R-12-17 RESOLUTION NO. R-12-17
RESOLUTION TO APPROVE THE DETAILS OF A LEASE
FINANCING FOR THE COSTS ASSOCIATED WITH THE
ACQUISITION OF CERTAIN REAL ESTATE USED FOR
CONSTRUCTION OF A STREET AND FOR ECONOMIC
DEVELOPMENT PURPOSES AND TO AUTHORIZE THE
EXECUTION AND DELIVERY OF RELATED DOCUMENTS
WHEREAS, the City of Fairfax, Virginia (the "City"), desires to effect the
refinancing of costs to acquire certain real property (including the improvements located
thereon) known as the Eleven Oaks Property (the "Property") that has been used for street and
economic development purposes (the "Eleven Oaks Project") and to effect the financing of
costs to acquire and improve a parcel near the Property to be used by the City and Fairfax
County Public Schools as a school bus parking lot (the "School Bus Parking Lot Project,"
and,together with the Eleven Oaks Project,the "Project");
WHEREAS, the City Council (the "Council") has received a bid from Branch
Banking & Trust Company (the "Bank") pursuant to advertisement in the manner prescribed
by law, from bidders to act as financing n nanc neleaseunder
agreementmore attached hereto as Exhibit A
financing lessor under one or m g
(the"Proposal"); and
WHEREAS, the Bank desires to acquire a leasehold interest in the Property, to serve
as collateral for the provision of funds to finance and refinance the Project; and
WHEREAS, there have been circulated to members of Council (a) a draft Deed and
Agreement of Ground Lease (the "Ground Lease") pursuant to which the City will convey to
the Bank a leasehold interest in the Property, and (b) a draft Deed and Agreement of
Financing Lease between the Bank and the City (the "Lease Agreement") pursuant to which
the Bank will sub-lease the Property back to the City, both of which instruments the City
proposes to execute or approve to carry out the purposes of the Project and copies of which
shall be filed with the records of the Council;
NOW, THEREFORE, BE IT RESOLVED BY CITY COUNCIL OF THE CITY
OF FAIRFAX,VIRGINIA:
1. The Council approves the lease easetA Agreement.the Property from the
The Lease Agreement Bha 1
pursuant to the terms of the Proposal and g
initially provide that the total of principal components of basic rent (the "Basic Rent")
payable under the Lease Agreement shall
finance ve Oaks Project (th
exceed
the E$en , se" 2012A
approximately $4,400,000 principal portion to re
Financing") and (b) approximately $3,900,000 principal portion to finance the School Bus
Parking Lot Project (the "2012B Financing"). The final principal portions of the 2012A
Financing and the 2012B Financing shall be determined by the City Manager, subject to the
maximum aggregate amount of$8,200,000. The term of the Lease Agreement shall terminate
no later than December 31, 2015. The interest component of Basic Rent payable under the
Lease Agreement attributable to (a) the 2012A Financing shall have an interest rate of 2.30%
per year and (b) the 2012B Financing shall have an interest rate of 1.67% per year, both
calculated on the basis of a 360-day year each January 30-day
July 15, cometencnng January
Rent shall be payable semi-annually on
15, 2013, in the years and amounts determined by the City Manager.
2. The Mayor and the City Manager, either of whom may act, are authorized and
directed to execute the Ground Lease and the Lease
such completions,rteomissions,vmsertions land
to this meeting are hereby approved,
changes not inconsistent with this Resolution as may be approved by the City Attorney and
the officer executing the Ground Lease approval and
such Agreement,
onssuomissionsloinsertions constitute ad
conclusive evidence of their appro any
changes.
3. Such officers of the City c rtifi certificates requested ndyinstrumentsaandeto take all actions
necessary directed to execute and deliver all
necessary or desirable in connection with the execution and delivery of the Ground Lease and
the Lease Agreement and the completion of the financing, including without 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 h City
credit or taxing power of the City.stitutional or
statutory limitation or a pledge of the faith
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. The City covenants that it shall not take or omit to take any action the taking or
omission of which shall cause the portion of the principal components of rental payments
under the Lease Agreement allocable to the 2012B Financing to be "arbitrage bonds"within
the meaning of Section 148 of the Internal Revenue Code of 1986, as amended(the "Code"),
and regulations thereunder, or otherwise cause interest on such principal components to be
includable in the gross income for Federal income tax purposes of the registered owners
thereof under existing law. Without limiting the generality of the foregoing,the City shall
comply with any provision of law that may require the City at any time to rebate to the United
States of America any part of the earnings derived from the investment of the gross proceeds
of the Lease Agreement attributable to required Bed to be rebated to the United States of Financing.
legally available general funds any am ount q
America pursuant to the Code.
7. Any authorization herein to record such document where appropriaterization to
deliver it to the other parties thereto and to
8. 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
of the Project are approved and ratified.
9. This Resolution shall take effect immediately.
Mayor
ATTEST:
City Clerk
The vote on the motion to approve was recorded as follows:
VOTE:
Councilman Drummond Aye
Councilman Greenfield Aye
Councilman Meyer Aye
Councilmember Schmidt Aye
Councilman Silverthorne Aye
Councilman Stombres Aye