City of Oak Creek

Common Council Report

Meeting Date: 11/18/03

Item No.:         6

Recommendation:

That the Common Council adopt Resolution 10313-111803, a Resolution Authorizing Execution of Second Agreement to Bond Agreement Relating to Industrial Development Revenue Bonds, Series 1998 (AAA Sales & Engineering, Inc/Emjay Project), Amending Provisions Relating to the Allocation of Bond Proceeds, and Amending the Redemption Dates and the Maturity Schedule of the Bonds.

Background:

As of Nov. 1, 1998, the City of Oak Creek approved Industrial Development Revenue Bonds in the amount of $6,375,000.00 for AAA Sales & Engineering (AAA) to expand and equip their facility.  The Bonds were structured as draw down bonds, which means that AAA did not actually receive bond proceeds until they did the work contemplated in the agreement.

A required public hearing was held on April 16, 2002, on this amendment, which would extend the three year period to a five year period, to allow the borrower an extension of time where they could continue to grow their business when economic conditions picked up.  A copy of that hearing transcript is included.  AAA now wishes to proceed with the amendment.

Because these are Industrial Development Revenue Bonds, this is essentially conduit financing.  The City lent its name to the financing in order for AAA to obtain a tax exempt status on the bonds.  The City has no liability whatsoever on the bonds.  The restructuring of the bond transaction is essentially between the bond holder, Bank One (formerly American National Bank & Trust Company), and the borrower, AAA/Emjay.

Fiscal Impact: 

None. 

Prepared by and Fiscal Review by : Beverly A. Buretta, CMC City Clerk

Respectfully submitted, Robert L. Kufrin City Administrator