HomeMy WebLinkAboutResolutions - 1991.08.22 - 1840191179 August 22, 1991 MISCELLANEOUS RESOLUTION NO.
RE: ECONOMIC DEVELOPMENT DIVISION
RESOLUTION APPROVING PROJECT PLAN
(CRANBROOK EDUCATIONAL COMMUNITY PROJECT) -
CITY OF BLOOMFIELD HILLS
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 ID,-0joot Plan required by the
Economic Development Corporations Act, Act No. 338 of the
Michigan Public Acts of 1974, as amended (the "Act") for the
Cranbrook Educational Community 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 August 13 , 1991, the governing body of
the City of Bloomfield Hills, Oakland County, Michigan, also
approved the Project Plan; and
WHEREAS, on August 22 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.
Mr. Chairperson, on behalf of the Planning and Building
Committee, I move adoption of the foregoing resolution.
7— r7 7
.-rREGOING F.
. ..7„--DrANNING,AND BUILDING COMMITTEE
iNoved by Crake supported by McConnell the resolution be adopted.
YEAS: Krause, Law, McConnell. McCulloch, Millard, Moffitt, Oaks, Olsen,
Palmer, Pappageorge, Pernick, Price, Rewold, Schmid, Serra, Skarritt, Wolf,
Aaron, Bishop, Caddell, Crake, Gosling. Huntoon, Jensen,
NAYS: None. (0)
ABSENT: Ferrens, McPherson. (2)
ABSTENTIONS: NONE.
RESOLUTION DECLARED ADOPTED:
Lynn D. jsdlen
County Clerk
111111SCH1
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 22nd day of August, 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.
Ly7,-u D. Allen
County Clerk
Dated: August 22, , 1991
(RLS/2629)
THE ECONOMIC DEVELOPMENT CORPORATION
OF THE COUNTY OF OAKLAND
Oakland County, Michigan
Cranbrook Educational Community Project
PROJECT PLAN
CONTENTS
1. Summary Description of Project (Page 2)
2. Project Plan Certification by Company (Page 4)
3. Statutorily Required Information (Page 5)
4. Exhibits
"A" - Project Area Legal Description
"B" - Underwriter's Commitment Letter
"C" - Company Certificate Regarding "Prevailing
Wages"
- Company Certificate Regarding Transfer of
Employment
"E" - Letter of Credit Issuer's Commitment Letter
(RLS-2633)
PROJECT PLAN
SUMMARY DESCRIPTION OF
CRANBROOK EDUCATIONAL COMMUNITY PROJECT
OWNER OF PROJECT:
Cranbrook Educational Community, a Michigan nonprofit corpora-
tion
CONTACT PERSON: (Name, address, telephone number)
George H. Herbst
Vice President for
Finance and Administration
P.O. Box 801
Bloomfield Hills, MI 48304
(313) 645-3111
LOCATION OF PROJECT: (Local municipality)
City of Bloomfield Hills
PROJECT AREA/DISTRICT AREA: See Exhibit A
NATURE OF PROJECT:
Construction of approximately one mile long two-lane road from
Woodward Avenue to center of Cranbrook Educational Community
(i.e., to science and art museums), including public (Woodward)
entrance and landscaping; reimbursement and future expenditures
for various major capital improvements, including fire alarm
and smoke detection systems, sidewalks and courtyards;
acquisition and installation of information technology,
including computer hardware, software and systems; and capital
expenditures for renovation and expansion of science museum,
athletic complex, graduate art studio, elementary school, and
performing arts facilities.
EMPLOYMENT CREATED OR RETAINED:
Existing employees retained. Numerous construction jobs
created. (Total full-time employment approximately 450
employees).
TOTAL PROJECT COST:
Approximately $40,000,000
- 2 -
BONDS TO BE ISSUED:
$10,000,000 maximum
BOND PURCHASER/CREDIT ENHANCER:
McDonald & Company Securities, Inc., is Underwriter. NBD Bank,
N.A., is the issuer of the letter of credit.
DATE AND EXPIRATION DATE OF LETTER OF CREDIT COMMITMENT:
Dated July 24, 1991; expires September 30, 1991
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.
CRANBROOK EDUCATIONAL COMMUNITY,
a Michigan nonprofit corporation
By:
Its: Vice President
for Finance and
Administration
Dated: T-6,4 3O /qv
—
PROJECT PLAN
STATUTORILY REQUIRED INFORMATION REGARDING
CRANBROOK EDUCATIONAL COMMUNITY 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:
Existing land within the Project Area/District Area is
all owned by Cranbrook Educational Community and contains no
publicly-owned streets or other facilities. The site contains
the Cranbrook Academy of Art, Cranbrnok Academy of Art Museum,
Cranbrook Institute of Science, and Cranbrook Schools. The
Project Area/District Area will be the site for construction of
approximately one mile long two-lane road from Woodward Avenue
to center of Cranbrook Educational Community (i.e., to science
and art museums), including public (Woodward) entrance and
landscaping; reimbursement for various major capital
improvements, including fire alarm and smoke detection systems,
sidewalks and courtyards; acquisition and installation of
information technology, including computer hardware, software
and systems; and capital expenditures for new renovation and
expansion of science museum, athletic complex, graduate art
studio, elementary school, and performing arts facilities,
collectively constituting the "Project".
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:
Existing facilities will be retained; improvements
described in I above.
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:
Reimbursement for capital expenditures
Approximately $4.0 million Immediate
Road construction, entrance and landscaping
Approximately $4.0 million Approximately one year
5
Systems acquisition and installation
Approximately $1.0 million Approximately one and
one-half years
Additional miscellaneous capital improvements
Approximately $1.0 million Approximately three years
IV. A DESCRIPTION OF THE CONSTRUCTION OR STAGES OF
CONSTRUCTION PLANNED, AND THE ESTIMATED TIME OF COMPLETION OF
EACH STAGE:
Road construction expected to commence in Fall, 1991,
and continue until completed in Spring, 1993.
Other capital improvements are in process and will
continue through 1994.
V. A DESCRIPTION OF THE PARTS OF THE PROJECT AREA TO
BE LEFT AS OPEN SPACE AND THE USE CONTEMPLATED FOR THE SPACE:
No alterations of existing open space expected except
areas impacted by road construction.
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:
Approximately 15 acres of land along and in the area
of the proposed new Woodward Avenue entrance are currently
zoned "residential" and "cluster" and are anticipated to be
zoned "institutional."
VIII. A DESCRIPTION OF THE PROPOSED METHOD OF
FINANCING THE PROJECT, INCLUDING ATTACHMENT OF A COPY OF THE
BOND PURCHASER'S COMMITMENT LETTER:
McDonald & Company Securities, Inc., will purchase the
bonds for resale. NBD Bank, N.A., will issue a letter of
credit to secure principal and interest with a five year term.
The bonds will have a twenty year term, with put options at
five year intervals, principal all due at maturity.
Copy of commitment letter attached as Exhibit B and
credit enhancer's commitment attached at Exhibit E.
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 I (ONE) YEAR FROM THE DATE OF APPROVAL OF THE PROJECT PLAN:
George H. Herbst, Vice President for Finance and Administration
- 7 -
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:
Not applicable.
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:
Not applicable.
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
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.
- 8 -
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
The Project Area/District Area is comprised of the
property located in the City of Bloomfield Hills which is owned
by or for the benefit of Cranbrook Educational Community
including the property designated by the following sidwell
numbers:
12-19-14-351-013 1
12-19-14-351-013 2
12-19-22-426-003
12-19-22-426-005
12-19-22-200-002
12-19-22-176-001
12-19-22-176-002
12-19-22-200-001
12-19-23-176-009
12-19-23-101-002 1
12-19-23-101-002 2
12-19-23-101-003
12-19-23-301-001
12-19-23-301-002
12-19-23-301-004
12-19-14-351-012
12-19-15-451-002
12-19-14-351-015
12-19-14-351-016
12-19-14-351-017
12-19-14-351-011
12-19-11-351-014
(RLS/2601)
EXHIBIT
McDONALD & COMPANY
SECURITIES, INC
Air mra NEW YORK STOCK EXCHANGE
260 E. BROWN STREET • SUITE 150 • P,0 EIOX 4475
B1RMIWIITAM, MICH1OAN 48012 • 313/140-1230
TELECOPY 312040.8886
June 24, 1991
Mr. George Herbst
Vice President
Finance and Administration
Cranbrook Educational Community
380 Lone Pine Road
Box 801
Bloomfield Hills, MI 48013
Re; $10,000,000 The Economic Development Corporation
of the County of Oakland
Limited Obligation Revenue Bonds
(Cranbrook Educational Community Project), Series 1991
Dear George:
Following, our various discussions concerning the above-captioned project and our
review of all data you have provided us to date, McDonald & Company Securities,
Inc. ("McDonald") is prepared to enter into a Bond Purchase Agreement (the
"Agreement") with Cranbrook Educational Community ("Cranbrook") and the
Economic Development Corporation of the County of Oakland (the "Issuer") to
purchase up to $10,000,000 of Limited Obligation Revenue Bonds (the "Bonds").
The irincipal of the Bonds will be amorti7Pd over a period not to exceed 2.5 years.
The ends will be five-year adjustable rate bonds secured by a letter of credit issued
by a bank that has a long-term debt rating of at least "A" by Moody's Investor
Services or Standard SE Poor's Corpration.
Based on the foregoing structure, our discount for underwriting the Bonds will be
one percent (1.0%) of the aggregate principal amount of the Bonds. In addition, it
is agreed that Cranbrook shall bear the first $5,000 of Underwriters' Counsel fees and
expenses with anything in excess of such amount to be paid by McDonald. If,
however, the Bonds are not delivered to McDonald, through no fault of McDonald,
Crartbrook agrees to pay for any and all legal expenses incurred by Underwriters'
Mr. George Herbst
June 24, 1991
Page Two
Counsel. We understand and agree that the fees and expenses outlined in this
paragraph will remain the same for subsequent bond financings for Cranbrook
provided that the issue(s) are structured as described in this letter and are issued
within 24 months of the date hereof. While both parties have agreed to the described
fees and expenses, McDonald commits to advise Cranbrook if the agreed upon
underwriting, discount should be considered for review by Cranbrook due to adverse
market conditions at the time of sale of the Bonds or subsequent bond issues.
Based upon our preliminary review of the data presented to us; the assumption of
the accuracy of such data which you have provided, and our understanding of the
financing, it is our opinion that the Bonds could be issued and marketed. Our
opinion as to the final structure of the issue and marketability of the Bonds is subject
to completion of our examination of your data and of the final feasibility of the
financing prior to the execution of the proposed Agreement.
The trustee for the Bonds will be a bank, to be mutually agreed upon by McDonald
and the Issuer, which must have an undivided capital and surplus of at least
$100,000,000; be on the bank wire system; be a Registrar and be registered with the
SEC pursuant to Rule 240.17A or be willing to send a letter to the Depository Trust
Company stating they will abide by the SEC's transfer turn-around rules which
require completion of normal transfers in 72 hours.
Our firm is registered with the Securities and exchange Commission pursuant to
Section 15, et seq., of the Securities Exchange Act of 1934 (the "Act"), and is a
member in good standing of the National Association of Security Dealers, Inc. Our
"net capital" as calculated in accordance with the Rules promulgated under the act
is in excess of $55,000,1)00: This is sufficient under the regulations of the Securities
and Exchange Commission, as well as the various regulatory agencies having
jurisdiction of McDonald to permit McDonald to underwrite the subject offering.
We understand that this letter may be submitted to the Issuer in connection with the
Issuance of Bonds and we consent to its use for that purpose. We look forward to
working with you toward the successful completion of the financing of the project.
Catherine L. Vaugh
Vice President
CRANBROOK EDUCATIONAL commuNrry
/1(
By
Title
Dat
tr7,4 2
Mr. George Herbst
jtme 24, 1991
Page Three
by executing this letter, both parties agree that they shall be bound to use their best
efforts to execute the financing proposed herein subject to the terms and conditions
of the Bond Purchase Agreement. This commitment must be accepted within 30 days
or it shall be deemed to be withdrawn.
ACCEPTED BY:
ice President
for Finance and
Administration
Its:
Dated:
Exhibit C
COMPANY CERTIFICATE REGARDING
PAYMENT OF PREVAILING WAGES
(Cranbrook Educational Community Project)
The undersigned, Cranbrook Educational Community, 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.
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 Cranbrook Educational
Community 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.
CRANBROOK EDUCATIONAL COMMUNITY, a
Michigan nonprofit corporation
By:
Exhibit D
COMPANY CERTIFICATE REGARDING
TRANSFER OF EMPLOYMENT
(Cranbrook Educational Community Project)
The undersigned, Cranbrook Educational Community, 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.
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 Cranbrook Educational
Community 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 Bloomfield Hills, 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
Bloomfield Hills, Michigan unless the Company or such lessee or
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.
D- 1
By:
Dated:
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.
CRANBROOK EDUCATIONAL COMMUNITY, a
Michigan nonprofit corporation
Its: Vice President
for Finance and
Administration
NBD Bank, N.A.
1116 W. Long Lake Road
Bloomfield Hills, Michigan 48302
Phone 313.645-7384
FAX 313.540.4620
EXHIBIT E
Frederick J. Crawford
Loan Officer
July 24, 1991
George H. Herbst
V.P. Finance and Administration and Treasurer
Cranbrook Educational Community
P.O. Box 801
Bloomfield Hills, MI 48303-0801
Dear Mr. Herbst:
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 executed by NBD Bank, N.A. this document shall be
considered to be for discussions purposes only.
PROPOSED IRREVOCABLE LETTER OF CREDIT ("L/C")
IN FAVOR OF A TRUSTEE TO BE NAMED ("TRUSTEE")
Issuer: NBD Bank, N.A. ("NBD")
For the account of: CRANBROOK EDUCATIONAL COMMUNITY
("Cranbrook")
Purpose:
To insure the payment of industrial revenue bonds
("Bonds") to be issued for the benefit of Cranbrook by
the Oakland County EDC for a project located in
Bloomfield Hills, Michigan.
Amount:
NBD's aggregate liability under the L/C will not exceed
$10,000,000.
Commitment Expiry Date:
NBD's commitment to issue the L/C expires December 31,
1991 unless extended in writing.
Placement Agent/Remarketing Agent:
McDonald & Company Securities, Inc.
Bond Maturities:
To be negotiated to the mutual satisfaction of Cranbrook
and NBD with final maturity not to exceed twenty years.
Subsidiary of NBD Bancorp, Inc.
George H. Herbst -2- July 24, 1991
Letter of Credit Reductions:
Reductions in the L/C will be permitted by written
authorization of the Trustee based on principal payments
made on the Bonds or Bonds purchased by Cranbrook and
retired.
Letter of Credit Expiry:
Not later than 30 days following the fifth anniversary of
the Bonds' issuance date unless extended at the sole
discretion of NBD. Upon Cranbrook's requested received
within six months of the original expiry date (or any
subsequent extension thereof) NBD will, within 30 days,
advise Cranbrook of the terms by which it is willing to
extend the existing expiry date.
Letter of Credit Commission:
7/10% per annum, payable annually in advance based upon
NBD's liability under the L/C (including any liability
subject to reinstatement). The commission rate may be
subject to annual adjustment as provided in the paragraph
entitled "Capital Adequacy Adjustment" below, but the
commission rate is not to be less than 7/10% nor more
than 4/5% per annum during the initial three years of the
L/C, and no more than 1.0% per annum during years four
and five.
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-payments.
In the event that NBD is replaced by another bank as
letter of credit issuer for the Bonds (or a refunding
issue) prior to an expiry date, a premium will be due
equal to the commissions that would accrue over the
remaining scheduled maturities at the then existing
commission rate discounted to the L/C scheduled expiry
date at the U.S. Treasury rate with maturity equal to the
remaining te/in of the L/C plus 50 basis points. In
addition, NBD will apply a $5,000.00 fee per year of the
remaining term of the L/C. No such premium will be
payable, however, if:
George H. Herbst -3- July 24, 1991
(a) NBD proposes a commission adjustment to a rate
in excess of 7/8%.
(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 Adequacy Adjustment:
The Federal Reserve Board has imposed a capital adequacy
provision covering letters of credit such as the
proposed, which would place the L/C in a 100% risk
category and has establish a 7 1/4% capital requirement
as of 12-31-90 and 8% by 12-31-92. NBD may adjust the
commission rate annually after 90 days notice to a rate
sufficient to provide a 12.5% after-tax return on the
maximum incremental capital requirement applicable after
giving credit for earnings on capital employed at the
one-year U.S. Treasury yield. Regardless of the capital
adequacy adjustment formula, NBD will not increase the
commission rate above 4/5% per annum during the initial
three years of the L/C teLm. Years four and five of the
L/C permit NBD to adjust the commission rate based on the
following formula:
Formula:
With factors as follows:
ACR = Adjusted L/C Commission Rate
RBCR = Risk-Based 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
ACR = RBCR x RC x RR - (RBCR x TY x RC)
1 - TR
Calculation:
ACR = (.0725 x 1.00 x .125) - (.0725 x .0638* x 1.00) = .91%
(1 - .34)
If RBCR is .08 and other factors the same ACR = 1.0%
* Approximate current one year U.S. Treasury yield.
George H. Herbst -4- July 24, 1991
Commitment and Closing Fee:
$10,000.00 fee for issuance of the L/C with $5,000.00
payable upon acceptance (non-refundable) and the balance
payable on the date of issuance.
Disbursement Fee:
$100 fee for each draw by the Trustee under the L/C.
Expenses:
Legal expenses of NBD together with all out-of-pocket
costs to be paid by Cranbrook. NBD legal expenses not to
exceed $10,000.00.
Reimbursement Agreement:
Agreement between NBD and Cranbrook providing as follows:
1. Cranbrook will be obligated to reimburse NBD for
all amounts drawn under the L/C on the day of the
drawing and any shortfall in reimbursement will
accrue interest at NBD's prime rate.
2. The Reimbursement Agreement will include a covenant
which would require Cranbrook to maintain
unrestricted fund balances of not less than the
amount of the L/C. The covenant is designed to
protect NBD in the event of a material adverse
change in the condition of Cranbrook.
3. NBD may direct the Trustee to prepay the Bonds if
there is a drawing under the L/C not immediately
reimbursed by Cranbrook or if there is any other
default under the Reimbursement Agreement.
Drawing Rights:
Drawing under the L/C by the Trustee may result from:
1. Payment of principal and/or interest on the Bonds
when due.
2. Default under the bond identure if the Trustee is
required, at the direction of the Bondholders, to
accelerate payment of the Bonds.
3. A default under the Reimbursement Agreement
resulting in NBD directing the Trustee to prepay
the Bonds.
By:
•0
George H. Herbst -5- July 24, 1991
Financial Statements:
Cranbrook will be obligated to provide to NBD annual
audited financial statements, annual breakout of
endowment investments, and quarterly internally prepared
fund balance to budget report. Each certified as correct
by an officer of Cranbrook 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
NBD and its legal counsel.
When executed by NBD below, this document represents a
commitment on its part to issue the letter of credit
subject to the terms and conditions outlined herein if
accepted by Cranbrook on or before September 30, 1991.
acceptance is to be evidenced by execution of this
document by an authorized official of Cranbrook and
payment of the non-refundable portion of the Commitment
and Closing Fee stipulated above.
NBD Bank, N.A.
Its: LoA.,1 Oricir.02_
Accepted this 0:21/ day of , 19 f_j
CRANBROOF EDUCATIONAL COMMUNITY
BY: 2
Its:
\fxc\herbst.ltr