MINUTES OF THE SPECIAL MEETING OF THE CITY COUNCIL Wichita, Kansas, January 21, 1997 Tuesday, 10:05 A.M. The City Council met in special session with Mayor Knight in the Chair. Council Members Cather, Cole, Gale, Kamen, Rogers; present. Council Member Ferris absent. Chris Cherches, City Manager; Gary Rebenstorf, Director of Law; Pat Burnett, City Clerk; present. NEW BUSINESS IRB - 901, L.L.C. REQUEST FOR LETTER OF INTENT FOR TAXABLE INDUSTRIAL REVENUE BONDS - 901, L.L.C. Allen Bell Financial Projects Director reviewed the Item. Agenda Report No. 97-057. Ablah Enterprises, Inc., acting on behalf of 901, L.L.C., has submitted a request for the issuance of a Letter of Intent for taxable industrial revenue bonds in an amount not to exceed $7,900,000 to acquire and renovate a facility located at George Washington and Lincoln (the "901 Building"). 901, L.L.C. also requests a 100% 5-year property tax abatement on the facility and proposes an in lieu of tax payment equal to 1996 existing taxes on the property. 901, L.L.C. is a Kansas limited liability company formed in January, 1997 for the purpose of acquiring, owning, managing, operating and selling real estate. The Company is owned by its members, Ablah Enterprises, Inc. and Ronald D Ryan. Bond proceeds will be used to acquire and renovate the 901 Building, a three-story building with a basement containing 175,140 s.f. on 377,300 S.f. of land located at the intersection of George Washington Boulevard and Lincoln Street in southeast Wichita. The renovation of the building will include, but not be limited to: new fire sprinkler systems; plumbing; restrooms; exterior windows; HVAC units; reconditioned elevators; parking improvements; landscaping; exterior building improvements; fencing and a ground floor restaurant. Upon completion of the renovation, NationsBank (formerly Bank IV) will locate a Banking Call Center in the facility. The Center will provide service around-the-clock, 7 days a week, to the banks customers, regardless of their location. Wichita was selected as the site for the Call Center following a nationwide competition that included most of the major cities in the NationsBank system. NationsBank will create new employment for 200- 300 persons during the first year of its operation and up to 400-600 persons by the end of the second year of operations. In addition, Ryan International Airlines will relocate its corporate headquarters for national and international operations to the facility from its present location near the airport on Kellogg. Ryan will add approximately 80 new employees (to its existing staff of 106 persons) during the term of its initial lease of space in the facility of 10 years. The bonds will be privately placed with one or more institutional investors. The firm of Hinkle, Eberhart & Elkouri, L.L.C. will serve as bond counsel in the transaction. The project will be financed by bond proceeds as follows: USE OF BOND PROCEEDS Building Acquisition $1,100,000 Building Renovation 5,290,000 Issuance Costs (Legal Fees, etc.) 100,000 Other Costs (Architectural & Development costs) 625,000 Working Capital 785,000 Total: $7,900,000 901 L.L.C. will file an approved EEO/AA Plan and Water Conservation Plan with the City prior to the issuance of the bonds. 901. L.L.C. agrees to pay all costs of issuing the bonds and agrees to pay the City's $2,500 annual IRB administrative fee for the term of the bonds. 901, L.L.C. is requesting a 100% tax abatement of ad valorem property taxes on the project and proposes to make an in lieu of tax payment equal to existing 1996 taxes on the facility. The 1996 taxes on the facility are $26,415.48. Under the City's Business Incentives Policy, the project would qualify for a 100% tax abatement. Due to state law requirements concerning the giving of notice prior to City Council consideration of an IRB tax abatement, approval of the requested property tax abatement will have to be considered the Council at a subsequent meeting. Bond documents needed for the issuance of the bonds will be prepared by Hinkle, Eberhart & Elkouri, bond counsel for the project. Council Member Rogers Council Member Rogers, with regard to Condition No. 14, said procedures need to be developed to monitor the use of Minority-owned Business Enterprises and Women-owned Business Enterprises by those using IRBs. Discussion was had and consensus of the Council was to take up the matter in a workshop session. Mayor Knight Mayor Knight inquired if anyone wished to be heard and no one appeared. Motion -- Cather moved that the issuance and Mayoral signing of a Letter of Intent to 901, L.L.C. for taxable industrial revenue bonds in an amount not to exceed $7.9 million for a 6-month term be approved subject to the following conditions: 1. Negotiation of a Lease Agreement and Bond Ordinance. 2. Arrangements have been made for the sale/placement of the bonds. 3. Guarantees for the payment of the bonds are in place. 4. Agreement to pay the City administrative fees of $2,500 per year for as long as the bonds are outstanding. 5. Agreement to pay all costs incurred by the City for processing the bonds/application. 6. An approved Equal Employment Opportunity/Affirmative Action Plan is on file with the City prior to issuance of the bonds. 7. An approved Water Conservation Plan is on file with the City prior to issuance of the bonds. 8. Agreement to submit building and site plans to CART (City manager's Aesthetic Review Team) for review and to modify the proposed design to comply with any reasonable CART conditions or recommendations. 9. Agreement to provide the City, prior to submitting the proposed Lease Agreement, an Environmental Site Assessment (ESA) that documents the environmental conditions of the property, and an agreement that the ESA will be conducted by an independent consultant who is a recognized expert in the area. Industrial Revenue Bonds will not be issued if the ESA discloses environmental conditions that might have implications for bond purchasers under the liability provisions of the Superfund Amendments and Reauthorization Act (SARA). 10. Agreement that if the bonds are to be offered for sale to the public, the applicant will not, during the period of time the bonds are outstanding, have a commercial banking relationship with the trustee of the bonds to be issued unless the original purchaser of the bonds acknowledges in writing the existence of the relationship and waives any conflict that might exist as a result of the relationship. 11. Applicant is required to furnish copies of its annual audits to the City. 12. Cooperation with any annual compliance audit procedure the City may adopt to monitor compliance with conditions, including any annual reports required of the applicant and any inspections of the applicant's premises or interviews with the applicant's staff. 13. Commitment to achieve and maintain its proposed employment goals, and to meet its Equal Employment Opportunity/Affirmative Action goals, during the term of the tax abatement. If the applicant fails to demonstrate a good- faith effort to achieve these goals, the City may revoke the tax abatement by either imposing payments-in-lieu-of-taxes or by declining to make the annual exemption filing with the Board of Tax Appeals. All repayments of in-lieu taxes shall be redistributed to the other taxing authorities in accordance with the law. 14. Applicant is encouraged to utilize Minority- owned Business Enterprises (MBE) and Women-owned Business Enterprises (WBE) as contractors, subcontractors, engineers, architects, suppliers and vendors whenever possible; and that the matter of the use and monitoring of MBE and WBE contractors, subcontractors, engineers, architects, suppliers, and vendors be taken up in -- carried workshop session. Motion carried 6 to 0. (Ferris absent) ADJOURNMENT The City Council meeting adjourned at 10:32 a.m. Pat Burnett City Clerk COUNCIL PROCEEDINGS JOURNAL 162 JANUARY 21, 1997 Page 2