R-18-48RESOLUTION NO. R-1848
RESOLUTION AUTHORIZING THE CITY OF FAIRFAX,
VIRGINIA, TO UNDERTAKE A LEASE/PURCHASE
FINANCING IN THE MAXIMUM PRINCIPAL AMOUNT
OF $1,000,000, AND AUTHORIZING THE CITY
MANAGER TO EXECUTE AND DELIVER THE
RELATED LEASE DOCUMENTS
WHEREAS, the Council (the "Council") of the City of Fairfax, Virginia (the "City"),
desires to finance, in whole or in part, the costs to acquire, equip and install (a) rolling stock
and other equipment for use by various City departments (the "Equipment") and (b) new turf
fields at Draper Drive Park (collectively, the "Project");
WHEREAS, the City's administration, in collaboration with Davenport & Company
LLC, the City's financial advisor (the "Financial Advisor"), has solicited proposals from
commercial banks, financial institutions and leasing entities to provide for the City to undertake
a lease/purchase financing in the maximum principal amount of $1,000,000 to pay costs of the
Project and related financing costs;
WHEREAS, plans for the Project have advanced, and the City expects to advance its
own funds to pay expenditures related to the Project (the "Expenditures") prior to undertaking
such lease/purchase financing and to receive reimbursement for such Expenditures from
proceeds of such financing;
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY
OF FAIRFAX, VIRGINIA, THIS 11tb DAY OF DECEMBER, 2018, THAT:
1. The Council hereby determines that it is in the best interests of the City and its
citizens to undertake the Project and to finance the same through a lease/purchase financing
with one of the commercial banks, financial institutions or leasing companies submitting bids.
2. The City Manager (such tern to include any Assistant City Manager) is
authorized to determine, in consultation with the Financial Advisor, which bid offers the most
favorable terns to the City and to negotiate with the entity offering such bid (the "Lessor") the
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 (as hereinafter defined) shall not exceed
$1,000,000, (b) the Lease Agreement shall terminate not later than December 31, 2026, (c) the
principal components of Basic Rent payable under the Lease Agreement shall bear interest at
an annual rate not to exceed 3.20% (exclusive of any interest penalties or rate reset), and (d) the
prepayment premium, if any, shall not exceed 3.00% of the principal amount to be prepaid. 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 relating to any prepayment of such Basic Rent (including any make -whole
prepayment price).
3. The City Manager is authorized to execute a lease/purchase financing agreement
and related documents containing such terms and conditions as are in conformance with the
parameters set forth in Section 2 and are otherwise approved by the City Manager, in
consultation with the Financial Advisor and the City Attorney. In the alternative, the City
Manager is authorized in his discretion to execute an additional schedule (the "Schedule") to
evidence the lease/purchase financing should the City Manager select as the Lessor an entity
with which the City has already entered into a master lease agreement. The lease/purchase
financing agreement and related documents or, as the case may be, any Schedule entered into
pursuant to the terms of an existing master lease agreement shall collectively be referred to in
this Resolution as the "Lease Agreement". The execution by the City Manager of the Lease
Agreement and the delivery to the Lessor shall constitute conclusive evidence of the City
Manager's approval of the final form of such Lease Agreement and any related completions,
omissions, insertions, and changes. The officers of the City are authorized and directed to
execute and deliver all certificates and instruments, including a project escrow agreement, and
to take all actions necessary or desirable in connection with the execution and delivery of the
Lease Agreement.
4. The undertaking by the City to make payments under the Lease Agreement shall
be a limited obligation 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 or the taxing power of the City beyond
any fiscal year for which the City has appropriated funds for such purpose.
5. The Council hereby 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 the
efficient operation of the City through the term of the Lease Agreement.
6. 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 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 payments of Basic Rent due under the Lease Agreement during
such fiscal year.
7. 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 the interest components of Basic Rent
to be includable in the gross income of the registered owner thereof under current statutes.
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 registered owner thereof under existing
law.
8. Such officers of the City as may be requested by the City's special tax counsel
are authorized and directed to execute an appropriate certificate setting forth (a) the expected
use and investment of the proceeds 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
the City's special tax counsel, and such elections shall be made after consultation with such
special tax counsel.
9. The City is authorized to grant a security interest in some or all of the Equipment
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.
10. The City Manager is authorized to determine whether the obligations under the
Lease Agreement shall be designated as "qualified tax-exempt obligations" for the purpose of
Section 265(b)(3) of the Code. If the City Manager determines that it is in the best of the City
to make such designation, the Council acknowledges that the City will be required to make the
following covenants:
a. 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 2018 for the purpose of such Section 265(b)(3);
b. 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
2018 (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);
C. 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 2018, 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 2018
(excluding for this purpose private activity bonds other than qualified 501(c)(3) bonds);
and
d. The City has no reason to believe that the City and such other entities
will issue tax-exempt obligations in calendar year 2018 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).
11. The Council intends that the adoption of this Resolution confirms the "official
intent" of the City within the meaning of Treasury Regulations Section 1.150-2 promulgated
under the Code.
12. 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.
13. All resolutions or parts of resolutions in conflict herewith are repealed.
14. This Resolution shall take effect immediately.
Adopted this 11 day of December, 2018.
Ijs"4,v
Mayor
Attest:
The vote on the motion to approve was recorded as follows:
VOTE:
Councilmember DeMarco
Aye
Councilmember Lim
Aye
Councilmember Miller
Aye
Councilmember Passey
Aye
Councilmember Stehle
Aye
Councilmember Yi
Aye