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HomeMy WebLinkAbout62 of 1981 - A RESOLUTION AUTHORIZING AND INDUCING THE EXECUTION OF A MEMORANDUM OF AGREEMENT WITH PETRO-CHEM, IN Resolution No. City Council By COMMISSIONER Authorizing & inducing execution of a memorandum of agreement with Petro-Chem, Inc. regarding issuance of Industrial Develont Revenue Bonds for construction of a barite processing mill including land acquisition. g)C,v; . C 7 • Salt Lake City, Utah August 4, 1981 The City Council of Salt Lake City, Salt Lake County, Utah met in regular session at its regular meeting place in Salt Lake City, Utah, at 5 :00 p.m. on August 4, 1981 with the following City officials present : Palmer DePaulis Chairman -Gant Mabey Councilmember Sydney Reed Fonnesbeck Councilmember Ronald J . Whitehead Councilmember Alice Shearer 0 Councilmember Ione Davis Councilmember Edward W. Parker Councilmember Also present: Ted L. Wilson Mayor Absent : None After the meeting had been duly called to order the minutes of the preceding meeting read and approved, the following resolution was introduced in writing, read in full, and pursuant to motion duly made by and seconded by , adopted by the following vote: • YEA: NAY: The resolution was then signed by the Chairman in open meeting and recorded by the City Recorder in the official records of Salt Lake City, Utah. The resolution is as follows : RESOLUTION AUTHORIZING AND INDUCING THE EXECUTION OF A MEMORANDUM OF AGREEMENT WITH PETRO-CHEM, INC. , A WYOMING CORPORATION QUALIFIED TO DO BUSINESS IN UTAH, REGARDING THE ISSUANCE OF INDUSTRIAL DEVELOPMENT REVENUE BONDS FOR A COMMERCIAL INDUSTRIAL PROJECT. WHEREAS, Salt Lake City, Utah (the "Issuer") , is an incorporated City authorized and empowered by the provisions of the Utah Industrial Facilities Development Act (the "Act") to issue industrial development revenue bonds or other forms of industrial revenue financing (the "Bonds") for the purpose of acquiring or financing manufacturing, industrial , or commercial projects; and WHEREAS , in order to promote industry and commerce and develop trade by inducing manufacturing, industrial and -2- commercial enterprises to locate or remain in the State of Utah and Salt Lake City, the Issuer proposes to finance the acquisition of land, construction of plant buildings, crude and finished product storage, and railroad siding extension, and acquiring on-site material handling equipment and transportation equipment and related improvements to be located on the real property (the "Project") within the boundaries of the Issuer to be developed and operated by Petro- Chem, Inc., a Wyoming corporation qualified to do business in Utah (the "Company"); and WHEREAS, the Company is reluctant to take steps toward the realization and completion of the Project without satisfactory assurance from the Issuer that the proceeds of the sale of the Bonds of the Issuer will be made available to finance the development of said Project; and WHEREAS, it is deemed necessary and advisable for the development, welfare and prosperity of the Issuer and its inhabitants that the Project be constructed, and that the Issuer take such action as may be required under applicable statutory provisions to authorize and issue its Bonds to finance the cost thereof, to an amount not exceeding $2,000,000; and • WHEREAS, a form of agreement, designated as a "Memorandum of Agreement," has been prepared under which the Company has -3- a • stated its willingness to acquire land, let construction contracts , and commence construction and development of the Project; and WHEREAS , it is considered necessary and desirable and for the best interest of said Issuer that execution of said Memorandum of Agreement be authorized for and on behalf of the Issuer: NOW, THEREFORE, Be It Resolved by the City Council of Salt Lake City, Salt Lake County, Utah, as follows : Section 1. In order to assure the location of this Project within the boundaries of Salt Lake City, Utah, with the resulting public benefits which will flow therefrom, it is deemed necessary and advisable that the Memorandum of Agreement hereinafter referred to , be approved and executed for and on behalf of the said Issuer. Section 2. The Memorandum of Agreement by and between the Company and Salt Lake City, Utah, in the form and with the contents set forth in Exhibit "A" attached hereto, is hereby approved and the execution thereof is hereby authorized. Section 3 . All resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict . Section 4. The City Council considers that this resolution is necessary and in the best interest of the Issuer, and therefore, it shall become effective immediately upon its passage, approval and adoption. -4- Passed and approved this 4th day of August , 1981, by the City Council of Salt Lake City, Utah. hai an ATTEST: City Recorder ( S E A L ) -5- After conduct of other business not pertinent to the above, the meeting was, on motion duly made and seconded, f. adjourned. /tt / Chairman ATTEST: City Recorder ( S E A L ) -6- STATE OF UTAH ) ss. COUNTY OF SALT LAKE ) I, Kathryn Marshall, the duly qualified City Recorder of Salt Lake City, Salt Lake County, Utah, do hereby certify, according to the records of said City in my official possession, that the above and foregoing is a true and correct copy of the minutes of a meeting of the City Council of said City, including a resolution adopted at said meeting, insofar as said minutes pertain to the matters therein set out. IN WITNESS WHEREOF, I have hereunto subscribed my official signature and impressed herein the seal of Salt Lake City, Salt Lake County, Utah this 4th day of August, 1981. City Recorder ( SEAL ) • -7- STATE OF UTAH ) CERTIFICATE OF COMPLIANCE : ss. WITH OPEN MEETING LAW COUNTY OF SALT LAKE ) I, Kathryn Marshall, the duly qualified City Recorder of Salt Lake City, Salt Lake County, Utah, do hereby certify that on the day of , 1981, pursuant to Utah Code Annotated Section 54-4-6 (1953), as amended, there was posted (at least 24 hours prior to the meeting time) at the regular meeting place of the City Council written notice of the regular meeting of the City Council held on August 4, 1981 at said regular meeting place. I further certify that there was delivered to the local news media, at least 24 hours prior to said meeting, a copy of said Notice of Regular Meeting. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of said Municipality this day of August, 1981. City Recorder ( S E A L ) -8- MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT is between the City of Salt Lake City, Salt Lake County, Utah, party of the first part (hereinafter referred to as the "City"), and Petro-Chem, Inc., a Wyoming corporation qualified to do business in Utah, party of the second part (hereinafter referred to as "Company"). 1. Preliminary Statement. Among the matters of mutual inducement which have resulted in the execution of this Agreement are the following: (a) The City is authorized and empowered by the provisions of the Utah Industrial Facilities Development Act (the "Act"), to issue industrial revenue bonds for the purpose of acquiring, or financing the acquisition of, manufacturing, industrial, or commercial properties (as defined in the Act) and of leasing, selling or financing the same to or for others for such rentals and upon such terms and conditions as the City may deem advisable. (b) The purposes of the Act are to achieve greater industrial and commercial development in the State of Utah and to authorize municipalities and counties in the state to finance, acquire, own, lease, or sell projects for the purpose of reducing, abating, or preventing pollution and of protecting and promoting the health, welfare, and safety of the citizens of the state. The Act vests the City with all powers that may be necessary to enable it to accomplish such purposes. Said Act further authorizes the City to issue industrial development revenue bonds, or other forms of municipal industrial development financing, (the "Bonds") for the purpose of carrying out its powers . In furtherance of such purposes the City proposes to finance the acquisition of land, the construction of plant buildings , crude and finished product storage, and railroad siding extension, and acquiring on-site material handling equipment and transportation equipment and related improvements to be located on the real property (the "Building") . The land on which such Building shall be located (the "Site") shall be located within the corporate limits of the City and the acquisition of all or portions of said Site may be financed by the City. The Site, the Building, the equipment and furnishings and any other related improvements (all of which are collectively referred to herein as the "Project") shall be financed by the City based upon the commitment of the Company to repay the obligations underlying the financing arrangements at no cost to the City or the taxpayers residing within the City. (c) In view of rising construction costs , it is considered essential that the Project be completed at the earliest practicable date. The Company is willing to proceed with the Project on the understanding that the proceeds of the -2- sale of the Bonds of the City will be made available to finance the cost of land and building acquisition, construction, furnishing and equipping of the Project. (d) The City, is interested in assisting the Company to effect the financing of the project consistent with the purposes of the Act and hereby advises the Company that, subject to due compliance with all requirements of law and the obtaining of all necessary consents and approvals and to the happening of all acts, conditions and things required precedent to such financing, the City by virtue of such statutory authority as may now or hereafter be conferred, will issue and sell the Bonds in an amount not exceeding $2,000,000 to pay the costs of the Project . 2. Undertakings on the Part of the City. Subject to the conditions above stated, the City agrees as follows : (a) It will authorize or cause to be authorized, the issuance and sale of an issue of the Bonds, pursuant to the terms of the Act as then in force, in an aggregate principal amount not exceeding $2,000,000. Said Bonds shall not be guaranteed by the City nor secured with a pledge of the credit of the City. (b) It will cooperate with the Company's efforts to find a purchaser or purchasers for the Bonds and if purchase arrangements satisfactory to the Company and consistent with its existing borrowing commitments can be made, it will adopt , or cause to be adopted, such proceedings and authorize the execution -3- of such documents as may be necessary or advisable for the authorization, issuance and sale of the Bonds, and the financing of acquisition, construction, furnishing and equipping of the Project by the Company exclusively, all as shall be authorized by law and mutually satisfactory to the City and the Company. (c) The aggregate loan payments to be paid by the Company (i.e. , the loan payments to be used to pay the principal, interest and premium, if any, on the Bonds) payable under the loan agreement whereby the Project shall be financed by the Company shall be such sums as shall be sufficient to pay the principal of and interest and redemption premium, if any, on the Bonds, as and when the same shall become due and payable. (d) It will take or cause to be taken such other acts and adopt such further proceedings as may be required to implement the aforesaid undertakings or as it may deem appropriate in pursuance thereof. 3. Undertakings on the Part of the Company. Subject to the conditions above stated, the Company agrees as follows: (a) It will use all reasonable efforts consistent with its existing borrowing commitments to find one or more purchasers for the Bonds in an aggregate principal amount not exceeding $2,000,000. (b) It will, to the extent deemed by it to be necessary or desirable, enter into a contract or contracts for the -4- acquisition, construction, furnishing and equipping of the Project and at the time of the delivery of the Bonds , it will pledge its interest in the Project toward repayment of the Bonds . After acquisition of the Site, title thereto as well as title to the equipment , furnishings and other personal property in connection with the Project, shall be held in such a manner as to be subject to assessment for real and personal property taxes . (c) Contemporaneously with the delivery of the Bonds it will enter into a loan, purchase or lease agreement with the City under the terms of which the Company will obligate itself to pay the City sums sufficient in the aggregate to pay the principal of and interest and redemption premium, if any, on the Bonds as and when the same shall become due and payable, such agreement to contain provisions required by law and such other provisions as shall be mutually acceptable to the City and the Company, including but not limited to the indemnification of the City by the Company against any costs or damages arising from or connected with the offer and sale of the Bonds and the payment or default in payment of principal or interest of the Bonds . In addition, the Company will pay and reimburse the City from proceeds from the sale of the Bonds for costs advanced and, if agreed upon in advance, for the services of certain staff personnel such as the City Attorney and the Director of Finance and Administrative Services and the City Recorder. In the -5- absence of extraordinary and presently unforeseen expenses it is agreed that the sum of $2,500 including the $1,500 to be paid in accordance with paragraph 4(b) will be sufficient to satisfy said expenses of the City. If the City incurs extraordinary and unforeseen expenses, it will submit an itemized statement of the same to the Company at the time of delivery of the Bonds and the Company will allocate payment for such expenses from Bond proceeds. The $2,500 shall be paid as follows: $1,000 at the time of execution of this Agreement and $1,500 at the time of issuance of the Bonds. If the Bonds are not issued, the $1,500 shall be paid as required by paragraph 4(b). (d) The Company will arrange for purchase of the Bonds by Purchasers which have knowledge and experience in financial and business matters and which are capable of evaluating the merits and risks of purchasing the Bonds. These sophisticated Purchasers will have knowledge of the business and properties of the Company and will have access upon request to the same kind of information as might be used in various registration statements under the Securities Act of 1933, relative to the business of the Company to the extent that the Company possesses such information or can acquire it without unreasonable effort or expense. The Purchasers will acknowledge that they are not relying on the representations of the Issuer with respect to the financial quality of the Bonds and the Purchasers will acknowledge that -6- they rely solely on statements and representations of the Company and on their own knowledge and investigation of the facts and circumstances relating to the purchase of the Bonds ; and that the contents of this subsection will substantially be included in one or more agreements between the Company, the Issuer and/or any Purchasers of the Bonds. However, if the Bonds are sold to the general public the Company will retain the services of an investment banking firm to serve as underwriter and an official statement containing a full and fair disclosure of all pertinent facts will be used in connection with the offering of the Bonds . (e) It will commence construction of . the Project within twelve months from the date of adoption of this Resolution and construction shall be completed within three years from said date unless such deadlines are extended by mutual agreement between the Issuer and the Company. (f) It will take such further action and adopt such further proceedings as may be required to implement its aforesaid undertakings or as it may deem appropriate in pursuance thereof. 4. General Provisions . (a) All commitments of the City under paragraph 2 hereof and of the Company under paragraph 3 hereof are subject to the obtaining of all necessary governmental approvals and the approvals of the appropriate financial officers of the Company and the condition that on or before three years from the date -7- hereof (or such other date as shall be mutually satisfactory to the City and the Company) , the City and the Company shall have agreed to mutually acceptable terms for the Bonds and of the sale and delivery thereof, and mutually acceptable terms and conditions of the agreements referred to in paragraph 3 and the proceedings referred to in paragraphs 2 and 3 hereof. (b) If the events set forth in (a) of this paragraph do not take place within the time set forth or any extension thereof and financing in such amount as shall not exceed $2,000,000 is not arranged for and consummated within such time , the Company agrees that it will reimburse the City for all reasonable and necessary direct out-of-pocket expenses, including reasonable attorney' s fees for the review and/or preparation of documents , which the City may incur at the Company's request arising from the execution of this Agreement and the performance by the City of its obligations hereunder, and this Agreement shall thereupon terminate. In addition the Company will pay the City amounts sufficient to reimburse the City for the review of the initial proceedings and an evaluation of financial information concerning the Company and the Project. At the time of execution of this Agreement the Company will deposit with the City the sum of $1,000 from which the City may draw monies in reimbursement for said initial costs . -8- • • (c) If the Bonds are issued as contemplated by this Agreement, the Company will not expect the Issuer to assume any substantial obligation with regard to administering the proceeds of the Bonds or the construction of the Project , and will arrange for a trustee with an office in Salt Lake City, Utah, an escrow agent or a bond servicing agent to handle all such financial administration, and will handle construction supervision either in its own name or through an affiliated company. The Company will also hold harmless the Issuer from any costs or expenses in connection with the execution of this Agreement , the issuance of the Bonds or the administration of the proceeds thereof, or the construction or use of the Project. IN WITNESS WHEREOF, the parties hereto have entered into this Agreement by their agents thereunto duly authorized as of the 4th day of August , 1981. SALT LAKE CITY, SALT LAKE COUNTY, UTAH By Mayor ( CITY SEAL ) ATTEST: City Recorder -9- PETRO-CHEM, INC., a Wyoming corporation By President ATTEST: Secretary ( SEAL ) -10-