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R-17-37RESOLUTION NO. R-17-37 RESOLUTION TO APPROVE THE DETAILS OF A LEASE FINANCING FOR THE COSTS ASSOCIATED WITH THE DESIGN, ACQUISITION, CONSTRUCTION AND EQUIPPING OF A FIRE STATION, THE RELATED TRANSITION COSTS AND CERTAIN IMPROVEMENTS TO A TEMPORARY FIRE STATION FACILITY AND THE ACQUISITION AND INSTALLATION OF CERTAIN PUBLIC SAFETY RADIO EQUIPMENT AND TO AUTHORIZE THE EXECUTION AND DELIVERY OF RELATED DOCUMENTS WHEREAS, the City of Fairfax, Virginia (the "City"), desires to finance (a)(i) the design, acquisition, construction and equipping of a fire station, (ii) the related transition costs and (iii) certain improvements to a temporary fire station facility (collectively, the "Fire Station Project"), (b) the acquisition and installation of certain police radio equipment (the "Equipment"), (c) certain capitalized interest expenses and (d) related financing costs (collectively, the "Project"); WHEREAS, the City Council (the "Council") of the City has received bids from several banks, pursuant to an advertisement made in the manner prescribed by law, to arrange for the financing of the Project and has determined that Raymond James Capital Funding, Inc. (the "Bank"), submitted a proposal providing the most favorable terms to the City, a copy of which is attached hereto as Exhibit A (the "Proposal"); WHEREAS, the Bank has proposed that (a) the City lease to a corporate trustee (the "Trustee") the Property pursuant to a prime lease, (b) the Trustee lease the Property back to the City pursuant to a financing lease agreement and (c) the Trustee issue and sell to the Bank certificates of participation in the rental payments received from the City under such financing lease agreement; WHEREAS, the Council, having determined it to be in the best interest of the City to finance the Project through a lease financing arrangement, intends to authorize the leasing of certain real property and the improvements (both existing and future) thereon owned by the City and located at 10101 Fairfax Boulevard, Fairfax, Virginia 22030 (Tax Parcel No. 47-4- 03-000-B) (collectively, the "Property"); and WHEREAS, there have been circulated to members of the Council (a) a draft Deed and Agreement of Prime Lease between the City and the Trustee (the "Prime Lease") and (b) a draft Financing Lease Agreement between the Trustee and the City (the "Lease Agreement"), both of which instruments the City proposes to authorize and approve to carry out the purposes of the Project and copies of which shall be fled with the records of the Council; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAIRFAX, VIRGINIA: 1. The Council approves the lease by the City of the Property from the Trustee pursuant to the terms of the Proposal and this Resolution. The City Manager, in consultation with Davenport & Company LLC, as the City's financial advisor, is authorized to determine the final terms of the loan from the Bank reflected in the Prime Lease and the Lease Agreement as the City Manager shall deem to be in the best interests of the City; provided, however that (a) the aggregate sum of the principal components constituting basic rent (the "Basic Rent") payable under the Lease Agreement shall not exceed $11,500,000, (b) the Prime Lease shall terminate no later than September 30, 2047, (c) the Lease Agreement shall terminate no later than September 30, 2037 (provided that all payments due thereunder have been made), (d) the initial interest component of Basic Rent payable under the Lease Agreement shall not exceed 2.60% per year, calculated on the basis of a 360 -day year of twelve 30 -day months and subject to adjustment as reflected in the Proposal, and (e) the principal components under the Lease Agreement may be subject to optional prepayment at a premium not to exceed 100% of the principal components to be prepaid or a "make whole" prepayment price based on financial market conditions at the time of prepayment. The City Manager shall also be authorized to determine the payment dates and amounts of Basic Rent, as he shall deem to be in the best interests of the City. 2. The City is hereby 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. 3. The Mayor and the City Manager, either of whom may act, are hereby authorized and directed to execute the Prime 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 City Attorney and the officer executing the Prime Lease and the Lease Agreement, such execution to constitute conclusive evidence of their approval of any such completions, omissions, insertions and changes. The Mayor and the City Manager, either of whom may act, are further authorized to execute a purchase agreement or other covenant agreement with the Bank in a form not inconsistent with this Resolution. 4. Such officers of the City as requested by the City Manager are hereby 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 Prime Lease and the Lease Agreement and the completion of the financing, including without limitation the granting of a leasehold deed of trust on the Property as further security for the financing and the acknowledgement by the City of the terms of the trust indenture providing for the issuance and sale of certificates of participation in connection with the Lease Agreement. 5. 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 City within the meaning of any constitutional or statutory limitation or a pledge of the faith and credit or taxing power of the City. 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 hereby directs the City's Assistant City Manager/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. 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 hereby directs the City's Assistant City Manager/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. 7. The City hereby covenants that it shall neither take nor omit to take any action the taking or omission of which shall cause the principal components of rental payments under the Lease Agreement 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. The City shall pay from its legally available general funds any amount required to be rebated to the United States of America pursuant to the Code. 8. 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 thereby 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, (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 under the Lease Agreement or the related certificates of participation 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. 9. 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. 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. In adopting this Resolution the City intends to evidence its "official intent" (within the meaning of Treasury Regulations 1.150-2 promulgated under the Code) that expenditures with respect to the Project made prior to the execution of the Lease Agreement will be reimbursed with proceeds from the Lease Agreement. 12. 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 hereby approved and ratified. The officers of the City are further authorized and directed to execute and deliver all such certificates and instruments and to take all such further action as may be considered necessary or desirable in connection with this lease financing arrangement and the issuance and sale of the related certificates of participation. 13. This Resolution shall take effect immediately. ADOPTED this 26th day of September, 2017. 1&&Ip -;(_"-I." Mayor Attest: "�'% i, , EM i cl,. City Clerk The vote on the motion to approve was recorded as follows: VOTE: Councilmember DeMarco Aye Councilman Greenfield Aye Councilmember Miller Aye Councilmember Passey Aye Councilmember Schmidt Nay Councilmember Stehle Aye