Ordinance 26-O-21: Educational Facility Revenue Bonds for Roycemore School Date: April 12, 2021
Total Page:16
File Type:pdf, Size:1020Kb
Memorandum To: Honorable Mayor and Members of the City Council From: Hitesh Desai, Chief Financial Officer Subject: Ordinance 26 -O-21: Educational Facility Revenue Bonds for Roycemore School Date: April 12, 2021 Recommended Action: Staff recommends approval of ordinance 26-O-21, approving and authorizing the issuance and sale of not to exceed $11,000,000 aggregate principal amount of Educational Facility Revenue Bonds, Series 2021 of the City of Evanston, Illinois for the benefit of Roycemore School. Funding Source: The City will not incur a liability to repay this debt in the event of a default by Roycemore. This debt does not appear in the City’s financial balance sheet, but appears only as a note to our financial statements. Attached Ordinance outlines the fact that the bonds are not an indebtedness or obligation of the City, and no owner of the Bonds has the right to compel the City for payment of the Bonds. Council Action: For Action Summary: Roycemore School, a not for profit corporation (“Roycemore”), is an independent, accredited, coeducational college-preparatory day school for students in junior kindergarten through grade 12, and is located in Evanston. Roycemore has requested that the City issue tax-exempt and/or taxable bonds and loan the proceeds of those bonds to Roycemore. As a governmental issuer, the City’s issuance of the Bonds on behalf of Roycemore allows interest on any such tax-exempt bonds to be excluded in the gross income of the owners of the bonds for Federal income tax purposes, allowing Roycemore to borrower money at more favorable rates. The City is charging a flat fee of $10,000 to Roycemore School for this administrative costs related to this bond issue. The bonds are expected to be issued in an amount not to exceed $11,000,000 and the proceeds will be used to refund the outstanding balance of a taxable loan incurred by Roycemore 2011 Bonds, Revenue Facility Series City’s the refinance to Educational (Roycemore School Project) (the “Prior Bonds”) in order to provide debt service savings for Roycemore in today’s more favorable interest rate market. The Prior Bonds had been issued by the City for the benefit of Roycemore to pay the costs of acquiring and renovating its current campus at 1200 Davis Street in Evanston. Again, repayment of the bonds is the sole responsibility of Roycemore. The City has no will ofrepaymentforthebonds. theconstitutebonds liabilityneverdebt a or The indebtedness of the City and will not constitute or give rise to a pecuniary liability of the City or a charge against the City’s general credit or taxing powers. No owner of the bonds will have the right to compel any exercise of the taxing power of the City. Attachments: Ordinance 26-O-21 Bond Trust Indenture Loan Agreement Preliminary Limited Offering Memorandum Bond Purchase Agreement Limited Offering Memorandum Appendix A Page 2 of 242 ORDINANCE NUMBER 26-O-21 AN ORDINANCE APPROVING AND AUTHORIZING THE ISSUANCE AND SALE OF NOT TO EXCEED $11,000,000 AGGREGATE PRINCIPAL AMOUNT OF EDUCATIONAL FACILITY REVENUE BONDS, SERIES 2021 (ROYCEMORE SCHOOL) OF THE CITY OF EVANSTON, ILLINOIS, FOR THE BENEFIT OF ROYCEMORE SCHOOL; AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND TRUST INDENTURE, LOAN AGREEMENT AND OTHER DOCUMENTS RELATED THERETO; AUTHORIZING THE SALE OF SAID BONDS TO STIFEL, NICOLAUS & COMPANY, INCORPORATED, AS UNDERWRITER; AND APPROVING RELATED MATTERS THERETO. Introduced on the 22nd day of March, 2021. Adopted by the City Council on the 12th day of April, 2021. Published in Pamphlet Form by Authority of the City Council on the ___ day of April, 2021. Page 3 of 242 ORDINANCE NUMBER 26-O-21 AN ORDINANCE APPROVING AND AUTHORIZING THE ISSUANCE AND SALE OF NOT TO EXCEED $11,000,000 AGGREGATE PRINCIPAL AMOUNT OF EDUCATIONAL FACILITY REVENUE BONDS, SERIES 2021 (ROYCEMORE SCHOOL) OF THE CITY OF EVANSTON, ILLINOIS, FOR THE BENEFIT OF ROYCEMORE SCHOOL; AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND TRUST INDENTURE, LOAN AGREEMENT AND OTHER DOCUMENTS RELATED THERETO; AUTHORIZING THE SALE OF SAID BONDS TO STIFEL, NICOLAUS & COMPANY, INCORPORATED, AS UNDERWRITER; AND APPROVING RELATED MATTERS THERETO. WHEREAS, pursuant to the provisions of Section 6(a) of Article VII of the 1970 Constitution of the State of Illinois, the City of Evanston, Cook County, Illinois (the “City”), a municipality and home rule unit of the State of Illinois (the “State”), is authorized and empowered to exercise any power or perform any function pertaining to its government or affairs, including the issuance of revenue bonds to finance projects within the territorial limits of the City or to refund bonds issued to finance said projects, and may authorize the issuance of such revenue bonds by ordinance adopted by the City Council of the City (the “City Council”); WHEREAS, Roycemore School, an Illinois not for profit corporation (the “Borrower”), has requested that the City Council approve the issuance by the City of qualified 501(c)(3) revenue bonds under Section 145 of the Internal Revenue Code of 1986, as amended (the “Code”), through the issuance of its Educational Facility Revenue Bonds, Series 2021 (Roycemore School) (the “Bonds”); WHEREAS, the Borrower desires that the Bonds be issued in order to be used, together with other available funds to (i) refinance the outstanding portion of the $10,000,000 original amount of taxable note (the “Taxable Note”), currently outstanding in the aggregate amount of $7,900,000, the proceeds of which Taxable Note refinanced the City of Evanston Educational Facilities Revenue Bonds, Series 2011 (the “Series 2011 Bonds”), the proceeds of which Series 2011 Bonds financed and refinanced (a) the acquisition of approximately 2.4 acres of land located at 1200 Davis Street, Evanston, Illinois 60201 (the “Campus”) with an existing three level, 66,000 square foot building (the “Facility” and together with the Campus, the “School Facility”); (b) the renovation, remodeling, improvement, and equipping of said School Facility; (c) the construction and equipping of a gymnasium on the Campus (collectively, the “Project”); (d) the funding of certain working capital; (e) the payment of capitalized interest with respect to certain portions of the Project; (f) the funding of a debt service reserve fund; and (g) the payment of certain costs incurred in connection with the issuance of the Series 2011 Bonds; (ii) fund one or more debt service reserve funds, if deemed necessary or advisable by the Borrower; and (iii) pay certain costs incurred in connection with the issuance of the Bonds (collectively, the “Financing Purposes”); WHEREAS, the City proposes to issue the Bonds on behalf of the Borrower pursuant to a Bond Trust Indenture (the “Indenture”) between the City and Wilmington Trust, National Association, as trustee (the “Trustee”) and loan the proceeds from the sale of the Bonds pursuant to a Loan Agreement (the “Loan Agreement”) between the City and the Borrower, and in accordance with this Ordinance authorizing the Bonds; Page 4 of 242 WHEREAS, the issuance of the Bonds and the loan of the proceeds thereof to the Borrower to finance the Financing Purposes will be economically beneficial to the Borrower and will enable the Borrower to offer more of its services to the City’s residents, thereby promoting the well-being of the residents of the City, and will enhance the quality of life of the residents of the City, and therefore is for a proper public purpose; WHEREAS, in connection with the issuance of the Bonds, the following additional documents will be executed and delivered by parties other than the City (collectively, the “Additional Transaction Documents”): (a) Promissory Note of the Borrower (the “Promissory Note”), which will be pledged as security for the Bonds, in a principal amount equal to the aggregate principal amount of the Bonds and with prepayment, maturity and interest rate provisions similar to the Bonds; and (b) Mortgage, Security Agreement and Assignment of Rents and Leases between the Borrower, as mortgagor, and the Trustee, as mortgagee (the “Mortgage”); WHEREAS, forms of the Loan Agreement, the Purchase Agreement (as hereinafter defined), the Indenture and the Limited Offering Memorandum (as hereinafter defined) have been prepared and presented at this meeting; WHEREAS, the Bonds shall be special, limited obligations of the City, payable solely from the revenues and income pursuant to the Loan Agreement, and the Bonds shall not constitute an indebtedness or obligation of the City, the State or any political subdivision thereof or a loan of credit of any of them, within the meaning of any constitutional or statutory provision, or a charge against the general credit or taxing powers, if any of the City, the State or any political subdivision thereof; and no holder of any Bond shall have the right to compel any exercise of the taxing power of the City, the State or any political subdivision thereof, to pay the principal of the Bonds or the interest or premium, if any, thereon; WHEREAS, the Borrower has requested the City to issue the Bonds on a negotiated basis; WHEREAS, pursuant to the provisions of Section 147(f) of the Code, the City Council, being the elected legislative body of the City and the applicable elected representative required to approve the issuance of the Bonds within the meaning of Section 147(f) of the Code, held a public hearing on the proposed issuance of the Bonds on March 22, 2021, pursuant to notice published at least seven (7) days prior to such public hearing in the Chicago Sun-Times, a newspaper of general circulation in the City, on March 10, 2021; and NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Evanston, Cook County, Illinois, as follows: Section 1.