HomeMy WebLinkAbout20100104 - VIII-B-1Memo
To: Mayor Hicks and City Council
From: John Hinzman, Planning Director
Date: January 4, 2010
Subject: Authorize Letter of Credit Reduction: Westview Properties LLC
REQUEST
Westview Properties LLC ( Westview Packaging) seeks authorization to reduce their
letter of credit from $136,123 to $43,559.36 (a $92,563.64 reduction).
The letter of credit was taken in lieu of an assessment lien to ensure completion of
certain business subsidies as part of an Industrial Park lot sale in 2004. All of 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 prorated amount per month. The $43,559.36
requested reduction represents the remaining value as of December 25, 2009.
The City Council granted a similar reduction from $325,695 to $136,123 in July, 2008.
RECOMMENDATION
Approval of the request is recommended.
ATTACHMENTS
• Original Letter of Credit
VERMILLIONBANK
107 East Main street *Vermillion, MN 55085 s (651) 437 -4433 Fax 437 -4321
January 04, 2005
IRREVOCABLE LETTER OF CREDIT
Letter of Credit No. 111708
Date: January 04, 2005
Expiration Date: February 05, 2010
City of Hastings
101 Fourth Street East
Hastings, MN 55033
Re: Irrevocable Letter of Credit No. 111708
Dear Sir or Madam:
We hereby establish our Irrevocable Letter of Credit No. 111708 in your favor for the account of West Properties, LLC,
Farmington, MN, 55024, and authorize you to draw on Vermillion State Bank, 107 East Main Street, Vermillion, MN
55085, drafts at sight for any sum or sums not exceeding a total of three hundred twenty six thousand six hundred ninety -five
and no /100 dollars ($326,695.00).
All drafts under this Letter of Credit must bear the clause "drawn under Vermillion State Bank, Letter of Credit No. 111708,
dated January 04, 2005 ". All drafts shall be accompanied by a Statement of Default from City of Hastings certifying that at
least thirty (30) days prior to the expiration date of this Letter of Credit that Westview Properties, LLC is in default under
your agreement.
This Letter of Credit is irrevocable, and we hereby agree with you that each such draft shall be duly honored by us in
accordance with the previous paragraph upon presentation to us at Vermillion State Bank, P.O. Box 28, Vermillion,
Minnesota 55085. Vermillion State Bank has no obligation to (1) inquire into the correctness of any such herein described
signed statement of Default, or (2) see to the proper application or use by City of Hastings of any payment by Vermillion
State Bank to it under such signed statement of Default.
The amount of the draft negotiation, must be endorsed by you on the reverse of this Letter of Credit and any draft presented
to us shall constitute a warranty that such endorsement was affected. This Letter of Credit must be attached to the final draft
when the credit is exhausted.
This Letter of Credit shall automatically renew for one year as of the one year anniversary date of origination, and each year
there forth, and will be terminated on February 5, 2010, or when released by City of Hastings. Not withstanding any other
provisions of this Letter of Credit, we may at our sole option pay at any time the remaining principal balance available for
draw under this Letter of Credit without complying with the requirements herein contained for a draw under this Letter of
Credit, and upon our payment to you of the remaining principal balance available for draw under this Letter of Credit, this
Letter of Credit shall terminate. You hereby agree to accept any tender of the remaining principal balance and full
satisfaction of our obligation under this Letter of Credit.
Except as far as otherwise expressly stated, this Letter of Credit is subject to Uniform. Customs and Practice for Documentary
Credit (1993 Revision) of the International Chamber of Commerce Publication No. 500.
Vermillion State Bank
By: 2%
Its: L•, 0 _,-