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R-16-18RESOLUTION NO. R-16-18 RESOLUTION AUTHORIZING THE CITY OF FAIRFAX, VIRGINIA, TO ENTER INTO A LEASE/PURCHASE FINANCING FOR MOTOR VEHICLES IN THE MAXIMUM PRINCIPAL AMOUNT OF $960,000, APPROVING THE FORM OF A LEASE/PURCHASE AGREEMENT PREPARED IN CONNECTION THEREWITH AND AUTHORIZING THE EXECUTION AND DELIVERY OF THE SAME WHEREAS, the Council (the "Council") of the City of Fairfax, Virginia (the "City"), desires to undertake the lease/purchase financing of motor vehicles (collectively, the "Equipment") for use by the City and its various departments; WHEREAS, the City's administration, in collaboration with Davenport & Company LLC, the City's financial advisor (the "Financial Advisor"), has solicited bids from commercial banks and leasing entities to provide for the City to undertake a lease/purchase financing of the Equipment in the maximum principal amount of $960,000, and 16 bids have been received; WHEREAS, the Council has reviewed the bids received and has determined to proceed with the lease/purchase financing through U.S. Bancorp Government Leasing and Finance, Inc. (the "Lessor"); and WHEREAS, the City and the Lessor have previously entered into a Master Tax - Exempt Lease/Purchase Agreement dated December 14, 2012 (the "Master Lease Agreement"), pursuant to which the City and the Lessor will execute a Property Schedule (as defined in the Master Lease Agreement and, together with the Master Lease Agreement, the "Lease Agreement") to provide for the lease/purchase of the Equipment; NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FAIRFAX, VIRGINIA, THIS 28th DAY OF JUNE, 2016, THAT: The Council has determined that it is in the best interests of the City and the taxpayers to proceed with the lease/purchase financing of the Equipment through the Lessor and hereby authorizes the acquisition of the Equipment through the execution of a Property Schedule with the Lessor in accordance with the terms of the Master Lease Agreement, the bid of the Lessor dated June 14, 2016 (attached hereto as Exhibit A), and this Resolution. The City Manager (such term to include any Deputy City Manager) is authorized to negotiate with the Lessor and to accept such final pricing terms as the City Manager shall determine to be in the best interests of the City; provided however, that (a) the aggregate amount of principal components of basic rent (the "Basic Rent") payable under the Lease Agreement shall not exceed $960,000, (b) the Lease Agreement shall terminate not later than December 31, 2020, and (c) the interest components of Basic Rent payable under the Lease Agreement shall bear interest at an annual rate not to exceed 1.365% (exclusive of any interest penalties and subject to adjustment as set forth in the Lease Agreement). The City Manager is further authorized to determine the payment dates and installment amounts of Basic Rent (comprising both principal and interest components) due under the Lease Agreement and the provisions (including any make -whole prepayment price) relating to any prepayment of such Basic Rent. The City Manager is authorized to execute a Property Schedule with the Lessor in accordance with the terms of the Master Lease Agreement and this Resolution. The execution by the City Manager of such Property Schedule and the delivery thereof to the Lessor shall constitute conclusive evidence of the City Manager's approval thereof. The officers of the City are authorized and directed to execute and deliver all certificates and instruments, including a project escrow agreement or an amendment to any existing project escrow agreement between the City and the Lessor, and to take all actions necessary or desirable in connection with the execution and delivery of such Property Schedule. The City is authorized to grant a security interest in the Equipment acquired with proceeds of the Lease Agreement as security for the prompt payment when due of amounts payable and the performance by the City of its other obligations under the Lease Agreement. The Council determines that the acquisition and continuing use of the Equipment and the financing of the same through the Lease Agreement are necessary and proper to the efficient operation of the City and will continue to be necessary and proper to efficient operation of the City through the fiscal year ending June 30, 2021. The undertaking by the City to make payments under the Lease Agreement shall be a limited obligation payable solely from funds to be appropriated from time to time 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 or the taxing power of the City beyond any fiscal year for which the City has appropriated funds for such purpose. The City 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 Manager, or such other officer as may be charged with the responsibility for preparing the City's annual budget, to include in the budget for each fiscal year during the term of the Lease Agreement an amount sufficient to make all rental payments payable under the Lease Agreement during such fiscal year. The City covenants that it will not take or omit to take any action the taking or omission of which will cause the Lease Agreement to be an "arbitrage bond" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations issued pursuant thereto, or otherwise cause interest on the proceeds under the Lease Agreement to be includable in the gross income of the Lessor, and its successors and assigns, under current 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 any part of the earnings derived from the investment of the gross proceeds under the Lease Agreement, unless the City receives an opinion of nationally recognized bond counsel that such compliance is not required to prevent interest on the proceeds under the Lease Agreement from being includable in the gross income for federal income tax purposes of the Lessor, and its successors and assigns, under existing law. Such officers of the City as may be requested by bond counsel to the City are authorized and directed to execute an appropriate certificate setting forth (a) the expected use and investment of the funds received under the Lease Agreement to show that such expected use and investment will not violate the provisions of Section 148 of the Code and (b) any elections such officers deem desirable regarding rebate of earnings to the United States for purposes of complying with Section 148 of the Code. Such certificate shall be prepared in consultation with bond counsel for the City, and such elections shall be made after consultation with bond counsel. The City covenants that during the term of the Lease Agreement it will not use or permit the use of any portion of the Equipment other than for the purpose of performing one or more governmental or proprietary functions of the City consistent with the scope of the City's authority and will not use or permit the use of any portion of the Equipment in a trade or business of any person or entity other than the City. The City designates the obligations under the Lease Agreement as "qualified tax- exempt obligations" for the purpose of Section 265(b)(3) of the Code. The City represents and covenants as follows: The City will in no event designate more than $10,000,000 of obligations, including the obligations under the Lease Agreement, as qualified tax-exempt obligations in calendar year 2016 for the purpose of such Section 265(b)(3); The City, all its "subordinate entities," within the meaning of such Section 265(b)(3), and all entities that issue tax-exempt obligations on behalf of the City and its subordinate entities have not issued, when aggregated with the obligations under the Lease Agreement, more than $10,000,000 of tax-exempt obligations in calendar year 2016 (excluding for this purpose "private activity bonds," within the meaning of Section 141 of the Code, other than "qualified 501(c)(3) bonds," within the meaning of Section 145 of the Code); Barring circumstances unforeseen as of the date of delivery of the Lease Agreement, the City will not issue tax-exempt obligations itself or approve the issuance of tax-exempt obligations of any of such other entities if the issuance of such tax-exempt obligations would, when aggregated with the obligations under the Lease Agreement and all other tax-exempt obligations theretofore issued by the City and such other entities in calendar year 2016, result in the City and such other entities having issued a total of more than $10,000,000 of tax-exempt obligations in calendar year 2016 (excluding for this purpose private activity bonds other than qualified 501(c)(3) bonds); and The City has no reason to believe that the City and such other entities will issue tax-exempt obligations in calendar year 2016 in an aggregate amount that will exceed such $10,000,000 limit. Should the City receive an opinion of nationally recognized bond counsel that compliance with one or more of the covenants set forth in (a) and (c) above is not required for the obligations under the Lease Agreement to be qualified tax-exempt obligations, the City need not comply with such covenant(s). All other actions of the City in conformity with the purposes and intent of this Resolution and in furtherance of entering into the Lease Agreement are approved and confirmed. All resolutions or parts of resolutions in conflict herewith are repealed. This Resolution shall take effect immediately. Adopted: June 28, 2016 Mayor ATTEST: City Clerk The vote on the motion to approve was recorded as follows: VOTE: Mayor Silverthorne Aye Councilman DeMarco Aye Councilman Greenfield Aye Councilmember Loftus Absent Councilman Meyer Aye Councilmember Miller Aye Councilmember Schmidt Aye 37832.000039 EMF_US 60790209v4