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CITY OF MUSKEGON
LOCAL DEVELOPMENT FINANCE AUTHORITY
REGULAR MEETING
MINUTES
October 1, 2002
D. Seifert called the meeting to order at 12:14 p.m. and roll was taken.
MEMBERS PRESENT: C. Larson, D. Seifert, M. Balzic, R. Long, J. Kolkema-Shafer, J.
Hayner, J. Derbin
MEMBERS ABSENT: R. Kersman, excused; V. Zukiewicz; D. Witte; D. Woodward; P.
Roy Jr., excused
STAFF PRESENT: B. Mazade, C. Brubaker-Clarke, T. Paul
OTHERS PRESENT: M. Derwent, GVSU Attorney; F. Culver, City Attorney; Rich
Mills, Workstage; Bob Burns, Muskegon Chronicle.
APPROVAL OF MINUTES
A motion to approve the minutes of the regular meeting of September 10, 2002 was made by C.
Larson, supported by J. Kolkema-Shafer and unanimously approved.
NEW BUSINESS
Approval of Property Transfer Agreement for Smartzone Center of Excellence from Lakefront
LLC to LDFA- C. Brubaker-Clarke informed the Board that the final Agreement, with
attachments, arrived in the office on Friday afternoon. Therefore, all documents were not in
order in the packet (copies of certain documents had been made earlier in the day, then copies of
additional attachments were made in the afternoon when the entire Agreement was received).
The Property Transfer Agreement was reviewed. The “Put Option” was explained. C.
Brubaker-Clarke stated that signed copies of the entire document would be forwarded to the
LDFA after the Closing. In addition, it was added that the date on the document was written as
“September” and this needs to be changed to “October”.
A motion to approve the Property Transfer Agreement, subject to final review and approval by
our legal counsel, was made by R. Long and supported by J. Hayner and unanimously approved.
Approval of Lease Agreement with GVSU/LDFA for the Center of Excellence Building- The
LDFA members were given a revised lease from the one sent out on Friday. M. Derwent
explained the changes. These changes have to do with the tax-exempt status of the bonds.
Miller-Canfield, the City’s Bond Counsel, has determined that the entire facility can be tax-
exempt. The former Lease included language that 75 percent of the facility would be tax-
exempt. J. Derbin asked what would happen if the IRS said this was done improperly. Tim
assured the LDFA that Miller-Canfield was providing an “opinion” on the matter, and that they
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had told him that it is workable. M. Derwent added that the bonds would not be saleable,
without this opinion from Miller-Canfield, so there would not be a problem. By having the
entire facility tax-exempt, the LDFA is able to save approximately $800,000 on the bond costs.
J. Derbin asked if the fuel cell project would effect the bond status, particularly if energy is sold
in the future. M. Derwent assured the members that any major change such as this would require
additional agreements that would come before the LDFA in the future. F. Culver added that the
tax-exempt status will free the LDFA from having to monitor the uses in the building.
A motion to approve the Lease Agreement between the LDFA and GVSU for the Energy Center
of Excellence Building was made by C. Larson, supported by J. Derbin and unanimously
approved.
Authorization of Issuance of Bonds for 100 % Tax-Exemption- J. Derbin questioned whether the
LDFA should make a motion approving the change in tax-exemption on the bonds, since an
earlier motion by the LDFA included language that the facility would be only 75 % tax-exempt.
After some discussion, M. Derwent suggested that this would be a good idea to have for the
“record”. J. Derbin asked who would determine that the bonds would be tax-exempt. F. Culver
said it was the LDFA/City that made this decision.
A motion to approve the authorization of the issuance of bonds for 100% tax-exempt was made
by J. Derbin, supported by D. Seifert and unanimously approved.
Approval of Workstage Contract for the Construction of the Center of Excellence- C. Brubaker-
Clarke explained that there are actually two documents that need to be approved. One is the
“Design-Build Agreement” and the second is the “Phase I Services Agreement”. The Phase I
Services Agreement has changed slightly since Friday. R. Mills gave C. Brubaker-Clarke a copy
of the revised agreement that was faxed earlier in the meeting. The new version has the “LDFA”
as the party, rather than “the City of Muskegon”. It has also been signed by Workstage’s
president. C. Brubaker-Clarke explained that the Phase I Services Agreement allows Workstage
to begin design work immediately, which is required if the facility is to be constructed by May
2003. The Design-Build Agreement will not be signed until the Closing. D. Seifert asked what
LEEDS means. R. Mills replied that it stands for Leadership in Energy and Environmental
Design. He also said that this building should bring a Gold LEEDS certification, due to the fuel
cell, the building enclosure and such items as outlets in the parking lots for alternative fuel
powered cars.
A motion to approve the Phase I Services Agreement was made by J. Hayner, supported by J.
Kolkema-Shafer and unanimously approved.
J. Hayner asked if there were any concerns with the Design-Build Agreement. F. Culver stated
that this was one of the most “fair” agreements he had ever seen, on first draft. J. Hayner then
asked if we had made any changes to the document. F. Culver said that there was very little of
substance changed.
A motion to approve the Design-Build Agreement was made by J. Hayner, supported by R.
Long, and unanimously approved.
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Approval of the Addendum to Design-Build Agreement- M. Derwent provided an updated
version of the Agreement. C. Brubaker-Clarke had copies made for LDFA members. M.
Derwent went over the changes. The changes are as follows: The amount in Item “C” is changed
from “$4,045,000” to “4,340,400”, and the second sentence is changed to “The Contract Price
includes LEED Gold Certification and the barrel vaulted roof as described herein.” The amount
is #3 has been added, with the amount being, “$295,000”. The entire verbiage in #4 has been
changed to read, “Tenant agrees to pay for the incremental cost of structural steel, glass &
glazing, general trades, and membrane roofing for the barrel vaulted roof system. In no case
shall the liability of Tenant under this Section 4 exceed $250,000.”
A motion to approve the Addendum to Design-Build Agreement, as revised, was made by J.
Derbin, supported by J. Kolkema-Shafer and unanimously approved.
Next Meeting- D. Seifert asked if there were going to be any more meetings in the immediate
future. Both B. Mazade and C. Brubaker-Clarke said they did not foresee the number of
meetings that we have had recently, but they would schedule a meeting in the future to update
the members on the SmartZone activities.
OLD BUSINESS
None.
OTHER
None.
ADJOURN
There being no further business, the meeting was adjourned at 1:20 p.m.
cbc
10/1/02
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