HomeMy WebLinkAbout20080707 - VI-09VI-9
July 2, 2008
TO: The Honorable Mayor and Council
FROM: John Grossman, HRA Director
RE: Amend Letter of Credit, Westview Properties LLC
The value of industrial park land deeded to Westview Properties for the construction of
their new facility has been secured by a Letter of Credit No. 111708, issued by
Vermillion Bank. The amount of the letter equaled the amount that would have to be
paid back to the City in case of default on the development agreement.
All the requirements and goals of the Development Agreement and the Business Subsidy
Agreement have been met except for the obligation to remain in business at the site for
five years, which expires August 25, 2010. Under the five-year rule, the original amount
secured, $325,695, declines at a pro-rated amount per month so on July 25, 2008 the
amount of land value that would have to be paid to the City in case of default will be
$136,123. See attached draft letter to Vermillion Bank.
RECOMMENDATION:
Authorize Vermillion Bank to amend the letter of credit to the amount of $136,123 with
an expiration date of August 25, 2010. The effect is to release security in the amount of
$190,572, which would not be claimed under the terms of the Business Subsidy
Agreement.
CITY OF
HASTINGS
CITY HALL
101 4th Street East
Hastings, MN 55033-1955
651-480-2350
Fax: 651-437-7082
www. ci. hasti ngs. m n. us
cityhall@ci.hastings.mn.us
Department of
Building Safety
651-480-2342
Engineering/
Planning/HRA/HPC
651-480-2334
Public Works
1225 Progress Drive
651-480-6185
Parks 6z Recreation
920 10th Street West
651-480-6175
Police
150 3rd Street East
651-480-2300
Fire
115 5th Street West
651-480-6150
Civic Arena
2801 Red Wing Boulevard
651-480-6159
Aquatic Center
901 Maple Street
651-480-2392
June 26, 2008
Ref Vermillion Bank Letter of Credit No. i 11708
Ms. Megan Lee
Vermillion Bank
PO. BOX 28
Vermillion MN 55085
Dear Ms. Lee,
The purpose of the Letter of Credit is to secure the City for the value of
land transferred to Westview Properties, LLC in 2005. Under the
Business Subsidy Agreement dated January 4, 2005, Westview Properties
agreed to certain job creation and wage goals and to continuously operate
the property as Westview Packaging for a period of 5 years. The 5 years
ends August 25, 2010. Failure to do so is a default which would trigger
repayment of part of the value of the land.
The amount of repayment is calculated on the land value $326,695 divided
by 60 multiplied by the number of months remaining of the fu1160 months
(five years). As of July 25, 2008, 25 months will remain, times $5,444.92
(1/60), leaving the amount of $136,123 to be secured.
As the job and wage goals have been met, leaving only the five-year rule,
the City of Hastings releases the amount of $190,572. The City authorizes
you to amend the amount of Letter of Credit No. i 11708, in favor of the
City of Hastings, for the account of Westview Properties, LLC, from
$326,695 to $136,123. We also ask that the expiration date be extended
from February 5, 2010 to August 25, 2010.
Yours truly,
John Grossman
HRA Director
Cc: Daniel Fluegel, City Attorney
Julie Trevis, Westview Properties
_ -` ~~
~_ ~ ~\
-, - _
Hastings on the Mississippi