Number
011181
Version
SUBSTITUTE 2
Reference
001079
Sponsor
THE CHAIR
Title
Substitute resolution authorizing the issuance of Industrial Development Revenue Bonds (Aero Milwaukee, LLC Project).
Analysis
This substitute resolution provides details relating to and authorizes the issuance of industrial development revenue bonds in an aggregate amount not to exceed $13,500,000 to finance costs of the acquisition of a long-term leasehold interest in an air cargo sorting and transfer facility (the “Facility”) located in the City of Milwaukee at General Mitchell International Airport and the rehabilitation and improvement of the Facility. The Facility is located on land owned by the County of Milwaukee and leased to Aero Milwaukee, LLC, a Delaware limited liability company, pursuant to a ground lease with a remaining term of 18 years and one 5-year renewal option, which option Aero Milwaukee, LLC has agreed to exercise. During the term of the ground lease, the Facility will be operated by Aero Milwaukee, LLC and managed by Aeroterm US, Inc., an affiliate of Aero Milwaukee, LLC. The Facility will become property of Milwaukee County upon termination of the ground lease between the County and Aero Milwaukee, LLC.
Body
Whereas, The City of Milwaukee, Wisconsin (the “Municipality”), is a municipal corporation organized and existing under and pursuant to the laws of the State of Wisconsin and is authorized by Section 66.1103, Wisconsin Statutes, as amended (the “Act”):
a. To issue industrial development revenue bonds to finance all or any part of the costs of the construction, equipping, reequipping, acquisition, purchase, installation, reconstruction, rebuilding, rehabilitation, improving, supplementing, maintaining, repairing, enlarging, extending or remodeling of a project which qualifies under the Act and the improvement of the site therefor.
b. To enter into a revenue agreement with an eligible participant pursuant to which the eligible participant agrees to cause said project to be constructed and to pay the Municipality an amount of funds sufficient to provide for the prompt payment when due of the principal of and interest on said industrial development revenue bonds; and
Whereas, Aero Milwaukee, LLC (the “Borrower”), has requested the Municipality to issue industrial development revenue bonds to finance a project on behalf of the Borrower as the eligible participant under the Act; and
Whereas, The Common Council of the City of Milwaukee (the “Common Council”) has found and determined that said project consisting of the acquisition of a long-term leasehold interest in an air cargo sorting and transfer facility (the “Facility”) and the rehabilitation and improvement thereof (the “Project”) is a qualified “project” within the meaning of the Act and that the Borrower is an “eligible participant” within the meaning of the Act; and
Whereas, At least 30 days prior to entering into the revenue agreement, the Borrower shall have given notice of intent to enter into the revenue agreement and have provided information on the number of jobs the Borrower expects to be eliminated, created or maintained on the project site and elsewhere in this State by the Project, to the Department of Commerce of the State of Wisconsin and to any collective bargaining agent in the State of Wisconsin with whom the Borrower has a collective bargaining agreement; and
Whereas, The Municipality has received from the Department of Commerce of the State of Wisconsin an estimate of the net number of jobs expected to be eliminated, created or maintained as a result of the Project; and
Whereas, On December 15, 2000, the Common Council adopted an Initial Resolution pursuant to the Act (File No. 001079) wherein it was resolved that the Municipality would issue industrial development revenue bonds to finance the Project, subject, however, to the satisfaction of certain conditions including the approval by the Common Council of the terms of the bonds and the revenue agreement described in said Initial Resolution; and
Whereas, On January 12, 2001, notice of the adoption of the Initial Resolution was published in accordance with Section (10)(b) of the Act, and no sufficient petition was filed with the City Clerk requesting a referendum on the question of the issuance of said industrial development revenue bonds; and
Whereas, On January 18, 2002, a public hearing was held in the First Floor Board Room of 809 North Broadway and conducted in a manner that provided a reasonable opportunity to be heard for persons with differing views on both the issuance of the revenue bonds and the location and nature of the proposed facility to be financed with the revenue bonds; and
Whereas, Notice of the public hearing, substantially in the form attached to this Common Council File as Exhibit A, was published by one insertion in the official newspaper of the Municipality for the publication of notices pursuant to Chapter 985 of the Wisconsin Statutes no less than 14 days before the scheduled date of the hearing; and
Whereas, The official newspaper is a newspaper of general circulation in the locality of the Project; and
Whereas, The Common Council is an elected legislative body of the Municipality; and
Whereas, The Borrower has now requested that the Municipality provide for the issuance of industrial development revenue bonds in an aggregate principal amount not to exceed $13,500,000 upon the terms set forth in this Resolution (as herein further described, the “Bonds”); and
Whereas, In connection therewith the Borrower has presented the Municipality with proposed documentation for the Bonds, as follows:
a. A Bond Purchase Agreement, to be dated the date the Bonds are sold (the “Bond Purchase Agreement”), to be entered into by and among the Municipality, the Borrower and Salomon Smith Barney (the “Underwriter”), setting forth the terms and conditions on which the Municipality will sell and the Underwriter will purchase the Bonds.
b. A Trust Indenture, to be dated as of February 1, 2002, or such later date as shall be approved by the parties executing the same (the “Indenture”), and entered into between the Municipality and the corporate trustee hereinafter designated (the “Trustee”), providing for the creation of the Bonds, the terms thereof and the security therefor.
c. A Financing Agreement, to be dated as of February 1, 2002, or such later date as shall be approved by the parties executing the same (the “Financing Agreement”), and entered into between the Municipality and the Borrower providing for a loan of the Bond proceeds to the Borrower on repayment terms scheduled to provide the Municipality with revenues sufficient to retire the Bonds in accordance with their terms.
d. Two Promissory Notes (the “Senior Note” and the “Subordinate Note,” respectively), to be dated the date of original issuance of the Bonds (the “Promissory Notes”), and issued by the Borrower pursuant to the Master Indenture (defined below) and a supplemental indenture thereto as evidence of and to secure the borrowing provided for in the Financing Agreement. The aggregate principal amount of the Senior Note and the Subordinate Note shall not exceed $13,500,000.
e. A Master Trust Indenture, to be dated as of February 1, 2002, or such later date as shall be approved by the parties executing the same (the “Master Indenture”), to be entered into among the Borrower and each of the other initial members of the obligated group (the “Obligated Group”) to a pooled financing and Bank One, N.A. (the “Master Trustee”), providing for the security of the Bonds and all other revenue bonds being issued as a part of such pooled financing through the issuance of notes as joint and several obligations of the members of the Obligated Group.
f. A First Supplemental Master Indenture, to be dated as of February 1, 2002, or such later date as shall be approved by the parties executing the same (the “Supplemental Indenture”), to be entered into among the Borrower and each of the other initial members of the Obligated Group and the Master Trustee, providing for the issuance of the Senior Note and the Subordinate Note.
g. A Preliminary Official Statement (the “Preliminary Official Statement”) for the Bonds and the bonds to be issued by the other members of the Obligated Group as part of the pooled financing described above; and
Whereas, In accordance with the Act, this Resolution and the aforesaid instruments and documents, the Bonds and interest thereon shall never constitute an indebtedness of the Municipality within the meaning of any State constitutional provision or statutory limitation, shall not constitute or give rise to a pecuniary liability of the Municipality or a charge against its general credit or taxing powers, and shall not constitute or give rise to any personal liability of any member of the Common Council or of any officials or employees of the Municipality on the Bonds or for any act or omission related to the authorization or issuance of the Bonds; and
Whereas, It is in the public interest of the Municipality to encourage and promote the development of projects such as the Project to realize public benefits such as, but not limited to, the provision and retention of gainful employment opportunities for the citizens of the Municipality; the stimulation of the flow of investment capital into the Municipality with resultant beneficial effects on the economy in the Municipality; and the preservation and enhancement of the Municipality's tax base; and
Whereas, The development of the Project and the issuance of the Bonds to finance the Project as herein recited will, in the judgment of the Common Council, serve the intended accomplishments of public purpose and in all respects conform to the provisions and requirements of the Act; now, therefore, be it
Resolved, By the Common Council of the City of Milwaukee that:
1. Determinations. It has been found and determined and is declared:
a. That the Project is a qualified “project” under and for the purposes of the Act.
b. That the costs of the Project, including the acquisition of the leasehold interest in the Facility, which Facility is being substantially improved or rehabilitated in connection with the project as required by the Act, and the costs of such improvement and rehabilitation, are eligible for financing under the Act.
c. That the Borrower is a qualified “eligible participant” under and for the purposes of the Act.
d. That the Financing Agreement meets the requirements of a “revenue agreement” under and for the purposes of the Act.
e. That the establishment of a debt service reserve fund as provided in the Indenture and the funding of such reserve fund initially with a portion of the Bond proceeds (or with a letter of credit) is deemed advisable and approved.
f. That the payments required to be made by the Borrower under the Financing Agreement are sufficient in amount to pay when due the principal of, premium, if any, and interest on the Bonds.
g. That the Borrower has agreed to a Disadvantaged Business Enterprise Agreement (the “Agreement”) with the Municipality, in a form satisfactory to the Municipality, providing for the Borrower to make a “good faith effort,” as defined in the Agreement, to utilize certified “Disadvantaged Business Enterprises,” as defined in the Agreement, in the construction of the Project.
h. That all conditions set forth in said Initial Resolution have been satisfactorily met or provided for.
2. Authorization to Borrow and Lend. The Municipality shall borrow, but only in the manner herein recited, a sum not to exceed $13,500,000 for the purpose of financing the Project, funding a reserve fund, as needed, and paying the costs incident to the issuance of the Bonds, other than attorneys fees. Said borrowing shall be accomplished through the sale of the Bonds issued pursuant to the Act. The Municipality shall lend a sum not to exceed $13,500,000 to the Borrower pursuant to the terms of the Financing Agreement, which borrowing shall be evidenced and secured by the Promissory Notes. The Financing Agreement is approved as necessary to effectuate the purposes of the Act. The Mayor, the City Clerk and the City Comptroller are authorized and directed for and in the name of the Municipality to execute and deliver the Financing Agreement in the form thereof presented herewith or with such insertions therein or corrections thereto as shall be approved by them consistent with this Resolution, their execution thereof to constitute conclusive evidence of their approval of any such insertions and corrections.
3. Designation, Denomination, Tenor and Maturity of Bonds Created for Issuance. The Bonds shall be issued in an aggregate principal amount not to exceed $13,500,000, and designated as follows:
CITY OF MILWAUKEE, WISCONSIN, Senior Air Cargo Revenue Bonds, Series 2002, with such further identifying caption as set forth in the Indenture, (the “Senior Bonds”).
The Senior Bonds shall mature as set forth in the Indenture serially or by sinking fund on January 1 of each year, over a period not to exceed 23 years, beginning January 1, 2003, and shall bear interest at rates that will not exceed 8.00 percent.
CITY OF MILWAUKEE, WISCONSIN, Subordinate Air Cargo Revenue Bonds, Series 2002, with such further identifying caption as set forth in the Indenture, (the “Subordinate Bonds”).
The Subordinate Bonds are term bonds subject to mandatory sinking fund redemption as set forth in the Indenture on January 1 of each year, over a period not to exceed 23 years, beginning January 1, 2003 and shall bear interest at rates that will not exceed 10.00 percent.
The Senior Bonds shall be issuable as fully registered bonds in denominations of $5,000 or any multiple thereof. The Subordinate Bonds shall be issuable as fully registered bonds in authorized denominations as are provided in the Indenture. The Senior Bonds and the Subordinate Bonds (collectively, the “Bonds”) shall, when issued, be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company, New York, New York (“DTC”). The beneficial owners of the Bonds will not receive physical delivery of bond certificates. Beneficial ownership will be evidenced by book-entry only. Bonds and the interest thereon shall be transferable by and shall be payable to the registered owners thereof in the manner and with the effect provided in the Indenture. The principal of, premium, if any, and interest on the Bonds shall be payable in lawful money of the United States of America at the designated corporate trust office of the Trustee, as paying agent, or the office of any successor or additional paying agent designated by the Municipality and approved by the Borrower.
The Bonds shall be issued in the form therefor as set forth in the Indenture, with such insertions therein as shall be necessary to comply with the terms of this Resolution and with such corrections therein, if any, as the approving bond attorney may require for conformity with the terms of this Resolution, the Indenture and the Act.
4. Execution and Authentication of Bonds. The Bonds shall be executed on behalf of the Municipality with the facsimile or manual signature of its Mayor and its City Clerk, countersigned with the facsimile or manual signature of its City Comptroller and shall have impressed, imprinted or otherwise reproduced thereon an official seal of the Municipality or a facsimile thereof. No Bond shall be issued unless first authenticated by the Trustee (as fiscal agent and bond registrar), to be evidenced by the manual signature of an authorized signatory of the Trustee on each Bond.
5. Designation of Trustee. The Municipality designates and appoints Bank One, N.A. to perform the functions of Trustee under the Indenture.
6. Bonds as Limited Obligations. The Bonds and interest thereon shall never be or be considered a general obligation of the Municipality or an indebtedness of the Municipality within the meaning of any State constitutional provision or statutory limitation and shall not constitute or give rise to a pecuniary liability of the Municipality or a charge against its general credit or taxing powers.
7. Source of Payment; Pledge of Revenues. The Bonds shall be limited obligations of the Municipality payable by it solely from revenues and income derived by or for the account of the Municipality or the Bonds from or for the account of the Borrower pursuant to the terms of the Financing Agreement, the Promissory Notes and the Indenture and from or for the account of the Borrower or the other members of the Obligated Group pursuant to the Master Indenture; including without limitation: (i) payments by the Borrower pursuant to the terms of the Financing Agreement and the Promissory Notes or payments by the other members of the Obligated Group pursuant to the terms of the Master Indenture, and (ii) all cash and securities held from time to time in the trust funds under the Indenture and, to the extent provided in the Notes, the Master Indenture, and the investment earnings thereon; but excluding any amounts derived by the Municipality for its own account pursuant to the terms of the Financing Agreement and excluding cash and securities in the Rebate Fund under the Indenture and Master Indenture.
As security for the payment of the principal of, premium, if any, and interest on the Bonds, the Municipality shall pledge and assign to the Trustee all of its right, title and interest in and to the Promissory Notes and the “Trust Estate” described in the Indenture other than Unassigned Rights as that term is used in the Indenture.
8. Redemption of Bonds Prior to Maturity. The Bonds shall be subject to mandatory and optional redemptions prior to maturity, as provided in the Indenture.
9. Trust Funds. The trust funds and accounts created under the Indenture and Master Indenture to be held in the custody of the Trustee and Master Trustee, respectively, and applied for the uses and purposes provided in the Indenture and Master Indenture are authorized and approved.
10. Investment of Trust Funds. Any moneys held as a part of the trust funds held by the Trustee and Master Trustee under the Indenture and Master Indenture, respectively, may be invested and reinvested by the Trustee and Master Trustee in “Investment Securities” in accordance with, and as defined in, the Indenture and Master Indenture, respectively.
11. Approval of Documents. The terms and provisions of the Promissory Notes, the Indenture, the Master Indenture and the Supplemental Indenture are approved. The terms and provisions of the Preliminary Official Statement are approved, but only to the extent they describe the Municipality, its litigation status and the Bonds. The Mayor, the City Clerk and, where appropriate, the City Comptroller are authorized for and in the name of the Municipality to execute and deliver the Indenture and the Official Statement in the form thereof presented herewith, or with such insertions therein or corrections thereto as shall be approved by them consistent with this Resolution and the terms of the Act, their execution thereof to constitute conclusive evidence of their approval of any such insertions and corrections.
12. Determination of Revenue Payment. (a) The amount necessary in each year to pay the principal of, premium, if any, and interest on the Bonds is the sum of (i) the amount of principal becoming due in such year, including the principal amount of the Subordinate Bonds redeemed from mandatory sinking fund payments in such year, in accordance with paragraph 3 of this Resolution (as reduced from time to time by reason of prior redemptions); plus (ii) the principal amount of Bonds to be redeemed in such year in accordance with a call for redemption made in accordance with paragraph 8 of this Resolution and the Indenture, plus the premium, if any, payable with respect thereto; plus (iii) the amount of interest on the Bonds becoming due in such year in accordance with the interest rates set forth in paragraph 3 of this Resolution. (b) The amount necessary in each year to pay into the debt service reserve fund established pursuant to the Indenture is the amount sufficient to cause the total amount on deposit in such fund to be no less than the Debt Service Reserve Requirement, as defined in the Indenture, until such time as Additional Bonds are issued; and upon the issuance, if any, of Additional Bonds, the amount required to meet the Debt Service Reserve Requirement of the Master Indenture.
13. Award of Bonds; Execution and Delivery of the Bond Purchase Agreement. The Borrower has negotiated for the sale of the Bonds to the Underwriter at a discount not to exceed 2.0 percent of the principal amount of the Bonds. Given the purposes of the financing and the involvement of the Municipality therewith, it is the determination of the Common Council that the Bonds shall be awarded to the Underwriter at the discount aforesaid with delivery to follow in the manner, at the time and subject to the conditions set forth in the Bond Purchase Agreement. As evidence thereof the Mayor, the City Clerk and, where appropriate, the City Comptroller are authorized and directed for and in the name of the Municipality to execute, affix with the official seal of the Municipality and deliver the Bond Purchase Agreement in the form presented herewith, or with such insertions therein or corrections thereto as shall be approved by the Mayor and the City Clerk consistent with this Resolution and the terms of the Act, their execution thereof to constitute conclusive evidence of their approval of any such insertions and corrections.
14. Execution and Delivery of the Bonds. The Mayor, the City Clerk and the City Comptroller are authorized for and in the name of the Municipality to execute the Bonds in the manner authorized by paragraph 4 of this Resolution. Subject to the terms and conditions of the Bond Purchase Agreement, the Municipality shall deliver the Bonds to the Underwriter.
15. General Authorization. The Mayor and the City Clerk and the appropriate deputies and officials of the Municipality in accordance with their assigned responsibilities are each authorized to execute, deliver, publish, file and record such other documents, instruments, notices (including, without limitation, the Internal Revenue Service Form 8038) and records and to take such other actions as shall be necessary or desirable to accomplish the purposes of this Resolution and to comply with and perform the obligations of the Municipality under the Bond Purchase Agreement, the Bonds, the Financing Agreement and the Indenture.
In the event that said officials shall be unable by reason of death, disability, absence or vacancy of office to perform in a timely fashion any of the duties specified herein (such as the execution of the Bond Purchase Agreement, the Bonds, the Financing Agreement or the Indenture), such duties shall be performed by the official succeeding to such duties in accordance with law and the rules of the Municipality.
16. Effective Date; Conformity. This Resolution shall be effective immediately upon its adoption and approval. To the extent that any prior Resolutions of the Common Council are inconsistent with the provisions hereof, this Resolution shall control and such prior Resolutions shall be deemed amended to such extent as may be necessary to bring them in conformity with this Resolution.
17. Publication of Notice. Notice of the sale of the Bonds, in the form attached to this Common Council File as Exhibit B, shall be published in the official newspaper of the Municipality as a class 1 notice under Chapter 985 of the Wisconsin Statutes. The City Clerk of the Municipality shall obtain proof in affidavit form, of such publication, and shall compare the notice as printed with the form attached to this Common Council File as Exhibit B to ascertain that no mistake had been made therein.
18. Public Approval. The Common Council, on behalf of the Municipality, approves the issuance of the Bonds for the purposes of Section 147(f) of the Internal Revenue Code of 1986, as amended.
19. Issuance Fee. Issuance of the Bonds is expressly conditioned on the Municipality being paid, upon issuance, a fee equal to 0.5 percent of the principal amount of the Bonds issued, less any application fee previously paid to the Municipality.
20. Payment In Lieu of Taxes. In the event that all or any part of the Project becomes exempt from the payment of general real estate taxes, the Borrower shall make or cause to be made, by a party reasonably acceptable to the Municipality, a legally binding agreement in form and substance acceptable to the Municipality to pay annually an amount equal to the general real estate taxes which would be payable on the Project but for such exemption. This requirement shall be set forth in the Loan Agreement.
Drafter
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01/14/02