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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 -2- 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 -3- 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 -4- 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 -5- 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: