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2007-15 ORDINANCE NO. 2007-15 AN ORDINANCE A VV ARDING ONE OR 1VI0RE GROUND LEASES TO EFFECT TIIE ACQUISITION OF CERTAIN REAL ESTATE FOR STREET ANI> ECONOlVlIC DEVELOPlVIENT PURPOSES VVIIEREAS. the Council (the ""Council") of the City of Fairfax. Virginia (the ..City"), having received bids pursuant to advertisement: in the manner prescribed by la"", from bidders upon financing terms set: forth on Exhibit A hereto, to act: as fina.r1cing lessee under one or more ground leases ar1d to act: as financing lessor under one or more financing lease agreements to effect the acquisition of certain real property (including the improvements located thereon) knovvn. as the Eleven Oaks Property (the '''Property'') 1:0 be used for construction of a street and economic development purposes (the "Project"), "VV'hich bids have been read aloud", and other terms of vvhich are sho","I1 in the bidding documents on file in the office of the City Attomey; VVHE.REAS, the Council has,. after having follovved procedures required by general lavv,. conducted a full analysis and consideration of the technical ability,. financial condition" legal qualification and general character of said bidders; and ",,"UEREAS,. the Council,. after such consideration" ar1alysis and deliberation,. has approved and found sufficient the technical ability,. financial condition,. legal qualification and general character of the hereinafter named bidder as the bidder V\l'"hich provides the lovvest overall cost and most favorable terms to the City to effect the lease financing; NOVV. TIIEREFORE. BE IT ORDAINED by the Council of the City of Fairfax, Virginia,. that: 1 ~ It is the intention of the City to aV\l'"ard to Branch Banking a.:nd Trust Company the lease of the Property in accordance vvith the terms referenced above and pursuant to one or more ground leases, each for a period not to exceed thirty (30) years. Each ground lease shall be substantially in the form attached hereto as Exhibit :8, being one of the documents relating to the lease financing of the Project. 2~ This Ordinance shall take effect immediately~ INTRODUCED: June 24, 2007 PUBLIC HEARING: July 10. 2007 ENACTED: July 10, 2007 c~~~ lV'Ia or ~~~7 Date ATTEST: m~~~~ The vote on the motion to approve V\l'"as recorded as folloV\l'"s: VOTE: CouncilV\l'"oman Cross Councilman Greenfield CouncilV\l'"oman Lyon Councilman. Rasmussen Councilman Silverthome Councilmember V\.Tinter Aye Aye Aye Aye Aye Aye BB&T BB& T Governmental Finance 501 Tennessee Avenue Charleston, WV 25302 (304) 353-1635 Fax (304) 340-4702 June 22, 2007 Kyle A Laux Associate Vice President Davenport and Company LLC One James Center 901 East Cary Street Richmond, VA 23219 Dear Mr.Laux: Branch Banking and Trust Company ("BB&T") is pleased to offer this proposal for the financing requested by the City of Fairfax, Virginia ("City"). (1) Project: Purchase of Eleven Oaks Property (2) Amount To Be Financed: $4,210,000.00 (3) Interest Rates, Financing Terms and Corresponding Payments: Term Rate 5 years 7 years 6.81% 6.87% Interest payments shall be semi-annual on January 15 and July 15, commencing January 15,2008. The principal balance with any remaining interest shall be due at maturity, as requested. Unless the proceeds are expended at closing, the financing proceeds shall be deposited on behalf of the City in a project fund account with Branch Banking & Trust. Earnings on the project fund shall accrue to the benefit of the City for use on Project costs or interest payments. The interest rates stated above are valid for a closing not later than 30 days after today. Closing ofthe financing is contingent upon completing documentation acceptable to BB&T and upon the title and condition of the property being acceptable to BB&T. We shall review your most recent financial statements before approval of the funding of this transaction. Remuneration for our legal expenses, preparation of documentation and for providing the project fund services for this financing transaction shall be $3,700.00. All applicable taxes, surveys, permits, costs of environmental studies, title insurance premiums, costs of lawyers for the City and any other costs shall be the City's responsibility and separately payable by the City. These costs can be paid by the City at closing or financed as part of the project. The financing documents shall allow for prepayment of up to twenty percent (20%) of the proceeds without penalty, and shall allow prepayment of the principal balance in whole on a scheduled payment date with a 1 % prepayment premium for the remaining balance. The stated interest rates assume that the City expects to borrow the entire amount with taxable financing. (4) Financing Documents: It shall be the responsibility of the City to retain and compensate counsel to appropriately structure the documents according to Virginia Commonwealth statutes. BB&T shall also require the City to provide an unqualified bond counsel opinion. BB&T reserves the right to review the Bonds and it must be mutually accepted by BB&T and the City. * * * * * * BB&T appreciates the opportunity to make this financing proposal and requests to be notified within five days of this proposal should BB&T be the successful proposer. BB&T shall have the right to cancel this offer by notifying the City of its election to do so (whether or not this offer has previously been accepted by the City) if at any time prior to the closing there is a material adverse change in the City's financial condition, if we discover adverse circumstances of which we are currently unaware, if we are unable to agree on acceptable documentation with the City or if there is a change in law (or proposed change in law) that changes the economic effect of this financing to BB&T. We reserve the right to negotiate and/or terminate our interest in this transaction should we be the successful proposer. Please call me at (304) 353-1635 with your questions and comments. We look forward to hearing from you. Sincerely, ~~~~ BRANCH BANKING AND TRUST COMPANY Russell R. Akers, II Assistant Vice President Enclosure Prepared by: Christopher G. Kulp Hunton & Williams LLP Riverfront Plaza, East Tower 951 E. Byrd Street Richmond, Virginia 23219-4074 (804) 788-8742 Tax Parcel ID Number DEED AND AGREEMENT OF GROUND LEASE THIS DEED AND AGREEMENT OF GROUND LEASE dated as of July _, 2007 (this "Ground Lease"), by and between the CITY OF FAIRFAX, VIRGINIA, a municipal corporation within the Commonwealth of Virginia (the "City"), as lessor, and for indexing purposes, the grantor, and BRANCH BANKING AND TRUST COMPANY, a North Carolina banking institution, having a business location in Charlotte, North Carolina (the "Bank"), as lessee, and for indexing purposes, the grantee, provides: WITNESSETH: WHEREAS, the Bank desires to acquire a leasehold interest in certain land located in Fairfax County and the City of Fairfax, Virginia, as more fully described in Exhibit A hereto (such land and all improvements now or hereafter existing thereon, the "Property"), and to provide funds for the acquisition of the Property to be used for the construction of a street and economic development purposes (the "Project"); and WHEREAS, the City desires to lease the Property to the Bank, and the City will then sublease the Property from the Bank pursuant to a Financing Lease Agreement between the Bank and the City dated as of even date herewith (the "Lease Agreement"), the proceeds of which will finance the Project, and the Bank desires to enter into this Ground Lease with the City in order to accomplish the financing of the Project; NOW, THEREFORE, for and in consideration of the rents hereunder, the mutual covenants hereinafter contained, and other valuable consideration, the parties hereto covenant and agree as follows: Section 1. Lease of Property. The City hereby demises and leases to the Bank, and the Bank hereby leases from the City, the Property. The City hereby reserves for itself the right to grant such easements, licenses and to otherwise encumber the Property as is reasonably necessary in order to develop same in accordance with the Lease Agreement, but in all events subject to the terms of the Lease Agreement. Section 2. Term. The term of this Ground Lease shall commence on the date hereof, and shall expire on July 15, 2018, thereafter, unless such term is terminated earlier as hereinafter provided. Section 3. Rental. The Bank shall pay to the City, upon the execution hereof, as and for rental hereunder the sum of$10.00 upon the execution ofthis Ground Lease, receipt of which is hereby acknowledged, representing rental of the Property in advance for the term of this Ground Lease. Section 4. Purpose. The Bank shall use the Property solely for the purpose of leasing the Property back to the City pursuant to the Lease Agreement, as well as for such purposes as may be incidental thereto; provided, however, that if any default by the City (which is not cured within any applicable notice and cure period) or an event of non-appropriation by the City Council occurs under the Lease Agreement, then the Bank shall be entitled to use the Property for any use in accordance with all applicable laws for the remainder of the term hereof. If, and only if such event occurs, and the Bank has exercised its right to use the Property, then the Bank shall be responsible to maintain, insure, provide utilities to and pay taxes on any improvements to the Property constructed by the Bank in connection with any such use and development, if any. Insurance obtained by the Bank shall be in such reasonable amounts and have coverages as appropriate and customary for property similar to the Property, and shall name the City as an additional insured to the extent of its interests therein. Section 5. Title to Property. The City represents and warrants that it is the owner in fee simple of the Property as it exists on the date hereof. The Bank acknowledges and agrees that the City shall at all times retain fee simple title to the Property, and at no time shall fee simple title reside in the Bank. Other than the foregoing representation, the Bank acknowledges and agrees that the Property is leased to the Bank in its "AS IS, WHERE IS" condition and that the City has made no representation or warranty, express or implied, as to the Property, the quality, value, physical aspects or condition thereof, the suitability of the Property for any particular purpose, the presence of hazardous materials, or any other matter whatsoever. Section 6. Assignment and Sublease. The Bank may assign its rights under this Ground Lease or sublet the Property without the consent of the City only (a) in connection with an assignment of the Bank's rights permitted pursuant to Section 9.1 of the Lease Agreement, or (b) if the Lease Agreement is terminated by operation of the remedies provided in Sections 10.2 or 11.1 of the Lease Agreement. Section 7. Fees and Expenses. Other than those fees and expenses for which the Bank is responsible under Section 4 above, the City shall pay all reasonable expenses of the Bank arising out of the transactions contemplated by this Ground Lease and the Lease Agreement. Section 8. Termination. (a) Upon the payment of all outstanding Basic Rent and Additional Rent (each as defined and provided for in the Lease Agreement) or upon the expiration of the term hereof, the leasehold estate of the Bank hereunder shall automatically expire and terminate, without further action by the parties; provided, however, that the Bank agrees upon such termination to surrender the Property to the City subject to Section 4 above, and, upon the request of the City, to execute appropriate instruments evidencing such termination. (b) The City shall not have the right to exclude the Bank from the Property or take possession of the Property (other than pursuant to the Lease Agreement) or to terminate this Ground Lease prior to the expiration of its term upon any default by the Bank of its obligations hereunder. However, in the event of a default by the Bank hereunder, the City may maintain an action for specific performance. 2 Section 9. Quiet Enjoyment. Subject to the provisions of this Ground Lease, the Bank at all times during the term of this Ground Lease shall peaceably and quietly have, hold and enjoy the Property during the term hereof without hindrance from the City or any person claiming by or through the City. Section 10. Amendments to Release Property. In the event that the City elects to prepay (a) Basic Rent from the Net Proceeds (as defined in the Lease Agreement) received from (i) any insurance recovery obtained pursuant to Section 7.2 of the Lease Agreement, or (ii) any condemnation, eminent domain, or loss of title award obtained pursuant to Section 7.4 of the Lease Agreement, or (b) an amount up to 20% of the Principal Component (as defined in the Lease Agreement) pursuant to Section 5.5 of the Lease Agreement, Exhibit A hereto shall be amended to release from the terms of this Ground Lease a portion of the Property allocable to such prepayment. The Bank agrees to enter into such amendments as necessary to effectuate the purposes of this Section. Section 11. Notices. All notices to be given under this Ground Lease shall be in writing and shall be deemed to have been given when delivered in person or when mailed by first class registered or certified mail, postage prepaid, addressed (a) if to the City, at 10455 Armstrong Street, Fairfax, Virginia 22030 (Attention: City Manager), and (b) if to the Bank, at P. O. Box 31273, Charlotte, North Carolina 28231 (Attention: Account Administration/Municipal). The City and the Bank may, by notice given hereunder, designate any further or different addresses to which subsequent demands, notices, approvals, consents, requests, opinions or other communications shall be sent or persons to whose attention the same shall be directed. Section 12. Severability. If any provision of this Ground Lease shall be held invalid by any court of competent jurisdiction, such holding shall not invalidate any other provision hereof. Section 13. Successors and Assigns. This Ground Lease shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Section 14. Counterparts. This Ground Lease may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute but one and the same Ground Lease. Section 15. Governing Law. This Ground Lease shall be governed by the laws of the Commonwealth of Virginia. Section 16. No Merger. The reversionary and leasehold estates in and to the Property created by this Ground Lease shall not merge but shall always remain separate and distinct, notwithstanding the union of such estates by purchase or otherwise in the Bank, the City, any lessee or any third party, unless the person holding both of such estates shall expressly elect in writing for them to merge. Section 17. Entire Agreement; Amendment. This Ground Lease and any other agreements referred to herein contain the entire agreement between the parties regarding the subject matter hereof. No modification, waiver, amendment, discharge or change ofthis Ground 3 Lease shall be valid unless the same is in writing and signed by the party against which the enforcement is or may be sought. Section 18. Exculpation. The Bank shall look solely to the interest of the City in the Property for the satisfaction of any remedy it may have hereunder or in connection herewith and shall not look to any other person or assets of the City. Section 19. Construction. No provision of this Ground Lease shall be construed against or interpreted to the disadvantage of any party by any court or other governmental or judicial authority by reason of such party having or being deemed to have prepared or imposed such provision. IN WITNESS WHEREOF, the parties have caused this Ground Lease to be duly executed by their duly authorized representatives, all as of the date first above written. [Signatures Appear on Following Pages.] 4 CITY OF FAIRFAX, VIRGINIA By City Manager Approved as to form. Brian J. Lubkeman, City Attorney COMMONWEALTH OF VIRGINIA ) ) At Large, to-wit: ) The foregoing instrument was acknowledged before me in the City of Fairfax, Virginia, this _ day of , 2007, by Robert L. Sisson, City Manager of the City of Fairfax, Virginia. My commission expires: Notary Public 5 BRANCH BANKING AND TRUST COMPANY By Title ) ) ) The foregoing instrument was acknowledged before me in , this _ day of , 2007, by of Branch Banking and Trust Company, Charlotte, North Carolina. My commission expires: Notary Public 6 Exhibit A Property Description Parcel One: All that certain lot or parcel of land, lying and being in Fairfax County, Virginia, and more particularly described as follows: Beginning at a pipe at the original northeasterly comer of the entire Morarity tract, said pipe is also the southeasterly comer of the original School lot; thence with the easterly line of said Morarity, also the westerly line of the Barbour tract, (formerly Thomas) S. 50 06" 40" E. 419.09 feet to the original southeasterly comer of said Morarity; thence with the southerly line of Morarity also the northerly line of the Farr tract S. 850 01' W. 634.68 feet to a pipe; thence with a new division line through the Morarity tract N. 60 59' 40" W. 312.55 feet to a pipe; thence N. 840 58' 50" E. 198.03 feet to a pipe; thence N. 70 0" 40" W. 104.95 feet; thence with the northerly line of the Morarity tract N. 840 56' 20" E. 450.59 feet to the beginning, containing 5.681 Acres, more or less. Parcel Two: All that certain lot or parcel of land, lying and being in Fairfax County, Virginia, and more particularly described as follows: Beginning at a pipe of the northeasterly comer of the lot now in the name of Virginia Williams, et als, said pipe is the northwesterly comer of the property recently acquired from the former Morarity tract; thence with the easterly line of the Williams et als tract S. 70 00' 40" E. 104.95 feet to a pin; thence with the southerly line of said lot S. 840 58' 50" W. 198.03 feet to a pipe; thence with a new division line through the lot N. 60 59' 40" W. 104.82 feet to a pin on the original northerly line of the lot; thence with said line N. 400 56' 20" E. 198.00 feet to the beginning, containing 0.476 acres, more or less. Parcel Three: All that certain lot or parcel of land, lying and being in the City of Fairfax, Virginia, and more particularly described as follows: Beginning at a pipe, a comer common to Morarity, Newton and the present school lot, thence with the school lot N. 860 33' E. 246.2 ft., to a pipe, another comer to the school lot in the line of Chambers, thence, with the line of Chambers and the same course continued with Barbour S 30 24' E, 180.5 ft., to a stake, a comer to Morarity, thence with the line of Morarity S. 860 33' W., 237 ft., to a stake; thence with another lane of Morarity, N 60 18' W., 160.4 ft., to the beginning, containing one acre, more or less. A-I 37832.000009 RICHMOND 2058391v3