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1 Chapel Hill Revenue Note CITY OF CHANHASSEN 7700 Market Boulevard PO Box 147 Chanhassen, MN 55317 Administration Phone: 952.227.1100 Fax: 952.227.1110 Building Inspections Phone: 952.227.1180 Fax: 952.227.1190 Engineering Phone: 952.227.1160 Fax: 952.227.1170 Finance Phone: 952.227.1140 Fax: 952.227.1110 Park & Recreation Phone: 952.227.1120 Fax: 952.227.1110 Recreation Center 2310 Coulter Boulevard Phone: 952.227.1400 Fax: 952.227.1404 Planning & Natural Resources Phone: 952.227.1130 Fax: 952.227.1110 Public Works 1591 Park Road Phone: 952.227.1300 Fax: 952.227.1310 Senior Center Phone: 952.227.1125 Fax: 952.227.1110 Web Site WIIW.ci .chanhassen.mn. us 1- MEMORANDUM TO: Mayor and City Council, EDA FROM: ft;/; . o\~. Greg Sticha, Finance Director DATE: December 7, 2005 SUBJ: Issuance of Revenue Notes Chapel Hill Academy BACKGROUND The City has received a request from Chapel Hill Academy, a state and federal nonprofit corporation, to allow them to use the city's bonding authority to issue two revenue notes of approximately $1.45 million. One of the notes, of approximately $1.337 million, will be tax exempt and the other note, of approximately $30,000, will be taxable. The taxable note will be used to pay costs of issuance, which exceed the 2% IRS limit for tax exempt financings for nonprofits. The City has approximately $1.8 million left under its bank qualification status for 2005, and allowing the academy to issue this debt under the City's EDA bonding authority has no effect on the City's finances or bonding ability for the rest of the year in 2005. The debt is the sole responsibility of the Obligor (Chapel Hill Academy) and the City will be the issuer but will have no legal or other obligation to the debt. Chapel Hill Academy also has the responsibility of paying all the costs associated with the issuance of the notes. The council has already acted on this item at its November 28th meeting giving authority to the EDA to act on this item. First a public hearing must be conducted on the sale of the notes. Then two resolutions must be passed, the first of which is a preliminary approval required by DEED. The second is the actual resolution to allow for the issuance of the revenue notes. RECOMMENDA TION Staff recommends that the EDA hold the public hearing regarding this item as required, and then adopt both resolutions allowing for the issuance of two revenue notes for Chapel Hill Academy. The City of Chanhassen · A growing community with clean lakes, quality schools, a charming downtown, thriving businesses, winding trails, and beautiful parks. A great place to live, work, and play. RESOLUTION NO. RESOLUTION GIVING PRELIMINARY APPROVAL TO A PROJECT UNDER MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469.165 AND REFERRING THE PROPOSAL TO THE MINNESOTA DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT FOR APPROVAL BE IT RESOLVED, by the governing body (the "Board") of the Economic Development Authority of the City of Chanhassen, Minnesota (the "Issuer"), as follows: Section 1. Section 2. Description of the Proiect. a. Chapel Hill Academy (the "Borrower") located at 306 West 78th Street in Chanhassen, Minnesota, a Minnesota nonprofit corporation and organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code") has proposed issuance of revenue obligations, in one or more series, in an amount not to exceed $1,400,000 (the "Note") for the purpose of refinancing the outstanding principal amount of the Chapel Hill Academy, City of Chanhassen, Minnesota, First Mortgage Bonds, 1999 Series, dated June 1, 1999, issued by the Borrower in the original principal amount of $1,620,000 for the purpose of acquiring a kindergarten through eighth grade school facility, including a cafeteria and gymnasium, located on approximately 4.8 acres of land at 306 West 78th Street in Chanhassen, Minnesota (the "Project") and paying costs associated with the financing. b. The Project will be owned and operated by the Borrower. Recital of Representations Made bv the Borrower. a. The Issuer has been advised by representatives of the Borrower that: (i) conventional financing to pay the capital cost of the Project is available only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly reduced; (ii) on the basis of information submitted to the Borrower and their discussions with representatives of area financial institutions and potential buyers of tax-exempt bonds, the Note could be issued and sold upon favorable rates and terms to finance the Project; and (iii) the Project would not be undertaken in their present form but for the availability of financing under the Act. b. The Borrower has agreed to pay any and all costs incurred by the Issuer in connection with the issuance of the Note, whether or not such issuance is carried to completion. c. The Borrower has represented to the Issuer that no public official of the Issuer has either a direct or indirect financial interest in the Project nor will any public official either directly or indirectly benefit financially from the Project. Section 3. Section 4. Public Hearing. a. A Notice of Public Hearing was published in the Chanhassen Villager, the Issuer's official newspaper and a newspaper of general circulation, calling a public hearing on the proposed issuance of the Note and the proposal to undertake and finance the Project. b. The Issuer has, on December 12, 2005, held a public hearing on the issuance of the Note and the proposal to undertake and finance the Project, at which all those appearing who desired to speak were heard and written comments were accepted. Findings. It is hereby found, determined, and declared as follows: a. The welfare of the State and the Issuer requires the provision of necessary educational facilities so that such facilities are available to residents of the State and the Issuer at reasonable cost. b. The Issuer desires to facilitate the selective development of the community and help to provide the range of services and employment opportunities required by the population. The Project will assist the Issuer in achieving those objectives; help to stabilize market valuation of the Issuer; help maintain a positive relationship between assessed valuation and debt; and enhance the image and reputation of the community. c. On the basis of information made available to this Board by the Borrower it appears, and this Board hereby finds, that: (1) the Project constitutes properties, real and personal, used or useful in connection with a revenue producing enterprise within the meaning of Subdivision 2 of Section 469.153 of Minnesota Statutes; (2) the Project furthers the purposes stated in Section 469.152 of Minnesota Statutes; (3) the Project would not be undertaken but for the availability of financing under the Act and the willingness of the Issuer to furnish such financing; and (4) the effect of the Project, if undertaken, will be to: (i) encourage the development of economically sound industry and commerce, (ii) assist in the prevention of the emergence of blighted and marginal land, (iii) help prevent chronic unemployment, (iv) provide the range of service and employment opportunities required by the population, (v) help prevent the movement of talented and educated persons out of the State and to areas within the State where their services may not be as effectively used, and (vi) promote more intensive development and appropriate use of land within the Issuer, eventually to increase the tax base of the community. d. The Issuer acknowledges, finds, determines and declares that the provision of necessary education facilities so that such facilities and services are available to residents of the State at a reasonable cost is a public purpose. 2 Section 5. Section 6. Approval. a. The Project and the issuance of the No~e are hereby given preliminary approval by the Issuer. b. The President or the Executive Director, or their designee, is authorized and directed to submit the proposal for the Project to the Department of Employment and Economic Development of the State ("DEED") requesting approval, and other officers, employees and agents of the Issuer are hereby authorized to provide DEED with such information as it may require. Limited Obligation. The Note, when and if issued for the Project, shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the Issuer. (There will, however, be a charge, lien or encumbrance on the Project, which is not an asset of the Issuer.) The Note, when and if issued, shall recite in substance that the Note and the interest thereon, are payable solely from revenues received from the Project and property pledged for payment thereof, and shall not constitute a debt of the Issuer. Adopted: December 12, 2005 Attest: President Executi ve Director M :\DOCSV 61 MiJOOOOWlODJlW4052.DOC 3 RESOLUTION NO. RESOLUTION APPROVING THE ISSUANCE AND SALE OF A REVENUE NOTE, SERIES 2005A (CHAPEL HILL ACADEMY PROJECT) IN THE AMOUNT OF NOT TO EXCEED $1,337,700 AND A TAXABLE REVENUE NOTE, SERIES 2005B (CHAPEL HILL ACADEMY PROJECT) IN THE AMOUNT OF NOT TO EXCEED $30,000 AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATING THERETO BE IT RESOLVED, by the governing body (the "Board") of the Economic Development Authority of the City of Chanhassen, Carver and Hennepin Counties, Minnesota (the "Issuer"), as follows: Section 1. Definitions. The terms used herein, unless the context hereof requires otherwise, have the following meanings, and any other terms defined in the Loan Agreement (hereinafter defined) have the same meanings when used herein as assigned to them in the Loan Agreement unless the context or use thereof indicates another or differing meaning or intent: Act: Minnesota Statutes, Sections 469.152 through 469.165, as amended. Borrower: Chapel Hill Academy being (as represented to the Issuer), a Minnesota nonprofit corporation and organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the corporate offices of which are located at 306 West 78th Street in Chanhassen, Minnesota. Bond Counsel: the law firm of Fryberger, Buchanan, Smith & Frederick, P.A. or any other firm of nationally-recognized bond counsel. Code: the Internal Revenue Code of 1986, as amended. Board: the governing body of the Issuer. Documents: the Loan Agreement, the Pledge Agreement, the Negative Pledge Agreement and other documents required for the issuance of the Notes. DEED: the Minnesota Department of Employment and Economic Development. Issuer: the Economic Development Authority of the City of Chanhassen, a municipal corporation and political subdivision of the State. Issuer Documents: collectively, the Loan Agreement and the Pledge Agreement. Lender: M&I Marshall & Ilsley Bank, a Wisconsin state banking corporation with an office located in Eden Prairie, Minnesota. Loan Agreement: the Loan Agreement to be entered into between the Issuer and the Borrower, pursuant to which the Borrower agrees to repay the loan made thereunder in specified amounts and at specified times sufficient to pay In full when due the principal of, premium, if any, and interest on the Notes. Notes: collectively, the Series A Note and the Series B Note. Pledge Agreement: the Pledge Agreement to be entered into among the Issuer, the Borrower and the Lender, pursuant to which the Issuer pledges and grants a security interest in all of its rights, title, and interest in the Loan Agreement (except for the Unassigned Issuer's Rights) to the Lender. Prior Bonds: the Chapel Hill Academy, City of Chanhassen, Minnesota, First Mortgage Bonds, 1999 Series, dated June 1, 1999, issued by the Borrower, in the original principal amount of $1,620,000. Proiect: acquisition of a kindergarten through eighth grade school facility, including a cafeteria and gymnasium, located on approximately 4.8 acres of land at 306 West 78th Street in Chanhassen, Minnesota, and paying costs associated with the financing. Refunding: the refinancing of the outstanding principal amount of the Prior Bonds. Registrar: the bond registrar and transfer agent for the Notes. Series A Note: the Issuer's Revenue Note, Series 2005A (Chapel Hill Academy Project). Series B Note: the Issuer's Taxable Revenue Note, Series 2005B (Chapel Hill Academy Project). State: the State of Minnesota. Section 2. Legal Authorization. The Issuer is a public body, corporate and politic and political subdivision duly organized under the laws of the State and is authorized under the Act to initiate the revenue producing project herein referred to, and to issue and sell the Notes for the purpose, in the manner and upon the terms and conditions set forth in the Act and in this Resolution; provided, however, that the Issuer has relied without independent investigation on written representations and opinions of the Borrower, its consultants and Bond Counsel that the Project qualifies as a "project" within the meaning of the Act. Section 3. Recitals. a. Under the Act, the Issuer is authorized and empowered to issue revenue obligations to finance or refinance all or any part of the costs of a project consisting of the refinancing of debt incurred with respect to, or acquisition and betterment of educational facilities of organizations described in Section 501(c)(3) of the Code. 2 b. The Issuer has, after due notice and publication thereof, on December 12, 2005, held a public hearing on the Project and the financing thereof, and persons in attendance wishing to speak on the Project and financing thereof were given an opportunity to do so at the hearing. c. A resolution was adopted by the Board on December 12, 2005, which gave preliminary approval to the issuance of revenue obligations and the proposal to undertake and finance the Project and referred the proposal regarding the issuance of revenue obligations in order to finance the cost of the Project on behalf of the Borrower to DEED. The findings of the Board contained in said resolution are ratified and confirmed as though stated in full herein. d. Drafts of the following documents have been submitted to this Board and are on file in the office of the Executive Director: 1. the Loan Agreement; 11. the Pledge Agreement; 111 the Negative Pledge Agreement; and IV. the form of the Notes. Section 4. The Notes. a. In order to provide for the financing of the Project, the Issuer determines, based on representations of the Borrower, (i) that the offer of the Lender to purchase the Series A Note in an original principal amount of not to exceed $1,337,700, at an initial interest rate of not to exceed 4.80 percent per annum, subject to adjustment as provided in the Series A Note, and upon the terms and conditions hereafter specified and specified in the Series A Note is reasonable and is accepted; and (ii) that the offer of the Lender to purchase the Series B Note in an original principal amount of not to exceed $30,000, at an initial interest rate of not to exceed 7.15 percent per annum, upon the terms and conditions hereafter specified and specified in the Series B Note is reasonable and is accepted. The Issuer will loan the proceeds of the Notes to the Borrower in order to finance the Project. b. The Loan Repayments to be made by the Borrower under the Loan Agreement are fixed to produce revenue sufficient to provide for the prompt payment of principal of, premium, if any, and interest on the Notes when due, and the Loan Agreement also provides that the Borrower is required to pay all expenses of the operation and maintenance of the Project, including, but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and all lawfully imposed taxes and special assessments levied upon or with respect to the Project and payable during the term of the Loan Agreement. c. The Notes shall be in substantially the form submitted to the Board, with such appropriate variations, omissions and insertions as are permitted or required by this Resolution, and in accordance with the further provisions hereof as may be necessary and appropriate and approved by bond counsel and the Borrower prior to the execution thereof; and shall mature in 3 the years and amounts, be subject to redemption, and bear interest at the rate as therein specified, subject to adjustment as therein specified. d. The Notes shall be executed on behalf of the Issuer by the signatures of its President and Executive Director. The seal of the Issuer may be omitted as allowed by law. In case any officer whose signature shall appear on the Notes shall cease to be such officer before the delivery of the Notes, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. In the event of the absence or disability of the President or the Executive Director such officers of the Issuer as may act in their behalf, shall without further act or authorization of the Board of Commissioners execute and deliver the Notes. Section 5. Approval and Execution of Documents. a. The Issuer Documents and the Notes are made a part of this Resolution as though fully set forth herein and are approved in substantially the forms on file with the Board. The President and the Executive Director are authorized and directed to execute, acknowledge, and deliver the Issuer Documents and the Notes on behalf of the Issuer with such changes, insertions, and omissions therein as the Issuer's attorney may hereafter deem appropriate, such execution by the President and Executive Director to be conclusive evidence of approval of such documents in accordance with the terms hereof. b. The President and the Executive Director are authorized and directed to execute and deliver all other documents which may be required under the terms of the Issuer Documents or the Notes or by Bond Counsel, and to take such other action as may be required or deemed appropriate for the performance of the duties imposed thereby to carry out the purposes thereof. c. The President, Executive Director and other officers of the Issuer are authorized to furnish certified copies of this Resolution and all proceedings and records of the Issuer relating to the Notes, and such other affidavits and certificates as may be required to show the facts relating to the Issuer respecting the Notes, as such facts appear from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates, and affidavits, including any heretofore furnished, shall constitute representations of the Issuer as to the truth of all statements contained therein. d. If for any reason the President, Executive Director, or any other officers, employees, or agents of the Issuer authorized to execute certificates, instruments, or other written documents on behalf of the Issuer shall for any reason cease to be an officer, employee, or agent of the Issuer after the execution by such person of any certificate, instrument, or other written document, such fact shall not affect the validity or enforceability of such certificate, instrument, or other written document. e. If for any reason the President, Executive Director, or any other officers, employees, or agents of the Issuer authorized to execute certificates, instruments, or other written documents on behalf of the Issuer shall be unavailable to execute such certificates, instruments, or other written documents for any reason, such certificates, instruments, or other written documents may be executed by a deputy or assistant to such officer, or by such other officer of 4 the Issuer as in the opinion of the Issuer's attorney is authorized to sign such document and do all things and execute all instruments and documents required to be done or executed by such officers, with full force and effect, which executions or acts shall be valid and binding on the Issuer. Section 6. Registration. a. Registered Fonn. The Notes shall be issued only in fully registered form. Each Note shall be numbered R-l in a denomination equal to the principal amount thereof. b. Registration, Transfer and Exchange. The Issuer appoints the Executive Director as Registrar. The effect of registration and the rights and duties of the Issuer with respect thereto are as follows: i. Register. The Registrar must keep a bond register for the Notes in which the Registrar provides for the registration of ownership of the Notes and the registration of transfers and exchanges of the Notes. ii. Transfer of Notes. Subject to the provisions of clause x of this subsection, upon surrender for transfer of a Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar will authenticate and deliver, in the name of the designated transferee, one new note in an aggregate principal amount equal to the then outstanding principal amount of the Note so surrendered and of like maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the 15th day of the month preceding each interest payment date and until such interest payment date. 111. Issuance of New Notes. Subject to the provisions of clause x of this subsection, the Issuer shall, at the request and expense of the Lender, issue new notes in aggregate outstanding principal amount equal to that of the Notes surrendered, and of like tenor except as to number, principal amount, and, if applicable, the amount of the monthly installments payable thereunder, and registered in the name of the Lender or such transferee as may be designated by the Lender. iv. Exchange of Notes. When a Note is surrendered by the registered owner for exchange the Registrar will authenticate and deliver one new note in an aggregate principal amount equal to the then outstanding principal amount of the Note surrendered and of like maturity, as requested in writing by the registered owner or the owner's attorney. v. Cancellation. A Note surrendered upon any transfer or exchange will be promptly canceled by the Registrar and thereafter disposed of as directed by the Issuer. vi. Improper or Unauthorized Transfer. When a Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the Note so presented until the Registrar is satisfied that the endorsement on the Note or separate instrument of transfer 5 is valid and genuine and that the requested transfer is legally authorized. The Registrar will incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. vii. Persons Deemed Owners. The Issuer and the Registrar may treat the person in whose name a Note is registered in the bond register as the absolute owner of such Note, whether such Note is overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Note and for all other purposes, and payment so made to a registered owner or upon the owner's order will be valid and effectual to satisfy and discharge the liability upon such Note to the extent of the sum or sums so paid. Vlll. Taxes, Fees and Charges. For a transfer or exchange of a Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to the transfer or exchange. ix. Mutilated, Lost, Stolen or Destroyed Note. If a Note becomes mutilated or is destroyed, stolen or lost, the Registrar will deliver a new Note of like amount, number, maturity date, redemption privilege and tenor in exchange and in substitution for and upon cancellation of the mutilated Note or in lieu of or in substitution for any Note destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar and Issuer in connection therewith; and, in the case of a Note destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to the Registrar that the Note was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar and Issuer of an appropriate bond or indemnity in form, substance and amount satisfactory to it and as provided by law, in which both the Issuer and the Registrar must be named as obligees. A Note so surrendered to the Registrar will be canceled by the Registrar. If the mutilated, destroyed, stolen or lost Note has already matured or been called for redemption in accordance with its terms it is not necessary to issue a new Note prior to payment. x. Limitation on Transfers. The Notes have been issued without registration under state or other securities laws, pursuant to an exemption for such issuance; and accordingly a Note may not be assigned or transferred in whole or part, nor may a participation interest in a Note be given pursuant to any participation agreement, except in accordance with an applicable exemption from such registration requirements. In no event may any participation interest in a Note be in an initial principal amount of less than $100,000. Section 7. General Covenants. a. Payment of Principal and Interest. The principal of and interest on the Notes are payable solely from and secured by revenues and proceeds derived from the Notes and the Documents, which revenues and proceeds are specifically pledged to the payment thereof in the manner and to the extent specified herein and in the Notes and the Documents; and nothing in 6 the Notes or in this Resolution shall be considered as assIgnmg, pledging or otherwise encumbering any other funds or assets of the Issuer. b. Agreements Binding. All agreements, covenants, and obligations of the Issuer contained in this Resolution and in the above-referenced documents shall be deemed to be the agreements, covenants, and obligations of the Issuer to the full extent authorized or permitted by law, and all such agreements, covenants, and obligations shall be binding on the Issuer and enforceable in accordance with their terms. No agreement, covenant, or obligation contained in this Resolution or in the above-referenced documents shall be deemed to be an agreement, covenant, or obligation of any member of the Board, or of any officer, employee, or agent of the Issuer in that person's individual capacity. Neither the members of the Board, nor any officer executing the Notes, shall be liable personally on the Notes or be subject to any personal liability or accountability by reason of the issuance of the Notes. c. Rights Conferred. Nothing in this Resolution or in the above-referenced documents is intended or shall be construed to confer upon any person (other than as provided in the Notes, the Loan Agreement, the Pledge Agreement, and the other agreements, instruments, and documents hereby approved) any right, remedy, or claim, legal or equitable, under and by reason of this Resolution or any provision of this Resolution. d. Nature of Security. 1. The Notes will be special limited obligations of the Issuer. ii. Notwithstanding anything contained in the Notes or the Documents or any other document referred to herein to the contrary, under the provisions of the Act the Notes may not be payable from or be a charge upon any funds of the Issuer other than the revenues and proceeds pledged to the payment thereof, nor shall the Issuer be subject to any liability thereon, nor shall the Notes otherwise contribute or give rise to a pecuniary liability of the Issuer or any of the Issuer's officers, employees and agents. Accordingly, the Notes shall not be payable from or charged upon any funds other than the revenues pledged to the payment thereof, nor shall the Issuer be subject to any liability thereon. 111. No holder of the Notes shall ever have the right to compel any exercise of the taxing power of the Issuer to pay the Notes or the interest thereon, or to enforce payment thereof against any property of the Issuer other than the revenues pledged under the Pledge Agreement; and the Notes shall not constitute a charge, lien or encumbrance, legal or equitable, upon any funds, assets or property of the Issuer, other than revenues under the Loan Agreement; and the Notes shall not constitute a debt of the Issuer within the meaning of any constitutional or statutory limitation of indebtedness. The Notes will not constitute an indebtedness, a pecuniary liability, a moral or general obligation or a loan of the credit of the Issuer or a charge, lien or encumbrance, legal or equitable, against the Issuer's property (other than revenues under the Loan Agreement), general credit or taxing powers. Section 8. Offering and Disclosure Materials. The Issuer has not participated in the preparation of or reviewed any offering or disclosure materials with respect to the offer and sale 7 of the Notes and the Issuer makes no representations or warranties regarding the necessity, sufficiency, accuracy, fairness, completeness or adequacy of any disclosure with respect to such offer and sale. Section 9. Bank Qualified. In order to qualify the Series A Note as "qualified tax- exempt obligations" within the meaning of Section 265(b )(3) of the Code, the Issuer makes the following factual statements and representations: a. based entirely upon representations of the Borrower and Bond Counsel, the Series A Note, when issued, will be "qualified 501(c)(3) bonds" under Section 145 of the Code; b. the Issuer designates the Series A Note as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code; c. the reasonably anticipated amount of tax-exempt obligations (other than obligations described in clause (ii) of Section 265(b)(3)(C) of the Code) which have been or will be issued by the Issuer (and all entities whose obligations will be aggregated with those of the Issuer) during the calendar year in which the Series A Note is issued is not expected to exceed $10,000,000; and d. not more than $10,000,000 of obligations issued by the Issuer during the calendar year in which the Series A Note is issued have been designated for purposes of Section 265(b )(3) of the Code. Section 10. Subiect to DEED Approval. Notwithstanding anything in this Resolution to the contrary, the approvals and authorizations given herein are specifically subject to and contingent upon the receipt of approval of the Project by DEED. Section 11. Severability. If any provision of this Resolution shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever. The invalidity of anyone or more phrases, sentences, clauses or paragraphs in this Resolution contained shall not affect the remaining portions of this Resolution or any part thereof. Section 12. Effective Date. This Resolution shall take effect and be in force from and after its approval. 8 Adopted: December 12, 2005. ATTEST: Executi ve Director M :\DOCSI1616#JOOOOINIOLWX5041.DOC President 9