HomeMy WebLinkAboutIndustrial Development Certificate of Resolutions Agreement to Issue Bonds
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MOTOR INNS. INC.
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10/139275
1599 LaPorte
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Date: October 25, 1985
CERTIFICATION AS TO COMPLETION
From:
La Quinta Motor Inns, Inc.
First City Bank of Houston
Box 809
Houston, TX 77001
Attn: Corp. Trust Division
$3,800,000 City of La Porte Industrial Development Corporation
Industrial Development Revenue Bonds, Series 1983 (La Quinta
Motor Inns, Inc. Project)
To:
Re:
This Certificate is being delivered to you pursuant to the provlslons
of Section 3.6 of that certain Loan Agreement between the City of
La Po rte Industr ial Development Co rporation (the "Is suer") and
La Quinta Motor Inns, Inc. (the "User"), dated as of November 1, 1983
the "Agreement") relating to the $3,800,000 City of La Porte
Industrial Development Corporation Industrial Development Revenue
Bonds Series 1983 (La Quinta Motor Inns, Inc. Project). The terms
used in this Certificate shall have the meaning ascribed in the
Agreement.
The undersigned duly appointed ,Authorized Representative of the
User hereby certifies as follows:
1. As of July 31, 1985 (the "Completion Date") the Project has
been completed substantially in accordance with. the plans and all
costs of such acquisition, construction, furnishing and equipment have
been authorized for payment.
2. Of the original proceeds actually disbursed from the Issuer
not including any retainage described in paragraph 3 below), not more
than the Insubstantial Amount was used to pay other than Quali fy ing
Costs.
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3. The Trustee is hereby directed to retain $ -0- in the
Construction Fund for future disbursement to pay Issuance Costs or
Project Costs not now due and payable or the liability for payment of
which the User is contesting.
4. The sum of Quali fying Costs plus the Insubstantial Amount
exceeds the amount of Or iginal Proceeds heretofore disbursed to pay
Project Costs; the User, therefore, directs that on July 23, 1985 when
the investments in the construction fund mature:
Office of the General Counsel
La Quinta Plaza. P. O. Box 32064 · San Antonio, Texas 78216 · 512-366-6000
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(A) -0-
which amount has been
Issuance Costs and has
under Section 3.5 of the
of such excess be disbursed to the User,
expended by the User for Project Costs or
not previously been paid by a disbursement
Agreement, and
(B) -0- be disbursed for deposit in the Bond Fund to pay
interest on the Bonds for no more than one year after the Completion
Date.
5. -0- representing remaining Original Proceeds shall be
disbursed for placement in escrow in a separate account in the Debt
Service Fund to be used solely for the purpose of paying the principal
component, or portions thereof, in a redemption date as prov ided in
Section 3.03 of the Indenture; provided, that the amount so placed in
escrow shall not be invested so as to violate any of the arbitrage
rules relating to Industrial Development Revenue Bonds.
6. If any funds in excess of the sum of the above monies
(Sections 4(A), 4(B) and 5) remain in the Construction Fund, then
those remaining funds shall also be placed in the Bond Fund for
payment of interest.
Notwithstanding the foregoing, this Completion Certificate is
being given without prejudice to any rights against third parties
which exist of even date herewith or which may subsequently come into
being.
J,
Alan
Vice Pr ident-General Counsel
(Authorized Representative)
'NS, INC.
cc: Walter Biegler
Maxine Glasberg
Twyla Lord
Mary King
Lauren Kinzie
Deborah A. Wear-Rios
cc: City of La Porte Industrial Development Corporation
604 W. Fairmont Parkway
La Porte, TX 77571
Attn: President
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RESOLUTION OF CITY COUNCIL APPROVING AGREEMENT TO ISSUE BONDS BY
AND BETWEEN CITY OF LA PORTE INDUSTRIAL DEVELOPMENT CORPORATION AND
LA QUINTA MOTOR INNS, INC.
WHEREAS, the City of La Porte, Texas (the "Unit"), a political
subdivision, has approved and authorized the creation of the City of La
Porte Industrial Development Corporation (the "Corporation") as a Texas
nonprofit industrial development corporation, pursuant to the provisions
of the Development Corporation Act of 1979, Article 5190.6, Vernon's
Annotated Texas Civil Statutes, as amended (the "Act"), to act on behalf
of the Unit to promote and develop industrial, manufacturing and
commercial enterprises to promote and encourage employment and the
public welfare; and
WHEREAS, the Corporation is authorized by the Act to issue indus-
trial development revenue bonds on behalf of the Unit for the purpose of
paying all or part of the cost of a "project," as defined in the Act,
and to sell or lease the project or to loan the proceeds of the bonds to
finance all or part of the costs of the proj ect; and
WHEREAS, the Corporation entered into an Agreement to Issue Bonds
with La Quinta Motor Inns, Inc. (the "User"), pursuant to which the
Corporation agreed, subject to certain conditions, to issue its tax
exempt industrial development revenue bonds in the aggregate principal
amount (excluding bonds issued to refund any of the Bonds) now estimated
not to exceed $4,700,000, to provide funds to defray all or part of the
cost of acquiring and constructing certain industrial, manufacturing or
commercial facilities to be constructed by or to be leased or sold to
the User; and
WHEREAS, the City Council has reviewed the form and substance of
the proposed Agreement to Issue Bonds between the Corporation and the
User and intends, by adoption of this written Resolution, to approve
said Agreement to Issue Bonds; NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LA PORTE, TEXAS,
THAT:
Section 1: The Agreement to Issue Bon4s, in the form attached
hereto, entered into by and between the Corporation and the User,
pursuant to which the Corporation agreed, subject to the conditions
stated therein, to authorize and issue its industrial development
revenue bonds in the aggregate principal amount (excluding bonds issued
to refund any of the Bonds) now estimated not to exceed $4,700,000, to
provide funds to defray all or part of the cost of the acquisition and
construction of the industrial, manufacturing or commercial facility
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described in Exhibit "A" to said Agreement to Issue Bonds, is hereby
approved.
Section 2: This Resolution is adopted for the purpose of satisfy-
ing the conditions and requirements of the Act and Section 103 of the
Internal Revenue Code of 1954, as amended, and the regulations promul-
gated thereunder and for the benefit of the Corporation, the Unit, the
owners or holders from time to time of the obligations of the Corpora-
tion and all other interested persons.
Section 3: The Governing Body has considered evidence of the
posting of notice of this meeting and officially finds, determines,
recites and declares that a sufficient written notice of the date, hour
and place of this meeting and of the subject of this Resolution was
posted at a place convenient to the public on a bulletin board located
at a place convenient to the public in the City Hall of the City of La
Porte, Texas, for at least 72 hours preceding the scheduled time of such
meeting; the place of posting was readily accessible to the general
public at all times from such time of posting until the scheduled time
of such meeting; and such meeting was open to the public as required by
law at all times during which the Resolution and the subject matter
thereof were discussed, considered and formally acted upon, all as
required by the Open Meetings Law, Article 6252-17, Vernon's Annotated
Texas Civil Statutes, as amended.
PASSED AND APPROVED this ~ day of April, 1983.
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Exhibit "A"
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AGREEMENT TO ISSUE BONDS
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THIS AGREEMENT TO ISSUE BONDS, entered into as of the 4th day of
April, 1983, by and between the City of La Porte Industrial Development
Corporation (the. "Corporation"), created pursuant to the authority of
the Development Corporation Act of 1979, Article 5190.6, Vernon's
Annotated Texas Civil Statutes, as amended (the "Act"), and La Quinta
Motor Inns, Inc., a Texas corporation (the "User"), for the purpose of
carrying out the public purpose set forth in the Act, including the
promotion and development of industrial, manufacturing and commercial
enterprises to promote and encourage employment and the public welfare;
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WHEREAS, the City of La Porte, Texas (the "Unit"), has authorized
and approved the creation of the Corporation to act on behalf of the
Unit for the public purpose of furthering on behalf of the Unit the
promotion and development of industrial, manufacturing and commercial
enterprises to promote and encourage employment and the public weifare;
and
WHEREAS, the Corporation is authorized by the Act to acquire,
construct, improve, maintain, equip and furnish and to lease or sell
"projects," as such term is defined in the Act, or to make loans for the
purpose of providing financing for all or part of the costs of a proj-
ect, and the Corporation is further authorized to issue its bonds for
the purpose of paying all or part of the costs of a project; and
WHEREAS, the User desires to acquire and construct a facility, more
particularly described in Exhibit "A" attached hereto, within the Unit
(the "Project"), which Project is suitable for the promotion of
commercial development and expansion, the promotion of employment in the
Unit and for use by commercial enterprises; and
WHEREAS, pursuant to the Act, the Corporation is authorized to
issue the bonds hereinafter described, which bonds shall never con-
stitute an indebtedness or pledge of the faith and credit of the State
of Texas (the "State"), of the Unit, or of any other political corpora-
tion, subdivision or agency of the State within the meaning of any State
constitutional or statutory provision, shall never be paid in whole or
in part out of any funds raised or to be raised by taxation or any other
funds of the Unit, and shall never be paid in whole or in part out of
any funds of the Corporation except those derived from or in connection
with the sale or lease of the Project or the loan of funds to finance
the Project; and
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WHEREAS, to promote and encourage employment and 'the public wel-
fare, the Corporation agrees to issue, at the request of the User, one
or more series of the Corporation's industrial development revenue bonds
(the "Bonds") for the purpose of paying all or part of the cost of con-
structing and acquiring the Project, or for the purpose of loaning the
proceeds' to the User in order to provide temporary or permanent financ-
ing of all or part of the cost of constructing and acquiring the Proj-
ect, and the C9rporation and the User deem it desirable and proper that
this Agreement to Issue Bonds constitute a formal record of such agree-
ment and understanding in order that the User may proceed with or pro-
vide for the acquisition and construction of the Project; and
WHEREAS, the User has evidenced a desire to cooperate with the
Corporation in the acquisition and construction of the Project and for
the Corporation to authorize and issue the Bonds in the aggregate prin-
cipal amount now estimated not to exceed $4,700,000, to provide the
funds to defray all or part of the cost of the acquisition and con-
struction of the Project; and
WHEREAS, the Corporation and the User contemplate that the Project
will be sold on an installment payment basis or leased to the User or
that proceeds of the Bonds will be loaned to the User in order to pro-
vide temporary or permanent financing of all or part of the costs of the
Project and that the installment purchase, rental or loan payments
therefor will be sufficient to pay the principal of and any premium and
interest on the Bonds; and
WHEREAS, it is the desire of the Corporation that the acquisition
and construction of the Project occur at the earliest possible time so
as to promote and encourage employment and the public welfare within the
Unit; and
WHEREAS, it is intended that this Agreement to Issue Bonds shall
constitute "some other similar official action" toward the issuance of
the Bonds within the meaning of Section 1.103-8(a)(5) of the Treasury
regulations issued pursuant to Section 103(b) of the Internal Revenue
Code of 1954, as amended (the "Code");
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration and of the mutual benefits, covenants and agree-
ments herein expressed, the Corporatior. and the User agree as follows:
1. The User shall commence with the acquisition and construction
of the Project, which Project will be in furtherance of the public
purposes of the Corporation and the Unit as aforesaid, and the User will
provide, or cause to be provided, at its expense, the necessary interim
financing to expedite the commencement of the acquisition and
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construction of the Project. On or prior to the issuance of the Bonds,
the User will enter into a purchase, lease or loan agreement on an
installment payment basis (herein called the "Agreement") with the
Corporation under which the Corporation will sell or lease the Project
to the User or make a loan to the User for the purpose of providing
temporary or permanent financing of all or part of the costs of the
Project and the User will make installment payments sufficient to pay
the principal of and any premium and interest on such series of Bonds.
The Bonds shall never constitute an indebtedness or pledge of the faith
and credit of the State, of the Unit, or of any other political
corporation, subdivision or agency of the State within the meaning of
any State constitutional or statutory provision, and the Bonds shall
never be paid in whole or in part out of any funds raised or to be
raised by taxation or any other funds of the Unit, and shall be payable
from the funds of the Corporation derived from or in connection with the
sale or lease of the Project or the loan of the proceeds of the Bonds.
2. On receipt of a ruling from the Internal Revenue Service (or
the opinion of nationally recognized bond counsel) that interest paid on
the Bonds is exempt from federal income taxation, the Corporation hereby
agrees to issue, pursuant to the terms of the Act, the Bonds, or from
time to time the portion thereof as may be the subject of such a ruling
or opinion as aforesaid, in an appropriate principal amount not exceed-
ing that which is the subject of a ruling or opinion as aforesaid,
maturing in such amount and times, bearing interest at the rates, pay-
able on the dates and having such optional and mandatory redemption
features and prices as are approved in writing by the User. The Cor-
poration will deliver the Bonds to the purchaser designated by the User
and will cooperate to the fullest extent in facilitating delivery of the
Bonds.
3. The Corporation and the User agree that the Bonds may be
issued either at one time or in several series from time to time as the
User shall request in writingj provided, however, that the parties agree
that the Bonds will be issued in an aggregate principal amount as will
not exceed the amount which is the subject of a ruling or rulings or
opinion or opinions as aforesaid. A request in writing for issuance of
one or more series of Bonds shall not affect the obligation hereunder of
the Corporation to issue the remaining Bonds as written requests there-
for are received. It is further agreed that the proceeds of the Bonds
or portions thereof whether or not issued in a series, shall not be
invested so as to constitute the Bonds or a portion thereof as arbitrage
bonds within the meaning of Section 103(c) of the Code and applicable
regulations promulgated pursuant thereto.
4. The payment of the principal of and any premium and interest
on the Bonds shall be made solely from moneys realized from the sale or
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lease of the Project or from moneys realized from the loan of the pro-
ceeds of the Bonds to finance all or part of the costs of the Project.
5. The costs of the Project (hereinafter the "Project Costs") may
include any cost of acquiring, constructing, reconstructing, improving
and expanding the Project. Without limiting the generality of the
foregoing. the Project Costs shall specifically include the cost of the
acquisition of all land, rights-of-way, property rights, easements and
interests, the cost of all machinery and equipment, financing charges,
interest prior to and during construction and for one year after com-
pletion of construction whether or not capitalized. necessary reserve
funds, costs of estimates and of engineering and legal services, plans,
specifications, surveys, estimates of cost and of revenue, other expen-
ses necessary or incident to determining the feasibility and practic-
ability of acquiring, constructing, reconstructing, improving and ex-
panding the Project, administrative expenses and such other expenses as
may be necessary or incident to the acquisition, construction, recon-
struction, improvement and expansion of the Project, the placing of the
Project in operation and all incidental expenses, costs and charges
relating to the Project not enumerated above. The parties agree. upon
request, to provide or to cause to be provided to each other any data or
information which may be reasonably required to verify any of the Pro-
ject Costs enumerated in this paragraph. The User agrees that it will
be responsible for and pay any Project Costs incurred prior to issuance
of the Bonds and will pay all Project Costs which are not or cannot be
paid or reimbursed from the proceeds of the Bonds.
6. The User agrees that it will at all times indemnify and hold.
harmless the Corporation, the Board of~Directors of the Corporation, the
Unit, the City Council of the Unit and any of the officers, directors,
employees, agents, servants and any other party acting for or on behalf
of the Corporation or the Unit (such parties being hereinafter referred
to as the "Indemnified Parties") against any and all losses. costs.
damages, expenses and liabilities (collectively herein called "Losses")
of whatsoever nature (including, but not limited to, attorneys' fees,
litigation and court costs, amounts paid in settlement and amounts paid
to discharge judgments) directly or indirectly resulting from, arising
out of or relating to one or more Claims, as hereinafter defined, even
if such Losses or Claims. or both. directly or indirectly result from,
arise out of or relate to, or are asserted to have resulted from, arisen
out of or related to, in whole or in part, one or more negligent acts or
omissions of the Indemnified Parties in connection with the issuance of
the Bonds or in connection with the Project. The term "Claims" as used
herein shall mean all claims, lawsuits, causes of action and other legal
actions and proceedings of whatsoever nature. including but not limited
to claims, lawsuits. causes of action and other legal actions and
proceedings, involving bodily or personal injury or death of any person
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or damage to any property (including, but not limited to, persons
employed by the Corporation, the Unit, the User or any other person and
all property owned or claimed by the Corporation, the Unit, the User,
any affiliate of the User or any other person) or involving damages
relating to the issuance, offering, sale or delivery of the Bonds
brought against any Indemnified Party or to which any Indemnified Party
is a party, even if groundless, false or fraudulent, that directly or
indirectly result from, arise out of or relate to the issuance,
offering, sale or delivery of the Bonds or the design, construction,
installation, operation, use, occupancy, maintenance or ownership of the
Project or any part thereof. The obligations of the User shall apply to
all Losses or Claims, or both, that result from, arise out of or are
related to any event, occurrence, condition or relationship prior to
termination of this Agreement to Issue Bonds, whether such Losses or
Claims, or both, are asserted prior to termination of this Agreement to
Issue Bonds or thereafter. None of the Indemnified Parties shall be
liable to the User for, and the User hereby releases each of them from
all liability to the User for, all injuries, damages or destruction of
all or any part or parts of any property owned or claimed by the User
that directly or indirectly result from, arise out of or relate to the
design, construction, operation, use, occupancy, maintenance or
ownership of the Project or any part.thereof, even if such injuries,
damages or destruction directly or indirectly result from, arise out of
or relate to, in whole or in part, one or more negligent acts or
omissions of the Indemnified Parties in connection with the issuance of
the Bonds or in connection with the Project. Each Indemnified Party, as
appropriate, shall reimburse the User for payments made by the User to
the extent of any proceeds, net of all expenses of collection, actually
received by them from any insurance with respect to the Loss sustained.
Each Indemnified Party, as appropriate, shall have the duty to claim any
such insurance proceeds and the Indemnified Party, as appropriate, shall
assign its respective rights to such proceeds, to the extent of such
required reimbursement, to the User. In case any action shall be
brought or to the knowledge of any Indemnified Party, threatened against
any of them in respect of which indemnity may be sought against the
User, the Indemnified Party shall promptly notify the User in writing
and the User shall have the right to assume the investigation and
defense thereof, including the employment of counsel and the payment of
all expenses. The Indemnified Party shall have the right to employ
separate counsel in any such action and participate in the investigation
and defense thereof, but the fees and expenses of such counsel shall be
paid by the Indemnified Party unless (a) the employment of such counsel
has been specifically authorized by the User, in writing, (b) the User
has failed to assume the defense and to employ counselor (c) the named
parties to any such action (including any impleaded parties) include
both an Indemnified Party and the User, and said Indemnified Party shall
have been advised by such counsel that there may be one or more legal
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defenses available to it which are different from or additional to those
available to the User (in which case, if the Indemnified Party notifies
the User in writing that it elects to employ separate counsel at the
User's expense, the User shall not have the right to assume the defense
of such action on behalf of such Indemnified Party, it being understood,
however, that the User shall not, in connection with anyone such action
or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys for the Indemnified Parties
[provided that any Indemnified Party which has been advised by counsel
that there may be one or more legal defenses available to it which are
different from or additional to those available to any other Indemnified
Party shall have the right to employ separate counsel whose fees and
expenses shall be paid by the User], which firm shall be designated in
writing by said Indemnified Party). The Indemnified Party, as a
condition of such indemnity, shall use its best efforts to cooperate
with the User in the defense of any such action or claim. The User
shall not be liable for any settlement of any such action without its
consent but, if any such action is settled with the consent of the User
or if there be final judgment for the plaintiff in such action, the User
agrees to indemnify and hold harmless the Indemnified Party from and
against any Loss by reason of such settlement or judgment. The provi-
sions of this paragraph shall survive the expiration or termination of
this Agreement to Issue Bonds.
7. If within three (3) years from the date hereof (or such later
date as shall be mutually satisfactory to the Corporation and the User)
the Corporation and the User shall not have agreed to mutually accept-
able terms for the Bonds and for the sale and delivery thereof and
mutually acceptable terms and conditions of the Agreement, the User
agrees that it will pay the Corporation for all unpaid Project Costs
which the Corporation shall have incurred and this Agreement to Issue
Bonds shall thereupon terminate. In the event that the User elects,
prior to any such termination, not to proceed with the issuance of the
Bonds for any reason, it shall so notify the Corporation in writing and
shall promptly pay to the Corporation all Project Costs incurred by the
Corporation prior to such notification, and if payment is so made, the
User's obligations under paragraph 5 above shall terminate from and .
after the date of such notification.
8. The User may, without the consent of the Corporation, transfer
or assign this Agreement to Issue Bonds or transfer or assign any or all
of its rights and delegate any or all of its duties hereunder to any of
its subsidiaries or affiliates currently existing or hereafter created,
but no such transfer, assignment or delegation shall, without the writ-
ten consent and approval of the Corporation, relieve the User of its
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liability for payment of Project Costs under paragraphs 5 and 7 hereof
or indemnification under paragraph 6 hereof.
This Agreement to Issue Bonds and accompanying authorizing resolu-
tion shall be deemed and construed a resolution authorizing the issuance
of the Bonds and other similar official action of the Corporation,
acting by and through its Board of Directors, toward the issuance of the
Bonds as herein contemplated.
IN WITNESS WHEREOF, the City of La Porte Industrial Development
Corporation, acting pursuant to a resolution of its Board of Directors,
and La Quinta Motor Inns, Inc. have caused this Agreement to Issue Bonds
to be executed and attested by their duly authorized officers as of the
year and date first above written.
CITY OF LA PORTE INDUSTRIAL
DEVELOPMENT CORPORATION
By
President
A'ITEST:
Secretary
)>S'EAL)
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LA QUINTA MOTOR INNS, INC.
By
Title:
A'ITEST:
Title:
(SEAL )
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EXHIBIT "A"
The project to be financed with the proceeds of the Bonds (the
"Project") is the construction of (i) a two-story, 114-room motor inn
with parking facilities for approximately 130 cars and (ii) a free-
standing restaurant to accommodate approximately 150 patrons' with
on-premises parking facilities for approximately 55 cars. The project
will include acquisition and tmprovement of the Project site, construc-
tion of the motor inn facility containing approximately 130,092 square
feet and the restaurant containing approximately 2600 square feet,
landscaping and acquisition and installation of various items of fur-
nishings, fixtures, equipment and improvements functionally related and
subordinate to the foregoing.
The Project will be located in the southeast quadrant of the
intersection of US Highway 146 and Fairmont Parkway in the City of La
Porte, Texas.
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CERTIFICATE OF RESOLUTION
THE STATE OF TEXAS
CO~~ OF HARRIS
I, the undersigned officer of the City of La Porte, Texas (the
"Unit"), do hereby execute and deliver this Certificate for the benefit
of all persons interested in proceedings of the City Council (the
"Governing Body") of the Unit and the validity thereof, and do certify
as follows:
1. I am the duly chosen, qualified and acting officer of the Unit
for the office shown below my signature; as such I am familiar with the
facts herein certified; and I am duly authorized to execute and deliver
this Certificate.
2. The Governing Body convened in regular Session on the 6th
day of April, 1983, at the regular meeting place thereof, and the roll
was called of the duly constituted officers and members of the Governing
Body and a quorum was present. Whereupon, among other business, the
following was transacted at said meeting: a written resolution was
introduced for the consideration of the Governing Body. It was then
duly moved and seconded that said Resolution be adopted; and, after due
discussion, said motion, carrying with it the adoption of said Resolu-
tion, prevailed and carried by vote of the officers and members of the
Governing Body present and voting with the number of such officers and
members voting for such Resolution being at least equal to a majority of
the entire number of officers and members of the Governing Body that are
entitled to vote.
3. A true and complete copy of the aforesaid Resolution adopted
at the meeting is'attached to and follows this Certificate.
4. Such Resolution has been duly and lawfully adopted by the
Governing Body and has been duly recorded in the minutes of the Govern-
ing Body for such meeting.
5. Written notice of the date, hour, place and subject of the
meeting of the Governing Body was posted on a bulletin board located at
a place convenient to the public in the City Hall of City of La Porte,
Texas, for at leas't 72 hours preceding the scheduled time of such
meeting; the place of posting was readily accessible to the general
public at all times from such time of posting until the scheduled time
of such meeting; and such meeting was open to the public as required by
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law at all times during which the Resolution and the subject matter
thereof were discussed, considered and formally acted upon, all as
required by the Open Meetings Law, Article 6252-17, Vernon's Annotated
Texas Civil Statutes, as amended.
'3IGNED AND SEALED this 6th day of April
, 1983.
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(SEAL) . _ .
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(5) Execution Copies:
City Secretary
Seal
To be left with City
Secretary and returned
to Vinson & Elkins
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AGREE~IENT TO ISSUE BONDS
THIS AGREE~IENT TO ISSUE BONDS, entered into as of the lOb'1 day of
August, 1982, by and between the City of La Porte Industrial Development
C~rporation (the "Corporation"), created pursuant to the authority of
the Development Corporation Act of 1979, Article 5190.6, Vernon's Anno-
tated Texas Civil Statutes, as amended (the "Act"), and Bayshore National
Bank of La Porte, a national banking association (the "User"), for the
purpose of carrying out the public purpose set forth in the Act, includ-
ing the promotion and development of industrial, manufacturing and
commercial enterprises to promote and encourage employment and the
public welfare;
WIT N E SSE T H:
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\\THEREAS, the City of La Porte, Texas (the "Unit"), has authorized
and approved the creation of the Corporation to act on behalf of the
Unit for the public purpose of furthering on behalf of the Unit the
promotion and development of industrial, manufacturing and commercial
enterprises to promote and encourage employment and the public welfare;
and
\\THEREAS, the Corporation is authorized by the Act to acquire,
construct, improve, maintain, equip and furnish and to lease or sell
"projects," as such term is defined in the Act, or to make loans for the
purpose of providing financing for all or part of the costs of a project,
and the Corporation is further authorized to issue its bonds for the
purpose of paying all or part of the costs of a proj ect; and
\o.THEREAS, the User desires to acquire and construct a facility, more
particularly described in Exhibit "A" attached hereto, within the Unit
(the "Project"), ~'hich Project is suitable for the promotion of commer-
cial development and expansion, the promotion of employment in the Unit
and for use by commercial enterprises; and
\o,THEREAS, pursuant to the Act, the Corporation is authorized to
issue the bonds hereinafter described, which bonds shall never consti-
tute an indebtedness or pledge of the faith and credit of the State of
Texas (the "State"), of the Unit, or of any other political corporation,
subdivision or agency of the State within the meaning of any State
constitutional or statutory provision, shall never be paid in whole or
in part out of any funds raised or to be raised by taxation or any other
funds of the Unit, and shall never be paid in whole or in part out of
any funds of the Corporation except those derived from or in connection
~ith the sale or lease of the Project or the loan 0: funds to finance
the Project; and
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. \\THE~AS, to promote and encourage employment and the public
welfare, the Corporation agrees to issue, at the request of the User,
one or more series of the Corporation's industrial development revenue
bonds (the "Bonds") for the purpose of paying all or part of the cost of
constructing and acquiring the Project, or 'for the purpose of loaning
the proceeds to the User in order to provide temporary or permanent
financing of all or part of the cost of constructing and acquiring the
Project, and the Corporation and the User deem it desirable and proper
that this Agreement to Issue Bonds constitute a formal record of such
agreement and understanding in order that the User may proceed with or
provide for the acquisition and construction of the Project; and
WHEREAS, the User has evidenced a desire to cooperate with the
Corporation in the acquisition and construction of the Project and for
the Corporation to authorize and issue the Bonds in the aggregate prin-
cipal amount now estimated not to exceed $2,750,000, to provide the
funds to defray all or part of the cost of the acquisition and construc-
tion of the Project; and
\\THEREAS, the Corporation and the User contemplate that the Project
will be sold on an installment payment basis or leased to the User or
that proceeds of the Bonds will be loaned to the User in order to
provide temporary or permanent financing of all or part of the costs of
the Project and that the installment purchase, rental or loan payments "
t~erefor will be sufficient to pay the principal of and any premium and
interest on the Bonds; and
WHEREAS, it is the desire of the Corporation that the acquisition
and construction of the Project occur at the earliest possible time so
as to promote and encourage employment and the public welfare within the
Unit; and
\\~REAS, it is intended that this Agreement to Issue Bonds shall
constitute "some other similar official action" toward the issuance of
the Bonds within the meaning of Section 1.103-8(a)(5) of the Treasury
regulations issued pursuant to Section 103(b) of the Internal Revenue
Code of 1954, as amended (the "Code");
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration and of the mutual benefits, covenants and agree-
ments herein expressed, the Corporation and the User agree as follows:
.
1. The User shall commence with the acquisition and construction
of. the Project, which Project will be in furtherance of the public
purposes of the Corporation and the Unit as aforesaid, and the User will
provide, or cause to be pro~ided, at its expense, the necessary interim
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financing to expedite the commencement of the acquisition and construc-
tion of the Project. On or prior to the issuance of the Bonds, the User
will enter into a purchase, lease or loan agreement on an installment
. payment basis (herein called the ."Agreement") with the Corporation under
which the Corporation will sell or lease the Project to the User or make
a loan to the User for the purpose of providing temporary or permanent
financing of all or part of the costs of the Project and the User will
make installment payments sufficient to pay the principal of and any
premium and interest on such series of Bonds. The Bonds shall never
constitute an indebtedness or pledge of the faith and credit of the
State, of the Unit, or of any other political corporation, subdivision
or agency of the State within the meaning of any State constitutional or
statutory provision, and the Bonds shall never be paid in whole or in
part out of any funds raised or to be raised by taxation or any other
funds of the Unit, and shall be payable from the funds of the Corpor-
ation derived from or in connection with the sale or lease of the
Project or the loan of the proceeds of the Bonds.
2. On receipt of a ruling from the Internal Revenue Service (or
the opinion of nationally recognized bond counsel) that interest paid on
the Bonds is exempt from federal income taxation, the Corporation hereby
agrees to issue, pursuant to the terms of the Act, the Bonds, or from
time to time the portion thereof as may be the subject of such a ruling
or opinion as aforesaid, in an appropriate principal amount not exceeding
that which is the subject of a ruling or opinion as aforesaid, maturing
in such amount and times, bearing interest at the rates, payable on the
dates and having such optional and mandatory redemption features and
prices as are approved in writing by the User. The Corporation will
deliver the Bonds to the purchaser designated by the User and will
cooperate to the fullest extent in facilitating delivery of the Bonds.
3. The Corporation and the User agree that the Bonds may be
issued either at one time or in several series from time to time as the
User shall request in writing; provided, however, that the parties agree
that the Bonds will be issued in an aggregate principal amount as will
not exceed the amount which is the subject of a ruling or rulings or
opinion or opinions as aforesaid. A request in writing for issuance of
one or more series of Bonds shall not affect the obligation hereunder of
the Corporation to issue the remaining Bonds as written requests therefor
are received. It is further agreed that the proceeds of the Bonds or
portions thereof whether or not issued in a series, shall not be invested
so as to constitute the Bonds or a portion thereof as arbitrage bonds
within the meaning of Section l03(c) of the Code and applicable regula-
ti9ns promulgated pursuant thereto.
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4. .The payment of the principal of and any premium and interest
on the Bonds shall be made solely from moneys realized from the sale or
lease of the Project or from moneys realized from the loan of the
proceeds of the Bonds to finance all or part of the costs of the Proj ect.
,
5. The costs of the Project (hereinafter the "Project Costs") may
include any cost of acquiring, constructing, reconstructing, improving
and expanding the Project. Without limiting the generality of the
foregoing, the Project Costs shall specifically include the cost of the
-acquisition of all land, rights-of-way, property rights, easements and
interests, the cost of all machinery and equipment, financing charges,
interest prior to and during construction and for one year after comple-
tion of construction whether or not capitalized, necessary reserve
funds, costs of estimates and of engineering and legal services, plans,
specifications, surveys, estimates of cost and of revenue, other expenses
necessary or incident to determining the feasibility and practicability
of acquiring, constructing, reconstructing, improving and expanding the
Project, administrative expenses and such other expenses as may be
necessary or incident to the acquisition, construction, reconstruction,
improvement and expansion of the Project, the placing of the Project in
operation and all incidental expenses, costs and charges relating to the
Project not enumerated above. The parties agree, upon request, to
provide or to cause to be provided to each other any data or information
which may be reasonably required to verify any of the Project Costs "
e~umerated in this paragraph. The User agrees that it will be respon-
sible for and pay any Project Costs incurred prior to issu~nce of the
Bonds and will pay all Project Costs which are not or cannot be paid or
reimbursed from the proceeds of the Bonds.
6. The User agrees that it will at all times indemnify and hold
harmless the Corporation, the Board of Directors of the Corporation, the
Unit, the City Council of the Unit and any of the officers, directors,
employees, agents, servants and any other party acting for or on behalf
of the Corporation or the Unit (such parties being hereinafter referred
to as the "Indemnified Parties ") against any and all losses, costs,
damages, expenses and liabilities (collectively herein called "Losses")
of whatsoever nature (including, but not limited to, attorneys' fees,
litigation and court costs, amounts paid in settlement and amounts paid
to discharge judgments) directly or indirectly resulting from, arising
out of or relating to one or more Claims, as hereinafter defined, even
if such Losses or Claims, or both, directly or indirectly result from,
arise out of or relate to, or are asserted to have resulted from, arisen
out of or related to, in whole or in part, one or more negligent acts or
om~ssions of the Indemnified Parties in connection with the issuance of
the Bonds or in connection with the Project. The term "Claims" as used
herein shall mean all claims, lawsuits, causes of action and other legal
actions and proceedings of whatsoever nature, including but not limited
.
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to claims, la~'suits, causes of action and other legal actions and
proceedings, involving bodily or personal injury or death of any person
. or damage to any property (including, but not limited to, persons
employed by the Corporation, the .Unit, the User or any other person and
all property owned or claimed by the Corporation, the Unit, the User,
~y affiliate of the User or any other person) or involving damages
relating to the issuance, offering, sale or delivery of the Bonds
brought against any Indemnified Party or to which any Indemnified Party
is a party, even if groundless, false or fraudulent, that directly or
indirectly result from, arise out of or relate to the issuance, offering,
sale or delivery of the Bonds or the design, construction, installation,
operation, use, occupancy, maintenance or ownership of the Project or
any part thereof. The obligations of the User shall apply to all Losses
or Claims, or both, that result from, arise out of or are related to any
event, occurrence, condition or relationship prior to termination of
this Agreement to Issue Bonds, whether such Losses or Claims, or both,
are asserted prior to termination of this Agreement to Issue Bonds or
thereafter. None of the Indemnified Parties shall be liable to the User
for, and the User hereby releases each of them from all liability to the
User for, all injuries, damages or destruction of all or any part or
parts of any property owned or claimed by the User that directly or
indirectly result from, arise out of or relate to the design, construc-
tion, operation, use, occupancy, maintenance or ownership of the Project
or any part thereof, even if such injuries, damages or destruction
directly or indirectly result from, arise out of or relate to, in whole
or in part, one or more negligent acts or omissions of the Indemnified
Parties in connection ~ith the issuance of the Bonds or in connection
~Tith the Project. Each Indemnified Party, as appropriate, shall
reimburse the User for payments made by the User to the extent of any
proceeds, net of all expenses of collection, actually received by them
from any insurance with respect to the Loss sustained. Each Indemnified
Party, as appropria~e, shall have the duty to claim any such insurance
proceeds and ~he Indemnified Party, as appropriate, shall assign its
respective rights to such proceeds, to the extent of such required
reimbursement, to the User. In case any action shall be brought or to
the knowledge of any Indemnified Party, threatened against any of them
in respect of ~Thich indemnity may be sought against the User, the
Indemnified Party shall promptly notify the User in writing and the User
shall have the right to assume the investigation and defense thereof,
including the employment of counsel and the payment of all expenses.
The Indemnified Party shall have the right to employ separate counsel in
any such action and participate in the investigation and defense thereof,
but the fees and expenses of such counsel shall be paid by the Indem-
nified Party unless (a) the employment of such counsel has been speci-
fically authorized by the User, in writing, (b) ~he user has failed to
assume the defense and to employ counselor (c) the named parties to any
such action (including any impleaded parties) include both an Indem-
nified Party and the User, and said Indemnified Par~y shall have been
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adv~sed by' such counsel that there may be one or more legal defenses
available to it which are different from or additional to those avail-
able to the User (in which case, if the Indemnified Party notifies the
User in writing that it elects to employ separate counsel at the User's
expense, the User shall nQt have the right to assume the defense of such
action on behalf of such Indemnified Party, it being understood, however,
that the User shall not, in connection with anyone such action or
separate but substantially similar or related actions in the same juris-
diction arising out of the same general allegations or circumstanc~s, be
iiable for the reasopable fees and expenses of more than one separate
firm of attorneys for the Indemnified Parties [provided that any
Indemnified Party which has been advised by counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to any other Indemnified Party shall have
the right to employ separate counsel whose fees and expenses shall be
paid by the User], which firm shall be designated in writing by said
Indemnified Party). The Indemnified Party, as a condition of such
indemnity, shall use its best efforts to cooperate with the User in the
defense of any such action or claim. The User shall not be liable for
any settlement of any such action without its consent but, if any such
action is settled with the consent of the User or if there be final
judgment for the plaintiff in such action, the User agrees to indemnify
and hold harmless the Indemnified Party from and against any Loss by
reason of such settlement or judgment. The provisions of this paragraph.
s~all survive the expiration or termination of this Agreement to Issue
Bonds.
7. If within three (3) years from the date hereof (or such later
date as shall be mutually satisfactory to the Corporation and the User)
the Corporation and the User shall not have agreed to mutually accept-
able terms for the Bonds and for the sale and delivery thereof and
mutually acceptable terms and conditions of the Agreement, the User
agrees that it will pay the Corporation for all unpaid Project Costs
which the Corporation shall have incurred and this Agreement to Issue
Bonds shall thereupon terminate. In the event that the User elects,
prior to any such termination, not to proceed with the issuance of the
Bonds for any reason, it shall so notify the Corporation in writing and
shall promptly pay to the Corporation all Project Costs incurred by the
Corporation prior to such notification, and if payment is so made, the
User's obligations under paragraph 5 above shall terminate from and
after the date of such notification.
-
8. The User may, without the consent of the Corporation, transfer
or ,assign this Agreement to Issue Bonds or transfer or assign any or all
of its rights and delegate any or all of its duties here~~der to any of
its subsidiaries or affilia~es currently existing or here~fter created,
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but no such transfer, assignment or delegation shall, without the written
consent and approval of the Corporation, relieve the User of its liabil-
ity for payment of Proj ect Costs under paragraphs 5 and 7 hereof or
indemnification under paragraph 6. hereof.
This Agreement to Issue Bonds and accompanying authorizing reso-
lution shall be deemed and construed a resolution authorizing the issuance
the Bonds and other similar official action of the Corporation, acting
by and through its Board of Directors, toward the issuance of the Bonds
as herein contemplated.
IN \HTNESS WHEREOF, the City of La Porte Industrial Development
Corporation, acting pursuant to a resolution of its Board of Directors,
and Bayshore National Bank of La Porte, have caused this Agreement to
Issue Bonds to be executed and attested by their duly authorized officers
as of the year and date first above written.
CITY OF LA PORTE INDUSTRIAL
DEVELOP~ffiNT CORPORATION
BY~~~//
Sec
(SEAL)
BAYSHORE NATIONAL BANK OF LA PORTE
,.
BYY'< d E. ~- - . <04<<
President
~.
Cashi:e'r~---'<_ /:
';'" (/" '..
. -
CSE'~~ ~: ~
. _. ....'-0.... _~
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EXHIBIT II A"
The project to be financed with the proceeds of the
Bonds (the "project") is a new 24,000 square foot main banking
quarters for Bayshore National Bank of La Porte, together with
a 2,700 square foot drive-in facility with fifteen (l5) pneu-
matic drive-in lanes and one (1) drive-up automated teller
position. The main banking house will be located at the
intersection of state Highway 146 and West Fairmont Parkway,
and the drive-in facility and automated teller position will
be located at the intersection of South 8th Street and West
Fairmont Parkway, all in the City of La Porte, Harris County,
Texas.
The Project will include associated driveways and parking
facilities at both installations, security devices, vault and
teller equipment, data communications equipment, data records
facilities, telephone equipment, signs, landscaping, and var-
ious other items of equipment, furnishings and improvements
that are functionally related to and subordinate to the
foregoing described banking facilities.
~.
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K N 0 X W. ASK INS. J. D.. P. C.
ATTORNEY AT LAW
'<,
.JOHN O. A~MST~ONG. .J.D.
"SSOCI..TE
702 W. FA,R"ONT P..RKWAY
P. O. BOIC 1218
LA PORTE. TEXAS 77571-1218
TELEPtiONE
713 471-1SSe
November 24, 1982
Executive Director
Texas Industrial Commission
P. O. Box 12728
Austin, Texas 78711
Re: City of La Porte Industrial Development Corporation
Gentlemen:
As required by you Rules and Regulations, I enclose herewith
for filing, the form of application which has been duly adopted
by the board of directors of the City of La Porte Industrial
Development Corporation.
I would appreciate your acknowledging filing of this document,
by placing your file stamp on the enclosed duplicate of this
letter, and returning same to me in the enclosed stamped self-
addressed envelope.
Thank you for your kind assistance in this matter.
/
Kt~A/csr
Enclosures
cc: Mr. Dan Lyons
Attorney at Law
Vinson & Elkins
First City Tower, 27th Floor
Houston, Texas 77002
The Board of Directors
City of La Porte
Industrial Development Corporation
c/o City Hall
La Porte, Texas 77571
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DUMAS, HUGUENIN, BOOTHMAN & MORROW
FULBRIGHT & .JAWORSKI OFFICES
DALLAS, TEXAS 75201
TELEPHONE 12141 741-3458
BANK OF THE SOUTHW~ST BUILDING
HOUSTON. TEXAS 77002
TELEPHONE(7IJ, 651-5'51
TELEX 76-2829
AMERICAN BANK TOWER, SUITE 1740
221 WEST SIXTH STREET
AUSTIN. TEXAS 78701
TELEPHONE '5121474.5201
1212 KIR8Y 8UILDING 1509 MAIN STREET
1150 CONNECTICUT AVE.,N.W.
WASHINGTON, D.C. 20036
TELEPHONE 12021452-6800
TELEX 89-2802
LANDMARK BUILDING. SUITE 200
70S EAST HOUSTON AVENUE
SAN ANTON 10. TEXAS 78205
TELEPHONE 15121224-5575
ELBERT M. MORROW
PARTNER
2 $T. JAMES'S PLACE
LONDON.SWIA INP
TELEPHONE 1011629-1207
TELEX 28310
November 11, 1982
Mr. Knox W. Askins
City Attorney - La Porte
P. O. Box l2l8
La Porte TX 7757l-l2l8
Dear Mr. Askins:
My apologies' for not replying to your letter of
September 27th 'promptly but we have been working on some
varous forms and formats' to determine if the bas'ic fee
could be reduced with respect to indistrial development
bonds that are less than $500,000.
Work has been continuing on that part of the
project but we have had to set that as'ide at 'least until
after the first of the year because of the volume of
transactions that must be completed and bonds delivered
prior to December 31st.
Enclosed is a copy of the normal letter that we
utilize which outlines' the type of service that we normally
perform as well as the customary fees. Our objective in
working on the listed forms would De to reduce the amount of
paper work and time required to complete a transaction to
determine if .the minimum .fee could be cut in half. At this
point we have not determined whether that effort would be
success'ful but we anticipate returning to that project the
first part of January. If you feel that it would be appro-
priate to discuss the matter in January, if you would drop us
a note we would be pleased to get in touch with you when our
work on the proj ect has' been completed.
With kind personal regards and best wishes, we are,
Very truly yours,
EMM:fs
Enclosure
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AUSTIN OF"P"'CE
100' F"IRST CITY NATIONAL BANK BUILDING
AUSTIN,TEXAS 79701
(512) 472-811'
LIDDELL, SAPP, ZIVLEY, BROWN & LABoON
ATTORNEYS
TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002-309S
(713) 226-1200
TELEX 76-2616
TELECOPIER (713) 223-3717
DALLAS OF"F"ICE
2300 DIAMOND SHAMROCK TOWER
CALLAS. TEXAS 76201-6592
(214) 742-3232
October 20, 1982
Mr. Knox W. Askins, J.D.,
Attorney at Law
702 W. Fairmont
Post Office Box
La Porte, Texas
P.C.
Parkway
l2l8
77571-1218
Dear Mr. Askins:
I am wri ting in response to your letter to Mr. Frank A.
Liddell, Jr. of this firm.
We certainly would be interested in representing prospective
users of industr ial development bonds in La Porte. We have
relevant experience in serving as bond counsel, or as counsel to
development corporations, users, trustees, bond purchasers or
issuers of letters of credit in such transactions.
Where we serve as bond counsel, our usual fee is one-half of
one per~ent of the bond proceeds up to $5,000,000 and one-fourth
of one percent of the next $5,000,000 of bond proceeds. Our
minimum fee is $lO,OOO. Where we serve as counsel to the user,
our fee is based upon the time and effort expended, based upon
customary hourly rates for our lawyers having differing levels of
experience, ranging from $70 to $200 per hour. It has been our
experience that the fee charged to users has ranged from
approximately $2,500 to approximately $lO,OOO, depending upon the
complexities of the situation presented.
The scope of our representation as bond counsel would
consist of the preparation of all bond and financing documents,
including such secur i ty documents as deeds of trust, secur i ty
agreements, collateral assignments of leases and the like,
supervision and assistance in the preparation of an application
to the Texas Industrial Commission, preparation of resolutions
for the Development Corporation and the City Council, including
attendance at any necessary meetings, handling of opinions as to
the validity of the bonds and their tax-exempt character, and
handling such other materials as is usual and customary for bond
counsel.
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Mr. Knox W. Askins, J.D. P.C.
October 20, 1982
Page Two
The scope of our representation of users would range from
handling all matters incident to the bond issue itself, including
opinions on behalf of the user, to handling any collateral
materials which might be involved, including securities laws
compliance. As a firm of some 75 lawyers, we have broad
experience in all phases of commercial practice.
We would be very interested in participating in smaller
issues of less than $500,000, either as bond counsel for a fee of
$10,000 or as counsel to the user, in which instance we would
strive to minimize our time and effort so as to facilitate a
modest fee.
Thank you very much for your letter of inquiry, and please
do not hesitate to contact me at any time.
Very truly yours,
Carroll Shaddock
For the Firm
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FULBRIGHT & .JAWORSKI
BANK OF THE SOUTHWEST BUILDING
1150 CONNECTICUT AVE.,N. W.
WASHINGTON. D. C. 20036
TELEPHONE (202) 452-6800
TtLEX 89-2602
HOUSTON, TEXAS 77002
TELEPHONE (713) 651-5151
TELEX 76-2829
LANDMARK BUILDING. SUITE 200
705 EAST HOUSTON AVENUE
SAN ANTONIO. TEKAS 78205
TELEPHONE (512) 224 -5575
AMERICAN BANK TOWER. SUITE 1740
221 WEST SIKTH STREET
AUSTIN. TEXAS 78701
TELEPHONE (512) 474-5201
IN DALLAS
DUMAS, HUGUENIN, BOOTHMAN & MORROW
1509 MAIN STREET
DALLAS. TEXAS 7S201
TELEPHONE (214) 741-3458
2 ST. JAMES'S PLACE
LONDON, 5WIA INP
TELEPHONE (Oil 629-1207
TELEX 28310
October 19, 1982
RICHARD D. HUFF
PARTNER
Re: City of LaPorte Industrial
Development Corporation
Mr. Knox W. Askins
City Attorney
City of LaPorte
LaPorte, Texas 77571
Dear Mr. Askins:
This letter is in response to your letter of September
27, 1982 regarding the interest of our firm in representing
prospective users of industrial development bonds in LaPorte,
particularly on small. issues of $500,000 or less. In this
regard, we are currently working closely with Mr. Mike McAndrew
of RPC, Inc. in Austin to develop bond document forms that will
enhance the feasibility of industrial development bond issues
of $500,000 or less by reducing the cost of issuance.
Mr. McAndrew or I would be more than happy to discuss
this program with you and any members of the Board of Directors
of the LaPorte Industrial Development Corporation who may be
interested at your convenience. Please feel free to contact
either of us if we can be of any assistance to you in this
matter.
Yours very truly,
~
RDH/rl
cc: Mr. Mike McAndrew
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BUTLER, BINION, RICE, COOK M KNAPP
A PAR.TNER.SHIP INCLUDINC PR.OFESSIONAL COR.PORATfONS
ATTORNEYS AT LAW
ESPER.SON BUILDINCS
1747 PENNSYLVANIA AVENUE, N. W.
WASHINCTON,D.C.20006
(202) 466 -6900
HOUSTON, TEXAS 77002
OF COUNSEL
(713) 237-3111
LUIS J. CREEL, JR.
MEXICO CITY
TELEX 775532--TWX 8813CS28
CABLE: LERION
October 13, 1982
Mr. Knox W. Askins
Knox W. Askins, J.D., P.C.
702 W. Fairmont Parkway
P. O. Box 1218
La Porte, Texas 77571
Dear Mr. Askins:
I am writing to express the interest of this firm in
representing prospective users of industrial development bonds in
La Porte, Texas. We have an extensive practice in the industrial
development bond area and are in the Daily Bond Buyer I s "Red
Book", which list nationally recognized bond counsel. Our bond
practice presently includes representation of both users and
purchasers of industrial development bonds, and during the past
year we have represented eleven different users of bonds.
Because of our expertise in the bond area, we would
propose to represent users from the preliminary planning stage of
the financing (during which period we could assist in structuring
the financing) through the closing. We would prefer to base our
fees upon the actual number of hours worked on any transaction.
We would, however, consider the following fee schedule: $5,000
for financings of $500,000 or less, $6,000 for financings of
$l,OOO,OOO or less and $7,000 for financings of $l,OOO,OOO or
less, such amount to increase by $1,000 for each additional
$1,000,000 of bonds issued. For your information in considering
the alternative of basing fees on hours worked, recent fees
calculated on that basis averaged $ 5,700.
The lawyer in this firm who has developed our bond
practice and who would represent the users of bonds discussed in
z" . _ ~ .
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Mr. Knox W. Askins
October 13, 1982
Page Two
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this letter is Ann Jacobs. Either she or I would be pleased to
discuss this matter further with you at any time.
443C03/UU
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REYNOLDS, ALLEN & COOK
INCORPORATED .
ATTORNEYS
WASHINGTON OFFICE
ALAN H. RAYNOR
HOUSTON, TEXAS 77002
713-65I-1300
TELEX: RAC HOU 79-1164
1707 r. STREET. N.W.
WASHINGTON. D.C. 20036
/2021 223-4880
1100 Mll..AM BUII.DING. 16TH FI.OOH
October 5, 1982
Knox W. Askins, J.D., P.C.
Attorney at Law
702 West Fairmont Parkway
P. O. Box 1218
La Porte, Texas
Dear Mr. Askins:
Mr. Joe Reynolds has referred to me your letter to
him of September 27, 1982, inquiring into whether our firm
would be interested in providing legal services in connection
with financings by the City of La Porte Industrial Development
Corporation (the "Development Corporation"). We have assumed
that your request is with respect to whether we would be
interested in serving as bond counsel for such financings.
Attached is a proposed engagement letter outlining the
scope of our involvement as bond counsel and our fee schedule.
Such fee schedule is for a financing which involves documentation
of the type normally used in such financings and does not cover
additional charges which might have to be made for services
beyond the scope outlined therein. You have specifically indicated
interest in financings involving issues of $500,000 or less. We
recognize that such issues are of great importance to many cities.
However, it has been our experience that, to a great extent, the
fact that an issue is of a lesser principal amount does not
necessarily decrease the amount of legal work required on the
part of bond counsel to bring the issue to a successful conclusion.
In fact, we have often experienced the opposite to be the case.
We certainly do appreciate the inquiry which you have
made of our firm and hope that we have been responsive to your
request. If you heed any further information, please do not
hesitate to contact Mr. M. Paul Martin or the undersigned.
cc: Mr. Joe Reynolds
Mr. M. Paul Martin
"
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City of La Porte Industrial Development Corporation
c/o Knox W. Askins, J. D., P. C.
702 West Fairmont Parkway
P. O. Box 1218
La Porte, Texas
Ladies and Gentlemen:
We are submitting this letter to describe the duties and
to set forth the basis of our compensation for professional
services to be rendered as Bond Counsel in connection with the
authorization, sale, and delivery of bonds by the City of La Porte
Industrial Development Corporation (the "Issuer") and, when, if
requested, as special counsel to the Issuer.
BOND COUNSEL
We will perform all usual and necessary legal services as
Bond Counsel. Specificially, we will prepare and direct legal
proceedings and perform other necessary legal services with
reference to the authorization, sale, and delivery of bonds,
including the following:
1. Prepare all resolutions and other instruments
pursuant to which bonds will be authorized, sold, and delivered in
consultation with the governing body and other representatives of
the Issuer, the Underwriter with respect to the bonds, the
Finane ial Adv isor, and any other person wi th a direct pecun iary
interest in the issuance of the bonds, if any.
2. Prepare any agreements authorizing or securing the
bonds, including any trust indentures.
3. Attend meetings of the governing body of the Issuer
to the extent required or requested with reference to the issuance
of the bonds.
4. Attend meetings with prospective bond purchasers and
meetings with bond rating agencies to the extent required Or
requested.
5. Obtain approval of the bonds and the project to be
financed fram the Texas Industrial Commission, as required by law.
6. Supervise the execution of the bonds and delivery
thereof to the original purchasers.
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7. When so del i vered, render our opinion covering the
val idi ty of the bonds and the tax exempt status of the interest
thereon under federal income tax laws.
For each separate installment or series of bonds, our fee
covering legal services as Bond Counsel will be as follows, based
on the principal amount of each such installment or series:
For the first $1,000,000 thereof (with
a minimum fee of $20,000)
1%
For the next $7,000,000 thereof
1/2 of 1%
The additional fee for an issue in excess of $10,000,000 will be
the subject of a specific supplement to this Agreement. This fee
does not include our actual expenses and disbursements reasonably
and necessarily incurred in connection with the authorization,
sale, and delivery of the bonds for which we expect reimbursement.
Our fees and expenses - as Bond Counsel will be payable at the time
of the delivery of, and payment for, the bonds.
ADDITIONAL SERVICES
We will act as special counsel upon specific request
therefor and the above fees do not include any special services
not normally included in the legal services performed by Bond
Counsel such as fees for any litigation; fees for legal services
involving direct responsibility for proceedings before
administrative agencies, including, by way of example, the
Internal Revenue Service, the Securities and Exchange Commission,
and State Securities Administrator; fees for the preparation of
any prospectuses, official statements, or other materials which
must be prepared in accordance with various securities laws; fees
for title examinations or title opinions; and fees for negotiating
any special or unusual contracts not necessary for the security
for or issuance of the bonds.
Our fees for such additional services will be on an
hourly basis for which we will maintain complete records. Such
fees will consider the difficulty and complexity of the tasks
involved and the level of experience of the attorney rendering the
services. Each bill ing will contain information concerning the
services and the amounts billed therefor and a description of out-
of-pocket expenses for which reimbursement is requested
*
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Our compensation as Bond Counsel shall be due and payable
only out of proceeds of the sale of bonds or from the user of the
project to be financed, and there shall be no individual liability
on any member of the governing body of the Issuer for the payment
of any amounts due hereunder. This agreement may be terminated
either by you or by us at any time, in which event, of course, we
expect to be paid any compensation earned and expenses incurred to
the date of such termination.
A place is provided below for your acceptance of this
agreement, and if you so agree, we ask that two copies of the
letter be signed and returned to us for our files.
If you have any questions concerning any portion of the
letter, please contact the undersigned. We look forward to
working with you to the successful issuance of the bonds.
Very truly yours,
The foregoing agreement is
hereby accepted on behal f of
, pursuant to
due authorization thereof on
.
CITY OF LA PORTE INDUSTRIAL
DEVELOPMENT CORPORATION
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LE. GROUP ARCHJTECTS
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TRANGALEE DEVELOPMENT, INC.
DEVElOPERS · PLANNERS · ARCHITECTS. BUILDERS. CONSULTANTS
IA PORTE PLA7A
lAND USE SUMMARY
lAND :
Shopping Center Development
Reserved Developnent
Total
BUTI.DING A:
Cinema I, II, III (300 seats eaCh)
Anusement Games
Lease Space
BUILDING B:
Lease Space
BUILDING C:
Lease Space
Total
PROJECI' COST:
Land:
271,812 @ 4.00/SF =
Construction Cost:
60,400 @ 26.00/SF =
Developnent Cost:
64,400 @ 10.00/SF =
Total Proj ect Cost
12 GREENWAY PLAZA SUITE 902
405 BROADWAY 512/222-9401
SAN ANTONIO. TEXAS 78205
6. 24 Acres
1.46 Acres
7. 7 Acres
10,000 SF
5,400 SF
10,000 SF
19,200 SF
19,200 SF
64,400 SF
1,087,248.00
1,570,400.00
624~400.00
$ 3,282,048.00
HOUSTON. TEXAS 77046 n3/552-1991
4910 SAN BERNADO 512/772-52n
LAREDO. TEXAS 78041
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TRANGALEE DEVELOPMENT, INC.
DEVELOPERS · PLANNERS · ARCHITECTS · BUILDERS · CONSULTANTS
TRAVELOIx;E IA PORTE
DESCRIPITON OF PROPOSED PROJECT
The proposed 120-~oan Travelodge & Restaurant is to be built on
a tract of 2.5 acres located on the Frontage Rd. east of Hwy. 146,
on the South West quadrant of the intersection of North 8th
street and North H Street near Morgans Point in La. Porte.
Architectural renderings depict a two building scheme for the hotel.
The main building faces the comer of North H and Frontage
Rd. on State Hwy. 146, and is a two story building. It will contain
the Hotel's administration offices, lobby and two guest wings of
120 room capacity with 161 car parki.ng. The second building
located between the ''wings'' of the main building will contain the
Restaurant and lounge/bar "facilitY overlook:i11g the pool area.
We reccmnend that the configuration of 120 rooms' is as follows:
Type of Roan Consisting of Size Ntmber of
Bedrooms
Double-double 2 Queen-sized Beds 12 '8''x25 '6" 72
King 1 King-sized Bed 12 '8''x25 '6" 46
Suite 16' 0''x25 , 6" 2
Total Bedrooms 120
Food and beverage facilities for the proposed Travelodge include:
Seat' Square S~Se Footage
Facility ~ F tag P t
_ "Gapacit:y 00 e ea
100
Main Dining roan
1,600
16.
Lounge/Bar
100
1,800
18.
12 GREENWAY PLAZA SUITE 902
405 BROADWAY 512/222-9401
SAN ANTONIO, TEXAS 78205
HOUSTON, TEXAS 77046 713/552-1991
4910 SAN BERNADO 512/772-5271
LAREDO, TEXAS 78041
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TRANGALEE DEVELOPMENT, INC.
DEVElOPERS · PLANNERS · ARCHITECTS. BUILDERS · CONSULTANTS
TRAVELOIx;E IA PORTE
PROFORMA
lAND COST
2.5 Acres =
108,900 sf. @ 5.50 sf
=
598,950.00
OONSTRUCTION COST =
120 Roams and Support Facilities
55,388 sf. @ 35.000 sf. =
1,938,580.00
Restaurant =
3;400 sf. @ 70.00 =
Parldng =
Landscaping =
FUrnishing =
Architect and Engineer =
Interim Interest *
Point and Fee (3% of loan) =
Constroction CNerllead (8%) =
Legal, Tax =
Contingency
Total Cost =
238,000.00
65,000.00
10,000.00
360,000.00
80,000.00
276,000.00
66,000.00
176,800.00
30,000.00
200,000.00
4,039,330.00
Cost Per Roan
= 33,600.00
12 GREENWAY PLAZA SUITE 902
405 BROADWAY 512/222-9401
SAN ANTONIO. TEXAS 78205
HOUSTON. TEXAS 77046 n3/552-1991
4910 SAN BERNADO 512/772-S2n
LAREDO. TEXAS 78041
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TRANGALEE DEVELOPMENT, INC.
DEVELOPERS · PLANNERS · ARCHITECTS · I3UILDERS · CONSULTANTS
PETER T. s. TRANG D.E.D.
.1. PROFESSIONAL. EXPERIENCE
A. In the United States .of America
* 1980 to Present
l. CHAIRMAN' OF. TIlE BOI\RD AND PRESIDENT
TRANGALEE DEVELOPt-1EN1". INC.. Hous ton .
Texas
2. UJAIRMt\N OF TIlE BOARD. H. B . V. TEXAS cx)RP.
3. Q-JAIRMAN OF TIm BOARD AND PRESIDENT.
mALEXACO. INC.
4. UlAIRM'\N OF TIlE BOARD AND PRESIDENT TEXAS
GLOBAL TRADING, INC.
5. CHAIRMAN OF TIlE BO!\RD AND PRESIDENT NBD -
ASm.o HCMES, INC.
* 1975 to Present GJNER
5 Travelodge Motel, Hotel in
- Texas: . Houston, San Antonio, Laredo
Califomia: La Jolla, San Diego
- Florida: Jacksonville
I
12 GREENWAY PLAZA SUITE 902
405 I1ROADWAY 512/222.')401
SAN ANTONIO. TEXAS 78205
HOUSTON, TEXAS 770.$& 71)'552.1991
. 4910 SAN BfRNADO 512,772.5271
LAREDO. TEXAS 7/1041
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B. In South Vietnam
1963
1975
Judge - Vietnam Supreme Court
Brigadier General - Vieorurnm Armed Force~.
1962' - 1975
- 'o..JNER OF GRAND HarEL AND PAlACE HarEL.
- a.JNER OF 5 RUBBER PLANfATIONS
- OWNER OF 2 PHARl"'ACIES
II. EDUCATION
- OOCTEUR EN DROIT, Montpellier University,
France.
_ MASTER IN lAW, Saigon University, Vietnam.
III. PROFESSIONAL AFFTI..IATIOOS:
MEMBERSHIP:
- American Hotel 110tel Association
- Texas Hotel Motel Association
_ Califonda Hotel Motel Association
- Florida Hotel Motel Association
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TRANGALEE DEVELOPMENT, INC..
DEVHOPERS . PLANNERS . ARCHITECTS . BUILDERS . CONSU1.TANTS
LE, QUI PHONG
ARCHITECT DPLG - AJA
I. PROFESSIONAL E>CPERIENCE
A. In the United States-of America
1980 to Present
1. CHAIRMAN OF .1lIE BOARD 1 EXEClITlVE VICE-PRESIDENT
TRANGALEE DEVElDPMENI', INC., 'Hous ton, Texas
2. CHAIRMAN OF 1lIE BOARD / EXECUTIVE VICE-PRESIDENT
TRALEXACO, INC.
3. rnAIRMAN OF 1lIE BOARD / EXEClITlVE VICE-PRESIDENT
NED-ASTRO Ha-tES, INC.
4 . LE-GRQUP ARCHITEcrS, AJA / PRINCIPAL
Trangalee Developnent, Inc. is a finn of Developers,
Planners Architects, Builders and Hotel Managememt.
It's Subsidiaries include Trangalee Construction
'Co. (Residential and Cannercial General Contractor),
LE-GRQUP AIA Architect & Planner Finn, Trangalee
Properties Co. (Real Es tate Consul ting and Land
Development) .
1978 to 1980
FURD ENTERPRISES, Houston, Texas
Vice President. As Principal in charge of proj ects ,
have been responsible for architectural design,
land planning and site analysis. Responsibility
also involve project management, client relations,
and architectural control of construction. Ford
Enterprises, Inc.' is a firm of developers, planners,
architects, builders and consultants. Its sub-
sidiaries include Tectonic Corporation (residential
construction), Woods tone Properties, Inc. (res-
dential construction and land development) and
Dar - Tec (real estate consulting and R.E.I.T.
asset management.
hJJQ \\ l~1 LOOI' ~Olml sum 955
oIll5 HROl\D\'...\\' 512.'.22:!.9401
~."N ^~Tn~IO, TE~..\S ;6.205
1lH.I.AIf{[ (l.tOUSl ON\lL \;:\S 7;0101 /' \.I,:(,('S-1I9019
4911l SAN IUR~^D() 51~..711.S:!i1
, I.AREnO, HXA~ ;8().11
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~
1975 - 1977
B. In South Vietnam
1966 - 1975
1965 - 1966
1964 - 1965
"
II. EDUCATION .
1958 - 1964
1956 - 1958
III. C. E. U. 'So
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FORD ENTERPRISES, Hotis ton, Texas
FORD AND HEESCH, INC.
Worked as Design Architect.
LE, QUI PHONG & ASSOCIATES, Saigon, Vietnam
President and Manager of own architecutral firm.
Worked extensively on ccmnercial as well as
residential projects.
DIRECIDRATE GENERAL OF REOONSTRUCITON AND
URBANISM, GOVERNMENT OF VIETNAM
Director in charge of plarming and construction
for urban renewal adn developnent proj ects .
DIRECI'ORATE GENERAL OF REOONSTRUCTION AND
URBANISM, GOVERNMENT OF VIETNAM
Served as design architect.
- ECOLE SUPERIEURE n' ARCHITECI'URE FRANC'AISE
- SCHOOL OF ARCHITECTURE, UNIVERSITY OF SAIGON,
VIETNAM
Followed 6 - year architectural program.
Graduated lv.i.th degree in Architecture with
highest honors (Grade: Ou~standing) in 1964
FACULTY OF SCIENCE, UNIVERSITY OF SAIGON
Followed science and mathematics curriculum.
- Mas ter Spec Seminar
- Guidelines Workshop
- Cost Ccmpensation Seminar
- Housing Seminar
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IV. PROFESSIONAL AFFll..IATIONS:
- Membership of Greater Houston Builders
Association
- Merrber of National Association of
Home Builders
- Merrber of Texas Builder Association
V. AWARD
Prism award of GHBA
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LE, QUI PHONG
SELECI'ED PROJECTS IN 1HE U. S .A.
PlAZA DEL OORAOO
- 240 Arce Mast(:!r Plan at Nuevo Laredo, Mexico.
DEl. NORTE PlACE, I.AREDO TEXAS
- 60 Acre Project Development (450 Unit Apartment, 136 Townhomes).
TRA VELODGE MJrEL HarEL, l.AREOO, TEXAS
- 200 Room
- El Matador Club (120 seats)
- Rodeo Grill (200 Seats)
TRA VELOIX;E 10 - FAST HOUSTON, TEXAS
- Desing of Hotel of 125 Units with restaurant, swimning pool,
Conference Facilities for 200 Persons.
TRAVELOIX;E I - 45 Houston, Texas
- Design 165 Units Hotel Motel, with restaurant, club and
conference facilities for 300 persons.
STONEY CREEK ON MEMJRIAL, HOUSTON, TEXAS
- 20 Luxury Custom Townhames in 250,000 to 500,000 price range.
\mDlAKE FOREST IV, SECITON C, HOUsroN, TEXAS
- 36 Luxury Townhomes in 240,000 to 360,000 price range.
NEW 'cHINATONN HOUSTON. TEXAS
- 14 Acre Project Development: 18,000 SF
Olinatown Supennarket, Oriental Plaza, Lido Theaters 1 & 2,
Professional Building, Hotel, O1inatown Bank.
CYClDNE ANAYA' S MEXICAN RESTAURANT , HOUsroN. TEXAS
- 8,000 SF Mexican Restaurant (300 Seats) and Club (80 Seats).
PHOENIX RESTAURANT, CHINESE RESTAURANT, HOUSTON, TEXAS
- 5.000 SF with 200 seats
FlAGSHIP HarEL ~ GALVESTON, TEXAS
- RenDdeli.ng Restaurant (300 Seats) and Night Club (200 Seats).
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\oXX>DSTONE III, HOUSTON, TEXAS
Architectural design and supervision of architectural production for
60 luxury custom townhouses in $150,000 to 380,000 price range.
AMBIANCE ON MEM)RIAL, HOUSTON, TEXAS
Land planning architectural design for development of 16.5 acres
on Mem:>rial Drive (117. townhouses on portion fo the land)
lAPlS HIGH-RISE CONro1INIUM, HOUSIDN, TEXAS
Architectural design for 8 - story condominium building with 160
tmits on Richm::md, near downtown Houston.
TAMAN IlA.YU, FAST JAVA, INOONESIA
Land planning of 7,400 acres for new recreational resort, town center,
and residential coommity in East Java, Indonesia.
SMl'lli PlAZA, HOUSTON, ~
Design concept for development of 20 acres in Astrodome area,' to
include hotel:and high- rise condominium~
SAN FELIPE OJNIXMINIUM, HOUSTON, TEXAS
Design of 8 - story luxury condominium with one tmit per floor
(5600 sq. ft. per unit), in the River Oaks Ccnmtry Club area.
INOOCHINA PlAZA, HOUSIDN, TEXAS
Design for renovation of shopping center into an oriental center
wi th supennarket, shops, offices, and res taurant - club.
AUSTIN RESIDENCE, HOUSTON, TEXAS
Design and architectural control of construction for private residence
of SCJl'l}e 14, 000 sq. ft. on 2.4 acres of land, with budget of about
$1.8 million.
ll\KE CHARLES HILTON HOTEL, LAKE CHARLES, TEXAS
Design of hotel of 212 units on shore of Lake Charles (12 acres),
with termis courts, swinming pool, restaurant and conference facilities
for 600 persons.
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M)NTCI.AIR <DNOOMlNIUM, HOUSTON, TEXAS
. Design for 5 - story condominium with 30 tmits in Medical Center
area.
RICHMJND <DNlXMINIUM, HOUSTON, TEXAS
Design for 6 - story condominium with 288 tmits on l2 acres.
POINT AQUARIUS, lAKE CONROE, TEXAS
Project arChitect - Project includes development of residential
and recreational improvanents (cluster housing, clubhouse and yacht
club)
FARB RESIDENCE, HOUSTON, TEXAS
Project arChitect. Private residence with 30,000 sq. ft. River
Oaks Country Club area.
DESERT HOUSE, PAlM SPRINGS, CALIFORNIA
ArChitect in charge. Private residence in Palm Springs, California.
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1966 - 1972
1966
1966 - 1970
1970 - 1972
1969 - 1972
1972 - 1974
.,'
1972 - 1974
1973 - 1974
1970 - 1972
197.3 - 1975
197.3 - 1975
1973 - 1975
1973 - 1975
1974 - 1975
1973 - 1974
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LE, QUI PHONG
SELECTED ARCHITECTURAL PROJECTS IN SOUTH VIETNAM
CHODAM, CENTRAL SUPERMARKET OF NHA TRANG PROVINCE
480,000 sq. ft.
DANANG PALACE HOTEL
(96 rooms and 4 stories - night club, restaurant)
PALACE HOTEL IN VUNGT AU SEA SIDE
(140 rooms, 10 stories with restaurant, night club, swimming pool,
convention room)
PALACE HOTEL IN SAIGON
(408 room~,-15 stories, restaurant, night club, pool, banquet room and
convention room)
MIRRAMAR HOTEL IN SAIGON
(120 rooms, 8 stories, restaurant, night club, banquet room)
REX - HOTEL IN VUNGTAU SEASIDE RESORT
(126 rooms, 8 stories, night club, pool and banquet)
THAITHACH BUILDING IN SAIGON
(bank, offices, 10 stories, 106,000 sq. ft.)
SUPER K HOTEL IN SAIGON
(240 rooms, 12 stories, night club, restaurant, pool and international
conference room)
DAI A BANK
(I2 stories, 120,000 sq. ft.)
HOTRACO HOTEL, BAMETHUOT
(102 rooms, 8 stories, restaurant and hunting club)
NHA TRANG HOTEL
(I03 rooms, 9 stories, night club, restaurant, pool, banquet)
MANDARIN HOTEL IN SAIGON
(162 rooms, 10 stories, night club, japanese restaurant, conference room,
pool)
BUILDING 72, SAIGON
(I40 unit apartment building, 12 stories).
THANH TRUC GLASS FACTORY IN SAIGON
(160,000 sq. ft., under construction)
PANATICO ALUMIMUM FACTORY, SAIGON
002,000 sq. ft.)
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( Selected Architectural Projects in South Vietnam - (Continued)
1974 - 197.5 . PANASITRI FACTORY, SAIGON
(140,000 sq. ft.)
1973 _ 197.5 VINAHOSTlNCO HOTEL MOTEL, VUNG TAU SEASIDE RESORT
(casino, hotel motel, '6.50 units, and yacth club, under construction)
1973 - 197 .5 VICTORY HOTEL
(29 st~ries, hotel, shopping center, under construction)
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TRANGAlEE DEVELOPMENT, INC.
DEVElOPERS · PLANNERS · AI~CHITECTS · BUILDERS. CONSULTANTS
TRANGALEE DEVELOPMENT, INC.
BALANCE SHEET
as of: September 30, 1982
I. ASSETS
l. Current Assets:
- Cash/CD
- AccOlmts Receivable
- Escrow
Total Current Assets
2. Fixed Assets:
- T..and
Sterling Green
Stoney Creek/Memorial
Woodhollow
El Brazos/Rosenberg
Cypress
- House Inventories
Stoney Crecl</Menorial
Woodhollow
Total Fixed Assets
3. Properties
- Office Equipment
Total Properties
'j U 11\1.. ASSETS
11 (:1\11 O'.\\..\) 1'1".1,\ "'UIII. ')m
.Utr'1 IU~I \ 'I '\\" "d,I.'.I.lll.UII
.,,\f: \I.lt I:." I 11'..\'. "".'11'1
$ 575,000.00
328,000.00
30,000.00
$ 933,000.00
$ 1,500,000.00
470,000.00
225,000.00
423,000.00
3 , OL, G , 000. 00
1,960,000.00
810,000.00
$ 8,428,000.00
$ 65,000.00
$ 65,000.00
$ 9 ,1,26,000. 00 / _ .
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II. LIABILITIES
1 . Cons truc tion Loan
- Allied Bank of Texas
Strnley Cre~t/Memorial
Woodhollow
Total Constructirnl JA)an
2. Land Notes
- Stoney Creek
- Sterling Green South
- El Brazos/Rosenberg
- Cypress
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Total Land Notes
3. Development Loan
- Woodforest Na.tional Bank
- Mercantile Barnt
Total Development Loan
TOTAL LIABILITIES
Net Worth
TOTAL LIABILITIES & NET WOR1H
'" r-rM.-04:S
~----?....t\., .. S. Ll\.~~\
Dr. Peter T. S. Trang
President ~
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Le, Qui Pho g
Executive Vice President
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$ 700,000.00
500,OOO~00
$ 1,200,000.00
$ 500.00
800,000.00
155,000.00
l,825,OOO.0Q.
$ 2,780,000.00
$ 200,000.00
160,000.00
$ 360,000.00
$ 4,340,000.00
5,086,000.00
$ 9,426,000.00
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PORT TRUCK SERVICE CENTER
Land - 36,790 sq. ft. @ $5.00 a square foot
Site Work
Concrete slab and parking
Building - 97' x 80' Metallic Building,
Equipment, Plumbing, Electrical, Offices
TOTAL PROJECT COST
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$183,950.00
20,000.00
75,000.00
130,600.00
$409,550.00
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CERTIFICATE OF RESOLUTION
THE STATE OF TEXAS
COUNTY OF HARRIS
I, the undersigned officer of the City of La Porte Industrial
Development Corporation (the "Corporation") do hereby make and execute
this certificate for the benefit of all persons interested in the
validity of all actions and proceedings of the Corporation. I do hereby
certify as follows:
1. I am the duly chosen, qualified and acting officer of the
Corporation for the office shown beneath my signature, and in such
capacity I am familiar with the matters contained in this Certificate.
2. The Board of Directors of the Corporation convened its meeting
on the 3rd day of August, 1982, and the roll was called of the duly
constituted officers and members of the Board of Directors and a quorum
was present. Whereupon, among other business, the following was trans-
acted at said meeting~ a written resolution was introduced for the
consideration of the Board of Directors. It was then duly moved and
seconded that said Resolution be adopted; and, after due discussion,
said motion, carrying with it the adoption of said Resolution, prevailed
and carried by vote of the officers and members of the Board of Direc-
tors present and voting with the number of such officers and members
voting for such Resolution being at least equal to a majority of the
entire number of officers and members of the Board of Directors that are
entitled to vote.
3. The attached and following is a true, correct and complete
copy of said Resolution; the original of said Resolution is on file in
the official records of the Corporation; and said Resolution has not
been amended and is in full force and effect.
4. The members of the Board of Directors referred to in the above
and foregoing paragraph were the duly qualified and acting members of
the Board of Directors of the Corporation; and each member of the Board
of Directors received notice of the meeting of the Corporation to the
extent required by the Bylaws of the Corporation in accordance with the
requirements of the Development Corporation Act of 1979, Article 5190.6,
Vernon's Annotated Texas Civil Statutes, as amended.
WITNESS MY HAND AND THE
day of August, 1982.
,
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Secretary
(SEAL)
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RESOLUTION OF BOARD OF DIRECTORS PRESCRIBING THE FORM AND SUBSTANCE
OF AN AGREEMENT TO ISSUE BONDS; AUTHORIZING THE EXECUTION OF SUCH
AGREEMENT; AND CONTAINING OTHER PROVISIONS RELATING TO THE SUBJECT
WHEREAS, the City of La Porte Industrial Development Corporation
(the "Corporation") is authorized by the Development Corporation Act of
1979, Article 5190.6, Vernon's Annotated Texas Civil Statutes, as
. amended (the "Act") J to issue revenue bonds for the purpose of paying
all or part of the cost of a "proj ect, II as defined in the Act, and to
sell or lease the project to others or loan the proceeds of the bonds to
others to finance all or part of the cost of the project; and
WHEREAS, the Corporation now desires to authorize, issue and sell
its tax exempt industrial development revenue bonds, to the extent
authorized by law, to provide funds to defray all or part of the cost of
acquiring and constructing certain facilities to be constructed by or to
be leased or sold to Bayshore National Bank of La Porte (the "User"),
but the Corporation anticipates that construction of such facilities
will commence prior to the sale and delivery of such bonds; and
WHEREAS, the User and the Corporation desire that the Corporation
adopt a bond resolution with respect to the bonds or take some other~
similar official action toward the issuance of such bonds prior to the
commencement of construction or acquisition of such facil.ities; and
WHEREAS, the City of La Porte, Texas (the "Unit"), has authorized
and approved creation of the Corporation to act on its behalf to further
certain public purposes of the Unit and has approved or will approve the
attached Agreement to Issue Bonds between the Corporation and the User;
NOW, THEREFORE,
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF LA PORTE
INDUSTRIAL DEVELOPMENT CORPORATION, THAT:
Section 1: The Corporation hereby authorizes and agrees that it
\l'ill issue and sell its industrial development revenue bonds (the
"Bonds") from time to time in one or more series pursuant to the pro-
visions of Texas law in a principal amount sufficient to pay all or part
of the cost of acquiring and constructing the project described in
Exhibit "A" to the Agreement to Issue Bonds attached hereto (the "Pro-
ject"), together with all costs of authorization, sale and issuance of
the Bonds. The Bonds will be issued and sold as more fully provided in
the Agreement to Issue Bonds in an aggregate principal amount (excluding
bonds issued to refund any of the Bonds) now estimated to be not more
than $2,750,000.
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Section 2: The proceeds of the Bonds will be used to acquire,
construct, improve, maintain, equip and furnish the Project or will be
loaned to the User to pay all or part of the costs of acquiring, con-
. structing, improving, maintaining, equipping and furnishing the Project.
Section 3: The Corporation will enter into a lease, sale or loan
agreement with the User providing for the lease or sale of the Project
to the User or for the financing of all or part of the cost of the
Project, as more fully described in the Agreement to Issue Bonds.
Section 4: The Board of Directors of the Corporation (the "Board
of Directors") hereby finds, determines and declares that the Project is
required and suitable for the promotion of manufacturing development and
expansion and for the industrial development and expansion of industrial
facilities and facilities which are related thereto or for commercial
development and expansion and for use by commercial enterprises and in
furtherance of the public purposes of the Act.
. Section 5: The Agreement to Issue Bonds by and between the Corpor-
ation and the User in substance and in form substantially as shown in
the attachment hereto is hereby approved and the President or Vice
President and Secretary of the Corporation are hereby authorized to
execute and attest such Agreement to Issue Bonds for and on behalf of
the Corporation.
Section 6: This Resolution, together with the Agreement to Issue
Bonds attached hereto, shall be deemed and construed as a resolution
authorizing the issuance of the aforesaid Bonds or some other similar
official action toward the issuance of the Bonds within the meaning of
26 C.F.R. Section 1.I03-8(a)(5).
PASSED AND APPROVED this 3rd day of August, 1982.
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AGREE~IENT TO ISSUE BONDS
THIS AGREE~ffiNT TO ISSUE BO~~S, entered into as of the 3rd day of
August, 1982, by and between the City of La Porte Industrial Development
C?rporation (the "Corporation"), created pursuant to the authority of
the Development Corporation Act of 1979, Article 5190.6, Vernon's Anno-
tated Texas Civil Statutes, as amended (the "Act"), and Bayshore National
Bank of La Porte, a national banking association (the "User"), for the
purpose of carrying out the public purpose set forth in the Act, includ-
ing the promotion and development of industrial, manufacturing and
commercial enterprises to promote and encourage employment and the
public welfare;
WIT N E SSE T H:
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\mEREAS, the City of La Porte. Texas (the "Unit"). has authorized
and approved the creation of the Corporation to act on behalf of the
Unit for the public purpose of furthering on behalf of the Unit the
promotion and development of industrial, manufacturing and commercial
enterprises to promote and encourage employment and the public welfare;
and
\\T}{EREAS. the Corporation is authorized by the Act to acquire,
construct. improve. maintain, equip and furnish and to lease or sell
"projects." as such term is defined in the Act, or to make loans for the
purpose of providing financing for all or part of the costs of a project,
and the Corporation is further authorized to issue its bonds for the
purpose of paying all or part of the costs of a project; and
WHEREAS, the User desires to acquire and construct a facility. more
particularly described in Exhibit "A" attached hereto. ~dthin the Unit
(the "Project"). to.'hich Project is suitable for the promotion of commer-
cial development and expansion, the promotion of employment in the Unit
and for use by commercial enterprises; and
\~nEREAS, pursuant to the Act. the Corporation is authorized to
issue the bonds hereinafter described, which bonds shall never consti-
tute an indebtedness or pledge of the faith and credit of the State of
Texas (the "State"), of the Unit. or of any other political corporation,
subdivision or agency of the State within the meaning of any State
constitutional or statutory provision, shall never be paid in whole or
in part out of any funds raised or to be raised by taxation or any other
funds of the Unit, and shall never be paid in whole or in part out of
any funds of the Corporation except those derived from or in connection
~ith the sale or lease of the Project or the loan of funds to finance
the Project; and
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WHE~AS, to promote and encourage employment and the public
welfare, the Corporation agrees to issue, at the request of the User,
one or more series of the Corporation's industrial development revenue
bonds (the "Bonds") for the purpose of paying all or part of the cost of
constructing and acquiring the Project, or 'for the purpose of loaning
the proceeds to the User in order to provide temporary or permanent
financing of all or part of the cost of constructing and acquiring the
Project, and the Corporation and the User deem it desirable and proper
that this Agreement to Issue Bonds constitute a formal record of such
agreement and understanding in order that the User may proceed with or
provide for the acquisition and construction of the Project; and
WHEREAS, the User has evidenced a desire to cooperate with the
Corporation in the acquisition and construction of the Project and for
the Corporation to authorize and issue the Bonds in the aggregate prin-
cipal amount now estimated not to exceed $2,750,000, to provide the
funds to defray all or part of the cost of the acquisition and construc-
tion of the Project; and
~T}{EREAS, the Corporation and the User contemplate that the Project
will be sold on an installment payment basis or leased to the User or
that proceeds of the Bonds will be loaned to the User in order to
provide temporary or permanent financing of all or part of the costs of
the Project and that the installment purchase, rental or loan payments,
therefor will be sufficient to pay the principal of and any premium and
interest on the Bonds; and
~T}{EREAS, it is the desire of the Corporation that the acquisition
and construction of the Project occur at the earliest possible time so
as to promote and encourage employment and the public welfare within the
Unit; and
~T}{EREAS, it is intended that this Agreement to Issue Bonds shall
constitute "some other similar official action" toward the issuance of
the Bonds within the meaning of Section 1.103-8(a)(5) of the Treasury
regulations issued pursuant to Section 103(b) of the Internal Revenue
Code of 1954, as amended (the "Code");
NOW. THEREFORE. in consideration of the premises and other good and
valuable consideration and of the mutual benefits, covenants and agree-
ments herein expressed, the Corporation and the User agree as follows:
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1. The User shall commence with the acquisition and construction
of. the Project, which Project will be in furtherance of the public
purposes of the Corporation and the Unit as aforesaid. and the User will
provide, or cause to be pro~ided, at its expense, the necessary interim
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financing to expedite the commencement of the acquisition and construc-
tion of the Project. On or prior to the issuance of the Bonds, the User
will enter into a purchase, lease or loan agreement on an installment
. payment basis (herein called the ."Agreement") with the Corporation under
which the Corporation will sell or lease the Project to the User or make
a loan to the User for the purpose of providing temporary or permanent
financing of all or part of the costs of the Project and the User will
make installment payments sufficient to pay the principal of and any
premium and interest on such series of Bonds. The Bonds shall never
constitute an indebtedness or pledge of the faith and credit of the
State, of the Unit, or of any other political corporation, subdivision
or agency of the State within the meaning of any State constitutional or
statutory provision, and the Bonds shall never be paid in whole or in
part out of any funds raised or to be raised by taxation or any other
funds of the Unit, and shall be payable from the funds of the Corpor-
ation derived from or in connection with the sale or lease of the
Project or the loan of the proceeds of the Bonds.
2. On receipt of a ruling from the Internal Revenue Service (or
the opinion of nationally recognized bond counsel) that interest paid on
the Bonds is exempt from federal income taxation. the Corporation hereby
agrees to issue, pursuant to the terms of the Act, the Bonds, or from
time to time the portion thereof as may be the subject of such a ruling
or opinion as aforesaid. in an appropriate principal amount not exceeding
that which is the subject of a ruling or opinion as aforesaid, maturing
in such amount and times, bearing interest at the rates. payable on the
dates and having such optional and mandatory redemption features and
prices as are approved in writing by the User. The Corporation will
deliver the Bonds to the purchaser designated by the User and will
cooperate to the fullest extent in facilitating delivery of the Bonds.
3. The Corporation and the User agree that the Bonds may be
issued either at one time or in several series from time to time as the
User shall request in writing; provided, however, that the parties agree
that the Bonds will be issued in an aggregate principal amount as will
not exceed the amount which is the subject of a ruling or rulings or
opinion or opinions as aforesaid. A request in writing for issuance of
one or more series of Bonds shall not affect the obligation hereunder of
the Corporation to issue the remaining Bonds as written requests therefor
are received. It is further agreed that the proceeds of the Bonds or
portions thereof whether or not issued in a series. shall not be invested
so as to constitute the Bonds or a portion thereof as arbitrage bonds
within the meaning of Section 103(c) of the Code and applicable regula-
ti9ns promulgated pursuant thereto.
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. 4. .The payment of the principal of and any premium and interest
on the Bonds shall be made solely from moneys realized from the sale or
lease of the Proj ect or from moneys realized from the loan of the
proceeds of the Bonds to finance all or part of the costs of the Proj ect.
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5. The costs of the Project (hereinafter the "Project Costs") may
include any cost of acquiring, constructing, reconstructing, improving
and expanding the Project. Without limiting the generality of the
foregoing. the Project Costs shall specifically include the cost of the
"acquisition of all ~and, rights-of-way, property rights, easements and
interests, the cost of all machinery and equipment, financing charges,
interest prior to and during construction and for one year after comple-
tion of construction whether or not capitalized, necessary reserve
funds, costs of estimates and of engineering and legal services, plans,
specifications, surveys, estimates of cost and of revenue, other expenses
necessary or incident to determining the feasibility and practicability
of acquiring. constructing, reconstructing. improving and expanding the
Project, administrative expenses and such other expenses as may be
necessary or incident to the acquisition, construction, reconstruction.
improvement and expansion of the Project, the placing of the Project in
operation and all incidental expenses, costs and charges relating to the
Proj ect not enumerated above. The parties agree, upon request, to
provide or to cause to be provided to each other any data or information
which may be reasonably required to verify any of the Project Costs ,
e~umerated in this paragraph. The User agrees that it will be respon-
sible for and pay any Project Costs incurred prior to issu~nce of the
Bonds and will pay all Project Costs which are not or cannot be paid or
reimbursed from the proceeds of the Bonds.
6. The User agrees that it will at all times indemnify and hold
harmless the Corporation. the Board of Directors of the Corporation, the
Unit. the City Council of the Unit and any of the officers. directors.
employees, agents. servants and any other party acting for or on behalf
of the Corporation or the Unit (such parties being hereinafter referred
to as the "Indemnified Parties") against any and all losses. costs,
damages, expenses and liabilities (collectively herein called "Losses")
of whatsoever nature (including. but not limited to. attorneys' fees,
litigation and court costs, amounts paid in settlement and amounts paid
to discharge judgments) directly or indirectly resulting from, arising
out of or relating to one or more Claims. as hereinafter defined, even
if such Losses or Claims, or both, directly or indirectly result from,
arise out of or relate to. or are asserted to have resulted from, arisen
out of or related to, in whole or in part, one or more negligent acts or
om~ssions of the Indemnified Parties in connection with the issuance of
the Bonds or in connection with the Project. The term "Claims" as used
herein shall mean all claims, lawsuits, causes of action and other legal
actions and proceedings of whatsoever nature, including but not limited
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to claims. lawsuits, causes of action and other legal actions and
proceedings, involving bodily or personal injury or death of any person
or damage to any property (including, but not limited to, persons
. employed by the Corporation, the Unit, the User or any other person and
all property owned or claimed by the Corporation, the Unit, the User,
any affiliate of the User or any other person) or involving damages
relating to the issuance, offering, sale or delivery of the Bonds
brought against any Indemnified Party or to which any Indemnified Party
is a party, even if groundless. false or fraudulent, that directly or
indirectly result from, arise out of or relate to the issuance, offering,
sale or delivery of the Bonds or the design. construction, installation,
operation, use, occupancy, maintenance or ownership of the Project or
any part thereof. The obligations of the User shall apply to all Losses
or Claims, or both, that result from. arise out of or are related to any
event, occurrence, condition or relationship prior to termination of
this Agreement to Issue Bonds, whether such Losses or Claims, or both,
are asserted prior to termination of this Agreement to Issue Bonds or
thereafter. None of the Indemnified Parties shall be liable to the User
for, and the User hereby releases each of them from all liability to the
User for. all injuries, damages or destruction of all or any part or
parts of any property owned or claimed by the User that directly or
indirectly result from, arise out of or relate to the design. construc-
tion, operation, use, occupancy, maintenance or ownership of the Project
or any part thereof. even if such injuries, damages or destruction
directly or indirectly result from, arise out of or relate to, in whole
or in part, one or more negligent acts or omissions of the Indemnified
Parties in connection with the issuance of the Bonds or in connection
to.'i th the Proj ect. Each Indemnified Party, as appropriate, shall
reimburse the User for payments made by the User to the extent of any
proceeds. net of all expenses of collection, actually received by them
from any insurance with respect to the Loss sustained. Each Indemnified
Party. as appropriate. shall have the duty to claim any such insurance
proceeds and the Indemnified Party. as appropriate. shall assign its
respective rights to such proceeds, to the extent of such required
reimbursement. to the User. In case any action shall be brought or to
the knowledge of any Indemnified Party, threatened against any of them
in respect of to.'hich indemnity may be sought against the User, the
Indemnified Party shall promptly notify the User in writing and the User
shall have the right to assume the investigation and defense thereof.
including the employment of counsel and the payment of all expenses.
The Indemnified Party shall have the right to employ separate counsel in
any such action and participate in the investigation and defense thereof.
but the fees and expenses of such counsel shall be paid by the Indem-
ni~ied Party unless (a) the employment of such counsel has been speci-
fically authorized by the User, in writing, (b) the User has failed to
assume the defense and to employ counselor (c) the named parties to any
such action (including any impleaded parties) incluce both an Indem-
nified Party and the User. and said Indemnified Party shall have been
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adv~sed by' such counsel that there may be one or more legal defenses
available to it which are different from or additional to those avail-
able to the User (in which case, if the Indemnified Party notifies the
User in writing that it elects to employ separate counsel at the User's
expense, the User shall n~t have the right to assume the defense of such
action on behalf of such Indemnified Party, it being understood, however,
that the User shall not, in connection with anyone such action or
separate but substantially similar or related actions in the same juris-
diction arising out of the same general allegations or circumstances, be
iiable for the reasonable fees and expenses of more than one separate
firm of attorneys for the Indemnified Parties [provided that any
Indemnified Party which has been advised by counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to any other Indemnified Party shall have
the right to employ separate counsel whose fees and expenses shall be
paid by the User]. which firm shall be designated in writing by said
Indemnified Party). The Indemnified Party, as a condition of such
indemnity. shall use its best efforts to cooperate with the User in the
defense of any such action or claim. The User shall not be liable for
any settlement of any such action without its consent but, if any such
action is settled with the consent of the User or if there be final
judgment for the plaintiff in such action, the User agrees to indemnify
and hold harmless the Indemnified Party from and against any Loss by
reason of such settlement or judgment. The provisions of this paragraph.
s~all survive the expiration or termination of this Agreement to Issue
Bonds.
7. If within three (3) years from the date hereof (or such later
date as shall be mutually satisfactory to the Corporation and the User)
the Corporation and the User shall not have agreed to mutually accept-
able terms for the Bonds and for the sale and delivery thereof and
mutually acceptable terms and conditions of the Agreement. the User
agrees that it will pay the Corporation for all unpaid Project Costs
which the Corporation shall have incurred and this Agreement to Issue
Bonds shall thereupon terminate. In the event that the User elects,
prior to any such termination. not to proceed with the issuance of the
Bonds for any reason. it shall so notify the Corporation in writing and
shall promptly pay to the Corporation all Project Costs incurred by the
Corporation prior to such notification. and if payment is so made, the
User's obligations under paragraph 5 above shall terminate from and
after the date of such notification.
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8. The User may, without the consent of the Corporation, transfer
or .assign this Agreement to Issue Bonds or transfer or assign any or all
of its rights and delegate any or all of its duties here~~der to any of
its subsidiaries or affilia~es currently existing or here~fter created,
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but no such transfer, assignment or delegation shall, without the written
consent and approval of the Corporation, relieve the User of its liabil-
ity for payment of Project Costs under paragraphs 5 and 7 hereof or
indemnification under paragraph 6.hereof.
This Agreement to Issue Bonds and accompanying authorizing reso-
lution shall be deemed and construed a resolution authorizing the issuance
the Bonds and other similar official action of the Corporation, acting
by and through its Board of Directors, toward the issuance of the Bonds
as herein contemplated.
IN ~JITNESS WHEREOF, the City of La Porte Industrial Development
Corporation, acting pursuant to a resolution of its Board of Directors,
and Bayshore National Bank of La Porte. have caused this Agreement to
Issue Bonds to be executed and attested by their duly authorized officers
as of the year and date first above written.
CITY OF LA PORTE INDUSTRIAL
DEVELOP~ffiNT CORPORATION
>~~
By ..) 'V'-/
Presid nt
(SEAL)
BAYSHORE NATIONAL BANK OF LA PORTE
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B~ E. ~.._,~..~
President
~ /'J.
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Cas h1...e'r .
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CITY OF LA PORTE
INDUSTRIAL DEVELOP~ffi~'T CORPORATION
(a nonprofit corporation)
APPLICATION FOR FINA~CING
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The purpose of this application is to present to the Ci~y of La Por~e
Industrial Development Corporation (the' "Corporation") a reasonably
'comprehensive outline of the proje9t (the "Project") for which financing
is being requested'. Fill in all blanks, using "None" or "Not Applicable"
~here necessary. If additional space is needed, attach separate sheets
as exhibits. The completed application, ~ith supporting documents, is
to be submitted in duplicate to the City Secretary of the City of La
Port~ ~ Texas, at the follo""ing address: Ci t)' Secretary, City of La
Porte, Texas, 604 West Fairmont Pk~)., P.O. Box 1115, La Porte, Texas
i7571 Re: Application for Industrial Development Revenue Bonds. -In
adcition, one copy of the completed application should be submitted to
counsel to the Corporation, Knox W. Askins, J.D.. P.C., 702 West Fair-
mon: Pkwy., P.O. Box 121B, La Porte. Texas 77571. At the time 'this
application is submitted a non-refundable application fee must be paid
to the Corporation as follows: if the amount of financing applied for is
equal to or less than $500,000. then the fee is $500; if the amount of
financing applied for is greater than $500,000. then the fee is $1,000.
All applications for financing must be submitted to the Corporation fer
review and recommendation at least one (1) week prior to a meeting of
the Board of Directors during which action upon said application will be
taken.
1. General Information
e.
Legal name, address and telephone number of Applicant.
Trangalee DeveloJIIlent, Inc. (713)552-1991
12 Greenway Plaza, 11902, Houston, Texas 77046
State of incorporation or other form of organization or as-
sociation.
Texas
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c.
Registered agent for service of process for the Applican~.
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d. Person to ~horn questions and correspondence should be
directed.
Peter. T. S. Trang
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DEVELOPtlE?\T CORPORATION
; Aieiication for rinancin~
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e. Name, address and telephone number of co~nsel for Applicant
".(this does not mean bond counsel).
Arm c. Jacob~Butler, Binion, Rice, Cook & Knapp
1100 Esperson Bldg. . Halston, Texas 77002
f. Name, address and telephone number of accounting firm.
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g. Name, address and telephone number for bond counsel (if one
has been chosen).
.2. Description of Project
B.
Amount of financing applied for: $ 8,000,000
Total cost.of Project: $ 8,000,000
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c. Brief narrBtive description of the Project including ~hether
land acquisition is included and the major components of the
Project, the estimated number and type of ne"" jobs' to be
created in the City of La Porte by the Proje~t and ~he annual
payroll of employees ~orking at the Project.
The proj ect will consist of a 120 roan rootor hotel, a restaurant
and a retail shopping center containing approximately 64,400
square feet and a truck and automobile service center. '!he
,proj ect. will be located on State Highway 146 near the inter-
section;of Barbo-ur's Cut Blvd. '!he project will include the
acquistion of land which is expected to cost approximately
$ 1,500,000.. '
It is estimated that approximately 130 jobs will be created ~
the operation of the project and that the armual payroll of.
employees wo:rking at the project will be approximately $ ,1,500,000.
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DE\'ELOPHr~T CORPORATION
~pplication for Financ4lt
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d. If the Applicant is relying "on the "small issue II exemption as
the basis for the interest. of the bonds being exempt. from
federal income taxes, complete and attach to this application
the Indus~rial Development. Bond Financing Questionnaire
atLached to this application as Exhibit A. Any questions in
t.his regard should be addressed to bond counsel (if kno~n).
3." Financial Arran~ements
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a. Summarize 'the financing arrangements as planned as of :this
daLe including name and address of Lhe f~nancial instituLion(s)
(bank, investment banking firm, etc.), if determined, which
may be interested in purchasing the bonds if and when such
bonds may be approved for sale: (It is t.he responsibility of
the Applicant to arrange for the marketing of the bonds if the
financing is approved, with the Corporat.ion's concurrence.)
Bonds will be purchased by Bank; hCJ'Vl7ever, Bank has not yet been
detennined.
b. If the Applicant has credit rating, please state the rating
and agency: None
c. Explain how the Project will be financed if all or a portion
of the amount. of the financing applied for herein is denied:
"Conventional Financing will be used or project will be reduced in
Financial Statements size.
4.
a. Attach most recent Form lO-K to the Securities and Exchange
Commission, together with the most recent Form lO-Q.
OR
1.
A brief' description of the form of organization and
organizational structure. including parent, subsidiaries
and affiliates; and
" .
2.. A brief statement of the history and t)'pe of business
engaged in; and
,3.
The names and ages of execuLive or managing oific,ers and
direcLors and a brief accounL of all business experience
of each such officer or direct.or. including his principal
occupat.ions and employment. and the name and principal
t
'j
I
. i
"'" y. .. ......, ...,. . -.,.... .......... . . ... .... ...
DEVELOP~!ENT CORPORATION
~\?plication for financ~
"
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business of the corporation or ot.her organization in
which such occupations and employment were carried on;
and,
b.
t.. Audited financial statements' (or if audited financial
statements are not available, unaudited financial state-
ments) for each of the, three preceding fiscal years.
~ .
Detail change~ or events subsequent to the date of the most
recent. financial statements (including but not limit.ed. to
pending or threatened litigation, claims" assessments, commit-
ments, subsequent information regarding uncollectibility of
receivables, valuation-of assets, changes in corporate struc-
ture o~ statements of prior period financial statements) which
may have 2 'ma1:;crial effect on the Applicant's financial
position:
None
5. Agreements of Applicant
.' .
a.
Indemnity: ~y its execution of this Application, the Applicant.
agrees that it. will at all times indemnify and hold harmless
the Corporation, the Board of Directors of the Corporation,
the City of La Porte, Texas (the "Unit"), the City Council of
the Unit and any of the officers, directors, employees, agents,
servan~s and any other party acting for or on behalf of the
Corporation ,or the Unit (such parties being hereinafter
referred to as the "Indemnified Parties") against. any and all
losses, costs, damages, expenses and liabilit.ies (collectively
herein called "Losses") of whatsoever nat.ure (including, but
not limited to, attorneys' fees, litigation and court costs,
amounts paid in settlement and amounts paid to discharge
judgments) directly or indirectly resulting from, arising ~ut
of or relating to one or more Claims, as hereinafter defined,
even if such Losses or Claims, or both, directly or indirectly
result from, arise out of or relate to, or are asserted to
have resulted from, arisen out of or related to, ,in ",'hole or
in part, one or more negligent acts or omissions of the In-
demnified Parties in connection with the issuance of the Bonds
or in connection with the Project. The term "Claims" as used
herein shall mean all claims, lawsuits, causes of action and
other legal actions and proceedings of whatsoever nature,
..
. '... .
"
.;:... ..
j(;::'~' :~:-:',
.:.":...... . .
:.~. .':: .
'.
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-.. .-.
'. .~.' . '.
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...~
DEVELOP~1ENT . CORPORA T1 ON
Application for Fin4IJ~ng
L-"l)C J
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including but not limited to claims, lawsuits, causes of
action and other legal actions and proceedings, involving
bodily or personal injury or death of any person or damage to
any property (inclUding, but not limited to, persons employed'
by the Corporation, the Unit, th'e' applicant or any other'
person and .all property owned or claimed by the Corporation,
'the Unit, the Applicant, any affiliate of the Applicant or any
other person) or involving d~mages relating to the issuance,
offering. sale or delivery of the Corporation's bonds to
finance 'the Project (the "Bonds") brought against any Indemni-
fied Party or which any Indemnified Party is a party, even if
groundless, fals.e or fr.audulent, tha t directly or indirectly
result from, arise out' of or relate to tbe issuance offering,
sale or' delivery of the Bonds or the design, construction,
installatio~" operation, use, occupancy, maintenance or o\o'Iler-
ship of tbiProject or any part thereof.
None of tbe Indemnified Parties sball be liable to the Appli-
cant for, and the Applicant hereby releases each of them from
all liability to the Applicant for all injuries, damages or
destruction of all or any part or parts of any property owned
or claimed by tbe Applicant that directly or indirectly'result
from, arise out of or relate to the design, construction,
operation, use, occupancy,' maintenance or ownersbip of the
Project or any part thereof, even if such injuries, damages or
destruction di,rectly or indirectly resul~ from, arise out of
or relate to, in whole or in part, one or more negligent acts
or omissions of the Indemnified Parties in connection with the
issuance of the Bonds or in connection with the Proj ect.
,. ,
Eacb Indemnified Party, as appropriate, shall reimburse the
Applicant for pa)~ents made by t~e Applicant to the extent of
any proceeds" net of all expenses of collection, actually
received by them from any insuranc~ with respect to the Loss
sustained. Such Indemnified Party, as appropriate, sball have
the duty to claim any such insurance proceeds and the Indemni-
fied Party, as, appropriate, shall assign its respective rights
to such proceeds, to the extent of such required reimbursement,
to tbe Applicant. In case any action shall be brought or to
the knowledge of any Indemnified Party, threa~ed against any
of ,them in respect of which indemnity may be sought against
the Applicant, the Indemnified Party shall promptly 'notify the
Applicant in writing and the Applicant shall have the right to
assume the investigation and defense thereof, including the
employment of counsel and the payment of all expenses. The
Indemnified Party shall have tbe right to employ separate
counsel in any such action and participate in the investi-
. .
.. ...u.... ""
DEVELOPl-lENT COHPORATION
Application for Fin~~n~
"
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gation and defense there~f, but the fees and expenses of such
counsel shall be paid by the Indemnified Party unless (a) the
employment of such counsel has been specifically authorized by
the Applicant, i,n writing, (b) the Applicant has failed to
assume the defense and to employ counselor (c) the named,
parties to.any such action (including any impleaded'parties)
include bot~ 'an Indemnified Party and the Applicant, and said
Indemnified Party shall have Qeen advised by such counsel that
there may be one or more legal. defenses available to it which
are different from or additional to those available to .the
Applicant (in which case, if the Indemnif~ed Party notifies
the Applicant in writing that it elects to employ separate
counsel at the Applicant's expense, the Applicant shall not
have the right to assume the defense of such action on bebalf
of such Indemnified Party, it being u~derstoodJ however, that
the Appli ca'tit shall not, in connection with anyone such
action or separa.te but substantially similar or related
actions in the same jurisdiction arising out of the same
general al~egations or circumstances I be liable fo~. the
recsonable fees and expenses of more than one separate firm of
attorneys for the Indemnified Party, which firm shall be
designated in writing by said Indemnified Party), The Indem-
nified Party, a~ a condition of such indemnity, shall 'use its
best efforts to cooperate with the Applicant in th~ defens~~of
any such action or claim. The Applicant.. shall not be laible
for any settlement of any such action without its consent but,
if any such action is settled with the consent of the Applicant
or if there be final judgment for the plaintiff in any such
action, the Applicant agrees to indemnify and hold harmless
the Indemnified Parties from and against any Loss by reason of
such settlement or judgment.
b.
Fees and Expenses: Applicant agrees to pay all reasonable and
necessary costs, expenses and fees incurred by the Corporation
in connection. with the issuance 'of'the bonds or in connection
with the Project, including but not limited to the out-of-pocket
expenses incurred by the Corporation's personnel; fees for
legal services and out-of-pockit expenses of ~he Corporation's
General Counsel and any special counsel (such legal services
to be charged at the normal hourly rate multiplied by the
number of hours spent);' fees and out-of-pocke.t expenses for
consulting advice of the Corporation's consuling engineers;
fees and expenses required in connection ~ith the underwriting
or placement of the Bonds; fees and out-of-pocket expenses of
Bond Counsel; fees and out-of-pocket expenses of the trustee;
all recording cpsts i Blue Sky and legal investment survey
costs, rating agencies j fees and printing costs j and all
~
\.oJ A oJ V.I .1...1\ J \'J\ J I'. J"UJLldl"~"I.
. I- l-I L
Qt:VELOPHENT CORPORATJ ON
~.'" ." ~PP; icati on for Fi.nance
.
incidental expenses, costs and charges relating to the Project
and the issuance of the Bonds not enumera t.ed above. The
Corporation will upon request provide or cause to be provided
to the trustee under the indenture of trust. and/or the Applicant
any data or information which may be reasonably required to .
verify any of. the costs and ,expenses and fees enumerated
above. With respect to the costs, expenses and fees enumerated
above, the Applicant shall at\the Corporation's request advance
on a monthly basis the amounts incurred by the Corporation
pending reimbursement out of the proceeds from the sale of the
Bonds; To the extent that the cost.s, expenses and fees
enumerat.ed abo~e are ~ot or cannot be paid or reimbursed from
the proceeds of the bonds or if bonds are not issued, the
Applicant shall pay the same.
In addition, at the time the Application is forwarded to the Texas
lndustrial Commission, the Applicant will be required to pay to the
Texas lndustrial Commission a $1,500.00 application fee on behalf. qf the
Corporat.ion as required by the Texas Industrial Commission~s lndustrial
Revenue Bond Program Rules.
The undersigned verifies that he is duly authorized to submit the
foregoing application on behalf of the Applicant and that the foregoing
information is true and, correct t.o the best of his lalo,,'.ledge and belief
submitt.ed on the 'day of October , 1982.
Trangalee Develorment, Inc.
Applicant
By
Peter T. S. Trang
Presiden~
~'~
-. - ~~
<. "Tit~e
.. .
Le, Qui Phong
Executive Vice President
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INDUSTRIAL DEVELOPMENT BOND FINANCING
QUESTIONNAIRE
1.
A.
Name, address and employer identification number of
the enti ty ~(the ::Pri.l1cipal U&t:.!'II) that will purchase
or lease the Project to be acquired or constructed
with the proceeds of the bonds.
..
B. 'Form of organization of Pri~cipal User (check one):
corporation
.-
partne~ship sole proprietorship
: ;,
io
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,:--.
2. List the name and address .of any entity which, actually
or constructively, ,is owned more_.than 50% by the Princi-
pal. User. In addition, list the name and address ~f-any
person and entity which, actually or constructively,
owns more than 50% of the Principal User. List all
c>ther enti ti,es in which such "more than 50%" owner
actually or constructively has a greater than 50%
interest and all family members (i.e., brothers and
sisters, husband and wife, ancestors and lineal
descendants) of such ."more than 50%" owner. If the
Principal User is not a partnership, list any partner-
ship in which such "more'than 50%" owner has any actual
or constructive interest. If the Principal User is a .
partnership, list the name and address of all the part-
ners. List all other entities in which any partrier in
the Principal User has a greater than 50% actual or
constructive interest and all family members (as des-
cribed above) of any partner. (The person and entities
required to be l:i,sted should be considered "Related
Persons" to the Erincipar User for purposes of this
questionnaire.)
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3. Location of project:
Address
Incorporated
Municipality
. . '". .
Township
if any
County
The Incorporated Municipality or the County (if the
Project is in an unicorporated area) in which the
Project is located will be referred to as the "Politi-
cal Jurisdiction.1I Please indicate whether the Project
site is, (a) entirely within an incorporated municipality,
(b) entirely within the unicorporated area of the
county or (c) partially-in each. If there "is any
question. ~s to the location of th~Project site, please
so indicate. . ..." _
4. Provide the following information regarding previous'
tax-exempt financing used to finahce the Project or any
other facilities used by the Pri~ipal User or Related
Persons wholly or partly within~the Political Jurisdiction.
':'-- .
Date of Issue
Amount. of
Issue
.....
Amount outstanding
as of Estimated Date
of Issue of the Bonds
4a. Please list all tax-exempt financings in the past year
and all tax-exempt financings currently being considered
in which the Company has or will be a user of the facili-
ties being financed with bond proceeds.
s. Is the Project site part of an industrial park that has
been financed with tax exempt bonds?
:r
6. Were or will any of the ~tilities for the Project site
(gas, electricity, water, sewage, telephone) be provided
by a public utility or a state or local government unit?
How will they be paid for by the Principal User?
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7. Is the Project site owned or leased by the Principal
User?
A. If owned:
Date of option 'contract
Amount of option
payment
Date of purchase (i.e.,
c'losing date)
Purchased from
Purchase price
Amount of mortgage
Mortgagee
B. If leased:
Lessor
Date of lease
Terms
Is th,er~ an option to purchafe?
c. If Principal "User does not n~w own the Project
,site, but has an option to ~urchase the site,
please state: ~.
Date option "agreement'siqned,'
with owner -
Amount of downpayment or
option payment
Purchase price
Estimated purchase date
(i.e., closing date)
D. will all of the property purchased
or leased be used for the project?
If not, give number of acres that
will be used for Project
Is there any relationship legally
or by virtue of common control
_ between the Principal User and
the seller ~f the Project Site?
- :r
8. Describe the .Project. (NUmber and size of buildings,
equipment, expected use, etc.)
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9. What is the expected date of issuance of the bonds?
10. Expected use of bond proceeds:
'.' '.: ,..
Paid or incurred
prior to expected
issue date of
Bonds
Paid or incurr
'. after expected
issue date of
Bonds
Item
Engineering
Architecture
Building(s)
Machinery and Equipment
Land Acquisition (including
legal and title fees)
site Improvement
capitalizeable interes~ and
taxes
Issuance expenses
Underwriter's discount
or placem~nt agent's fees
$
$
..
TOTAL
- ~
-:--.
11. will any of the bond proceeds be used for other than
the acquisition, construction, reconstruction or
improvement of land or depreciable 'property? [Acquisi-
tion, construction" reconstruction or improvement of
~and or depreciable property includes, among others,
the following: (a) modifying and installing equipment
moved from another location and (b) the acquisition of
stock of a corporation if the corporation is liquidated
and the tax basis of the corporation's assets is
stepped up to the acquirer's basis in the stock under
IRC ~ 334(b)(2). Representative examples of the use
of bond proceeds for other than the acquisition" con-
struction, reconstruction or improvement of land or
depreciable property include, among others, the
following: (a) financing working capital or inventory;
(b) refinancing an existing mortgage ~r outstanding
loan; or (c) moving of ~xisting equipment from one of
the Principal User's (or Related Person's) other
facilities to the Projec~.]
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12. List actual and reasonably expected capital expendi-
tures (not including those expenditures funded out of
the bond proceeds) paid or incurred by anyone with
respect to the Project. (All capital expenditures,
wheth~r or.not made. by th~ Principal User or a Related
Person, must 'be" included. )' " . "
Paid or Incurred in
Three Years After
and Including
Date of Issue of Bonds
Items
organizational
Expenditures
Engineering
Architecture
Research and
Development
Building(s)
Machinery 'and
Equipment
Land (including
legal and
ti tIe fees)
site Improvement
Capitalizeable
Interest and
Taxes _
Bond Issuance
Expenses
Underwriter's
Discount or
Placement
Agent's Fee
Other
Total
Paid or Incurred in
Three Years Prior to
Date of Issue of Bonds
.'
: ~
;.
.---.
.....
$
$
EI-:~nditures are capital expenditures if they are '
! .:>perly chargeable to the capital account or may be
~apitalized under any prqvision of the Internal Revenue
Code. Attached as Exhibit "A" is a memorandwn which
sets out examples of capital and non-capital expendi-
tures.
13. What capital expenditures (other than' those for the
Project as liste~ ~n Par~graph 10 and 12 or those
financed with bonds listed in Question 4) have been or
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will be paid or incurred within the 6 year period
described in Question 12 within the Political
Jurisdiction for property used in connection with other
facilities to be used by the Principal Us~r or a
Rela,tedPerson?. [All. capital ,expenditur.es, whether or .
not made by the.Principal User or a Related Person,
must be included (e.g., if the Principal User or a
related person leases space in another building within
the Political Jurisdiction, any capital expenditures by
the lessor for the leased property made or to be made
within the 6-year period must be included).]
14. A.
If any equipment or other facilities to be used in
connection with the Project will be leased, please
describe such items. Also, describe the lease
terms and include a copy of the existing or
proposed lease if. available.
If any equipment will be moved from another
location, please describe. f
B.
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,:,,--.
15. Type of
Work
Date B'egun
--
site Clearance
Foundation
Buildings
16. On what date was official action taken by the Develop-
ment corporation that will issue the bonds?
17. What costs have been oaid or incurred on the Project
prior to the date in 16. above? Please state to whom
such expenditures where made and the purpose of such
expenditures.
18. On what date we~ contracts entered into for fabrica-
tion of major "COmponents of the Project or for con-
struction of the.building(s) for the Project?
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On what date did fabrication, manufacturing or construc- .
tion begin?
. 19.- If any. part o.f ,the. Project .will be lease.d .to other than
the Principal User, please indicate:
20. A.
4/81
(a) total square footage of ~roject:
(b) Amount to be leased to each tenant (if more than
10% in space or in value).
On what date will the development and construction
work with respect to the real property in connec-
tion with the PrQject be completed?
B. On wnat date will the-personal property in connec-
tion with the Project be installed or first put
into use by the Principal -'User, whichever is '
later. . f .
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Exhibit A
Treas. Reg. Sl.103-10(b)(2)(ii)(e)
Capital Expenditures
. . .".. .
. ". . .. ,"
"Section 103(b)(6)(D) capital expenditures" are
defined in Treas. Reg. Sl.l03-10(b)(2)(ii). That regulation
states for an expenditure to be a "section 103(b)(6)(D) capi-
tal expenditure'~, inter alia, it must be properly chargeable
to the capital account without regard to any rule of the
Internal Revenue Code which permits the expenditure to be
treated as a current expense or it must be able to be capi-
.talized under , any rule or election uride~ the Code.
The following are representative examples of ex-
penditures which, within the meaning of Treas. Reg. Sl.103-
10 (b) (2)( ii) (e), are prop~rly chargea1?"le to the capital
account or may be capitalized under the Code:
1.
f
Costs allocable - to the acquisit.ion, construction, or
erection of buildings, machin~ry and equipment, furni-
ture and fixtures, and similar~~9perty having a useful
life substantially beyond the taxable year~ See Treas.
Reg. Sl.263(a)-2(a). See also Addressograph-Multigraph
Core., 4 T.C.M. 147 (1945) (legal fees paid to acquire
assets in a reorganization must be capitalized); Missis-
sipoi Valley Trust Co. v. U.S., 61 F.Supp. 451 (E.D. Mo.
1945), rev'd on other issues sub nom. Buelterma~~ v. U.S.,
155 F.2d 597 (8th Cir. 1946) (appraisal costs paid for
possession of premises must be capitalized); Southeastern
Express Co., 19 B.T.A. 490 (1930), aco. as to issue 1,
X-1 C.B. 61 (1931) (one-half of corporate general coun-
sel's salary, representing time spent in connection with
organization of a corporation must be capitalized).
2'. Interest on a construction loan, interest on a loan to
purchase real property, interest on a loan to purchase,
transport, or install personal property, and interest
on a mortgage of unimp~oved and unprDductive real pro-
perty and other items (including certain taxes and
insurance payments) permit~ed to be capitalized under
Section 266 of the Code 1 and the regulations thereunder"
even though deduoted as expenses on principal user's
tax return. Rev: Rul.; 75-185, 1975-1 C.B. 43; Rev.
Rul. 77-262, 1977-2 C.B~ 41 (amount' of capital expendi-
tures not offset by income from investing proc~eds
.
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during the temporary period). See also Treas. Reg.
91.266-1(b) (1) (iv) (taxpayer permitted to capitalize
"any other taxes and carrying charges with respect .to
property, which in the opinion of the Commissioner,
ar~, under sound accounting principles, chargeable to
, capital accountH')." . " '
3. Issuance costs (underwriting fees, legal fees, printing
costs, etc.); but, of course, only if paid other than
out of ' the bond proceeds. Rev. Rul. 77-234, 1977-2
C.B. 39.
. .
4. ~.mounts' expended for securing a copyright and plates
that remain the property of the person making the ,pay-
ments. See Treas. Reg. 91.263(a)-~(b).
5. Cost of defending or-perfecting title to property. See
Treas. Reg. 91-263(a)-2(c~.
6. Amounts expended for architect'~ services. See TreaS.
Reg. 91.263(a)-2(d). f
7.' A corporation's cash acquisi ti_ob of stock of another
::, "corporation followed by a liqui~:tion of the acquired
corporation to which Section 334(b)(2) of the. Code ap-
plies is in substance an ,acquisition of underlying as-
sets, and, therefore is a capitai expenditure with re-
spect to the acquired corporation's facilities to-th~
extent of the percentage of the corporation's fixed
assets located in the county (or incorporated munici-
pality). The capital expenditure, however, is reduced
by the amount expended by the acquired corporation from
proceeds of an outstanding prior small issue for depre-
ciable tangible assets located in the county (or incor-
porated municipality). LTR 7916021.
8. Commissions paid in purchasing stock as descr~bed in
"5." above. See Treas. Reg. 91.263(a)-2(e).
9. Cost of goodwill or a covenant not to compete in con-
nection with the acquisition of the assets of a going
concern. Rev. Rul. 81-56, 1981-8 I.R.B. 7; Rev. Ru1.
81-55, 1981-8 I.R.B. 6. See Treas. Reg. 9l.263(a)-2(h).
,. -
10. Trademark and tradenarne exnenditures even though amor-
tizable under Section 177 of the Code.
"
14.
15.
16.
17.
.
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11.
Cost of railroad rolling stock even if amortizable under
section 184 of the Code.
12.
Advertising costs which result in the acquisition of an
. c;sset having. a, .us~fu,l ,li~e substan-t;ially beyond the
taxable year. See A. V. simonson,S T.C.M. 718 (1946)
(cost of a promotional film not currently deductible).
Cost of trucks based at a trucking terminal facility
with respect to the terminal facility. Treas. Reg. S
1.103-10(f), Example (11). Comoare Rev. Rul. 80-12
(expenditures for trucks are not capital expenditures
because they are not allocable to any specific facil-
i ty) .
13.
-
Expenditures for equipment or machinery which is moved
into the county or municipality within three years of
the bond -issue; however, 'only if,. the expenditures for
the equipment are made wi thin the" six-year period.
Treas. Reg. ~1.103-l0(f), Example (1~).
f
Cost of molds us~d to manufact~e custom plastic pro-
ducts wi~~ respect to the man~acturing facility, re-
- 'gardles-s of whether the manufacturer or the customers
take title to the molds, if the molds have a useful
life substantially beyond the ~nd of the taXable year.
Rev. Rul. 77-224, 1977-1 C.B. 25~
If the principal user of a facility orders equipment
for.the facility from a manufacturer, expenditures paid
or incurred by the manufacturer are considered to have
been incurred concurrently by the principal user. The
amount which must be taken into account as a caoita1
expenditure is determined by multiplying (a) the"total
purchase price payable for the equipment by the prin-
cipal user times (b) the percentage of the manufactur-
er's total expenditures paid 'within three years of the
bond issue. Rev. Rul. 78-347, 1978-2 C.B. 101. See
also Rev. Rul. 74-485, 1974-2 C.B. 32 (capital expendi-
tures by construction contractor attributed to prospec-
tive owner .of building). Note that merely placing the
purchase order or entering the construction contract
does not incur any capital expenditure by itself.
"
,.
.
Cost of timber ineurred under a pay-as-cut timber con-
tract when the timber is'cut. Rev. Rul. 76-132, 1976-1
C.B. 16.'
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18. Cost of mobile buildings for use as temporary offices.
even though the mobile buildings later are sold to un-
related parties. Rev. Rul. 75-208, 1975-1 C.B. 46.
19. . Research and, .experimenta1 expenditures (including com-,
puter software,.Rev. Proc. 69-21, 1969-2 C.B. 303) allo-
cable to facilities where rnanufactu=ing will occur even
though deducted as expenses. Rev. Ru1. 77-27, 1977-1
C.B. 23; LTR 8052071. See Rev. Ru1. 77-253, 1977-2
C.B. 40'. See also LTR 8042136 (definition of research
and experimental expenditures).
20. Circulation expenditures even though deductible under
section 173 of the Code.
21. Intangible drilling co~ts even though deductible under
Section 263(c) of the Code.
. .
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22. Cost.of property obtained under a iease which is treated
as a sale for federal income ta~ purposes. Treas. Reg.
~1.103-10(b)(iii);' Treas. Reg. ~~.103-10(f) Example 13.
.
~ ~
Assumption of liabilities in c~rtnection with the pur-
" chas'e' of proper'ty. ',' See' Crane- ~- Commissioner, 331 '
U . S . 1 (1947).
24. Organizatior. expenditures of a.~orporation or a PA~~
nership, even though amortized under sections 248 or
709, respectively, of the Code. But see LTR 8014111
(~rganization expenditures not paid or-Incurred with
respect to facilities in the city in which the financed
facility is located and, therefore, not section 103(b)
(6)(D) capital expenditures).
23:.
25. Interest prepayments' of a cash (or accrual) basis tax-
payer. See IRC ~461(g).
26. In the case of an individual (including a partner), a
subchapter S corpor~tion or a personal holding company,
real property and const'ruction period interest and
taxes required to be capitalized under Section 189 of
the Code.
27. Cost of real property including water rights, ease-
ments (see Rev. Ru1. 80~100, 1980-1 C.B. 25) and the
ne~ cos~f demolition of an existing building (LTR
8024079).
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28. Origination fee in connection with a lease.
29. Fair market value of property given up in section 1031
like-kind exchange.
30. Expenditures to retire a' portion of a' '.prior exempt
small issue; however, only to the extent paid or in-
curred wi thin the six-year period. Treas. Reg. .
~1.103-l0(f) Example 10; Rev. Rul. 76-98, 1976-1 C.B.
31.
The following are representative examples of ex-
penditures which are not "section 103(b)(6)(D) capital ex-
pendi ture s II : .
-
1. Administrative costs, everhead, and wages -(unless allo-
cable to the acquisition, construction, or erection of
property described in "1. 1I above);
2. Cost of incidental repairs or maintenance. See Treas.
Reg. sl.263(a)-1(b). f'
r
3.' Cost of property which would p~bperly be included in
'inventory if on "hand at the ertd~of the taxable year
[i.e., direct inventory costs]. LTR 8015025. See IRC
!!1221(1), 1231('b).(1)(A).. ' ,
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- 4. Purchase of cash, accounts receivable and prepaid
expenses. LTR 8015025.
5. Cost of property held primarily for sale to customers
in the ordinary course of a trade or business if not
used in the trade or business until sold. See IRe
~~1221(1), 1231(b)(1)(B); Rev. Rul. 62-141, 1962-2 C.B.
182.
,
6. Cost of supplies (defined as property which does not
have a useful life substantially beyond the taxable
year when acauired).
7. Periodic rent payments under a true lease for federal
income tax purposes (Rev. Rul. 77-353, 1977-2 C.B. 44);
but lessor's expenditures for the leased item are capi-
tal expendi tur.es. if made wi thin the six-year period
unless the leased - item is described in "7." below.
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8. Cost to the lessor of personal property leased under a .
true lease for federal income tax purposes either from
the manufacturer or from a person in the trade or'busi-
ness of leasing similar property provided, pursuant to
.general Qusines$ practice, prope~ty of this type Qrdi- ,
narily is the s~ject of a lease. Treas. Reg. 91.103-
10{b){2){iv){b)i LTR 7925037. However, if ~~c prin-
cipal user of a facility purchases the personal prop-
erty within three years of the bond issue, sells it to
a leasing company, and re-leases it, a capital expendi-
ture was incurred on the occasion of the purchase in
the amount thereof regardless of the subsequent sale
and re-'lease. 'Rev. Rul. 79-248, 1979-34 I.R.B. 5. But
see Rev. Rul. 80-162, 1980-25 I.R.B. 5 (no actual pur-
chase even though purchase order submitted and down
payment made). In a4dition, expenditures by the ground
lessor with respect to the facility on the leased ground
are capi t-al expenditures;' but,' of' course, only if made
within three years of the date of the bond issue. LTR
7833014; LTR 7951067; LTR 8011062.
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9. Issuance of stock or securitieSrfor property in a tax-
free incorporation or other eiehange under Section
'351(a) of'the Code. T'reas. Reif. ~1.103-10{b){2)(v)(c).':-
If'Section 351(a) applies to a transfer during the 6-
year period surrounding the dat~ of issue, and if, with
respect to the property transfe~red, expenditures made'
within such period would have been Section 103(b)(oJ1D)
capital expenditures if the transferor and the trans-
(eree corporation had been related persons for such
period, then such expenditures shall be considered to'
be section l03(b)(6)(D) capital expenditures made by
the transferee corporation. In addition, if a trans-
feror and transferee are related persons immediately
following such transfer, such transferor and transferee
shall also be treated as having been related persons
for the portion of such 6-year period preceding the
date of such transfer. Treas. Reg. 91.103-10 (b) (2)
(v.){d). Furthermore, the purchase by the shareholder
or security holder of such property is a capital expen-
diture if made within the 6-year period.
10. Exchange of consideration for assets in a tax-free-re-
organization or ~iquidation which qualifies under Sec-
tion 38l(a) of the Code (relating to carryover of tax
attributes); but the tr'ansferor and transferee are
treated as related throughout the portion of the six-
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year period preceding the date of exchange. Treas. .
Reg. sl.103-l0(b)(2)(v)(a), (b)i Treas. Reg. ~1.103-l03-
10(f) Example 17 ("A" reorganization with boot).
11. " Exchange, 9f stock ip.. q. tax-free "B" reorg~nizationi put
the parent and ~ubsidiary are treated as related through-
out the six-year period. Rev. Rul. 75-411, 1975-2 C.B.
41.
12. A corporation's cash pu~chase of 100 percent of the
stock of another corporation (which later finances a
facility with tax-exempt bonds) which will not be liqui-
dated within two years, but which will be operated as
an autonomous subsidiary of the acquiring corporation.
The corporations will, however, be. treated as related
parties throughout the-six-year period at 'least if they
are related on the date of the issue. LTR 8008136.
13. Issuance of a partnership interest ~n tax-free exchange
under ,section 721 of the Code f.or property, at least
where the p'artner purchased thet property more than 3
vears before th~ issuance of the bonds. Rev. Rul.
77-146, 1977-1 C.B. 24. ~~
-
~.
14. If the present owner purchased the facility within the
six-year period; the purohase price is a capital ex-
penditure, but the prior owner~s'capital expenditures
with respect to the facility may be disregarded to the
extent they are reflected in the purchase price. Rev.
Rul~ 76-427, 1976-2 C.B. 28. See LTR 8011062.
15. Cost to replace property damaged or destroyed by fire,
storm, or other casualty to the extent not in excess of
the fair market value (determined immediately before
the casualty) of the property replaced. Treas. Reg.
gl.103-10(b) (2) (iv) (c).
16. Expenditu=es by a Section 501(c)(3) charitable organiza-
tion for cha=itable activities are not Section 103(b)
(b)(D) capital expenditures for purposes of a related
person's small issue financing of an unrelated facility.
Rev. Rul. 74-289, 1974-1 C.B. 32. See LTR 8011062.
17. Expenditures by a politieal subdivision paid or incurred
in carrying out 11;s statutory purposes are not Section
103 (b) (6) (D) capital expenditures for purposes of a
small issue financing of an unrelated facility. LTR
8012090.
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18. Expenditures by a public utility which is not the prin-.
cipal user ,of the bond-financed facility with respect
to property of such company or by a state or local gov-
ernmental unit with respect~o the property of such
uni t, ,i,t: the. f~llowing copd,i t,ioD;S are met: (i). Such
property is use~ to provide gas, water, sewage disposal
ser/ices, electric energy, or telephone servicas; (ii) -
such property, though installed in or connected to the
facility, is not an integral part of the facility such
that the cost of such property is ordinarily included
as part of the acquisition, construction, or reconstruc-
tion cost of such facility; and (iii) such property is
of a type normally paid for in the form of periodic
fees based upon time or use. Treas Reg. sl.103-10(b)
(2 )(iv) (a).
19. Cost of moving equipment or machinery (including
removal and installation i:osts?) 'except for taxes and
carrying charges which may be capitalized under Section
266 of the Code. See Eastern Shoe Manufacturing Co~ 8
B.T.~. 1169- (1927), ~., VlI-1fC.B. 9; Addressograph-
!'t!ultlgraoh Corn.,. 4 T.C.M. 147 ~(a945).
:. ~
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20. Thebretical interest of' a taxpayer. using his own funds.
See Treas. Reg. ~1.266-l(b}(1}(iv).
5/81
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; 6A,/The HOU5ton P05t/Wed., May 2,6, 198~',
~ C:~ty Coun~i,l app-,;oves guidelines
':!f~~ issuing,~n~ustJrial ,revenu~ bonds
. f .J ' ,~" . . . .
M MABK CARREAU . ' L ',r' The policies would not allow a restaurant
pist KeP;Ol1er ...' owner or a groups such as doctOl'S, lawyers
P ,.,;.", . . -:' or accountants to seek bond financ!.ng for of-
The, ijouston City Council Tuesday agreed... fice space, ',: .'
to guidelines for the Issuance of tax-exempt, . .' -. ,
Industrial revenue bonds that are intended to " Ot~er s.1fe~ualds..adopt.ed by the ~ouncll
, encourage development of blighted areas and requIre apphcan~s for b?~~ finanCing to
spur employment without prompting abuses. . ~ develop a nelg.hbolhOOd a~essm~nt that sug-
. Earli~ this year, the council desigri,.'lted ' gests h~w thell' com~erctal pl'OJCCt w~1I re-
much df. the city ~ithiri Loop 610 as well- as ,move bh~ht and proVIde em'ploy~ent without
areas outside the loop as blighted and eligible. t~reatemng sUI'~ollndln? resIdential areas,
lor con'imbrcial projects funded through bond ':' :'Applicants also ~ust provide proof 'their
sales,.. '''\'. . proposal would not violate the deed rcstric- '
Guur~!mes adopted Tu~sday would prevent, tions in fOl'ce at the project site. . ':. ", .
the use ,of the bonds to finance free-standing' " ' : . , "',
liquor stotes, golf courses or country clubs, . In the event housing with occupants would ~
racquetball courts or health clubs, race- be eliminitled by Ii project, the applicants
tracks 'and' hot tub or suntan facilities as well would be obligated to pt'ovide limited relo<;a-,
as builiJiiigs used for the sale of pornographic. . . tion assistance. That. help might include moy-
materi~~.:l . .' '. ". ' '..~.".' ing expenses and deposits for utilities, ' . '; I
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Appi~catlons for bond financing wui be
made to the nine-member Houston Industrial
Development Corp. Final approval of
projects must come from the City Council,
and prWects rejected by the development
corporaTIon's board could be appealed to the
council for consideration., . ' ......-. :
'" Tuesda~, :~he council a'PPointed' to ~~e I." . .
. development corporation F. Max Schuette, an' ". '.:. .
attorney; Sheila Jackson Lee, cOl'porate ':..:
. attorney:,' Joseph Ryan, an attorney; and .
Evangelt'ne Acevedo, a I'eal estate.
,sales'forria~;. ~; , .
. Also James' P. Hayden, ,certified pu'blic ac~ '
countant; Thad Hutcheson Jr., an attorney'
Constantine Kaldis, a real estate saleswoma~ ~:;~"'~~;"'.
and developer; Robert Sakowitz. Sakowitz
boa~d chairman; and Fl'ank F. Thompson, an
engmeer, ..',
... ....
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