ORDINANCE NO. 120376

Approving an Industrial Development Plan for Heartland Sheets, LLC, for the purpose of constructing, equipping, and furnishing a manufacturing facility consisting of a corrugated sheet feeding operation located at 3950 N. Kimball Drive; waiving the City’s Chapter 100 Policy; authorizing and approving a Development Agreement for the purpose of setting forth covenants, agreements and obligations of the City and Heartland Sheets, LLC; authorizing the issuance of taxable and tax-exempt industrial revenue bonds in a maximum aggregate principal amount not to exceed $15,000,000.00; authorizing and approving certain other documents; and authorizing certain other actions in connection with the issuance of said bonds.

WHEREAS, the City of Kansas City, Missouri, a constitutional charter city and municipal corporation of the State of Missouri (the “City”) is authorized pursuant to the provisions of Article VI, Section 27(b) of the Missouri Constitution, as amended, and Sections 100.010 to 100.200, inclusive, of the Revised Statutes of Missouri, as amended, and the City of Kansas City Charter (collectively, the “Act”), to issue its revenue bonds for carrying out a project or projects under the Act, such revenue bonds to be paid solely from revenue received from such project, and to enter into a lease of certain personal property associated with the Project to be financed with the proceeds of such revenue bonds with any person, firm or corporation; and

WHEREAS, the City has heretofore prepared and approved plans for the industrial development of the City and desires to approve an Industrial Development Plan (the “Plan”) for the purpose of carrying out a development project (the “Project”) for Heartland Sheets, LLC (the “Company”); and

WHEREAS, the City intends to issue its Taxable and Tax-Exempt Industrial Revenue Bonds (the “Bonds”) for the purpose of furthering the Project to be located at 3950 N. Kimball Drive, Kansas City, Missouri (the “Project Site”); and

WHEREAS, notice of the Project was given to the taxing jurisdictions in accordance with Section 100.059.1 of the Revised Statutes of Missouri; and

WHEREAS, the Council has heretofore and does hereby find and determine that it is desirable for the economic development of the City and within the public purposes of the Act that the Council approve a Chapter 100 Industrial Development Plan as proposed by the Company; and that the City issue the Bonds, as more fully described in the Indenture and in the Lease, as hereinafter defined and authorized, proceeds of which shall be used for the purchase of certain personal property associated with the Project and which shall be located at the Project Site and leased by the City to the Company, with an option to purchase; and

WHEREAS, the principal amount of the Bonds will be issued in two series, a tax-exempt series and a taxable series, both of which will be issued as Chapter 100 bonds over a period of ten years and which will be repaid solely by the Company under the terms of the lease agreement; and

WHEREAS, for a Chapter 100 bond issuance, the City Council has previously established a policy for the review and approval of these projects, one component of which suggests a maximum bond term of 10 years and another of which suggests payments-in-lieu-of-taxes (PILOTS) at a level of no less than 50% of the amount the property would have paid if it had been fully taxed, to the affected taxing jurisdictions during the term of the bonds; and

WHEREAS, in this specific instance, it has been determined that a waiver of the policy must occur in order to carry out the Project and incent the Company to locate its manufacturing facility in Kansas City, Missouri, as well as cause the creation of 43 net new jobs in Kansas City, Missouri; and

WHEREAS, the City finds and determines that it is necessary and desirable in connection with the project to establish a 75% abatement of ad valorem taxes of personal property associated with the Project with annual payment-in-lieu-of-taxes (PILOTS) equal to 25% of the personal property taxes to the affected taxing jurisdictions that would have been payable had the personal property been fully taxed; and

WHEREAS, a declaration of intent to reimburse the Company from the proceeds of tax-exempt bonds for expenditures made by the Company in connection with the Project was made on January 19, 2012, pursuant to a resolution of The Industrial Development Authority of the City of Kansas City, Missouri (the “Authority”), following which time it was determined that the City rather than the Authority would be the issuer of such tax-exempt bonds in order for the Project to be eligible for an abatement of ad valorem taxes of personal property associated with the Project, and such declaration of intent is hereby approved on behalf of the City; and

WHEREAS, the City further finds and determines that it is necessary and desirable in connection with the Project and the issuance of the Bonds that the City enter into certain documents, and that the City take certain other actions and approve the execution of certain other documents as herein provided; NOW, THEREFORE,

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

Section 1. Approval of Plan. The City Council hereby finds and determines that the Project will promote the economic well-being and industrial development of the City and the Project will be in furtherance of the public purposes set forth in the Act. The City Council hereby approves the Plan for the Project, which includes the following provisions:

(a) Establishing and equipping a corrugated sheet feeding operation including certain equipment and other related personal property at the Project Site in the City of Kansas City, Missouri;

(b) Waiver of the Chapter 100 policies establishing PILOTS at a level of 25% and resulting in 75% property tax abatement;

(c) A total estimated investment of $12 million in personal property;

(d) The costs for the personal property will be funded from proceeds of the sale of up to $15 million maximum principal amount of Taxable and Tax-Exempt Industrial Revenue Bonds to be issued by the City, the Taxable Bonds to be purchased by the Company and the Tax-Exempt Bonds to be purchased by a third party lender on behalf of the Company; and

(e) Repayment of the Chapter 100 bonds over a 10-year period.

Section 2. Authorization of Documents. The City is hereby authorized to enter into the following documents (the "City Documents"), in such form as shall be approved by the officials of the City executing such documents, such officials’ signatures thereon being conclusive evidence of their approval thereof:

(a) Development Agreement (the “Development Agreement”), between the City and the Company for the purpose of setting forth covenants, agreements and obligations of the City and the Company with respect to the Project, the Bonds, and the tax redirection.

(b) Trust Indenture (the “Indenture”), between the City and BOKF, N.A., d/b/a the Bank of Kansas City (the “Trustee”), pursuant to which the Bonds shall be issued and the City shall pledge the Project and assign certain of the payments, revenues and receipts received pursuant to the Lease to the Trustee for the benefit and security of the owners of the Bonds upon the terms and conditions as set forth in the Indenture.

(c) Lease Agreement (the “Lease”), between the City and the Company, under which the City will acquire the Project and lease the Project to the Company pursuant to the terms and conditions in said Lease, in consideration of rental payments by the Company which will be sufficient to pay the principal of, premium, if any, and interest on the Bonds.

(d) Purchase Agreements relating to each of the Tax-Exempt Bonds and the Taxable Bonds, under which the purchaser named therein agrees to purchase the applicable series of Bonds.

(e) Tax Compliance Agreement relating to the Tax-Exempt Bonds between the City and the Company, which sets forth certain representations, facts, expectations, terms and conditions relating to the use and investment of the proceeds of the Tax-Exempt Bonds by the Company, to establish and maintain the exclusion of interest on the Tax-Exempt Bonds from gross income for federal income tax purposes, and to provide guidance for complying with the arbitrage rebate provisions of Section 148(f) of the Internal Revenue Code.

Section 3. Authorization of the Bonds. The City is hereby authorized to issue and sell its Taxable and Tax-Exempt Industrial Revenue Bonds (Heartland Sheets Project), in a maximum aggregate principal amount not to exceed $15,000,000.00, for the purpose of providing funds for certain personal property associated with the Project. Each series of the Bonds shall be issued and secured pursuant to the Indenture and shall bear such date, shall mature at such time, shall be in such denominations, shall bear interest at such rates, shall be in such form, shall be subject to redemption and other terms and conditions, and shall be issued in such manner, subject to such provisions, covenants and agreements, as are set forth in the Indenture.

Section 4. Sale and Terms of Bonds; Authorization and Execution of Bond Purchase Agreements. The maximum aggregate principal amount of both series of Bonds shall not exceed $15,000,000.00. The Tax-Exempt Bonds will be sold to Key Government Finance Inc. or an affiliate thereof under the terms of a Bond Purchase Agreement among the City, the Company and such purchaser (the “Tax-Exempt Purchase Agreement”). The interest rate on the Tax-Exempt Bonds shall not exceed 3.5% (other than as provided in the Indenture upon an event of default or event of taxability, as described therein). The Taxable Bonds will be sold to the Company under the terms of a Bond Purchase Agreement between the City and the Company (the “Taxable Purchase Agreement” and with the Tax-Exempt Purchase Agreement, the “Purchase Agreements”). The interest rate on the Taxable Bonds shall not exceed 5% per annum. The principal on the Taxable Bonds shall be payable at maturity and the principal on the Tax-Exempt Bonds shall be payable as provided in the Indenture. The final maturity date for the Bonds shall be no later than the tenth anniversary of the first day of the month in which the Bonds are issued. Each series of the Bonds shall be purchased at 100% of the principal amount thereof, and each series of Bonds may be redeemed at the times and at the redemption prices as provided in the Indenture. The Director of Finance or the City Treasurer is each authorized to execute the Purchase Agreements for and on behalf of and as the act and deed of the City.

Section 5. Limitation on Liability. The Bonds and the interest thereon shall be limited obligations of the City payable solely out of certain payments, revenues and receipts derived by the City from the Lease described below, and such payments, revenues and receipts shall be pledged and assigned to the Trustee named below as security for the payment of the Bonds as provided in the Indenture. The Bonds and the interest thereon shall not constitute general obligations of the City or the State of Missouri, and neither the City nor said State shall be liable thereon. The Bonds shall not constitute indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and are not payable in any manner by taxation.

Section 6. Creation of Bond Fund. The City is hereby authorized to establish with the Trustee pursuant to the Indenture, a special trust fund in the name of the City to be designated the “City of Kansas City, Missouri, Bond Fund – Heartland Sheets Project” and the City shall cause all sums required by the Indenture to be deposited therein and shall create all accounts therein required by the Indenture.

Section 7. Execution of Documents. The Mayor is hereby authorized and directed to execute the Bonds and to deliver the Bonds to the Trustee for authentication for and on behalf of and as the act and deed of the City in the manner provided in the Indenture. The Director of Finance is hereby authorized and directed to execute the City Documents and such other documents, certificates and instruments as may be necessary or desirable to carry out and comply with the intent of this Ordinance, for and on behalf of and as the act and deed of the City, including a IRS Form 8038 with respect to the Tax-Exempt Bonds. The City Clerk or a deputy City Clerk, of the City is hereby authorized and directed to attest to and affix the seal of the City to the Bonds and the City Documents and such other documents, certificates and instruments as may be necessary or desirable to carry out and comply with the intent of this Ordinance.

Section 8. Further Authority. The Mayor, Director of Finance and other officials, agents and employees of the City as required, are hereby authorized and directed to take such further action, hold such hearings and execute such other documents, certificates and instruments as may be necessary or desirable to carry out and comply with the intent of this Ordinance and to carry out, comply with and perform the duties of the City with respect to the Bonds, the City Documents, and tax redirection.

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I hereby certify that there is a balance, otherwise unencumbered, to the credit of the appropriation to which the foregoing expenditure is to be charged, and a cash balance, otherwise unencumbered, in the treasury, to the credit of the fund from which payment is to be made, each sufficient to meet the obligation hereby incurred.

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Randall J. Landes

Director of Finance

Approved as to form and legality:

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Cecilia Abbott

Assistant City Attorney