snyder at 312-72d-7I27. 'W'e look forward to working with you ar~d other representatives of the City. Very truty yours, ICE MILLER LLP s Sny r Ac ted b and on behatf of the City of Canton, Fulton County, Illinois, this day pf ~ 2011. City of Can~ton, Fulton unty, ~1linais / . ~ B~r: ' Mayar JMS jp -4- ~ EXHIBIT B ENGAGEMENT LETTER OF D.A. DAVIDSON & CO. Ru~:N S~~u~T~s A Division of '~`~.nn ~ c~~ ~t L./(lYlt1~7 U( Vl/ member SIPG September 14, 20 ] l City of Canton, Illinois City Council c/o City Administrator Jim Snider 2 N Main St Canton, Illinois 61520 RE: Letter of Intent - Proposed General Obligation Alternate Revenue Source Bonds, Series 2011 Dear City Council: It is anticipated that the City of Canton, Illinois (the "City") through its City Council (the "Council") will authorize and issue up to $7,000,000 General Obligation Alternate Revenue Source Bonds (the "Bonds") in an effort to pay costs of the City pertaining to various municipal improvements and refinancing the 2009 Debt Certificates. The Council desires to engage the services of Ruan Securities, a Division of D.A. Davidson & Co., its successors or assigns ("Ruan Securities") regarding the process leading to the sale of the Bonds. Section 1. Arran~ements Before Sale. There are several arrangements, which must be made before any sale of Bonds can occur. These arrangements include, but are not limited to: Structuring. Once a financing structure has been selected by the Council, the terms of the debt (such as the sources of payment, the nature of the security, maturity schedule, the rights of redemption prior to maturity, etc.) must be determined, taking into account both the interests of the City and the expectations of investors. Legal Counsel. Legal counsel will be selected and engaged by the City to prepare the legai proceedings necessary to authorize the debt should an underwriting become necessary, to assist in the preparation of disclosure documents necessary to sell the securities, and to render certain approving opinions when the securities are delivered. All fees and expenses of counsel to the City will be paid by the City, regardless of whether the Bonds are issued. Ratings. The ratings, which may be obtained for the Bonds, are likely to have a significant effect on the rates of interest at which the Bonds can be sold. If it is determined to be in the City's best interest to obtain these ratings, Ruan Securities will assist the City in preparing and submitting applications to the rating agencies along with detailed information about the City, the debt and any credit enhancement. Credit Enhancement. By providing investors with a guarantee of timely payments on the debt, for even a limited time period, the purchase of credit enhancement can produce a net reduction in financing costs. Ruan Securities will assist the City in investigating the availability of bond insurance, letters of credit or other forms of credit enhancement and assist the City in determining the cost effectiveness of these products. Ruan Securities, a Division of D.A. Davidson & Co. 515 East Locust, Suite 200 • Des Moines, lowa 50309 •(515) 471-2700 •(800) 642-5082 • Fax (515) 471-2702 w~ti~v. dadav i d s o n. co m D.A. Davidson & Co. Member SIPC City of Canton, Illinois Letter oflntent Page 2 of 3 Disclosure to Investors. In connection with the issuance of the Bonds by the City and the sale and delivery of securities to ultimate investors, material information about the City and the transaction must be compiled in a disclosure document for distribution to prospective purchasers. As set forth above under Legal Counsel, the City and Ruan Securities will engage the services of counsel to assist in the preparation of such disclosure documents and advise the City and Ruan Securities about sales practices, regulatory requirements, and security matters. In contemplation of submitting an offer to underwrite the Bonds, we will assist the City in making these arrangements. By accepting this letter and accepting our assistance in making these arrangements, the City will not incur any obligation except to pay from the Bond proceeds the expenses as provided in Sections 2 and 3 of this letter. Our active participation in making these arrangements should not and cannot be construed by the City as a promise to underwrite the Bonds or as an assurance that the Bonds can be sold. Section 2. Underwritin~. At such time as the arrangements for the sale of the securities have been successfully completed, it is our intention to submit for consideration by the Council our offer to underwrite the Bonds. Our offer will be submitted in the form of a~ond Purchase Agreement and will set forth terms of the purchase such as the rates of interest, the amount of any original issue premium or discount, our underwriting compensation (not to exceed 1.5 percent of the principal amount of the Bonds and not less than $10,000), and the date and conditions for delivery of the Bonds. Until the City accepts our offer, there will be no obligation for this firm to purchase the Bonds from the City. In consideration for our work performed pursuant to Section 1, above, the City agrees that it will not consider other underwriting proposals unless Ruan Securities has first declined to underwrite the transaction on terms and conditions acceptable to the City. Section 3. Pavment of Exnenses. Expenses will be incurred to make the arrangements for the sale of the Bonds before their delivery and the receipt of proceeds by the City but such expenses will not be obligations of the City unless advance authorization has been obtained from the City. All of the expenses incurred in connection with the authorization, sale, and delivery of the Bonds, including rating application, letter of credit fees and related expenses, insurance premiums, bond, and disclosure counsel and our out-of-pocket expenses (not to exceed $1,500) are expected to be paid from the proceeds derived upon sale of the Bonds. Section 4. Not an Offer to Buv. This letter of intent is not an offer to purchase or a guarantee that we will make an offer to purchase the Bonds or any of the City's Bonds in the future. Our offer to purchase, if made, will be subject to the same terms and conditions as all other financings that Ruan Securities brings to the market. Those terms and conditions include, but are not limited to, the following: (a) performance of due diligence satisfactory to Ruan Securities; (b) approval from Ruan Securities' internal commitment committee; (c) execution of a Bond Purchase Agreement; and (d) the market's ability and appetite to embrace such a financing transaction given then prevailing market conditions and rates. Section 5. Term of Letter A~reement. This letter agreement shall remain in full force and effect until the Bonds are issued or such time as the Council notifies Ruan Securities in writing of their intent to terminate this letter agreement, provided that any such action or notice shall provide no less than 30 days notice of such. Ruan Securities may resign as investment banker to the City by providing written notification with no less than 30 days notice to the City. Section 6. Choice of Law: The parties hereby agree that this Letter of Intent will be governed by the laws of Illinois. RUAN SE~tTRiTIES D.A. Davidson & Co. member SIPC Ciry of Canton, Illinois Letter oflntent Page 3 of 3 Section 7. Acceptance. The Mayor of the City may indicate the Council's desire to proceed with the delivery of these investment banking services upon the basis set forth in this letter by executing one copy of this letter and returning it to us. Respectfully submitted, Ruan Securities, a Division of D.A. Davidson & Co. G~~'`° Scott Stevenson Senior Vice President - Public Finance ACCEPTED this ~ day of ~C~ 201 l. City of Canton, Illinois Mayor RUAN SECURITIES ^ D.A. Davidson & Ca. mamDer SIPC ~ EXHIBIT C ENGAGEMENT LETTER OF: JACOB & KLEIN, LTD., THE ECONOMIC DEVELOPMENT GROUP, LTD., AMERICAN BOND CORPORATION, LTD. JACOB 1 ~ KLEINLTD ~ Attorneys at Law September 19, 2011 City of Canton Mayar and City Aldermen Go Mayor Kevin R. Meade 2 N. Main Street Canton, IL 61520 RE: Canton I-H Downtown TIF District - 2011 Bonds Proposed Engagement Agreement Letter Jacob & Klein, Ltd.; The Economic Development Group, Ltd.; American Bond Corporation, Ltd. Dear Mayor Meade and City Aldermen: After analysis and study undertaken by our Companies and discussions with City of Canton ("City") officials, the City expects to authorize and issue Alternative Revenue T~ Increment Finance Bonds, Series 2011, to fund certain public infrastructure improvements in the Canton I- H Downtown TIF District and to refund certain previously issued Debt Certificates due on December 1, 2011. The Total Bond Issue is estimated to be an amount not to exceed $7.0 Million. The City Administrator, Mayor and City Aldermen are aware of our Staffs' discussions with the City of desired public infrastructure improvements; development of alternative payment possibilities; preparation of alternative projections; and meetings with the City to present and discuss alternative payment possibilities. In addition, we spent time and effort in locating, discussing, and negotiating with national underwriters who have the ability to sell these types of TIF Revenue Bonds in the existing credit markets at the most advantageous price and interest rate. In order to facilitate the issuance of these Bonds, we ask that the City enter into this Engagement Agreement Letter with our Companies: Jacob & Klein, Ltd.; The Economic Development Group, Ltd., and American Bond Corporation, Ltd. to compensate them for the services aiready provided and for services to be provided which are necessary for the issuance of the Bonds. Those services are listed on the attached Exhibit A which is a part hereof. We will coordinate with the City the engagement of other professionals to accomplish the authorization, structuring, issuance and sale of the bonds. In addition, we will assist in and coordinate efforts to obtain a bond rating for the City if deemed advantageous and/or necessary. Thomas N. Jacob Stephanie L. Sandre Herbert J. Klein 1701 Clearwater Ave. ~ Bloomington, IL 61704 925 Shooting Park Rd., Suite A ~ Peru, IL 61354 ph. 309.664.7777 ~ fa~c 309.664.7878 ph. 815.223.7550 ~ faac 815.223J577 www jacobkleinlaw.com Mayor & City Aldermen - City of Canton Page 2 The fees of all our Companies, for all services including a11 of the work done to date, will not exceed $55,000. These fees are contingent on the sale of the bonds. As a part of our duties, we will assist the City in selecting its Bond Counsel and Underwriters. Our recommended experts' Engagement Letters are to be provided separately. Bond Counsel: As a part of these efforts, our companies have worked over the last couple years to secure national bond counsel advice concerning the effective use of TIF Revenue. Bond counsel were involved in reviewing the approved eligible project costs, as well as the tax structure that would produce the lowest interest costs to the City. This structure is in place if the City moves forward and acts on the Letter provided to engage them. They will issue an Attorney's Opinion Letter as to the tax status of the Bonds upon which the City and purchasers may rely. Our recommended Bond Counsel, Ice, Miller LLP, will submit its Engagement Letter to the Ciry for approval. That firm has extensive experience in these types of bonds. Underwriting and Marketing: In addition, we have brought together other professionals who have lent their expertise to market these bonds for the City. D.A. Davidson & Co. will submit its Engagement Letter to the City. We look forward to working on this project for the City. Your ery truly, r Thomas N. cob for: Jacob & Klein, Ltd. The Economic Development Group, Ltd. American Bond Corporation, Ltd. Accepted by and on behalf of the City of Canton this ~ day of , 2011. City of Canton By: evin R. Mea e, Mayor EXHIBIT A SERVICES AVAILABLE FOR TAX INCREMENT BOND FINANCING Jacob & Klein, Ltd., The Economic Development Group, Ltd., and The American Bond Corporation, Ltd., together can provide valuable assistance to cities and villages considering ta~c increment bonds and other forms of economic development debt obligations. The redevelopment and corresponding growth in assessed value of real estate can provide a unique and valuable opportunity for the municipality to finance a wide variety of public projects and improvements and/or to further assist with and stimulate continued economic growth. Often, the opportunities available are undiscovered until an evaluation is completed. These firms can combine their expertise and experience to assist the financing process through innovative and proven techniques. Services * provided include the analysis, coordination, and production of documents in conjunction with other professionals: 1. Perform a debt analysis of current municipal T'IF obligations; 2. Perform a cash flow analysis for the municipality as related to TIF funds and related funds as necessary; 3. Perform an analysis of the increment available with forward projections based on term of TIF and existing obligations thru development, redevelopment, and intergovernmental agreements; 4. Analyze existing development and redevelopment agreements regarding covenants, terms, and possible buyout options and financial savings; 5. Evaluate TIF Redevelopment Area, Plan and Projects for compliance with statutory requirements and consistency with debt obligations under consideration; 6. Evaluate and recommend any TIF amendments advisable or necessary; 7. Evaluate, advise, and recommend as to TiF legislative extension requests; 8. Assist with preparation of offering statement with community profile information; 9. Assist with ensuring proper taxing and assessed valuation of properties; 10. Establish financing timeline coordinated with municipaliTy for any TIF action to be undertalcen; 11. Assist the appropriate municipal officials, staff, architects, engineers, and consultants to identify projects to be financed and the scope of such projects; 12. Negotiate modifications to existing development, redevelopment, and intergovernmental agreements as necessary; 13. Coordinate and consult with other professionals needed for the fmancing process (bond counsel, underwriters, marketing agents, financial analysts, etc.); 14. Assist in determining the most appropriate type of Bond funding; 15. Assist with evaluation of proposals of various underwriters; 16. Assist the municipality with obtaining a credit rating when advisable; ~ . 17. Provide opinion letter as to taa~ increment financing districts; 18. Attend municipal meetings to explain and answer questions regarding the undertalcing; 19. Coordinate the preparation, execution and ultimate closing of the financing documents. * All legal services listed shall be provided by Jacob & Klein, Ltd. The Economic Development Group and T'he American Bond Corporation do not provide legal services. Thomas N. Jacob is principal owner of all the entities and City enters this letter voluntarily and with informed consent and after the opportunity to consult with independent counsel. The total fees and costs paid hereunder will be billed separately, will not be duplicated, and will not exceed the amount stated.