City Council

COMMON COUNCIL COUNCIL ROOM JUNE 17, 2014 6:00 P.M. The Common Council met in special session, Mayor Mabie presiding. On roll call: all members present. Also present: Ryan Neville, Memorial Medical Center (MMC) Chief Executive Officer and Roger Sneath, MMC Chief Financial Officer. Mayor Mabie stated that the purpose of this special meeting is to open, discuss and act on interest rate proposals to borrow $1.5 million for economic development. City Clerk Roehl opened and read the following loan interest rate proposals: Citizens State Bank 3.25% for ten years BMO Harris Bank Will unfortunately not be submitting a proposal. This is not a credit decision, but due to the short time frame from proposal date to required closing date. Associated Bank 3.54% for seven years on a ten year amortization schedule, then rate adjusted for the three years remaining. Nicolet Bank 3.05% for five years on a ten year amortization schedule. Discussion followed on a lower rate (3.05%) for a shorter period of time versus a slightly higher rate (3.25%) for the full period of time, rates increasing in the future, etc. City Attorney Wachsmuth stated that the Economic Development Commission has recommended to proceed with the loan request proposals. Now that the City has received the proposals, a selection can be made. Then the Economic Development Commission should meet to make a recommendation on the economic development loan to MMC. The Economic Development Commission has set the economic development loan interest rates on prior loans. At the May 27, 2014 Common Council meeting, MMC Board Member Gary Weirauch had offered to bump the rate the City received by a quarter of a percent (0.25%). Discussion continued. Motion Neville, second Horn, that the loan interest rate from Citizen’s State Bank for ten years at 3.25% with no prepayment penalties or fees be accepted for the Economic Development – Memorial Medical Center loan. On roll call: Council Member Neville – Aye, Council Member Horn – Aye, Council Member Glassbrenner – Aye, Council Member Weiers – Aye, Council Member Quicker – Abstained. 4 – Aye, 0 – Nay, 1 – Abstained. Motion carried. Council Member Weiers asked if MMC would be using the money for operations. Roger Sneath replied that the long term purpose is to purchase equipment, but MMC needs the cash for liquidity purposes initially. City Attorney Wachsmuth reported that the title work on the real estate has been ordered, but not yet received; a satisfaction has been received from a prior mortgage; real estate not included is the nursing home, Auxiliary Thrift Shop building, and former doctor’s house; and a list of personal property has been received – there are questions on some of the listed items, such as including building improvements. Sneath stated that the collateral is divided into: land, buildings, building improvements, fixed and moveable equipment. The only change since the last financing is the sale of the nursing home in a condominium plat – buildings still have about $7 million left; $1.3 million in moveable equipment; and Accounts Receivable in addition. Sneath asked that the City consider asking for a 0.15% rate add on for soft costs or intangibles (title work fees, attorney or auditor costs, etc.). The consensus of the Council was to refer the Economic Development loan to Memorial Medical Center back to the Economic Development Commission to make a specific loan recommendation with the suggestion of an interest rate of 3.4%. (3.25% + 0.15% add on). Motion Horn, second Neville, to adjourn. All Aye. __________________________________________ Steven J. Mabie ____________________________________ Rex R. Roehl, Clerk ************ RESOLUTION NO. A RESOLUTION FOR BORROWING $1.5 MILLION FOR ECONOMIC DEVELOPMENT WHEREAS, the City of Neillsville, Clark County, Wisconsin (hereinafter called the “City”), is presently in need of funds aggregating $1,500,000.00 for public purpose(s) of: (1) Economic Development –Memorial Medical Center; and WHEREAS, the Council deems it necessary and in the best interests of the City that, pursuant to the provisions of Section 67.12(12), Wisconsin Statutes, the sum of One Million Five Hundred Thousand no/100 Dollars ($1,500,000.00) be borrowed for such purposes upon the terms and conditions hereinafter set forth: NOW, THEREFORE, BE IT RESOLVED, that for the purposes hereinabove set forth, the City, by its Mayor (or City Manager), and Clerk, pursuant to Section 67.12(12), Wisconsin Statutes, borrow from Citizens State Bank of Loyal (“Lender”), the sum of $1,500,000.00, and, to evidence such indebtedness, said Mayor (or City Manager) and City Clerk shall make, execute and deliver to the Lender for and on behalf of the City the promissory note of the City to be dated July 1, 2014 in said principal amount with interest at the rate of Three and Twenty Five Hundredths percent (3.250%) per annum and payable as follows: Installments of Principal and Interest in 19 equal payments of $88,448.96 due on January 1, 2015 and on the same day(s) of each sixth month thereafter, PLUS a final payment of the unpaid balance and accrued interest due on July 1, 2024. All payments include principal and interest. Interest is computed for the actual number of days principal is unpaid on the basis of a 365 day year. Said interest to be payable on the dates set forth above on the outstanding principal balance, with prepayment privileges on any principal or interest payment date on or after July 1, 2014. A copy of the promissory note shall be attached to this resolution. BE IT FURTHER RESOLVED, that there be, and there hereby is, levied on all the taxable property of the City, a direct annual irrepealable tax sufficient in amount to pay the principal and interest on said note as the same becomes due and payable, said tax to be in the following minimum amounts: Amount of Tax To Meet Note Payments Year of Levy (principal and interest) Due On (must be in year(s) prior to due date) $88,448.96 January 1, 2015 & July 1, 2015 For the year 2014 $88,448.96 January 1, 2016 & July 1, 2016 For the year 2015 $88,448.96 January 1, 2017 & July 1, 2017 For the year 2016 $88,448.96 January 1, 2018 & July 1, 2018 For the year 2017 $88,448.96 January 1, 2019 & July 1, 2019 For the year 2018 $88,448.96 January 1, 2020 & July 1, 2020 For the year 2019 $88,448.96 January 1, 2021 & July 1, 2021 For the year 2020 $88,448.96 January 1, 2022 & July 1, 2022 For the year 2021 $88,448.96 January 1, 2023 & July 1, 2023 For the year 2022 $88,448.96 + $88,818.45 January 1, 2024 & July 1, 2024 For the year 2023 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 not when due, the requisite amount shall be paid from other funds of the City then available, which sums shall be replaced upon the collection of the taxes herein levied. In the event that the City exercises its prepayment privilege, if any, then no such direct annual tax shall be included on the tax rolls for the prepayments made and the amount of direct annual tax hereinabove levied shall be reduced accordingly for the year or years with respect to which said note was prepaid.  In each of said levy years, the direct annual tax so levied shall be carried into the tax rolls each year and shall be collected in the same manner and at the same time as other taxes of the City for such years are collected; provided, that the amount of tax carried into the tax roll may be reduced in any year by the amount of any surplus in the debt service account for the note. So long as any part of the principal of, or interest on, said note remains unpaid, the proceeds of said tax shall be segregated in a special fund used solely for the payment of principal of, and interest on, said note. BE IT FURTHER RESOLVED, that there be and there hereby is, established in the treasury of the City, if one has not already been established, a debt service fund, separate and distinct from every other fund, which shall be maintained in accordance with generally accepted accounting principles. 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 be and there hereby is established a separate and distinct account designated as the “Debt Service Account for Promissory Note dated July 1, 2014”, which account shall be used solely for the purpose of paying principal of and interest on said note. There shall be deposited in said account any accrued interest paid on said note at the time it is delivered to the Lender, all money raised by taxation or appropriated pursuant hereto, and such other sums as may be necessary to pay principal and interest on said note when the same shall become due. BE IT FURTHER RESOLVED, that the proceeds of said note shall be used solely for the purposes for which it is issued, but may be temporarily invested until needed in legal investments, provided that no such investment shall be in such a manner as would cause such note to be an “arbitrage bond” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or the Regulations of the Commissioner of Internal Revenue thereunder; and an officer of the City, charged with the responsibility for issuing the note, shall certify by use of an arbitrage certificate that on the basis of the facts, estimates and circumstances in existence on the date of the delivery of the note, it is not expected that the proceeds will be used in a manner that would cause said note to be an “arbitrage bond.” BE IT FURTHER RESOLVED, that the projects financed by the note and their ownership, management and use will not cause the note to be a “private activity bond” within the meaning of Section 141 of the Internal Revenue Code of 1986, as amended, and that the City shall comply with the provisions of the Code to the extent necessary to maintain the tax-exempt status of the interest on the note. BE IT FURTHER RESOLVED, that the City Clerk shall keep records for the registration and for the transfer of the note. 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 presentation of the note at the office of the City Clerk, duly endorsed for the transfer or accompanied by an assignment duly executed by the registered owner or his legal representative duly authorized in writing. Upon such presentation the note shall be transferred by appropriate entry in the registration records and a similar notation, including date of registration, name of new registered owner and signature of the City Clerk, shall be made on such note. BE IT FURTHER RESOLVED, that the note is hereby designated as a “qualified tax-exempt obligation” for purposes of Section 265 of the Internal Revenue Code of 1986, as amended, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. BE IT FURTHER RESOLVED, that the City officials are hereby authorized and directed, so long as said note is outstanding, to deliver to the Lender any audit statement or other financial information the Lender may reasonably request and to discuss its affairs and finances with the Lender.  BE IT FURTHER RESOLVED, that said note shall be delivered to the Lender on or after the date of said note, upon receipt of the total principal amount of the loan evidenced thereby, plus accrued interest, if any, to date of deliver, provided that, if this is a refinancing, the refunding note shall be immediately exchanged for the note being refinanced. __________________________________________ Steven J. Mabie, Mayor __________________________________________ Charles W. Glassbrenner, President of the Council __________________________________________ Rex R. Roehl, Clerk