R-07-34
RESOLUTION NO. R-07-34
RESOLUTION TO APPROVE THE DETAILS OF LEASE
FINANCING FOR THE ACQUISITION OF CERTAIN
REAL EST ATE TO HE USED FOR CONSTRUCTION OF
A STREET AND FOR ECONOJVI:IC DEVELOPJVl:ENT
PURPOSES AND TO AUTHORIZE THE EX:ECUTION
AND DELIVERY OF RELATED DOCUJVl:ENTS
VVHEREAS, the City of Fairfax. Virginia (the "City"). desires to finance the
acquisition of certain real property (including the improvements thereon) knovvn as the Eleven
Oaks Property (the "Property"') to be used for construction of a street a.n.d for economic
development purposes (collectively, the '''ProjectH);
'VVHEREAS, the City Conneil (the '''Counei!''''') has received a bid from Branch
Ba.nking and Trust Compnny (the "'Ba..n.kH) pursuant to advertisement in the mann.er prescribed
by la"VV, from bidders to act as financing lessee under one or more ground leases and to act as
financing lessor under one or more fiunncing lease agreements, attached hereto as Exhibit A
(the "Proposal'"); and
""VVI-IEREAS, the Bank desires to acquire a leasehold interest in certain land located in
the City (such land and all improvements noV\l' or hereafter exis~ing thereon,. the ....Property"").,
to serve as collateral for the provision of funds for the Project; and
VVHEREAS, the City desires to lease the Property to the Ba=k:. and the City vvill then
sublease the Property from the Ba.nk pursuant to a Deed and Agreement of Financing Lease
betvveen the Ba=k: and the City dated as of even date herevvith (the "Lease ~greement"), the
proceeds ofV\l'hich vvill fund the costs of the Project;
VVHEREAS., there have been presented at this meeting (a) a draft Deed and
Agreement of Ground Lease (the ....Ground LeaseH) pursua..n.~ to V\Thich the Ci~y '-'ViII convey to
the Ba.n.k a leasehold interest in the Property and (b) a draft Lease Agreement pursuarlt to
vvhich the Bank vvill lease ~he Property back to the City, both of vvhich the Conncil proposes
to execute or approve to carry out the purposes of the Project a.n..d copies of vvhich shall be
filed vv-i1:h 1:he records of 1:he Council;
NOVV, THEREFORE, HE IT RESOLVED HY CITY COUNCIL OF THE CITY
OF FAIRFAx:, VIRGINIA:
I. The Council approves the lease by the City of the Property from the Ba=k:
pursuan1: to 1:he 1:erms of 1:he Proposal and 1:he Lease Agreemen1:. The Lease Agreement shall
ini1:ially provide tha1: 1:he 1:otal of principal compouen1:s of basic ren1: (1:he ....Basic Rent"")
payable under 1:he Lease Agreemen1: shall not exceed $4,210",000. The 1:erm of 1:he Lease
Agreement shall terminate no la1:er than December 31, 2014. The interest component of Basic
Rent payable under the Lease Agreement shall have an interest rate of 6.87% per year"
calculated on ~he basis of a 360-day year of tvvelve 30-day months. The payrn.cnts of Basic
Rent shall be payable semi-annually on each Ja.n.uary 15" and July 15,. commencing Ja.n.uary
15,. 2008,. in the years and amounts determined by the City I\t:lanager.
2. The l"V1:ayor and the City l\Ilanager, ei~her of vvhom may act,. are authorized and
directed to execute the Ground Lease and the Lease Agreement,. the forms of vvhich submitted
to this meeting are hereby approved, vvith such completions, omissions,. insertions and
changes not inconsistent V\l"ith this R.esolution as may be approved by the City Attomey a.n.d
the officer executing the Ground Lease and the Lease Agreement:,. such execution to constitute
conclusive evidence of their approval of any such completions, omissions" insertions and
changes.
3. Such officers of the City as requested by the City lV1anager are authorized a.n.d
directed to execute and deliver all certificates and instruments and to take all actions
necessary or desirable in connection vvi"'th the execution and delivery of the Ground Lease and
the Lease Agreement and the completion of the financing, including vvithout limitation, the
granting of a leasehold deed of trust on any or all of the Property as further security for the
financing.
4. The undertakings by the City under the Lease Agreement shall be limited
obligations payable solely from funds to be appropriated by the Council for such purpose and
shall not constitute a debt of the City within the meaning of any constitutional or statutory
limitation or a pledge of the faith and credit of the City beyond any fiscal year for which the
Council has lawfully appropriated from time to time. Nothing herein or in the Lease
Agreement shall constitute a debt of the City within the meaning of any constitutional or
statutory limitation or a pledge of the faith and credit or taxing power ofthe City.
5. The Council believes that funds sufficient to make payment of all amounts
payable under the Lease Agreement can be obtained. While recognizing that it is not
empowered to make any binding commitment to make such payments beyond the current
fiscal year, the Council hereby states its intent to make annual appropriations for future fiscal
years in amounts sufficient to make all such payments and hereby recommends that future
Councils do likewise during the term of the Lease Agreement. The Council directs the City's
Director of Finance, or such other officer who may be charged with the responsibility for
preparing the City's annual budget, to include in the budget request for each fiscal year during
the term of the Lease Agreement an amount sufficient to pay all amounts expected to come
due under the Lease Agreement during such fiscal year. As soon as practicable after the
adoption of the City's annual budget, the City Manager is authorized and directed to deliver to
the Bank evidence indicating whether the annual budget contains an appropriation sufficient
to pay all amounts expected to come due under the Lease Agreement for such fiscal year. If
at any time during a particular fiscal year of the City, through the fiscal year in which the last
payment of Basic Rent will be due, the amount appropriated in the City's annual budget for
such fiscal year is insufficient to pay when due the amounts then payable under the Lease
Agreement, the Council directs the City's Director of Finance, or such other officer who may
be charged with the responsibility for preparing the City's annual budget, to submit to the
Council at the next scheduled meeting, or as promptly as practicable but in any event within
45 days, a request for a supplemental appropriation sufficient to cover the deficit.
6. Any authorization herein to execute a document shall include authorization to
deliver it to the other parties thereto and to record such document where appropriate.
7. All other acts of the officers of the City that are in conformity with the
purposes and intent of this Resolution and in furtherance of this financing and the undertaking
ofthe Project are approved and ratified.
8. This Resolution shall take effect immediately.
Adopted this 10" day of July 2(~~~
' ayor
--............
ATTEST:
~J
The vote on the motion to approve was recorded as follows:
VOTE:
Councilwoman Cross Aye
Councilman Greenfield Aye
Councilwoman Lyon Aye
Councilman Rasmussen Aye
Councilman Silverthorne Aye
Councilmember Winter Aye
BB&cT
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").
Project:
Purchase of Eleven Oaks Property
(1)
(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 of the
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,
~~c:Jk..%
BRANCH BANKING AND TRUST COMPANY
Russell R. Akers, II
Assistant Vice President
Enclosure