City Council Information Form

Transcription

1 City Council Information Form DATE: 11/24/2015 ASSIGNED STAFF: Mark Dunning DEPARTMENT: Development Center TYPE OF FORM: Public Hearing Form No.: 5142 APPROVALS: fin: CLAMB 11/24/2015 dept: MDUNNING 11/24/2015 ISSUE/REQUEST: LEGISLATIVE PUBLIC HEARING REGARDING THE PLAN FOR AN INDUSTRIAL DEVELOPMENT PROJECT FOR CERNER PROPERTIES, INC. AND CERNER CORPORATION. KEY ISSUES: Cerner is seeking a tax incentive utilizing the RSMo Chapter 100 section that abates taxes on real property and machinery and equipment. Cerner is currently in the process of acquiring the "North Building" and associated surrounding property of the "Summit Technology Campus". The property Cerner is looking to acquire is currently within an existing Chapter 100 project (real estate taxes), and Cerner currently has an existing Chapter 100 project related to the purchase of machinery and equipment. In short summary, with Cerner purchasing the "North Building" and intending on purchasing more machinery and equipment, what is being proposed is to make the necessary revisions to the existing Chapter 100 plans and to create new Chapter 100 plans to reflect the new owner and new planned investments. The proposed plans and cost benefit analysis have been attached for consideration. Cerner and their legal counsel, Mr. David Frantze as well as City staff and Rich Wood with Gilmore & Bell will be present to present the proposed plan(s) and answer questions. The purpose of the public hearing is to provide the public an opportunity to comment on the proposed Industrial Development (Chapter 100) Plan(s). The proposed plan is rather complex, and will require the consideration of 4 separate ordinances to approve the plan presented. For this reason, a separate document has been prepared to assist with the consideration of these respective ordinances which are proposed for later in the agenda. PROPOSED CITY COUNCIL MOTION: I move to direct staff to present all necessary ordinances approving the proposed Industrial Development Project(s) along with necessary amendments as presented. BACKGROUND:(including location, programs/departments affected, and process issues) The proposed plan is rather complex, and will require the consideration of 4 separate ordinances to approve the

2 plan presented. For this reason, a separate document has been prepared to assist with the consideration of these respective ordinances which are proposed for later in the agenda. Brief Summary: On June 18, 1998, the City issued its Taxable Industrial Development Revenue Bonds (Townsend Summit, LLC), Series 1998, in the maximum principal amount of $100,000,000 (the Series 1998 Bonds ), for the purpose of providing funds to finance the costs of purchasing and constructing an industrial development project in the City, including land, buildings and fixtures (collectively, the Original Project ), and, in connection therewith, the City leased the Original Project to Townsend Summit, LLC, a Delaware limited liability company ( Townsend ). In 2007, Townsend agreed to sell a portion of the Original Project consisting of two buildings of approximately 1,037,985 square feet (the KC Summit Project ), together with the real property on which such buildings are located, to KC Summit. In connection with the sale of the Townsend Summit Project to KC Summit, KC Summit requested that the Series 1998 Bonds be refunded by the issuance by the City of its Taxable Industrial Development Refunding Revenue Bonds (Summit Technology Center Project), Series 2007 (the Series 2007 Bonds ), in the maximum principal amount of $51,590, Pursuant to Ordinance No passed August 2, 2007, the City (i) entered into a Trust Indenture dated as of August 1, 2007 (the Indenture ), with UMB Bank, N.A., Kansas City, Missouri, as trustee (the Trustee ), for the purpose of issuing and securing the Series 2007 Bonds, and (ii) entered into the Lease Agreement dated as of August 1, 2007 (the Lease ), with KC Summit, under which the City (a) caused the proceeds of the Series 2007 Bonds to be used to pay the costs of the KC Summit Project, and (b) leased the Townsend Summit Project to KC Summit in consideration of payments to be made by KC Summit to the Trustee which are to be sufficient to pay the principal of and interest on the Series 2007 Bonds as the same become due. KC Summit has agreed to sell a portion of the KC Summit Project consisting of the north building (the North Building ), together with its interest in the real property on which the North Building is situated, to Cerner Properties, Inc., a Delaware corporation ( Cerner Properties ). In connection with the sale of the North Building to Cerner Properties, KC Summit and the City, at the request of KC Summit, desire to amend the legal description of the Project Site (as defined in the Indenture), which is the subject of the Lease, to remove the North Building and the real property on which it is situated. With the planned sale of the property and proposed new investments by Cerner, amending the existing Chapter 100 plan with KC Summit Technology and creating new Chapter 100 plans with Cerner are being proposed. IMPACT/ANALYSIS: TIMELINE Start: Finish: OTHER INFORMATION/UNIQUE CHARACTERISTICS: STAFF RECOMMMENDATION Staff recommends approval OTHER BOARDS AND COMMISSIONS ASSIGNED: Not Applicable DATE: ACTION: COUNCIL COMMITTEE ASSIGNED: Not Applicable DATE:

3 ACTION: List of Reference Documents Attached 1. Cerner Chapter 100 Plan and CBA Real Property 2. Cerner Chapter 100 Plan and CBA Personal Property 3. Cerner Chapter 100 plan additional information 4. Site map

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34 Council Packet Information Form for Public Hearing and four separate Ordinances related to the Summit Technology Center Ordinance No. 1 (Cerner Properties, Inc.- Series 2015 Bonds) Issue/Request: AN ORDINANCE APPROVING A PLAN FOR AN INDUSTRIAL DEVELOPMENT PROJECT FOR CERNER PROPERTIES, INC., A DELAWARE CORPORATION, CONSISTING OF THE ACQUISITION, CONSTRUCTION AND IMPROVEMENT OF CERTAIN REAL PROPERTY FOR THE COMPANY; AUTHORIZING THE CITY OF LEE S SUMMIT, MISSOURI TO ISSUE ITS TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BONDS (CERNER PROPERTIES PROJECT), SERIES 2015, IN A PRINCIPAL AMOUNT NOT TO EXCEED $106,575,000 TO FINANCE THE COSTS OF SUCH PROJECT; AUTHORIZING AND APPROVING CERTAIN DOCUMENTS; AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION WITH THE ISSUANCE OF THE BONDS. Key Issues: This Ordinance is presented after the public hearing on the Plan for an Industrial Development Project (the Plan ) for Cerner Properties, Inc. ( Cerner Properties ). The Ordinance (i) approves the Plan, (ii) authorizes the City to issue industrial development revenue bonds for the Project (defined below) in an amount not to exceed $106,575,000, and (iii) authorizes the execution of a Trust Indenture, Bond Purchase Agreement, Lease Agreement between the City and Cerner Properties, and a Performance Agreement between the City and Cerner Properties. Background: The This Chapter 100 Plan for Cerner Properties is for a project consisting of (1) the acquisition of the north building (the North Building ) and land at the Lee s Summit Technology Center, located at 777 Northwest Blue Parkway in the City, (2) the design and construction of improvements to the utility structure serving the North Building, (3) necessary improvements to the North Building so as to increase the space utilized as a data center by Cerner Corporation, and (4) associated site work and infrastructure (collectively, the Project ). Notice of the Project was given to the taxing jurisdictions. Staff Recommendation: Staff recommends approval

35 Ordinance No. 2 (Cerner Corporation- Series 2015 Bonds) Issue/Request: AN ORDINANCE APPROVING A PLAN FOR AN INDUSTRIAL DEVELOPMENT PROJECT FOR CERNER CORPORATION, A DELAWARE CORPORATION, CONSISTING OF THE ACQUISITION AND INSTALLATION OF CERTAIN MACHINERY AND EQUIPMENT FOR THE COMPANY; AUTHORIZING THE CITY OF LEE S SUMMIT, MISSOURI TO ISSUE ITS TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BONDS (CERNER CORPORATION PROJECT), SERIES 2015, IN A PRINCIPAL AMOUNT NOT TO EXCEED $422,000,000 TO FINANCE THE COSTS OF SUCH PROJECT; AUTHORIZING AND APPROVING CERTAIN DOCUMENTS; AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION WITH THE ISSUANCE OF THE BONDS. Key Issues: This Ordinance is presented after the public hearing on the Plan for an Industrial Development Project (the Plan ) for Cerner Corporation ( Cerner ). The Ordinance (i) approves the Plan, (ii) authorizes the City to issue industrial development revenue bonds for the 2015 Cerner Project (defined below) in an amount not to exceed $422,000,000, and (iii) authorizes the execution of a Trust Indenture, Bond Purchase Agreement and Lease Agreement between the City and Cerner. Background: This Chapter 100 Plan for Cerner is for a project consisting of the acquisition and installation of certain machinery and equipment (the 2015 Cerner Project ), to be used by Cerner to operate a data center at the north building of the Lee s Summit Technology Center, located at 777 Northwest Blue Parkway in the City; notice of the 2015 Cerner Project was given to the taxing jurisdictions. The City now desires to approve (i) the Plan and (ii) the issuance of its Taxable Industrial Development Revenue Bonds (Cerner Corporation Project), Series 2015, in an aggregate principal amount not to exceed $422,000,000, for the purpose of providing funds to pay the costs of the 2015 Cerner Project. A portion of the 2015 Cerner Project consists of personal property and equipment which was initially expected to be purchased in connection with Cerner s Series 2010 Bonds. The Series 2010 Bonds are being capped in an amount equal to the amount spent by Cerner to date to acquire and install the project related to the Series 2010 Bonds. No more personal property will be purchased in relation to said Series 2010 Bonds. Staff Recommendation: Staff recommends approval

36 Ordinance No. 3 (KC Summit Technology LLC- Series 2007 Bond Amendments) Issue/Request: AN ORDINANCE AUTHORIZING THE DELIVERY OF A SPECIAL WARRANTY DEED AND A FIRST SUPPLEMENTAL LEASE AGREEMENT RELATED TO THE CITY S TAXABLE INDUSTRIAL DEVELOPMENT REFUNDING REVENUE BONDS (SUMMIT TECHNOLOGY CENTER PROJECT), SERIES 2007, TO PERMIT THE MODIFICATION OF THE LEGAL DESCRIPTION OF THE REAL PROPERTY WHICH IS THE SUBJECT OF THE LEASE AGREEMENT. Key Issues: This ordinance authorizes the execution of a First Supplemental Lease Agreement, between the City and KC Summit Technology LLC, a Delaware limited liability company (the KC Summit ), and a Special Warranty Deed from the City to KC Summit. Background: On June 18, 1998, the City issued its Taxable Industrial Development Revenue Bonds (Townsend Summit, LLC), Series 1998, in the maximum principal amount of $100,000,000 (the Series 1998 Bonds ), for the purpose of providing funds to finance the costs of purchasing and constructing an industrial development project in the City, including land, buildings and fixtures (collectively, the Original Project ), and, in connection therewith, the City leased the Original Project to Townsend Summit, LLC, a Delaware limited liability company ( Townsend ). In 2007, Townsend agreed to sell a portion of the Original Project consisting of two buildings of approximately 1,037,985 square feet (the KC Summit Project ), together with the real property on which such buildings are located, to KC Summit. In connection with the sale of the Townsend Summit Project to KC Summit, KC Summit requested that the Series 1998 Bonds be refunded by the issuance by the City of its Taxable Industrial Development Refunding Revenue Bonds (Summit Technology Center Project), Series 2007 (the Series 2007 Bonds ), in the maximum principal amount of $51,590, Pursuant to Ordinance No passed August 2, 2007, the City (i) entered into a Trust Indenture dated as of August 1, 2007 (the Indenture ), with UMB Bank, N.A., Kansas City, Missouri, as trustee (the Trustee ), for the purpose of issuing and securing the Series 2007 Bonds, and (ii) entered into the Lease Agreement dated as of August 1, 2007 (the Lease ), with KC Summit, under which the City (a) caused the proceeds of the Series 2007 Bonds to be used to pay the costs of the KC Summit Project, and (b) leased the Townsend Summit Project to KC Summit in consideration of payments to be made by KC Summit to the Trustee which are to be sufficient to pay the principal of and interest on the Series 2007 Bonds as the same become due. KC Summit has agreed to sell a portion of the KC Summit Project consisting of the north building (the North Building ), together with its interest in the real property on which the North Building is situated, to Cerner Properties, Inc., a Delaware corporation ( Cerner Properties ). In connection with the sale of the North Building to Cerner Properties, KC Summit and the City, at the request of KC Summit, desire to amend the legal description of the Project Site (as defined in the Indenture), which is the subject of the Lease, to remove the North Building and the real property on which it is situated. To effect such amendment it is necessary that the City (i) deliver a Special Warranty Deed to KC Summit transferring the Project Site in full, (ii) enter into a First Supplemental Lease Agreement with KC Summit to modify the legal description of the Project Site under the Lease going forward, and (iii) execute and record a plat dividing up the Project Site for the purposes set forth above. Staff Recommendation: Staff recommends approval

37 Ordinance No. 4 (Cerner Corporation- Series 2010 Bond Amendments) Issue/Request: AN ORDINANCE AUTHORIZING THE DELIVERY OF AN OMNIBUS AMENDMENT TO BOND DOCUMENTS RELATED TO THE CITY S TAXABLE INDUSTRIAL REVENUE BONDS (CERNER CORPORATION PROJECT), SERIES 2010, TO MAKE CERTAIN MODIFICATIONS TO THE BOND DOCUMENTS RELATED TO SAID BONDS. Key Issues: This ordinance authorizes the execution of an Omnibus Amendment to Bond Documents among the City, Cerner Corporation ( Cerner ) and the trustee for the Series 2010 Bonds (defined below). Background: On November 18, 2010, the City issued its Taxable Industrial Revenue Bonds (Cerner Corporation Project), Series 2010, in the maximum aggregate principal amount not to exceed $390,000,000 (the Series 2010 Bonds ), for the purpose of the acquisition and installation of certain machinery and equipment for a facility that provides electronic data center and related services (the 2010 Cerner Project ), located at 777 Northwest Blue Parkway in Lee s Summit, Missouri (the Project Site ), for Cerner. In connection with the issuance of the Series 2010 Bonds, the City (i) entered into a Trust Indenture dated as of November 1, 2010 (the Indenture ) with the trustee for the Series 2010 Bonds, to issue and secure the Series 2010 Bonds, (ii) entered into a Lease Agreement dated as of November 1, 2010 (the Lease ) with Cerner, pursuant to which the City, as lessor, acquired title to the 2010 Cerner Project and leased the 2010 Cerner Project to Cerner in consideration of rentals which will be sufficient to pay the principal of and interest on the Series 2010 Bonds, and (iii) entered into a Bond Purchase Agreement dated November 18, 2010 (the Bond Purchase Agreement, and together with the Indenture and the Lease, collectively referred to herein as the Bond Documents ), with Cerner, as purchaser of the Series 2010 Bonds. Cerner has acquired and installed a portion of the Series 2010 Cerner Project. As discussed above, under Ordinance No. 2, the City is considering the approval of the issuance of its Taxable Industrial Development Revenue Bonds (Cerner Corporation Project), Series 2015, in the maximum principal amount of $422,000,000 (the Series 2015 Bonds ), and Cerner and the City have agreed that the remaining personal property to be acquired and installed as part of the 2010 Cerner Project shall be acquired and installed using proceeds of the Series 2015 Bonds (rather than the Series 2010 Bonds) and thereafter conveyed to the City in connection with the Series 2015 Bonds. In order to effect such modification, the City and Cerner now desire to amend the Bond Documents to memorialize the fact that (i) the Series 2010 Bonds will be capped at a maximum principal amount equal to the amount spent by Cerner to date, and (ii) Cerner will acquire no more personal property using proceeds of the Series 2010 Bonds.

38 Proposed Cerner Purchase Area Existing Summit Technology Campus