127450
E
RESOLUTION NO. 12,745
3 A RESOLUTION AUTHORIZING THE ENTRY INTO AN AGREEMENT
4 TO ISSUE BONDS FOR THE PURPOSE OF ASSISTING IN THE
5 FINANCING OF INDUSTRIAL FACILITIES WITHIN OR NEAR THE
6 CITY OF LITTLE ROCK, ARKANSAS, TO BE LEASED TO LM GLASFIBER
7 (ARKANSAS), INC., PURSUANT TO THE AUTHORITY OF THE LAWS
8 OF THE STATE OF ARKANSAS, INCLUDING PARTICULARLY
9 AMENDMENT 65 TO THE ARKANSAS CONSTITUTION AND THE
10 MUNICIPALITIES AND COUNTIES INDUSTRIAL DEVELOPMENT
11 REVENUE BOND LAW.
IVA
13 WHEREAS, the City of Little Rock, Arkansas, is authorized under the provisions
14 of Amendment 65 to the Arkansas Constitution and the Municipalities and Counties
15 Industrial Development Revenue Bond Law, Ark. Code Ann. §§ 14- 164 -201 to -224 (the
16 "Act "), to own, acquire, construct, equip, and lease facilities to secure and develop
17 industry and to assist in the financing thereof by the issuance of bonds payable from the
18 revenues derived from such facilities; and
19 WHEREAS, LM Glasfiber (Arkansas), Inc. (the "Company "), has evidenced its
20 interest in acquiring, constructing, and equipping an industrial facility within the City if
21 the permanent financing can be provided through the issuance of bonds under the
22 authority of the Act; and
23 WHEREAS, the City desires to assist the Company in order to secure and
24 develop industry within the City, and to aid in the financing thereof under the
25 provisions of the Act; and
26 WHEREAS, it is desirable that the City enter into an Agreement to Issue Bonds
27 for such purpose.
28 NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
2 9 THE CITY OF LITTLE ROCK, ARKANSAS that:
[Page 1 of 7]
1189630.1
1 Section 1. The Mayor and the City Clerk of the City are hereby authorized to
2 enter into an Agreement to Issue Bonds in substantially the form and substance as
3 follows:
0
AGREEMENT TO ISSUE BONDS
5 THIS AGREEMENT is made as of August , 2008, by and between the City of
6 Little Rock, Arkansas, a city of the first class under the laws of the State of Arkansas (the
7 "City "), and LM Glasfiber (Arkansas), Inc. (the "Company "), for the purpose of carrying
8 out the purposes set forth in the Municipalities and Counties Industrial Development
9 Revenue Bond Law, Ark. Code Ann. §§ 14- 164 -201 to -224 (the "Act ").
10 WITNESSETH:
11 WHEREAS, the City is authorized by Amendment 65 to the Arkansas
12 Constitution and the Act to own, acquire, construct, reconstruct, extend, equip,
13 improve, operate, maintain, sell, lease, or contract concerning, or otherwise deal in or
14 dispose of any land, buildings, or facilities of any and every nature that can be used in
15 securing or developing industry within or near the City; and
16 WHEREAS, the City has determined that such purposes may be served by
17 cooperation with the Company in the acquisition, construction, and equipping of an
18 industrial facility within the City, consisting of acquisition of land, construction of
19 buildings and improvements, and acquisition and installation of equipment for the
20 manufacture of wind turbine blades (the "Project "); and
21 WHEREAS, the City and the Company desire to cooperate in the acquisition,
22 constructing, and equipping of the Project and to have the costs of the Project financed
23 from the proceeds of revenue bonds of the City (the "Bonds ") to be issued pursuant to
24 the Act in an aggregate principal amount now estimated not to exceed $150,000,000
25 (excluding any bonds issued to refund the Bonds); and
26 WHEREAS, the City and the Company intend to enter into a Lease Agreement
27 (the "Lease ") of the real and personal property constituting the Project, which
28 contemplates that the Project will be leased to the Company, with an option to purchase
29 for a nominal price, and the rental payments therefor together with other moneys
30 available shall be sufficient to pay debt service on the Bonds and all related costs;
[Page 2 of 7]
1 NOW, THEREFORE, in consideration of the premises and other good and
2 valuable consideration under the mutual benefits, covenants, and agreements herein
3 expressed, the City and the Company agree as follows:
4 1. Proceedings. All proceedings in connection with the issuance of the Bonds
5 shall be consistent with the requirements of the Act. All references contained herein to
6 the issuance of the Bonds shall be subject to compliance with the formalities of the Act
7 when the facts required to do so are determined.
8 2. Acquisition, Construction, and Equipping. The City and the Company will
9 cooperate in causing to be commenced and continued the required acquisition,
10 construction, and equipping of the Project, and the Company may provide, or cause to
11 be provided, the necessary interim financing to permit work on the Project to
12 commence and continue expeditiously pending the issuance of Bonds. Not later than
13 the date of issuance of the Bonds, the Company will convey and transfer or cause to be
14 conveyed and transferred to the City, the Project or portions thereof theretofore
15 acquired, constructed, and equipped. There shall also be conveyed to the City any
16 easements and rights -of -way necessary to permit construction, equipping, installation,
17 operation, and maintenance of the Project.
18 3. Lease. The City and the Company shall enter into the Lease under which the
19 Company will lease the Project, with an option to purchase for a nominal price, from the
20 City and will agree to make rental payments sufficient to pay the principal of and
21 premium, if any, and interest on the Bonds.
22 4. Sale of Bonds, Security. The City will take such steps as are necessary to issue,
23 sell, and deliver the Bonds, pursuant to the terms of the Act, for the purposes of
24 financing the costs of the Project, in each case only upon receipt of the written
25 designation by the Company of the purchaser(s) or underwriter(s) thereof, such Bonds
26 to be in such principal amount, to mature in such amount and times, to bear interest at
27 such rate or rates, to be payable on such dates, and to have such optional and
28 mandatory redemption features and prices as are determined by the City and approved
29 in writing by the Company. The City further agrees that it will enter into the Lease and
30 a mortgage with the purchaser of the Bonds, for the purpose of providing rental
31 payments sufficient, with other amounts available from the Company or directly or
[Page 3 of 7]
1 indirectly from the proceeds of the Bonds, to pay the principal of and premium, if any,
2 and interest on the Bonds as they become due, and pledging and otherwise securing the
3 payment of such rental payments for the benefit of the holder(s) of the Bonds. The
4 Lease, the mortgage, other related documents, and the Bonds shall contain such terms
5 and conditions as are agreed upon by the City and the Company. The City will
6 cooperate in consummating the transactions so contemplated.
7 5. Bonds to be Special Obligations. The City shall have no financial
8 responsibility with respect to the Project, the Bonds, or the costs associated with either,
9 and the Bonds shall be special obligations of the City and shall never constitute a
10 general obligation, indebtedness, or pledge of the credit of the City within the meaning
11 of any constitutional or statutory provision and shall never be paid in whole or in part
12 out of any funds raised or to be raised by taxation or any other revenues or other funds
13 of the City except those (including unexpended Bond proceeds) derived from or in
14 connection with the sale or lease of the Project as provided for herein.
15 6. Conditions of Issuance. The Bonds may be issued either at one time or in
16 several series from time to time, in such aggregate principal amount or amounts as the
17 Company shall request in writing; provided, however, that all conditions of the Act
18 shall have been met.
19 7. Costs to be Financed. The costs of the Project may include any costs
20 permissible under the Act, including but not limited to reasonable and necessary costs,
21 expenses, and fees incurred by the City in connection with the issuance of the Bonds or
22 in connection with the Project; fees and out -of- pocket expenses of Mitchell, Williams,
23 Selig, Gates & Woodyard, P.L.L.C.; recording costs; rating agency's fees, if any; and
24 printing costs. The City will upon request provide or cause to be provided any data or
25 information which may be reasonably required to verify any of the costs, expenses, and
26 fees enumerated above.
27 8. Termination. In the event that the Bonds shall not be sold within three years
28 from the date hereof, this Agreement shall automatically terminate unless the parties
29 hereto shall agree in writing to its extension for a further period of time specified in
30 such writing, which agreement on the part of the City shall not be unreasonably
31 withheld. The Company may unilaterally terminate this Agreement without liability to
[Page 4 of 71
1 the City (except for any amounts due and owing by the Company to the City arising out
2 of the transactions occurring on or before the time of such termination, which shall be
3 promptly paid by the Company to the City) by giving notice by ordinary mail, postage
4 prepaid, to the City specifying therein the date of termination, which may be the date of
5 the notice.
6 9. Protection to the City. The Company shall pay all of the City's costs and
7 expenses reasonably and necessarily incurred in connection with this Agreement or any
8 other related document or instrument. The Company will at all times indemnify and
9 hold harmless the City against any and all losses, costs, damages, expenses, and
10 liabilities of whatsoever nature directly or indirectly resulting from, arising out of, or
11 related to matters in connection with this Agreement.
12 10. Ad Valorem Taxation Exemption. The City and the Company recognize that
13 under the Arkansas Constitution and decisions of the Supreme Court of Arkansas and
14 in accordance with Ark. Code Ann. §§ 14- 164 -701 to -703, the Project will be exempt
15 from ad valorem taxation. The City agrees that the Company shall be required to enter
16 into an Agreement for Payments in Lieu of Taxes ( "PILOT Agreement ") with the City in
17 substantially the form submitted to this meeting, providing for payments in lieu of a
18 portion of the ad valorem taxes that would otherwise be levied by local public bodies
19 with taxing authority.
20 11. Purpose and Effect. The Bonds are to be issued, sold, and delivered under the
21 authority of the Act and all related actions and documents shall be in conformity
22 therewith. The City intends this Agreement to be the expression of its present intent,
23 pursuant to the terms hereof, to issue the Bonds up to $150,000,000 aggregate principal
24 amount outstanding at any one time, and also to issue additional Bonds if the Project
25 costs exceed such amount, and to expend the Bond proceeds to defray the costs of the
26 Project.
27 12, Assignment. The Company may assign this Agreement and the PILOT
28 Agreement in whole or in part to an affiliate of the Company without the prior written
29 consent of the City and to an entity which is not an affiliate of the Company with the
30 prior written consent of the City, which consent shall not be unreasonably withheld.
31 Notwithstanding the foregoing, no assignment and no dealings or transactions between
[Page 5 of 7]
1 the City and any assignee shall relieve the Company of any of its obligations under this
2 Agreement.
3 IN WITNESS WHEREOF, the City of Little Rock, Arkansas, acting pursuant to a
4 Resolution of its Board of Directors, has caused its name to be hereunto subscribed by
5 its Mayor and the Company has caused its corporate name to be- subscribed hereto by
6 its duly authorized officer, all as of the year and date fi st above ritten.
7 CITY OF R R NSAS
8 By: ;`-
9 Mayor
10 LM GLASFIBER (ARKANSAS), INC.
11 By:
12
13 Section 2. The PILOT Agreement is hereby approved in substantially the form
14 submitted to this meeting.
15 Section 3. This Resolution shall be in full force and effect from and after its
16 adoption
17 Section 4. Severability. In the event any title, section, paragraph, item, sentence,
18 clause, phrase, or word of this resolution is declared or adjudged to be invalid or
19 unconstitutional, such declaration or adjudication shall not affect the remaining
20 portions of this resolution, which shall remain in full force and effect as if the portion so
21 declared or adjudged invalid or unconstitutional was not originally a part of this
22 resolution.
23 Section 5. Repealer. All ordinances or resolutions of the City in conflict herewith
24 are hereby repealed to the extent of such conflict.
25 PASSED: August 19, 2008
26 ATTEST: APPROVED-
2 7
28
29 Nan Wood, ity Clerk Mark Stodola, Mayor
30 H
31 H
[Page 6 of 7]
1
2
3
4
5
6
7
8
9
1C
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
APPROVED AS TO LEGAL FORM:
4l/L 'j,
Thomas M. Carpenter, Ci y Attorney
[Page 7 of 71
PAYMENT IN LIEU OF TAXES AGREEMENT
City of Little Rock, Arkansas
500 Markham Street
Little Rock, Arkansas 72201
Attention: Mayor
Date 1, 2008
Re: $150,000,000 City of Little Rock, Arkansas Industrial Development Revenue
Bonds (LM Glasfiber Project)
Ladies and Gentlemen:
The City of Little Rock proposes to issue the Bonds identified above in one or more series
under the provisions of the Municipalities and Counties Industrial Development Revenue Bond
Law, Ark. Code Ann. §§ 14- 164 -201 to -224 (the "Act') for the purpose of financing a substantial
industrial project consisting of the acquisition of land, construction of buildings, and acquisition
and installation of equipment, located at 7301 Lindsey Road and 7400 Scott Hamilton Drive,
Little Rock, Arkansas (the "Project'). The Project will be leased by the City to LM Glasfiber
(Arkansas), Inc. (the "Company "), pursuant to a Lease Agreement (the "Agreement'), for a
period of 20 years, for rentals sufficient to pay debt service on the Bonds. The Company will use
the Project as facilities for the manufacture of wind turbine blades, as training facilities and as
corporate offices.
Article VI of the Agreement provides that the Company is obligated to pay all taxes and
assessments levied and assessed on the Project during the term of the Agreement. The Company
is informed and understands that, notwithstanding the provision of Article VI of the Agreement,
under Article 16, Section 5 of the Constitution of the State of Arkansas, as interpreted by the
Arkansas Supreme Court in Wayland v. Snapp, 233 Ark. 57, 334 S.W. 2d 633 (1960), and Pulaski
County v. Jacuzzi Bros. Div., 332 Ark. 91, 964 S.W.2d 788 (1998), and Ark. Code Ann.
§§ 14 164 -701 to -703, the Project will be exempt from ad valorem taxes because it is owned by
the City and used for a public purpose within the meaning of the applicable Constitutional and
statutory provisions affording the exemption.
"Thus, the Company understands that it, as Lessee of the Project owned by the City, will,
in fact, pay no ad valorem taxes on the Project property under the provisions of Article V of the
Agreement. The City has indicated a reluctance to lose all tax revenues which would otherwise
be received by it if the property involved was privately owned.
Therefore, to induce the City to proceed with the issuance of the Bonds for the purpose
indicated, which will inure to the benefit of the Company, and for other valuable consideration,
the receipt of which is hereby acknowledged, the Company agrees with the City as follows:
1. In lieu of ad valorem property taxes, the Company will pay to the City an annual
sum equal to 35% of the amount which would be payable as ad valorem taxes that would have to
be paid on the Project to the State of Arkansas, the City, Pulaski County, the Little Rock School
District, and /or other political subdivisions of the State of Arkansas (the "taxing authorities ") if
the Project were not exempt from ad valorem taxes under the provisions of Article 16, Section 5
11908881
LM Glasfiber (Arkansas), Inc.
PILOT Agreement
Page 2
of the Constitution of the State of Arkansas, as interpreted by the Supreme Court of the State of
Arkansas in Wayland v. Snapp, supra, and Pulaski County v. Jacuzzi Bros. Div., supra, and Ark.
Code Ann. §§ 14- 164 -701 to -703. Payments are due not later than October 10 each year
commencing after completion of construction. Payments not paid when due shall bear interest at
5% per annum until paid.
The payment is based on land, building, improvement and equipment used at the Project
site excluding licensed vehicles. Any expansion or improvement of the Project will become
subject to this Agreement using the same formula for the term of the Bonds.
2. The payments to be made pursuant to paragraph 1 are intended to be in lieu of all
ad valorem taxes that would have to be paid on the Project to the taxing authorities if the Project
were not exempt from ad valorem taxes under the provisions of Article 16, Section 5 of the
Constitution of the State of Arkansas, as interpreted by the Supreme Court of the State of
Arkansas in Wayland v. Snapp, supra, and Pulaski County v. Jacuzzi Bros. Div., supra, and Ark.
Code Ann. §§ 14- 164 -701 to -703, but are not intended to be in lieu of (i) any licenses, occupation
or privilege tax, or fee imposed upon the Company for or with respect to its right to carry on its
business in the State of Arkansas, (ii) any special benefit or local improvement tax or
assessment, or (iii) fees or charges for utility services rendered, such as for water or sewer
services.
3. The City agrees to distribute each payment under paragraph 1 among the taxing
authorities in the proportion that the millage collected bears to the total millage collected by all
during the year of distribution.
4. The City and the Company agree to cooperate in sustaining the enforceability of
this Agreement. However, if by reason of a change in the Constitution of the State of Arkansas,
a change by the Supreme Court of the State of Arkansas in its interpretation of the Constitution, a
change by the General Assembly of the State of Arkansas, or otherwise, the Company is required
to pay any tax for which the payments specified in paragraph 1 are intended to be in lieu, the
Company may deduct the aggregate of any such payments made by it from any amount herein
agreed to be paid under paragraph 1. Furthermore, inasmuch as the payments in paragraph 1
herein agreed to be made are intended to be in lieu of taxes, it is agreed that said payments shall
not as to any year be in an amount greater than would otherwise be payable for such year in ad
valorem taxes, in the aggregate, on account of its ownership of the Project.
5. The agreement herein made by the Company shall terminate and be of no further
force and effect from and after the date that the Agreement shall terminate for any purpose other
than a default on the part of the Company. If such termination shall be at a point constituting a
portion of a year, the Company shall pay for the year in which termination occurred that portion
of the specified annual payment that the number of days in such year that the Project was exempt
prior to the terminations bears to 365 days (366 days in a leap year).
6. This Agreement shall be binding upon the successors and assigns of the
Company, but no assignment shall be effective to relieve the Company of any of its obligations
hereunder unless expressly authorized and approved in writing by the City.
LM Glasfiber (Arkansas), Inc.
PILOT Agreement
Page 3
When executed, this instrument shall constitute a valid and binding contract between the
Company and the City.
Very truly yours,
LM GLASFIBER (ARKANSAS), INC.
M
ACCEPTED:
CITY OF LITTLE OCIS
e
i
By:
Mark Stodola, Mayor