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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 01/04/2000 - RESOLUTION 2000-9 WITH RESPECT TO ISSUANCE OF REVE AGENDA ITEM SUMMARY ITEM NUMBER: 30 DATE: Januan7 4. 2000 • FORT COLLINS CITY COUNCIL STAFF: Alan ICrcmazik SUBJECT: Resolution 2000-9 With Respect to Issuance of Revenue Bonds of the City of Fort Collins,Colorado to Finance All or a Portion of the Cost of Acquiring, Constructing, Equipping, and Improving Certain Facilities For Anheuser-Busch Companies,Inc.and Anheuser-Busch,Incorporated;Authorizing the Execution of a Memorandum of Agreement by and Between the City of Fort Collins, Colorado and Said Corporations; and Related Matters. RECOMMENDATION: Staff and the Council Finance Committee recommend adoption of the Resolution. FINANCIAL IMPACT: The City may issue private activity bonds"on behalf'of certain projects that meet legally defined public purposes as are identified in the federal tax code and more specifically in the Colorado County and Municipality Development Revenue Bond Act. Although the bonds are issued by the City, the responsibility for repayment of the debt remains with the business or corporation requested financing for the project. The debt is to be repaid 0m revenues generated by the project or the entity requesting the issuance. Federal and state law preclude the rty using its own revenues for paying the bonds. As private activity bonds are not considered obligations of the City by credit rating agencies, such debt is not considered in assessing the City's financial or debt position. Inducement of this financial transaction does not obligate the City to approve the issuance of the referenced bonds, and subsequent issuance of the bonds, if approved, would not draw on the City's financial resources. EXECUTIVE SUMMARY: In mid-November of 1999,representatives of Anheuser-Busch Companies,Inc. (the"Company") and Anheuser- Busch. Incorporated ("ABI"). a wholly owned subsidiary of the Company contacted the City to request consideration of using private activity bonds to finance sewage and solid waste disposal facility near the existing brewer- located in the northeast part of the City. The Company estimates the total amount of bonds for which a private activity bond allocation would be sought for the project to be $30 million. Each year the City receives a private activity bond allocation from the State of Colorado. In 2000. the amount is $2,756 250. Council has previously established affordable housing private activity bonds as the top priority use for its 2000 allocation. Staff expects that an affordable housing project will apply for the City's entire allocation and also need to request additional allocation from the Statewide balance of private activity bonds. The Company is requesting the City also support its application to the State for a portion of the statewide balance. Approval of the inducement resolution would allow the Company to submit an application to the State. The Resolution also sets the beginning point for the transaction. Costs that the Company incurs after the Resolution approved may be reimbursed from the proceeds of the bond issue. • RESOLUTION 2000-9 OF THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO WITH RESPECT TO ISSUANCE OF REVENUE BONDS OF THE CITY OF FORT COLLINS, COLORADO TO FINANCE ALL OR A PORTION OF THE COST OF ACQUIRING, CONSTRUCTING, EQUIPPING, AND IMPROVING CERTAIN FACILITIES FOR ANHEUSER-BUSCH COMPANIES, INC. AND ANHEUSER-BUSCH, INCORPORATED; AUTHORIZING THE EXECUTION OF A MEMORANDUM OF AGREEMENT BY AND BETWEEN THE CITY OF FORT COLLINS, COLORADO AND SAID CORPORATIONS; AND RELATED MATTERS WHEREAS, the City of Fort Collins, Colorado (the "City"), a municipal corporation organized and existing under the Constitution and laws of the State of Colorado (the "State"), is authorized by the laws of the State, and specifically the provisions of the County and Municipality Development Revenue Bond Act, Part 1 of Article 3 of Title 29, Colorado Revised Statutes, as supplemented and amended(the"Act"), and by its home-rule charter, among other things,to issue its bonds for any of the purposes set forth in the Act, to enter into agreements with others for the purpose of providing revenues to pay such revenue bonds and further to secure the payment of such revenue bonds; and . WHEREAS, Anheuser-Busch Companies, Inc. (the "Company") and Anheuser-Busch, Incorporated,a wholly-owned subsidiary of the Company("ABI"),are considering proceeding with the acquisition,construction,installation,equipping and improvement of certain sewage and/or solid waste disposal facilities (the "Facilities") to be operated by ABI and/or Nutri-Turf, Inc. ("Nutri-Turf'), a wholly owned subsidiary of Busch Agricultural Resources,Inc., which is itself a wholly owned subsidiary of the Company, in connection with and to be located at or near the existing brewery operated by ABI within the corporate boundaries of the City and the land application site operated by Nutri-Turf in Weld County,Colorado,within eight miles of the nearest corporate boundary of the City; and WHEREAS,the Company and ABI wish to have the City issue one or more issues and in one or more series its revenue bonds, in an aggregate principal amount not to exceed a combined total of$30.000,000(the"Bonds").to provide financing for all or a portion of the costs of the acquisition, construction, installation, equipping and improvement of any such Facilities; and WHEREAS,all or a portion of the expenditures relating to the Facilities(the"Expenditures") (a) have been paid within the 60 days prior to the passage of this Resolution or(b)will be paid on or after the passage of this Resolution; and WHEREAS,the City reasonably expects(based upon information supplied by the Company. upon which it is reasonable and prudent for the City to rely)to pay the Expenditures or to reimburse the Company or ABI for the Expenditures with the proceeds of the Bonds,if and when such Bonds . are issued; and WHEREAS, a Memorandum of Agreement has been presented to the City under the terms of which the City declares its intention, subject to the provisions of such agreement, to issue the Bonds for such purpose. NOW, THEREFORE,BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO as follows: Section 1. That the City reasonably expects (based upon information supplied by the Company, upon which it is reasonable and prudent for the City to rely) to pay or reimburse the Expenditures with the proceeds of the Bonds, if and when such Bonds are issued. Section 2. That the maximum principal amount of Bonds expected to be issued for the Facilities is $30,000,000. Section 3. That the City Manager is hereby authorized to execute a Memorandum of Agreement with the Company and ABI in the form attached hereto as Exhibit"A"and incorporated herein by this reference,with such changes therein as may be approved by the City Manager, after consultation with the City Attorney, as being necessary to effectuate the purposes of said Memorandum of Agreement. Section 4. That the City is hereby authorized to submit at the request of the Company an application or applications requesting an allocation or allocations of up to $30,000,000 of the State of Colorado's unified volume cap for one or more of the years 2000 through 2004,inclusive, to permit the City to issue the Bonds, on a tax-exempt basis, for the Facilities. Section 5. That the officials, officers and employees of the City are hereby authorized to take such further action consistent with and as is necessary to carry out the intent and purpose of the Memorandum of Agreement as executed and to cause not more than a combined aggregate principal amount of$30,000.000 of the Bonds to be issued upon the terms and conditions stated in such Memorandum of Agreement,which Memorandum of Agreement is hereby made a part of this Resolution. All actions of the officers,agents and employees of the City that are in conformity with the purpose and intent of this Resolution, whether taken before or after the adoption hereof, are hereby ratified, confirmed and adopted. The issuance of the Bonds shall be contingent upon the determination by either the City or the State of Colorado that a portion of such entity's available allocation of authority to issue tax-exempt private activity bonds shall be used to issue the Bonds, and shall further be contingent upon the authorization of the issuance of the Bonds and execution of such documents and agreements as may be necessary to accomplish the same,by ordinance of the City Council in its discretion. Nothing contained in this Resolution or. the Memorandum of Agreement shall be construed to require the City to issue the Bonds. The decision to issue the Bonds shall be in the complete discretion of the City. Section 6. That nothing contained in this Resolution shall constitute the debt or indebtedness or a multiple fiscal year financial obligation of the City within the meaning of any limitation of the Constitution or statutes of the State of Colorado or the Charter of the City,nor give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers. . Section 7. That all resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. Section 8. That if any section,paragraph,clause or provision of this Resolution shall be held invalid,the invalidity of such section,paragraph,clause or provision shall not affect any of the other provisions of this Resolution. Section 9. That this Resolution shall be in full force and effect from and after its passage and approval as provided by law. Passed and adopted at a regular meeting of the City Council held this 4th day of January, A.D. 2000. Mayor ATTEST: i City Clerk i MEMORANDUM OF AGREEMENT EXHIBIT "A" THIS MEMORANDUM OF AGREEMENT(this"Agreement")is among the CITY OF FORT COLLINS,COLORADO(the"Issuer"),ANHEUSER-BUSCH COMPANIES,INC., a Delaware corporation (the "Company"), and ANHEUSER-BUSCH, INCORPORATED, a Missouri corporation("ABI"). 1. Preliminary Statement. Among the matters of mutual inducement which have resulted in this Agreement are the following: (a) The Issuer is authorized and empowered under the provisions of the County and Municipality Development Revenue Bond Act,Part 1 of Article 3 of Title 29, Colorado Revised Statutes, as supplemented and amended(the"Act"),to issue revenue bonds for the purposes set forth in the Act and to permit the expenditure of the proceeds thereof to finance, among other things, any project authorized under the Act. (b) The Company and ABI wish to have the Issuer finance all or a portion of the cost of acquiring, constructing, installing, equipping and improving certain facilities, as further described in Exhibit A hereto (the "Facilities"), to be operated by ABI and/or Nutri-Turf, Inc. ("Nutri-Turf'), a wholly owned subsidiary of Busch Agricultural Resources, Inc., which is itself a wholly owned subsidiary of the Company, in connection with and to be located at or near the existing brewery operated by ABI within the corporate boundaries of the Issuer and at the land application site operated by Nutri-Turf in Weld County, Colorado within eight miles of the nearest corporate boundary of the Issuer. The Company and ABI wish to have the Issuer issue in one or more issues and in one or more series its revenue bonds in an aggregate principal amount not to exceed a combined total of $30.000.000 (the "Bonds"),to finance all or a portion of the costs of the Facilities pursuant to the provisions of the Act and the Internal Revenue Code of 1986, as amended (the "Code"). (c) The Bonds will be special,limited obligations of the Issuer payable solely out of the revenues and receipts and other amounts received by or on behalf of the Issuer from the Company and ABI pursuant to a loan agreement or other financing agreement between the Issuer and the Company and/or.at the election of the Company,ABI. The Bonds and the interest thereon shall never constitute the debt or indebtedness or multiple fiscal year financial obligation of the Issuer within the meaning of any provision or limitation of the state constitution or statutes or the home-rule charter of the Issuer and shall not constitute nor give rise to a pecuniary liability of the Issuer or a charge against its general credit or taxing powers. (d) Subject to due compliance with all requirements of law,and contingent upon the determination by either the Issuer or the State of Colorado that a portion of such entity's • available allocation of authority to issue tax-exempt private activity bonds shall be used to issue the Bonds,and further contingent upon the authorization of the issuance of the Bonds and execution of such documents and agreements as may be necessary to accomplish the same,by ordinance of the Issuer's City Council in its discretion,the Issuer,by virtue of such authority as may now or hereafter be conferred,and subject to receipt of adequate assurance from the Company that there are one or more purchasers for the Bonds hereby declares its intention to issue and sell in one or more issues and in one or more series the Bonds in aggregate principal amount not to exceed a combined total $30,000,000, to pay all or a portion of the costs of the Facilities. 2. Undertakings on the Part of the Issuer. Subject to the conditions set forth above and in paragraph 4(a),the Issuer hereby declares its intention to: (a) authorize the issuance and sale of one or more issues and in one or more series of the Bonds in an amount not to exceed a combined aggregate principal amount of $30,000,000 pursuant to its lawful and constitutional authority; and (b) enter into a loan agreement or other financing agreement with the Company and,at the election of the Company, ABI,whereby the Company and,at the election of the Company,ABI will pay to,or on behalf of,the Issuer,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. 3. Undertakings on the Part of the Company and ABI. Subject to the conditions above stated,the Company and ABI agree as follows: (a) That the Company will use all reasonable efforts to find one or more purchasers for the total amount of Bonds of each issue prior to requesting any further approval by the Issuer for such issue; (b) That contemporaneously with the delivery of the Bonds, the Company and ABI will enter into a loan agreement or other financing agreement with the Issuer,under the terms of which the Company and, at the election of the Company.ABI,will be obligated to pay to or on behalf of the Issuer sums sufficient in the aggregate to pay the principal of, interest and redemption premium, if any,on the Bonds as and when the same shall become due and payable; (c) That prior the issuance of the Bonds,the Issuer shall receive an opinion of a qualified bond counsel supporting the legality of the financing of the Facilities through the issuance of the Bonds: and (d) That no costs or expenses reasonably incurred in connection with the issuance of the Bonds or the preparation of any documents by any legal or financial consultants retained in connection therewith,whether incurred by the Issuer or any other party, shall be home by the Issuer. All such costs or expenses shall be paid from the proceeds of the Bonds or otherwise borne by the Company. In addition to the costs and expenses to be borne by the Company as described in the preceding sentences,if the Bonds are issued,the Company shall • pay to the Issuer at the time the Bonds are issued an administrative fee and issuer's fee to be determined by the Issuer in accordance with the provisions for the same in Resolution 84-92 of the City Council of the Issuer,or such superseding fee policies as may have been enacted at the time of issuance, if any. 4. General Provisions. (a) All commitments of the Issuer under paragraph 2 hereof and of the Company and ABI under paragraph 3 hereof are subject to the condition that,on or before five years from the date hereof(or such other date as shall be mutually satisfactory to the Issuer, the Company and ABI), the Issuer, the Company and ABI shall have agreed to mutually acceptable terms and conditions of the loan agreement or other financing agreement referred to in paragraph 3 and of the Bonds and other instruments or proceedings relating to the Bonds. (b) If the events set forth in subparagraph(a)of this paragraph do not take place within the time set forth or any extension thereof and the Bonds in an amount of approximately the amount stated above are not sold within such time,the Company agrees that it will reimburse the Issuer for all reasonable and necessary direct out-of-pocket expenses which the Issuer may incur at the Company's or RBI's request arising from the execution of this Agreement and the performance by the Issuer of its obligations hereunder, and this Agreement shall thereupon terminate. (c) The Company and ABI acknowledge that,under the Code and Colorado law, the Issuer's allocation of authority to issue tax-exempt private activity bonds during the term of this Agreement may be limited, and the Issuer makes no representation or warranty that the Bonds will receive any necessary allocation of such authority to issue tax-exempt private activity bonds. (d) If, by reason of any limitation under the Code or for any other cause, the Issuer is prevented from fulfilling its undertakings hereunder in accordance with the intent of the parties hereto,or if the Issuer chooses,in its discretion,not to apply its private activity bond allocation to issue the Bonds or not to issue the Bonds, then, at the request of the Company,this Agreement shall be assigned with full substitution by the Issuer to any other state or local agency or political subdivision having power to finance the Facilities and willing to accept such assignment, and upon such assignment all obligations of the Issuer hereunder shall terminate. IN WITNESS WHEREOF, the parties hereto have entered into this Agreement by their officers thereunto duly authorized as of the day, of 2000. CITY OF FORT COLLINS, COLOR-ADO By City Manager ANHEUSER-BUSCH COMPANIES, INC. By Title ANHEUSER-BUSCH, INCORPORATED By Title EXHIBIT A • DESCRIPTION OF FACILITIES The Facilities consist of sewage and solid waste disposal facilities and related improvements to be operated by ABI and/or Nutri-Turf, Inc. ("Nutri-Turf'), a wholly owned subsidiary of Busch Agricultural Resources, Inc., which is itself a wholly owned subsidiary of the Company, in connection with and to be located at or near the existing brewery operated by ABI within the corporate boundaries of the Issuer. Following is a more detailed description of the Facilities. Summary Description of the Brewing and Fermenting Process Barley malt and rice are ground in a mill, mixed with water and then combined in a mash tank. The mixture is moved to a straining tank where spent grains are removed. The liquid leaving the straining tank, called wort, flows into a brew kettle where hops are added. The spent hops are removed through a strainer upon completion of brewing. The wort is cooled and then flows into fermentation tanks where yeast is added. The yeast converts fermentable sugars into carbon dioxide and alcohol,and the wort becomes beer. Spent yeast is removed from the beer through separators and then moved to lager tanks. A portion of freshly yeasted wort is added to the lager tanks, as well as beechwood chips,as part of the second fermentation. After several uses,the chips are discarded. The beer is transferred to a chilling tank. After chilling, the beer is decanted into a tank for final filtration prior to packaging. The bottom of the chilling tank is known as decant sludge. Description of Solid Waste Disposal Facilities There are several waste streams created as a result of the brewing process. The waste streams include spent grains, spent hops, discarded chips and decant sludge. In addition, refuse is created in the general handling of materials as well as packaging. The proposed capital improvements include facilities to handle,transport, store and process the aforementioned waste streams. Description of Sewage Facilities The brewing process requires the use and ultimate discard of a substantial amount of sewage. The tankage throughout the process, brewing, fermenting, aging and finishing requires cleaning, either through manual methods or automated ("Clean-in-Place" or"CIP-) systems. The cleaning involves rinsing the tanks with either caustic or warm water,then flushing the solids into the sewer lines. These flush lines, along with the floor drains and discard from the yeast separators, are combined and sent to the sewage treatment plant for primary treatment. A portion of the wastewater is then discharged to the municipal sewage system and the remaining portion is sent to the Company's land application site for secondary treatment. The proposed capital improvements include facilities to handle,transport,store and process • the aforementioned waste streams. 01-227080.02 I