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R-17-07RESOLUTION NO. R-17-07 RESOLUTION APPROVING A PLAN OF LEASE REFINANCING WITH THE CITY OF FAIRFAX ECONOMIC DEVELOPMENT AUTHORITY, APPROVING THE FORM OF CERTAIN DOCUMENTS PREPARED IN CONNECTION THEREWITH, AUTHORIZING THE EXECUTION AND DELIVERY OF THE SAME AND PROVIDING FOR THE EARLY REDEMPTION OF THE CITY'S PUBLIC IMPROVEMENT REFUNDING CERTIFICATES OF PARTICIPATION, SERIES 2011B, AND PUBLIC IMPROVEMENT REFUNDING CERTIFICATES OF PARTICIPATION, SERIES 2011C WHEREAS, the City of Fairfax, Virginia (the "City"), previously issued its Public Improvement Refunding Certificates of Participation, Series 2011 B, and Public Improvement Refunding Certificates of Participation, Series 2011 C (collectively, the "2011 COPS"), and used the proceeds to refinance costs incurred by the City to acquire, construct, renovate, improve and equip certain properties for open space, parks, recreation and historic preservation purposes (collectively, the "Open Space Projects"); WHEREAS, the City of Fairfax Economic Development Authority (the "Authority") was created under and is authorized to exercise all the powers set forth in the Industrial Development and Revenue Bond Act, Title 15.2, Chapter 49, Code of Virginia, as amended (the "Act"), which include, among other things, the powers (a) to make loans to, among others, a city in furtherance of the Act, (b) to finance or refinance facilities and lease facilities for use by, among others, a city, (c) to issue its revenue bonds, notes and other obligations from time to time for such purposes and (d) to pledge all or any part of its revenues and receipts derived from payments received by the Authority in connection with its loans or from the leasing by the Authority of such facilities or from any source, as security for the payment of principal of and interest on any such obligations; WHEREAS, the City Council of the City (the "Council") hereby determines that it is in the best interests of the City and its residents to undertake another refinancing of the Open Space Projects for debt service savings purposes and to effect the early redemption of the 2011 COPs through a lease arrangement with the Authority, pursuant to which the City will lease certain real property and the improvements thereon (as more specifically described in the hereinafter defined Prime Lease, the "Property") to the Authority, which will lease the Property back to the City pursuant to the terms of the Lease Agreement (as hereinafter defined); WHEREAS, the City has requested that the Authority (a) issue a lease revenue refunding bond (the "Bond") pursuant to the terms of the Lease Agreement, (b) loan the proceeds of the Bond to the City pursuant to the terms of the Lease Agreement to effect the early redemption of the 2011 COPs and to pay the related costs of issuance and redemption, and (c) secure the repayment of the Bond by a lease of the Property to the City pursuant to the terms of the Prime Lease and the Lease Agreement; WHEREAS, the City has requested Davenport & Company LLC, as the City's financial advisor (the "Financial Advisor"), to solicit bids from banking and other financial institutions to make a loan to the Authority as evidenced by the purchase of the Bond; and WHEREAS, there have been presented to this meeting drafts of the following documents (collectively, the "Documents") that the City proposes to execute in support of the transactions described above, copies of which shall be filed with the records of the Council: (a) A Prime Lease (the "Prime Lease"), between the Authority and the City, pursuant to which the City will lease the Property to the Authority; and (b) A Bond Purchase and Lease Agreement (the "Lease Agreement"), between the Authority, the City and the Bondholder (as hereinafter defined), pursuant to which (i) the Authority will issue the Bond, (ii) the Bondholder will agree to make a loan to the Authority evidenced by its purchase of the Bond, (iii) the Authority will provide the proceeds of the Bond to the City to effect the early redemption of the 2011 COPs and (iv) the Authority will lease the Property to the City; NOW, THEREFORE, BE IT RESOLVED BY COUNCIL OF THE CITY OF FAIRFAX, VIRGINIA: 1. The following plan of lease refinancing is hereby approved: (a) the Authority shall issue the Bond in a principal amount not to exceed $9,900,000, (b) the City will lease the Property to the Authority pursuant to the terms of the Prime Lease, with an expiration not later than June 30, 2032, and (c) the Authority will lease the Property back to the City pursuant to the terms of the Lease Agreement, with an expiration not later than June 30, 2027. The City will undertake to make payments to the Authority of basic rent ("Basic Rent") and additional rent ("Additional Rent") under the terms of the Lease Agreement in amounts sufficient to pay when due the principal of, and premium (if any) and interest on the Bond and to pay the fees and expenses of the Authority. The obligation of the Authority to pay principal of and premium (if any) and interest on the Bond will be limited to the payments of Basic Rent and Additional Rent received from the City. The undertaking by the City to make payments of Basic Rent and Additional Rent will be subject to appropriations from time to time by the Council of sufficient amounts for such purposes. Upon an event of default or an event of non -appropriation by the Council under the Lease Agreement, the Authority shall have the right to exercise any remedies provided in the Lease Agreement, including the right to terminate the Lease Agreement and exclude the City from possession of the Property for the remainder of the term of the Prime Lease. The Bond will be secured in part by an assignment to the Bondholder of the Authority's rights to receive payments of Basic Rent. This plan of lease refinancing shall contain such additional requirements and provisions as the City Manager (which term for purposes of this Resolution includes the Assistant City Manager/Director of Finance) may approve and determine to be in the best interests of the City. 2. Subject to the pricing parameters of the Bond described below, the Council hereby authorizes the City Manager, in consultation with the Financial Advisor and the Chair or Vice Chair of the Authority, to review the bids received and to select the bid that the City Manager determines to be in the best interests of the City. The banking or other financial institution submitting such winning bid shall be selected as the bondholder (the "Bondholder"). 3. The City Manager is hereby authorized and directed to execute the Documents, 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 City Attorney and the City Manager, his execution to constitute conclusive evidence of their approval of any such completions, omissions, insertions and changes. In making completions to the Lease Agreement, the City Manager shall provide for payments of Basic Rent on terms equivalent to the Bond, which (a) shall mature in installments ending no later than June 30, 2027; (b) shall have an aggregate principal amount not exceeding $9,900,000; (c) shall have an initial interest rate not exceeding 2.48% per year (subject to adjustment pursuant to the terms of the Lease Agreement); (d) shall be subject to optional redemption on such terms that the City Manager, in collaboration with the Chair or Vice Chair of the Authority, determines to be in the best interests of the City; and (e) shall be sold to the Bondholder at a price not less than 100% of the aggregate principal amount thereof. Following the sale of the Bond, the City Manager shall file a certificate with the records of the Council setting forth the final terms of the Bond and the Lease Agreement. The actions of the City Manager in approving the terms of the Bond and the Lease Agreement shall be conclusive, and no further action shall be necessary on the part of the City. As set forth in the Lease Agreement, the City undertakes to pay from legally available funds such "late charges" and other charges as described therein. 4. The undertaking by the City to pay any amounts under the Lease Agreement shall be limited obligations payable solely from funds to be appropriated by the Council for such purpose. 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. 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 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 make the payment of all amounts payable under the Lease Agreement. So long as the Bond is outstanding, if at any time during any fiscal year of the City, the amount appropriated in the City's annual budget in such fiscal year is insufficient to pay when due the amounts payable under the Lease Agreement, the Council directs the City Manager or such other officer who may be charged with the responsibility for preparing the City's annual budget to submit to the Council a request for a supplemental appropriation sufficient to cover the deficit. 6. (a) The City hereby covenants that it will not take or omit to take any action the taking or omission of which will cause the Bond to be an "arbitrage bond" 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 due on the Bond 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 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 interest on the Bond from being includable in the gross income for federal income tax purposes of the holder thereof under existing law. (b) The City hereby covenants that during the term of the Lease Agreement it shall not permit the proceeds of the Bond or the facilities refinanced therewith to be used in any manner that would result in (i) 10% or more of such proceeds or facilities being used in a trade or business carried 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 such facilities, (ii) 5% or more of such proceeds or facilities 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 (iii) 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 on the Bond 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 by bond counsel for the City are hereby authorized and directed to execute an appropriate certificate setting forth (a) the expected use and investment of the proceeds of the Lease Agreement in order 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. 8. The City Manager is hereby authorized and directed to take all proper steps to call for redemption the 2011 COPS and to prepare and deliver any such notices and correspondence necessary therefor. 9. All costs and expenses incurred in connection with the completion of the lease refinancing and the issuance of the Bond, including the Authority's fees and expenses and the fees and expenses of bond counsel, counsel for the Authority, the Bondholder and counsel to the Bondholder, shall be paid from the proceeds of the Bond or other legally available funds of the City. If for any reason the Bond is not issued, it is understood that all such expenses shall be paid by the City from its legally available funds and that the Authority shall have no responsibility therefor. 10. 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. 11. All other actions of the officers of the City that are in conformity with the purposes and intent of this Resolution and in furtherance of the completion of the lease refinancing are hereby approved and ratified. The officers of the City are hereby authorized and directed to execute and deliver all certificates and instruments and to take all other actions necessary or desirable in connection with the execution and delivery of the Documents and the completion of the lease refinancing. 12. All resolutions or parts of resolutions in conflict herewith are repealed. 13. This Resolution shall take effect immediately. Introduced: February 14, 2017 Adopted: March 28, 2017 Mayor Attest: �u City Clerk The vote on the motion to approve was recorded as follows: VOTE: Councilmember DeMarco Aye Councilmember Drummond Aye Councilman Greenfield Aye Councilmember Miller Aye Councilmember Schmidt Aye Councilmember Stehle Aye