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HomeMy WebLinkAboutResolutions - 1991.04.25 - 18383MISCELLANEOUS RESOLUTION NO. #91082 April 25, 1991 RE: ECONOMIC DEVELOPMENT DIVISION RESOLUTION APPROVING PROJECT PLAN (ROSE HILL PROJECT) - HOLLY TOWNSHIP BY: PLANNING AND BUILDING COMMITTEE, LARRY CRAKE, CHAIRMAN TO: THE OAKLAND COUNTY BOARD OF COMMISSIONERS Mr. Chairman, Ladies and Gentlemen: WHEREAS, The Economic Development Corporation of the County of Oakland (the "EDC") has recommended that this Board of Commissioners approve the Project Plan required by the Economic Development Corporations Act, Act No: 338 of the Michigan Public Acts of 1974, as amended (the "Act") for the Rose Hill Project, a copy of which Project Plan is attached hereto as Exhibit A (the "Project Plan"); and WHEREAS, the EDC's recommendation to this Board of Commissioners was based upon its determinations that the Project is reasonable and necessary to effectuate the purposes of the Act, that the Project Plan prepared in connection with the Project satisfies all of the requirements of Section 8 of the Act regarding project plans, that the persons who will be active in the management of the project for at least one (1) year after the projected date of the County Board of Commissioner's approval of the Project Plan will have sufficient ability and experience to manage the Plan properly, and that the proposed method of financing the Project is feasible and a bond purchaser's commitment has been obtained; and WHEREAS, on April 16 , 1991, the governing body of Holly Township, Oakland County, Michigan, also approved the Project Plan; and WHEREAS, on April 25 1991, this Board of Commissioners held a public hearing to consider whether the Project Plan constitutes a public purpose as contemplated by the Act; and WHEREAS, this Board of Commissioners, following such public hearing and its review of the Project Plan, concurs in the determinations of the EDC with respect thereto; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE COUNTY OF OAKLAND, as follows: 1. The Project Plan, in the form attached hereto as Exhibit A, is hereby determined to constitute a public purpose as contemplated by the Act. 2. The Project Plan is hereby approved. 3. The EDC is hereby authorized to take such steps as are necessary to implement the Project and the financing thereof by the issuance of revenue bonds or notes. 4. The County Clerk is hereby directed to provide four certified copies of this resolution to the Assistant Secretary of the Board of the EDC. The Planning and Building Committee, by Larry Crake, Chairman, moves for adoption of the foregoing resolution. PLANNING AND BUILDING COMMITTEE /er ( Cr --Chairman Moved by Crake supported by Johnson the resolution be adopted. YEAS: Members: McCulloch, Millard, Moffitt, Olcon Palmpr, Pappageorge, Pernick, Price, Rewold, Schmid, Skarritt, Wolf, Aaron, Bishop, Caddell, Crake, Gosling, Huntoon, Jensen, Johnson, Krause, Law, McConnell. (23) NAYS: Members: None.. (0) ABSENT: Members: Ferrens, McPherson, Oaks, Serra. (4) ABSTENTIONS: Members: None. an RESOLUTION DECLARED ADOPTED: Lynn D. Allen County Clerk STATE OF MICHIGAN ) ) SS. COUNTY OF OAKLAND ) I hereby certify that the foregoing is a true and complete copy of a resolution adopted at a regular meeting of the Board of Commissioners of the County of Oakland, Michigan held on the 25th day of April , 1991, the original of which is on file in my office. Public notice of said meeting was given pursuant to and in compliance with Act No. 267 of the Michigan Public Acts of 1976, as amended. Lynn D. Allen County Clerk Dated: April 26 , 1991 (RLS/2402) 3 THE ECONOMIC DEVELOPMENT CORPORATION OF THE COUNTY OF OAKLAND Oakland County, Michigan Rose Hill Project PROJECT PLAN CONTENTS 1. Summary Description of Project (Page 2) 2. Project Plan Certification by Company (Page 3) 3. Statutorily Required Information (Page 4) 4. Exhibits "A" - Project Area Legal Description "B" - Underwriter/Placement Agent's Commitment Letter "C" - Company Certificate Regarding "Prevailing Wages" - Company Certificate Regarding Transfer of Employment - Commitment of Letter of Credit Bank (RLS/2386) PROJECT PLAN SUMMARY DESCRIPTION OF ROSE HILL PROJECT OWNER OF PROJECT: Rose Hill Center, Inc., a Michigan nonprofit corporation CONTACT PERSON: (Name, address, telephone number) Virgil R. Stucker President 525 N. Woodward Avenue Bloomfield Hills, MI 48304 (313) 645-9760 LOCATION OF PROJECT: (Local municipality) Holly Township PROJECT AREA/DISTRICT AREA: See Exhibit A NATURE OF PROJECT: Mental Health Rehabilitation Center EMPLOYMENT CREATED OR RETAINED: 30 full-time employment positions created; no employment positions lost. TOTAL PROJECT COST: Approximately 5.2 million. 4.7 million in capitalization; $500,000 in start-up expense. BONDS TO BE ISSUED: $2 Million BOND UNDERWRITER/PLACEMENT AGENT: Bonds are lower -floater product from NBD. They are supported by a standing letter of credit from NBD Bank, N.A. to be placed by First Commerce Capital of Montgomery, Alabama. (See attached letter) DATE AND EXPIRATION DATE OF BOND PURCHASE AND/OR LETTER OF CREDIT COMMITMENT: NBD Bank, N.A. commitment for its standard letter of credit expiring June 30, 1991 has been accepted. Bond purchase undertaking by First Commerce Capital has also been arranged. - 2 - ROSE HII4 CENTER, INC. By: It s: PROJECT PLAN CERTIFICATION THIS PROJECT PLAN WAS PREPARED FOR THE ECONOMIC DEVELOPMENT CORPORATION OF THE COUNTY OF OAKLAND IN ACCORDANCE WITH THE REQUIREMENTS OF THE ECONOMIC DEVELOPMENT CORPORATIONS ACT, ACT NO. 338 OF THE MICHIGAN PUBLIC ACTS OF 1974, AS AMENDED. THE UNDERSIGNED HAS PROVIDED ALL OF THE INFORMATION CONTAINED HEREIN AND HEREBY CERTIFIES AS TO THE ACCURACY AND VALIDITY OF SUCH INFORMATION AS OF THIS DATE. THE UNDERSIGNED UNDERSTANDS THAT THIS PROJECT PLAN IS STATUTORILY REQUIRED AND, IF IT CONTAINS ANY MATERIAL MISREPRESENTATION OR INACCURACY, COULD RESULT IN THE INVALIDATION OF THE ECONOMIC DEVELOPMENT CORPORATION PROCEEDINGS REGARDING THE PROJECT TO WHICH THE PROJECT PLAN PERTAINS. 3///ci/ Dated: PROJECT PLAN STATUTORILY REQUIRED INFORMATION REGARDING ROSE HILL PROJECT I. THE LOCATION AND EXTENT OF EXISTING STREETS AND OTHER PUBLIC FACILITIES WITHIN THE PROJECT DISTRICT AREA; THE LOCATION, CHARACTER, AND EXTENT OF THE CATEGORIES OF PUBLIC AND PRIVATE LAND USES NOW EXISTING AND PROPOSED FOR THE PROJECT AREA, INCLUDING RESIDENTIAL, RECREATIONAL, COMMERCIAL, INDUSTRIAL, EDUCATIONAL, AND OTHER USES; AND A LEGAL DESCRIPTION OF THE PROJECT AREA: No public facilities exist within the project district area.. No public facilities are proposed for development ; within this area. Rose Hill's 372 acres will be retained largely as a farm. Approximately 40 acres will be developed. Nine buildings will be constructed to house 100 people; 30 will be the residential staff who will live on site with their families and the remaining will be 48 residential clients. The entire property including the farming operation will be used for enabling persons with mental illness to achieve rehabilitation. , Legal description of Project Area attached as Exhibit ; A. II. A DESCRIPTION OF EXISTING IMPROVEMENTS IN THE PROJECT AREA TO BE DEMOLISHED, REPAIRED, OR ALTERED; A: • DESCRIPTION OF REPAIRS AND ALTERATIONS; AND AN ESTIMATE OF THE TIME REQUIRED FOR COMPLETION: The barns for the farming operation, two farmhouses, and out buildings will be renovated. Renovation cost of these structures is included within our capitalization plan. Six months is required to complete the renovation activity. None of the existing structures will be demolished. The existing structures are situated along Fagan Road in a manner typical to a normal farm operation. The cost of the renovation is $45,000. III. THE LOCATION, EXTENT, CHARACTER, AND ESTIMATED COST OF THE IMPROVEMENTS, INCLUDING REHABILITATION CONTEMPLATED FOR THE PROJECT AREA, AND AN ESTIMATE OF THE TIME REQUIRED FOR COMPLETION: The answer is contained within answers II and IV. IV. A DESCRIPTION OF THE CONSTRUCTION OR STAGES OF CONSTRUCTION PLANNED, AND THE ESTIMATED TIME OF COMPLETION OF EACH STAGE: Construction is planned in two phases. The first phase of construction of core facilities will cost approximately $3.1 million and include Rose Hill's 15,000 sq. ft. community center, a 5,000 sq. ft. resident home, a four unit apartment building, and two single family homes. This construction will start in May of 1991 and be completed by December of 1991. The second phase of construction will begin in May of 1993 and be completed by December of 1993. During this phase, two additional resident homes, a four unit apartment building, and possibly one additional single family residence will be completed. This phase will cost approximately $1.6 million. V. A DESCRIPTION OF THE PARTS OF THE PROJECT AREA TO BE LEFT AS OPEN SPACE AND THE USE CONTEMPLATED FOR THE SPACE: Rose Hill's 372 acres has 190 acres of tillable farm land. As a result of Rose Hill's development, only 20 acres of this tillable acreage will be lost. The remaining land is composed of wooded areas surrounding three small lakes. VI. A DESCRIPTION OF PORTIONS OF THE PROJECT AREA WHICH THE ECONOMIC DEVELOPMENT CORPORATION OR THE COMPANY DESIRES TO SELL, DONATE, EXCHANGE OR LEASE TO OR FROM THE MUNICIPALITY AND THE PROPOSED TERMS: Not applicable. VII. A DESCRIPTION OF DESIRED ZONING CHANGES AND CHANGES IN STREET, STREET LEVELS, INTERSECTIONS AND UTILITIES: The area for Rose Hill's development has already received an approval from the Holly Township Planning Commission under a Special Land Use Permit. In the purchase of part of Rose Hill's acreage, a lot split variance was also granted by Holly authorities. No changes in street, street levels,-intersections or utilities are planned. VIII. A DESCRIPTION OF THE PROPOSED METHOD OF FINANCING THE PROJECT, INCLUDING ATTACHMENT OF A COPY OF THE BOND PURCHASER'S COMMITMENT LETTER: As a private non -profit corporation, Rose Hill's capital financing primarily results from donations receiVed from foundations, corporations and individuals. $3.2 million donated dollars will go directly into Rose Hill's capitalization and start-up expenses. $1 million of the $2 million in bonding will be paid off by future donations. The additional $1 million of bond financing will be paid off within 10 years by Rose Hill's operating revenue. Once established, Rose Hill's operating revenue will cover not only expenses but be sufficient to cover debt service on the longer term million dollar component of the bond financing. Copy of bond purchaser's commitment letter attached as Exhibit B. IX. A STATEMENT REGARDING THE PAYMENT OF PREVAILING WAGE AND FRINGE BENEFIT RATES AS DETERMINED PURSUANT TO ACT NO. 166 OF THE MICHIGAN PUBLIC ACTS OF 1965, AS AMENDED (REGARDING WAGES ON STATE CONTRACTS): See Exhibit C. X. A LIST OF PERSONS WHO WILL MANAGE OR BE ASSOCIATED WITH THE MANAGEMENT OF THE PROJECT FOR A PERIOD OF NOT LESS THAN 1 (ONE) YEAR FROM THE DATE OF APPROVAL OF THE PROJECT PLAN: Virgil R. Stucker, President and CEO of Rose Hill Center will manage the project. Charles Terrence McCafferty and Associates are hired as architects and community planners to oversee the construction of the major portion of the project which they have designed. The general contractor has not yet been chosen. XI. DESIGNATION OF THE PERSON OR PERSONS, NATURAL OR CORPORATE, TO WHOM THE PROJECT IS TO BE LEASED, SOLD OR CONVEYED AND FOR WHOSE BENEFIT THE PROJECT IS BEING UNDERTAKEN, TO THE EXTENT THAT INFORMATION IS PRESENTLY AVAILABLE: The project will neither be leased nor sold nor conveyed to the ownership of any other corporation. Rose Hill Center, Inc. will own and operate the project for the benefit of the seriously mentally XII. IF THERE IS NOT AN EXPRESS OR IMPLIED AGREEMENT WITH A PERSON OR PERSONS, NATURAL OR CORPORATE, THAT THE PROJECT WILL BE LEASED, SOLD, OR CONVEYED TO THOSE PERSONS, THE PROCEDURES FOR BIDDING FOR THE LEASING, PURCHASING OR CONVEYING OF THE PROJECT UPON ITS COMPLETION: There are no procedures for bidding for the leasing, purchasing or conveying of the project upon its completion because it will be retained and operated by Rose Hill Center, Inc. XIII. ESTIMATES OF THE NUMBER OF PERSONS RESIDING IN THE PROJECT AREA AND THE NUMBER OF FAMILIES AND INDIVIDUALS TO BE DISPLACED. IF OCCUPIED RESIDENCES ARE DESIGNATED FOR ACQUISITION AND CLEARANCE, INCLUDE A SURVEY OF THE FAMILIES AND INDIVIDUALS TO BE DISPLACED, INCLUDING THEIR INCOME AND RACIAL COMPOSITION, A STATISTICAL DESCRIPTION OF THE HOUSING SUPPLY IN THE COMMUNITY, INCLUDING THE NUMBER OF PRIVATE AND PUBLIC UNITS IN EXISTENCE OR UNDER CONSTRUCTION, THE CONDITION OF THOSE IN EXISTENCE, THE NUMBER OF OWNER—OCCUPIED AND RENTER—OCCUPIED — 7 — UNITS, THE ANNUAL RATE OF TURNOVER OF THE VARIOUS TYPES OF HOUSING AND THE RANGE OF RENTS AND SALE PRICES, AN ESTIMATE OF THE TOTAL DEMAND FOR HOUSING IN THE COMMUNITY, AND THE ESTIMATED CAPACITY OF PRIVATE AND PUBLIC HOUSING AVAILABLE TO DISPLACED FAMILIES AND INDIVIDUALS: Not applicable. No people presently reside in the Project Area, no families or individuals will be displaced by the Project, and no residences are located in the Project Area. XIV. A PLAN FOR ESTABLISHING PRIORITY FOR THE RELOCATION OF PERSONS DISPLACED BY THE PROJECT IN NEW HOUSING IN THE PROJECT AREA: Not applicable. XV. PROVISION FOR THE COSTS OF RELOCATING PERSONS DISPLACED BY THE PROJECT AND FINANCIAL ASSISTANCE AND REIMBURSEMENT OF EXPENSES, INCLUDING LITIGATION EXPENSES AND EXPENSES INCIDENT TO THE TRANSFER OF TITLE, IN ACCORDANCE WITH THE STANDARDS AND PROVISIONS OF THE FEDERAL UNIFORM RELOCATION ASSISTANCE AND REAL PROPERTY ACQUISITION POLICIES ACT OF 1970, 42 U.S.C. 4601 TO 4655: Not applicable. XVI. A PLAN FOR COMPLIANCE WITH ACT NO. 227 OF THE MICHIGAN PUBLIC ACTS OF 1972, WHICH PERTAINS TO PROVIDING FINANCIAL ASSISTANCE, ADVISORY SERVICES AND REIMBURSEMENT OF CERTAIN EXPENSES TO DISPLACED PERSONS: Not applicable. XVII. OTHER MATERIAL AS THE ECONOMIC DEVELOPMENT CORPORATION, LOCAL PUBLIC AGENCY, OR GOVERNING BODY CONSIDERS PERTINENT: Not applicable. EXHIBIT A Land situated in the Township of Holly, Oakland County, Michigan, described as follows: Parcel I: Part of the Southeast 1/4 of Section 10, Town 5 North, Range 7 East, lying Easterly of the center line of Fagan Road. Subject to the rights of the public and of any governmental unit in any part thereof taken, used or deeded for street, road or highway purposes. Parcel No. 01-10-400-001. Parcel II: The Northwest 1/4, also the West 314 of the Southwest 1/4, Section 11, Town 5 North, Range 7 East. Subject to the rights of the public and of any governmental unit in any part thereof taken, used or deeded for street, road or highway purposes. Parcel No. 01-11-100-001 Parcel III: The Northeast 114 of the Northeast 1/4 of Section 15, Town 5 North, Range 7 East, Subject to the rights of the public and of any governmental unit in any part thereof taken, used or deeded for street, road or highway purposes. Parcel No. 01-15-226-001. ALSO COVERS OTHER LAND. 0:/MAL/DMAL0666 E. HOLLY RD ROSE HILL CENTER HOLLY TOWNSHIP, MI 1111°‘1111111 ii HOLLY LOCATION MAP R C31 SE HILL 8 First Commerce Capital InvestrnentBankrs February 28, 1991 Mr. Jeffrey A. Kaczmarek Manager - Economic Development Corporation Division THE ECONOMIC DEVELOPMENT CORPORATION OF THE COUNTY OF OAKLAND 1200 North Telegraph Road Pontiac, Michigan 48053 : $2,000,000 The Economic Development Corporation of the County of Oakland Limited Obligation Revenue Bonds (Rose Hill Center Project), Series 1991 Dear Mr. Kaczmarek: We understand that The Economic Development Corporation of the County of Oakland, the "Issuer") is reviewing an application for the issuance of Industrial Development Revenue bonds in the principal amount of approximately $2,000,000 (the "Bonds") on behalf of Rose Hill Center (the "Company"). The bond proceeds will be used by the Company for the purpose of the construction of a psychiatric rehabilitation center (the "Project") to be located in the City of Holly, Michigan. As such times as the documents under which the Bonds are to be issued and all other necessary documents and proceedings have been determined by the Issuer, the Company and First Commerce Capital to be satisfactory in all respects for financing purposes, we will submit to the Issuer a Bond Purchase Agreement for the purchase of the Bonds, as underwriter or placement agent. The purchase of the Bonds, of course, would be subject to execution of an appropriate Bond Purchase Agreement among the Company, the Issuer, and First Commerce Capital, the completion of all requisite legal proceedings and receipt of satisfactory opinions from Counsel to the Issuer, if any, and of Bond Counsel. Also, the conditions of the municipal bond market generally should not be such as to make it undesirable, in our opinion, or in the opinion of the Company, to offer the Bonds as contemplated. 272 Commerce Street I Post Office Box 5079 I Montgomery, Alabama 36104 J Telephone 205/269-0044 A Division of Porter, White & Yardley, Inc. K.:"eph A. Whitehead AW:mhf First Commerce Capital Investment Bankers Mr. Jeffrey A. Kaczmarek THE ECONOMIC DEVELOPMENT CORPORATION OF THE COUNTY OF OAKLAND February 28, 1991 Page Two. The ultimate financing structure has not yet been determined and will depend upon market conditions. We are presently considering a Variable Rate Demand structure secured by an irrevocable Letter of Credit to be issued by NBD Bank, N.A. Our proposal for the purchase of the Bonds will be subject to approval by the Issuer, and the Company. The acceptance of this letter of intent by the Issuer does not obligate the Issuer for any fees for services performed or expenses we may incur, whether or not our proposal is accepted. Sincerely, FIRST COMMERCE CAPITAL CC: Ms. Mary Lee Penny NBD BANK, N.A. 611 Woodward Avenue Detroit, Michigan 48226 Telecopier (313) 225-3074 Exhibit C COMPANY CERTIFICATE REGARDING PAYMENT OF PREVAILING WAGES (Rose Hill Project) The undersigned, Rose Hill Center, Inc., a Michigan nonprofit corporation (the "Company"), hereby certifies to The Economic Development Corporation of the County of Oakland (the "EDC") as follows: 1. This Certificate is made and based upon the best of the Company's knowledge and belief, only after thorough investigation and discussion with all owners of the Company and others who might have knowledge regarding the subject matter. 2. The Company understands that this Certificate is a statutory requirement under the Economic Development Corporations Act, Act No 338 of the Michigan Public Acts of 1974, as amended (the "Act") which, if improperly made or based upon any material misrepresentation or inaccuracy, might invalidate the proceedings regarding the Rose Hill Project (the "Project") pursuant to which the EDC expects ultimately to issue its limited obligation economic development revenue bonds to finance all or part of the Project. 3. Within the meaning and intent of Section 8(4)(h) of the Act, all persons performing work on the construction of the Project will be paid the prevailing wage and fringe benefit rates for the same or similar work in the locality in which the work is to be performed, as determined pursuant to Act No. 166 of the Michigan Public Acts of 1965, as amended. ROSE HILL/CENTER, INC., a Michigan nonprofi,t corporation Dated: By: Exhibit D COMPANY CERTIFICATE REGARDING TRANSFER OF EMPLOYMENT (Rose Hill Project) The undersigned, Rose Hill Center, Inc., a Michigan nonprofit corporation (the "Company"), hereby certifies to The Economic Development Corporation of the County of Oakland (the "EDC") as follows: 1. This Certificate is made and based upon the best of the Company's knowledge and belief, only after thorough investigation and discussion with all owners of the Company and others who might have knowledge regarding the subject matter. 2. The Company acknowledges that this Certificate will be employed by the EDC as the sole basis for the EDC's certification to the Board of Commissioners of the County of Oakland as to transfer of employment as required by Section 8(3) of the Economic Development Corporations Act, Act No. 338 of the Michigan Public Acts of 1974, as amended, (the "Act"). 3. The Company understands that the EDC's Certification to the Board of Commissioners of the County of Oakland is a statutory requirement which, if improperly made or based upon any material misrepresentation or inaccuracy, might invalidate the proceedings regarding the Rose Hill Project (the "Project") pursuant to which the EDC expects ultimately to issue its limited obligation economic development revenue bonds to finance all or part of the Project. 4. As of the date hereof, the Project shall not have the effect of transferring employment of more than 20 full-time persons from a municipality (as that term is defined in the Act) of this State to Holly Township, Michigan, the municipality in which the Project will be located. 5. The Company agrees that during the life of the bonds proposed to be issued by the EDC to finance the costs of the Project for the Company, the Company will not permit a lease or sublease in connection with the Project which would have the effect of transferring, as to such lease, sublease or group of leases or subleases which are interrelated (i.e. "interrelated" means leases negotiated as part of one set of negotiations or leases with lessees who are related by more than 50% common ownership), employment of more than 20 full-time persons from a municipality of this State to Holly Township, Michigan unless the Company or such lessee or D-1 sublessee has first obtained a consent to the proposed transfer of employment from the governing body of each municipality from which employment is to be transferred. 6. The Company understands that a covenant to effectuate the purposes of this Certificate will be included in those covenants to be made by the Company when bonds are issued by the EDC for the benefit of the Project. ROSE HILL CENTER, INC., a Michigan nonprofit corporation By: Dated: Ntsu tiank. N.A. One East First Street Flint. Michigan 43502 Phone 313-766.4451 Todd A. Graham Second Vice President February 22, 1991 Mr. Virgil R. Stucker, President Rose Hill Center, Inc. Suite 100 525 North Woodward Avenue Bloomfield Hills, Michigan 48304 Dear Virgil: On behalf of NBD Bank, N.A., I am pleased to inform you that a $2,121,000 Standby Letter of Credit has been approved for Rose Hill Center, Inc. As indicated in the enclosed documents, this commitment will be held available until March 31, 1991. Please indicate acceptance on or before that date by returning a signed copy of the commitment along with a check in the amount of $10,600. Virgil, it has been a pleasure working with you and Bob and we certainly hope that this is but the beginning of a long and mutually beneficial relationship. Sincerely, Todd A. Graham Commercial Lending Division cf Subsidiary or NBD Bancorp, Inc. The following is intended to be a summary of principal terms and conditions for the proposed letter of credit transaction. Actual letter of credit documents can be expected to include other provisions typical to this type of credit facility. Unless exe=ted by NW 3ank. N.A. this doeurm=nt sh.,.11 be considered to be for discusion ournoses only. FROPOED IRREVOCABLE LETTER OF CREDIT ("L/C") IN FAVOR OF A TRUSTEE TO BE,NAKED ("TRUSTEE") Tssuer: NED BANE, NA.--formerly National Bank of Detroit--("NBD") For the account of: ROSEEILL CENTER INC. ("Company") PURPOSE: To insure the payment of industrial revenue bonds ("Bonds") to be issued for the benefit of the Company by the Economic Development Corporation of the County of Oakland for a project located in Holly, Michigan. AMOUNT: NBD's aggregate liability under the L/C will not exceed $2,121,000 which includes required interest coverage and principal, for a Bond issue of up to $2,000,000. COMMITMENT EXPIRY DATE: ,-Dis commitment to issue the L/C expires June 30, 1991 unless extended in writing. •PLACEMENT AGENT/-mARKETING AGENT: First Commerce Capital Division of Porter, White & Yardley. CONDITIONS PRECEDENT: 1. Designation of bond counsel and trustee acceptable to NBD. 2. Satisfactory compliance with NED's Environmental Policy as outlined in the - attached Addendum. 3. Satisfactory receipt and review of appraisal by NBD Mortgage Company, with a loan to value not to exceed 70%. 4. Contractor must be acceptable to NBD Bank. 5. Satisfactory review of fixed price contract. BOND FORMAT: The Bonds would initially be marketed on a "lower-floater" bP,sis i.e. interest rate re -set wee -ly to reflect the then current market rate for equivalent tax-exempt securities. Bondholders would have the right to tender their Bonds to the Trustee for purerlae by the Company on seven days notice. plpcement agent would endeavor to sell any Bonds tendered by the tender date. Any Bonds not remarketed could be held by the Company pursuant to the Reimbursement Agreement until a remarketing opportunity arose as detailed below or surrendered to the Trustee for cancellation. Bond documentation would provide the Company an option to convert the Bonds to a fixed rate if buyers could be found at mutually acceptable rates and terms. In the event of such conversion, the original L/C would be terminated. Prior to such conversion, the 3onds would be prepayable without premium at the option of the Company upon 30-days notice. BOND MATURITIES: Interest payable quarterly; annual prinoipl payments of $500,000 years 3 and 5 and $200,000 principal payment years 5-10. %-u.a.LLEZA,14.1. LU.N U U41 Y. .t4tR- OF - A CREDIT ° Reductions - in the L/C will be permitted by written authorization of the Truste5. on principal payments made cn the Bcnd or Bcnds purchased by the Company and retired. LET-FR OF CFED T T FXFIRY: Nct later than 7 0 days following the fifth ahniverarv cf the Bonds issuance date unless extended az the sole discretion of MD. Upon the Company 's request received within 6 months of the original ex=iry data (Cr any subsequent extension thereof) ITBD will, withib 30 days, advise the Company of tne terms by which it is willinz to extend the existing expiry date. LETTER OF CREDIT COMMISSION: 1 1/2% per annum. payable ..nrx=lly in advance based upon NED's liability under the L/C (including any liability subject Co reinstatement). The conuission race may be subject to annual adjustment as provided in the paragraph entitled "Capital Adequacy Adjustment" below, but the co. ission rata is not to be less than 1 112% nor more than 2 112: per annum during the initial term. REDUCTIONS AND EARLY TERMINATION: Prepaid commissions will be refunded on a pro-rata basis after the first year as L/C reductions are authorized by the Trustee as a result of Bond payments, or pre-pa'u-nts. In the event that .1 is replaced by another hank as letter of credit issuer for the Bonds (or a refunding issue) prior to an expiry date, a premium will be due eq to the comu*ssions that would accrue over the remAining scheduled maturities at the then existing co. ssion rata discounted - to the L/C scheduled expiry date at 7%. No such premium will be payable, however, if: (a) NBD proposes a co-mission adj , u-nt to a rate in excess of 2 1/4%. (b) NBD's credit rating by a major credit rating agency declines below single A and the replacement bank's equivalent rating is single A or higher. CAPITAL ADECUACY ADJUSTMENT: The Federal Reserve Bcard has imposed a capital adequacy provision covering letters of credit such as the proposed, which would piece the L/C in a 1007. risk category and establish a 7 1/47. capital requirement by 12 -31-90 and 87, by 12-31-92. NBD may adjust the commizsion rate annu-,..11 7 after 90 days notice to a rata sufficient to provide a 16% after-tax return on the maximum incremental capital requirement appliaable after giving credit for earnings on capital employed at the one-year U.S. Treasury yield. The effect would be to permit NBD to adjust the comuission rate based on the following formula: Formula: With factors as follow: ACR Adiusted L/C Commission Rate RBCR = Risk- ed Capital Requirement RC = Risk Category RR = Rate of Return on Capital TR Maximum Federal Corporate Tax Rate TY = Yield on One Year U.S. Treasury Obligations RBCR X RC x RR - (RBCR x TY x RC) 1 - TR Calculation: ACR (.072 x 1.00 x .16) (.075 x .0624* x 1.00) = 1.31%, (1 - .34) If RBCR is .08 and other factors the same AC?. = 1.441. * Approximate current one year U.S. Treasury yield. Lagal expenses of NED and bond to be paid by tte Cempany. tegether with all out-of-cocket costs 11I C above, the . a . under th* ent will a. The Company have annual operating revenues in excess of expenses. 4. Draws by the Company from the co follows: ruction fund will be limited as ..CCWITXEnT M. CLOSING IF'=: S21,210 fee for -Tssuance of the L/C witt $0,500 pa-,,a -,70- upon acceptance (ncn-refuildatie) and tbe balance payable on tte date of issuance. DI'AURSEHE= $100 fee for eact drat: by the Trsbe- be drawn upon four times a year. tte L/C, the 1 .:ter UESEMENT AGRZEnNT: ement between YBD and the Company providing as follows: 1. 50 long as no default exisr,..s, the Company may defer payment of the principal portion of its reimbursement obligation arising from Bonds being tendered and not remarketed until the earlier of 395 days after the data of the drawing or the expiry of the L/C. Such obligation will bear interest at a rate of p=-2% above te prime rate of NBD as it exists frun time to time. ,121 2. Except for re! Copie-ay will be L/C on the day accrue interest ursament obligations deferred pursuant to 1. obligated to reimburse a* for all -eounts of the drawing -.. shortf.: reimbur at .10s prime rate plus 3%. .3. -47 Reimbursement Agreement will include various business covenants customary to term firancing to be mutually agreed upon to protect NBD in the event of a material adverse change in the condition of the Comp b. The Company must maintain a debt service coverage ratio by not less than 1.20:1.00 (this shall include pledges plus excess revenues divided by annual debt). c. No other loans, liens, or leases withcut pricr NED 7=',nle approval. d. Total ennual capital expenditures (other tlien construction of Rosehill) are not to exceed $100,000 without prior ND lank approval. e. Company must maintain Department of Social Services license. a. Loan to appraised value shAll not exceed5.eit. b. Prior to fil.ing for new construction, the Co.:any must bave e 10% in project. (This does not include $500,000 Comerica payoff. c. Date down endorsements, sworn statements, lien waivers and site inspections will be required prior to disbursal of construction ..s. 5. NBD may direct the Trustee to prepay the Bonds if there is a drawing under the L/C not immediately reimhursed by the Cem.:_.y unless deferred pUrsuant to No. 1. above or if there is any'other default under the Reimbursement Agreement. of -3- n3/13/91 10'50 Si'313 766 4404 COMMERCIAL :LOAN Z005 . To secure itn obligations under the Reimbursement Agreement, the Company will provide a first HEM on land and buildings of Rosehill Center. Bonds tendered under the tender option will be retained by the Trustee as collateral for the Company's obligation to KBD arising from the drawing under the L/C until the Bonds are remarketed or the reimbursement obligation otherwise paid. DRAWING RIGHTS: Drawings under the L/C by the Trustee may result from: 1. Payment of principal and/or interest on the Bonds when due. 2. The tender of Bonds under the Bondholder's tender option if the Bonds are not rPm.r.rketed by the tender date. 3. Default under the bond indenture if the trustee is required, at the direction of the Bondholders, to accelerate payment of the Bonds. 4. A default under the Reimbursement Agreement resulting in NBD directing the trustee to prepay the Bonds. FINANCIAL STATEMENTS: The Company will be obligated to provide to NBD annual audited financial statements and qnarterly internal financial statements of the Company certified as correct by an officer of the Company copies of all audits performed by the state of Michigan together with other information NBD may reasonably request. DOCUMENTS: Documents prepared by bond counsel and other closing documents must be satisfactory in form and substance to ND and its legal coursel. When executed by NBD below, this document represents a commitment on its part to isue the letter of credit subject to the terms and conditions outlined herein if accepted by the Company on or before March 31, 1991. Acceptance is to be evidenced by execution of this document by an authorized official of the Company and payment of the non-refundable portion of the Commitment and Closing Fee stipulated above. Vice President Its: Accepted this /.7271 day of 19 By: / /Z/ Qr /14re -) ti/e7 ,e. ru c s -4- LA EZU' t • L/C 0 - tion. ** Estimated average over the life of ROSEHILL CENTER INC, ON A $2 DCX) 000 • 3: ELOA ,t4 ND ISSUE (For Discussion Purposes Only) Uo-Front Costs:* Underwriter Discount Fee (1 1/27.) Underwriter Counsel Bond Counsel C.ouaasel LIC IRP/Itr Co. See Trustee Accepce Fee Trustee Counsel Miscellaneous Costs Municipality Fee Total 6n0 $30,000 Included Above 22,500 10,000 21,210 2,000 1,500 2,000 2,500 $91,710 Annual Costs: (7. per annum add-on to actual interest rate). L/C Commission 1.500% Remarketing/Servicing Fee, .188 Trustee Fee .200** 1.888 * These fi t es do not provide for the Company's Counsel costs.