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20040525 r-04-30RESOLUTION R-04-30 RESOLUTION TO APPROVE THE DETAILS OF LEASE FINANCING FOR OPEN SPACE, PARKS, RECREATION AND HISTORIC pRESERVATION PURPOSES AND TO AUTHORIZE THE EXECUTION AND DELIVERY OF RELATED DOCUMENTS WHEREAS, the City of Fairfax, Virginia (the "City"), desires to finance the acquisition, construction, renovation, improvement and equipping, as applicable, of one or more of the following projects: (a) the properties located at (i) 10735 West Drive (referred to as the Jester Property), (ii) 10090 - 10120 Lee Highway (referred to as the Stafford Property), (iii) 9910 Barbara Anne Lane, 9990 Mosby Road, and 4143 Evergreen Drive (collectively, referred to as the Grefe Property), (iv) 9817 Ashby Road (referred to as the Ashby Road Property), (v) 10421-25 North Street (referred to as the Weight Watchers Property), and (vi) 10610 Moore Street (referred to as the Ratcliffe Cemetery), all located within the City limits, for the purposes of open space preservation, parks and recreation, and (b) the property located at 3610 Old Lee Highway (referred to as the Blenheim Property), located within the City limits, for the purposes of historic preservation and a new museum (collectively, such real property to be referred to herein as the "Property" and such projects to be referred to herein as the "Projects"); WHEREAS, the City Council (the "Council") has received bids pursuant to advertisement in the manner prescribed by law, from bidders to act as financing lessee under one or more ground leases and to act as financing lessor ("Financing Lessor") under one or more financing lease agreements; and WHEREAS, there have been presented at this meeting (a) a draft Ground Lease (the "Ground Lease") pursuant to which the City will convey to the Financing Lessor a leasehold interest in the Property and (b) a draft Financing Lease Agreement (the "Lease Agreement") pursuant to which the Financing Lessor will lease the Projects back to the City, both of which the Council proposes to execute or approve to carry out the purposes of the Projects 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 by the City of the Projects fi.om the Financing Lessor pursuant to the terms of the Lease Agreement provided that: (a) the aggregate total of principal components of basic rent (the "Basic Rent") payable under the Lease Agreement shall not exceed $15,000,000, (b) the term of the Lease Agreement shall not exceed ten (10) years from the date of the final Schedule of Advances under the Lease Agreement, (c) the interest component of Basic Rent payable under the Lease Agreement shall have an initial interest coupon rate not to exceed 5.0% per year (exclusive of any interest penalties and subject to adjustment as provided in the bid of the Financing Lessor), and (d) payments of Basic Rent (constituting both principal and interest components) shall be payable in the amounts and on the dates as shall be determined by the City Manager. 2. The Mayor, Vice-Mayor and the City Manager, any of whom may act, are authorized and directed to execute the Ground Lease and the Lease Agreement, the forms of which submitted to this meeting are hereby approved, with such completions, omissions, insertions and changes not inconsistent with this Resolution as may be approved by the officer executing the Ground Lease and the Lease Agreement, such execution to constitute conclusive evidence of his approval of any such completions, omissions, insertions and changes. 3. Such officers of the City as requested by the City Manager are authorized and directed to execute and deliver all certificates and instruments and to take all actions 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 obligations of 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 of the 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 Financing Lessor 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. (a) The City covenants that it will not take or omit to take any action the taking or omission of which will cause the Basic Rent payments due under the Lease Agreement to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and regulations issued pursuant thereto (the "Code"), or otherwise cause the interest components of the Basic Rent due under the Lease Agreement to be includable in the gross income of the holder thereof under existing 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 tax-exempt portion of the funds received under the Lease Agreement, unless the City receives an opinion of nationally recognized bond counsel that such compliance is not required to prevent the interest components of Basic Rent due under the Lease Agreement from being includable in the gross income for federal income tax purposes of the holder thereof under existing law. (b) The City covenants that it shall not permit the proceeds derived from the Lease Agreement to be used in any manner that would result in (a) 10% or more of such proceeds or the facilities financed with such proceeds being used in a trade or business carded on by any person other than a governmental unit, as provided in Section 141(b) of the Code, provided that no more than 5% of such proceeds may be used in a trade or business unrelated to the City's use of the Projects, (b) 5% or more of such proceeds being used with respect to any "output facility" (other than a facility for the furnishing of water), within the meaning of Section 141(b)(4) of the Code, or (c) 5% or more of such proceeds being used directly or indirectly to make or finance loans to any persons other than a governmental unit, as provided in Section 141(c) of the Code; provided, however, that if the City receives an opinion of nationally recognized bond counsel that any such covenants need not be complied with to prevent the interest components of the Basic Rent from being includable in the gross income for Federal income tax purposes of the holder thereof under existing law, the City need not comply with such covenants. 7. Such officers of the City as may be requested are authorized and directed to execute an appropriate certificate setting forth the expected use and investment of the funds received under the Lease Agreement, and 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 and elections shall be in such form as may be requested by bond counsel for the City. 8. 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. 9. All other acts of the officers of the City that are in conformity with the )urposes and intent of this Resolution and in furtherance of this financing and the undertaking of the Projects are approved and ratified. 10. This Resolution shall take effect immediately. Adopted: May 25, 2004 Vote J. Cross Aye J. Greenfield Absent G. Lyon Aye G. Rasmussen Aye S. Silverthome Aye P. Winter Aye t ;'7, ;.ooq DATE The undersigned Clerk of the City of Fairfax, Virginia, certifies that the foregoing constitutes a true and correct extract from the minutes of a regular meeting of the Council held on the 25th day of May, 2004, and of the whole thereof so far as applicable to the matters referred to in such extract. WITNESS my signature and the seal of the City of Fairfax, Virginia, this r/T? th day of /~,2004. ($EAI,) Oity Clerk, City of Fairfax, Vfi-ginia