HomeMy WebLinkAbout1980-11-12 81-16 RESOLVE81-16
Introduced by Councilor Weymouth, November 12, 19W
CITY OF BANGOR
(TITLE,) �liesah,Pe - Anxn 1 irrg. _ne city Manager to Execute an Inducement--
a e
Agreement between the City and Bar Harbor Airways, Incorporated Pertaining to
Industrial Revenue Bonds and Autherizing the City Manager to Prepare and Submit
Such
Xfnestrial Revenue Bonds .an.APPllcation..Seeking.Approval.fnr.26e.3ssuevice
of Buch $dusCrial Revenue Bonds
By the City tooth aike sty ofBawpr:
fbFWLVSD, THAT the Bangor City Council, Municipal Officers of the City
of Bangor, naive, hereby authorise the City Manager is execute and deliver,
n behalf of the City, an Inducement Agreement (generally in the form
attached hereto) between the City and Bar Harbor Ain,aye, Iurorpolaxed, its
assigns, which Agreement shall be reviewed and approved by the
City Solicitoup to Five Million Dollars ($5,000,000.00) of inAusurial
revenue bonds for the purpose of assisting with the financing of certain
transportation equipment, to wit: the acquisition of .four roN
29-paa ger No
passenger aircraft and. related spare parts by Bar Harbor Airways, Incorporated,
its successors or assigns.
and be it further
RESOLVED, THAT the Bangor City Council hereby authorize the City
Manager to prepare and to submit to the Maine Guarantee Authority on
behalf of the City, a municipal application seeking approval for the
issuance of such industrial revenue bonds and to take such other steps
as he may deem necessary or appropriate in order to obtain a certificate
of approval it= the Maine Guarantee Authority pursuant to § 5328 of
Title 30 0£ the Wine Revised Statutes.
� 3�S8.P wi
In City Council November 121980
lotion to consider nett meeting N E 50 L V E
Peeped by the following yes and n
No: Vote wotiag yes goldsoo1�B awhtEe� S+
Mc%ernen�Portez�Soucy�Weymouth� l.,
Wood,Zendzien Voting No Gass
Authorizing the City, M+nager to Execute and
Cityperk Inducement Agreement between the City and Bar
Harbor Airveyselncorpornted pertaining to
Industrial Revenue Bands -nd Authorizing
the City Manager to prepare and submit to the
Maine Guarantee Authority and Application
Seekingpp rowel forthb issuance of Such
IN'City Council November A4,1980 Industrial uevenue Bonds
Indefinitely Postponed
City Clerk
BL -16
INDUCEMENT AGREEMENT
THIS AGREEMENT between the CITY OF BANGOR, Maine (herein-
after called the "City"), and BAR HARBOR AIRWAYS, INCORPORAT):D, a
corporation having a place of business in the City of Bangor (hereinafter
called the "Company"), Its successors or assigns.
1. Preliminary Statement. Among the matters of mutual Inducement
which have been previously discussed by the parties and have resulted in the
execution of this Agreement are the following:
(a) The City is authorized under the provisions of Chapter 242 of
Title 30 of the Maine Revised Statutes, as amended, the Municipal Securities
Approval Act (the "Act"), to issue revenue obligation securities of the City
to finance the acquisition, construction, reconstruction, renewal and
replacement of industrial -commercial projects, within or partly within the
City (subject to the approval of the Maine Guarantee Authority) and to sell
on an installment basis or lease such facilities to private persons on terms
such that the installment or lease payments will be sufficient to pay the
principal of, and interest on, such securities as the same become due and
payable, all for the purpose of providing enlarged opportunities for gainful
employment by the people, and to insure the betterment of the economy of
the State and the living standards and health of Its inhabitants.
(b) The Company desires to acquire four 29 -passenger Nord
passenger aircraft as additions to the Company's aircraft fleet.
(c) Subject to execution of this Agreement by the Company and the.
execution by the Company of a lease or installment sale contract as
contemplated by Section 3 (b) hereof, the City is willing to, take such steps
as are necessary to provide revenue bond financing for the acquisition of
equipment, which equipment will have an estimated cost of not to exceed
Five Million Dollars ($5,000,000.00) and is herein sometimes called the
'Project Equipment'.
(d) The Company anticipates that the Project Equipment will help
to preserve positions for 235 employees within the City and to create
approximately 30 new positions initially and additional employees in the
future.
(e) The City is desirous of the Company .undertaking the project,
and the City wishes to Undone such undertaking and to assist the Company
therein by providing revenue bond financing for the Project Equipment to the
extent contemplated by this Agreement.
(f) The Company wishes to obtain the assurances contained in this
Agreement before proceeding further with substantial expenditures for the
Project Equipment.
2. Undertakings on the Pan of the City. Subject to the conditions
herein stated, the City agrees as follows:
(a) That, upon request of the Company, the City will take the necessary
steps to authorize the issuance and sale of an issue of its revenue obligation
securities, pursuant to the terms of the Act, in an aggregate amount not
exceeding $5,000,000.00 for the purposes of financing the Project.
(b) That the City will, at the proper time and subject in all respects
subject to the prior advice, consent and approval of the Company and of
counsel for the City, adopt, or cause to be adapted, such actsand proceedings,
and authorize the execution of such documents as. may be necessary and
advisable for the authorization, issuance, and sale of such securities and
acquisition of the Project Equipment, as aforesaid, and the leasing or sale
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of the Project Equipment to the Company exclusively, all as shall be authorized
by law and mutually satisfactory to the City and the Company.
(c) That the aggregate basic payments (i.e., the payments to be
used to pay the principal, interest and premium, if any, on such securities)
payable under the instrument whereby the Project Equipment shall be leased
orsold to the Company shall be such sums as shall be sufficient to pay the
principal of, and Interest on, and redemption premium, if any, of such secu-
rities as and when the same shall become due and payable, and the Company
shall have an option to purchase the interest of the City In the Project
Equipment for an aggregate amount equal to the amount required to retire
any such securities then outstanding, plus an amount to be prescribed in
such Instrument which shall not, without the Company's consent and agreement
as aforesaid, exceed One Dollar.
(d) That 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.
(e) That, upon being furnished by the Company with sufficient funds
to pay the scats thereof, prior to the sale and delivery of such securities, it
will acquire, make improvements to and accept and pay the costs of the Project
Equipment.
3. Undertakings on the Pan of the Company. Subject to the conditions
stated above, the Company agrees as follows:
(a) That the Company will, subject to its approval of all terms and
conditions, enter into a contract or contracts for the acquisition and improvement
of the Project Equipment, and contemporaneously with the delivery of such
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securities, will convey to the City the Project Equipment or will assign to
the City any contract or contracts for the purchase of such Project Equipment,
as the case may be.
(b) That, contemporaneously with the delivery of such securities, It
will enter into S lease or Installment sale contract with the City under the terms
of which the. Company will obligate itself as Company to pay to the City payments
sufficient in the aggregate to pay the principal of and interest on and redemption
premium, 0 any, on such securities as and when the same shall become due
and payable, such lease or installment sale contract to contain the purchase
option mentioned above, other provisions required by law, and such other
provisions as shell be mutually acceptable to the City and the Company.
(c) That It will takesuch further action and adopt such further proceedings
as may be required to Implement its aforesaid undertakings or as it may deem
approproe in pursuance thereof.
(d) That, should the Company decide that it would like the City to
proceed with the acquisition, construction or improvement of the Project
Equipment prior to sale and delivery of such securities it will furnish the City
with sufficient funds to pay, any Project Equipment costs incurredby the City
and with any necessary documentation and approval of such Project costs.
4. General Provisions.
(a) All commitments of the City under Paragraph 2 hereof and of the
i Company under Paragraph 3 hereof are subject to the conditions that on or
before eighteen months from the date hereof (or such other date as scall be
mutually satisfactory to the City and the Company), the City and the Company
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shall have agreed to mutually acceptable terms for such securities and for
the sale and delivery thereof, and mutually acceptable terms and conditions
of the contracts and leases referred to in Paragraph 3 and the proceedings
referred to in Paragraphs 2 add hereof, and the City and the Company shall
each be satisfied that the Project Equipment is eligible for financing under
Act and that the issue of bonds is eligible for tax -exemption under Seaton 103
of the Internal Revenue Code. In the event such securities are not sold,
subject to the provisions of Paragraph 9(b), this Agreement shall thereupon
terminate.
ft) The Company shall make appropriate arrangements with a qualified
trust company acceptable to the City to serve as Trustee under an Indenture
of Trust mutually acceptable to the City and the Company for the purpose of
providing a vehicle for the administration of all leases and other documents
entered into before the parties pursuant to this Agreement_ The Company shall
be responsible for all fees charged and expenses incurred by the Trustee in
connection with said Indenture of Trust.
(c) The Company agrees that the Project Equipment shall be subject to
taxation to the same extent it would be if owned by the Company, and the
Company herein waives all claims of exemption, if any, by reason of the City's
ownership or interest in the said Project Equipment. Moreover, nothing herein
shall he construed as a waiver by the Company of the tax status of the aircraft
as equipment used by an interstate air carrier under federal law.
(d) The documentation of the Bond Issue shall contain appropriate
coge��by the Company to the effect that the Project Equipment will be
operated and maintained in such a manner as shall establish a sufficient
connection with the City of Bangor to the end that the requirements of the
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Section 103 of the Internal Revenue Cade shall be satisfied at issuance of the
bonds, and shall continue to be so satisfied for so long as the bonds shall be
outstanding.
(e) The Company agrees that it will reimburse the City for all
reasonable and necessary direct out-of-pocket disbursements which the City
may have incurred arising from the execution of this Agreement and the
performance by the City of its obligations hereunder, or otherwise incurred
by the City in connection with the acquisition and construction of the Project
and the financing thereof.
(f) At the request of the Company, the City hereby agrees that Messrs.
Prati, Flaherty and Beliveau of Portland, Maine SM11 be independent bond
counsel to supervise proceedings and to approve the legality of the issue of
such securities, compensation of such bond counsel to be paid or provided by
the Company.
(g) The City will, to the extent necessary and at the request of the
Company, arta at the Company's expense, become a co -applicant with the
Company for any necessary licenses relative to the acquisition and operation
of the Project Equipment.
C,WITNESS WHEREOF, the parties hereto have entered into this
Agreement by their officers hereunto duly authorized as of the day of
1980.
WITNESS: CITY OF BANGOR, MAINE
By:
BAR HARBOR AIRWAYS, INCORPORATED
AWAFAWrAINAW
138 Maine Avenue Bangor International Airport Bangor, Maine 00001 1201190]3)61
Novmlber 12, 1980 '1,11• yp
Robert Miller y
City Solicitor
City of Danger
Dear Mr. Miller:
On Monday, October 27 Bar Harbor Airlines brought before the
City of Bangor working committee of the city council a proposal
nBung the use of an IRB bond. It was explained to the Council
at list time by Rick Stouffer, legal representative for Bar Harbor
Airlines, that there were major questions surrounding the nontaxable
status of such a bond.
Further investigation by Attorney Stouffer indicates that such
nontaxable status eligibility is extremely questionable. As a result
of this £act we respectfully request that the City Council of Bangor
consider the matter of an IRB bond for Bar Harbor Airlines to be
deferred until further notice.
Tbad: you for your attention with regard to this matter. Your
time and efforts have been deeply appreciated.
Si e
0h grit
Dr tar of Finance
JH11mr: