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HomeMy WebLinkAbout07874SUBSTITUTED COPY: 09/05/08 ORDINANCE NO. 7874 AN ORDINANCE AUTHORIZING THE ISSUANCE OF POLICE COMPLEX CERTIFICATES OF PARTICIPATION, SERIES 2008, TO FINANCE THE CONSTRUCTION OF A POLICE COMPLEX FOR THE CITY OF PUEBLO, COLORADO; AUTHORIZING AND APPROVING THE LEASE AND SUBLEASE BACK OF THE LAND ON WHICH THE POLICE COMPLEX IS TO BE BUILT; AND AUTHORIZING AND APPROVING A LEASE PURCHASE AGREEMENT, A MORTGAGE AND INDENTURE OF TRUST, A GROUND LEASE, A PRELIMINARY OFFICIAL STATEMENT AND OTHER RELATED DOCUMENTS AND ACTIONS IN CONNECTION THEREWITH. WHEREAS, the City of Pueblo, Colorado (the "City"), is authorized, pursuant to the Home Rule Charter of the City (the "Charter ") to enter into lease purchase agreements in order to provide lands and facilities for governmental purposes; and WHEREAS, the City Council of the City (the "City Council ") has determined that the City is in need of a new police complex building (the "Police Complex "), located near other City buildings, on land already owned by the City, together with certain other related capital improvements; and WHEREAS, the City Council has determined that it is in the best interests of the City and its residents that the City and the City of Pueblo, Colorado Municipal Building Corporation (the "Corporation ") enter into (a) that certain Ground Lease dated as of October 1, 2008 (the "Ground Lease "), presented to this meeting of the City Council, pursuant to which the City will lease to the Corporation the land on which the Police Complex will be built, and (b) that certain annually renewable Police Complex Lease Purchase and Sublease Agreement, dated as of October 1, 2008 (the "Lease "), presented to this meeting of the City Council, to provide for the leasing by the City from the Corporation of the Police Complex (the Police Complex and the land on which it is located are hereinafter collectively referred to as the "Project "); and WHEREAS, the Corporation shall assign its rights in the Lease to Wells Fargo Bank, National Association, as trustee (the "Trustee ") pursuant to a Mortgage and Indenture of Trust dated as of October 1, 2008 (the "Indenture "), which has also been presented to this meeting; and WHEREAS, the Corporation will issue Certificates of Participation (the "Certificates ") pursuant to the Indenture, evidencing interests in the Lease Purchase Agreement, in a negotiated sale to an underwriter chosen by the City's City Manager, the City's Director of Finance and the City's Financial Advisor through a request for proposals; and WHEREAS, the underwriter will offer the Certificates to the public pursuant to a preliminary official statement, a form of which has been presented to the City Council at this meeting; and WHEREAS, the City Council has determined that it is in the best interests of the City and its residents that the Project be leased, with the present intention to acquire the Project, from the Corporation; and WHEREAS, pursuant to certain provisions of the Lease and the Indenture, the Corporation will deposit in escrow with the Trustee a deed for the Police Complex from the Corporation to the City (the "escrowed deed "); BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO: Section 1. Ratification of Prior Actions. All action heretofore taken (not inconsistent with the provisions of this Ordinance) by the City Council or the officers or employees of the City, directed toward the lease of the land to the Corporation and the sublease of the land and the leasing of the Police Complex from the Corporation are hereby ratified, approved and confirmed. The City Council hereby specifically ratifies, approves and confirms the employment of James Capital Advisors, Inc., as financial advisor, and its activities on behalf of the City arranging the financing, including contacting prospective underwriters of the Certificates. Section 2. Finding and Determination. The City Council hereby finds and determines, pursuant to the provisions of the Charter, that leasing the land to and subleasing and leasing the Project from the Corporation under the terms and provisions set forth in the Ground Lease and the Lease is necessary, convenient, efficient and economical, and in furtherance of the governmental purposes of the City, and is in the best interests of the City and its residents; and the City Council hereby authorizes such lease of the land to the Corporation pursuant to the Ground Lease and the subleasing and leasing of the Project from the Corporation under the terms and provisions of the Lease. Section 3. Approval of Ground Lease and Lease. The Ground Lease and the Lease, in substantially the forms presented to this meeting of the City Council and with substantially the same content, are in all respects approved, authorized and confirmed, and the President or Vice President of the City Council is authorized and directed to affix his or her signature to the Ground Lease and the Lease in substantially the form and with substantially the same content as presented to this meeting of the City Council, for and on behalf of the City, but with such changes, modifications, additions or deletions therein as the President or Vice President of the City Council and the City Attorney shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the forms and content of the Ground Lease and the Lease presented to this meeting. Section 4. Consent and Approval of Indenture. The City Council hereby approves and acknowledges the Indenture in substantially the form presented to this meeting of the City Council and with substantially the same content, and the City Council consents to the assignment by the Corporation to the Trustee, pursuant to the Indenture, of all rights, title and interest of the Corporation in, to and under the Lease (with certain exceptions as provided in the Lease and the Indenture), and the delegation by the Corporation to the Trustee, pursuant to the Indenture, of all duties of the Corporation under the Lease. Section 5. Issuance and Sale of Certificates. The City Council hereby authorizes and consents to the issuance and sale of the Certificates pursuant to the Indenture. The City Council hereby authorizes and approves the form, terns and provisions of the Certificates contained in the Indenture, in substantially the form and with substantially the same content as that presented _. —...__ to this meeting of the City Council; provided, that the principal amount of the Certificates shall not exceed $25,500,000 and the net effective interest rate of the Certificates as a whole upon issuance shall not exceed 5.5 %. The City Clerk and the President of the City Council are hereby authorized and directed to affix their facsimile signatures and the City seal, or a facsimile thereof, to authenticate the Certificates, as provided in the Lease and the Indenture. In addition, the City Council approves the sale of the Certificates to an underwriter chosen on the basis of requests for proposals, by the City's City Manager, the City's Director of Finance and the City's Financial Advisor. Section 6. Approval of Preliminary Official Statement. The City Council hereby approves the form of the Preliminary Official Statement presented at this meeting and also approves its use, with such changes as may be approved by the City's Director of Finance and the City Attorney, by the underwriter in connection with the offering of the Certificates. Section 7. Approval of Escrowed Deed. The City Council hereby approves the execution of the escrowed deed by the Corporation and the delivery of the escrowed deed to the Trustee. Section 8. Tax Covenants. (a) The City covenants that (i) it shall not use or permit the use of any proceeds of the Certificates or any other funds of the City from whatever source derived, directly or indirectly, to acquire any securities or obligations, and (ii) it shall not take or permit to be taken any other action or actions, either of which would cause any of the Certificates to be an "arbitrage bond" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code "), or would otherwise cause the interest on the Certificates to be includible in the gross income of the recipients thereof for federal income tax purposes. The City covenants that it shall at all times do and perform all acts and things permitted by law and which are necessary in order to assure that interest paid by the City on the Certificates shall, for purposes of federal income taxation, not be includible in the gross income of the recipients thereof under the Code or any other valid provision of law. (b) In particular, but without limitation, the City further represents, warrants and covenants to comply with the following restrictions of the Code, unless it receives an opinion of nationally recognized bond counsel stating that such compliance is not necessary: (i) Gross proceeds of the Certificates shall not be used in a manner which will cause the Certificates to be considered "private activity bonds" within the meaning of the Code. (ii) The Certificates are not and shall not become directly or indirectly "federally guaranteed." I (iii) The City shall timely file Internal Revenue Form 8038 -G which shall contain the information required to be filed pursuant to subsection 149(e) of the Code. (iv) The City shall comply with the Investment Instructions delivered to it on the date of issue of the Certificates with respect to the application and investment of the proceeds of the Certificates. Section 9. Other Actions in Furtherance of this Ordinance. The City Clerk is hereby authorized and directed to attest all signatures and acts of any official of the City Council or the City in connection with the matters authorized by this Ordinance, and to place the seal of the City on the Ground Lease, the Lease and the Indenture authorized and approved by this Ordinance. The President or Vice President of the City Council and other officials of the City Council or the City are hereby authorized to execute and deliver for and on behalf of the City any and all additional certificates, documents and other papers and to perform all other acts that they may deem necessary or appropriate in order to implement and carry out the transactions and other matters authorized and contemplated by this Ordinance. The appropriate officers of the City Council or the City are authorized to execute on behalf of the City agreements concerning the deposit and investment of funds in connection with the transactions contemplated by this Ordinance. Section 10. No General Obligation or Other Indebtedness of the City Created. NO PROVISION OF THIS ORDINANCE, THE GROUND LEASE, THE LEASE, THE INDENTURE OR THE CERTIFICATES SHALL BE CONSTRUED AS CREATING OR CONSTITUTING A GENERAL OBLIGATION OR OTHER INDEBTEDNESS OF THE CITY OR A MANDATORY PAYMENT OBLIGATION OF THE CITY IN ANY FISCAL YEAR BEYOND A FISCAL YEAR FOR WHICH THE CITY HAS APPROPRIATED AMOUNTS TO MAKE PAYMENTS UNDER THE LEASE. THE CITY SHALL HAVE NO OBLIGATION TO MAKE ANY PAYMENT WITH RESPECT TO THE CERTIFICATES EXCEPT IN CONNECTION WITH THE PAYMENT OF THE BASE RENTALS AND ADDITIONAL RENTALS (EACH AS DEFINED IN THE LEASE) TO THE EXTENT AND FOR THE YEAR FOR WHICH FUNDS HAVE BEEN APPROPRIATED AND CERTAIN OTHER PAYMENTS UNDER THE LEASE, WHICH PAYMENTS MAY BE TERMINATED BY THE CITY IN ACCORDANCE WITH THE PROVISIONS OF THE LEASE. Section 11. Determination of Rental Value and Purchase Option Price. The City Council hereby determines and declares that the Base Rentals (as set forth in the Lease) represent the fair value of the use of the Project, and that the Purchase Option Price (as defined in the Lease) represents the fair purchase price of the Project. The City Council hereby determines and declares that the Base Rentals do not exceed a reasonable amount so as to place the City under an economic or practical compulsion to renew the Lease or to exercise its option to purchase the Project pursuant to the Lease. In making such determinations, the City Council has given consideration to the uses and purposes for which the Project will be employed by the City, the benefit to the citizens and residents of the City by reason of the use of the Project pursuant to the terms and provisions of the Lease, the option of the City to purchase the Project, and the expected eventual vesting of title to the Project in the City. The City Council hereby determines and declares that the subleasing and the leasing of the Project pursuant to the Lease will result in facilities of comparable quality and meeting the same requirements and standards as would be necessary if the construction, acquisition, improvement and equipping of the Project were performed by the City. The City Council hereby determines and declares that the period during which the City has an option to purchase the Project (i.e., the maximum term of the Lease, including all Renewal Terms) does not exceed the useful life of the Project. Section 12. Home Rule Powers Invoked. In authorizing and approving the actions herein set forth, it is the intent of the City Council of the City to exercise the home rule powers of the City granted pursuant to the Colorado Constitution and the Charter, and the City Council of the City hereby finds, determines and declares that the matters herein referred to are matters of local or municipal concern and are appropriate for the exercise of the home rule powers of the City. Section 13. Severability. If any section, paragraph, clause or provision of this Ordinance (other than provisions as to the payment of Base Rentals by the City during the Lease Term and provisions for the conveyance of the Project to the City under the conditions provided in the Lease) shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. Section 14. Repealer. All bylaws, orders and ordinances, or parts thereof, inconsistent with this Ordinance or with any of the documents hereby approved, are hereby repealed only to the extent of such inconsistency. This repealer shall not be construed as reviving any bylaw, order or ordinance, or part thereof. Section 15. Public Hearing. A public hearing on this Ordinance shall be held on Monday, September 8, 2008, at 7:00 p.m., in the City Council Chambers, One City Hall Place, Pueblo, Colorado. INTRODUCED: August 25, 2008 By Vera Ortegon Councilperson APPROVED: President of the City Council APPROVED AS TO FORM BY CITY ATTORNEY: City Attorney PASSED AND APPROVED September 8, 2008 Cy OrA• 70`f D � �J o ° Background Paper for Proposed ORDINANCE DATE: August 25, 2008 AGENDA ITEM DEPARTMENT: Law Department TITLE AN ORDINANCE AUTHORIZING THE ISSUANCE OF POLICE COMPLEX CERTIFICATES OF PARTICIPATION, SERIES 2008, TO FINANCE THE CONSTRUCTION OF A POLICE COMPLEX FOR THE CITY OF PUEBLO, COLORADO; AUTHORIZING AND APPROVING THE LEASE AND SUBLEASE BACK OF THE LAND ON WHICH THE POLICE COMPLEX IS TO BE BUILT; AND AUTHORIZING AND APPROVING A LEASE PURCHASE AGREEMENT, A MORTGAGE AND INDENTURE OF TRUST, A GROUND LEASE, A PRELIMINARY OFFICIAL STATEMENT AND OTHER RELATED DOCUMENTS AND ACTIONS IN CONNECTION THEREWITH ISSUE Should the City Council approve a transaction involving the issuance and sale of certificates of participation to finance the construction of the police complex building? RECOMMENDATION City staff recommends approval. BACKGROUND In order to obtain sufficient financing to construct the police complex building ( "Building') the following transactions have been submitted to the City Council for approval: (a) City will lease the land upon which the Building will be constructed ( "Ground Lease ") to the City of Pueblo, Colorado Municipal Building Corporation ("Corporation ") for a term ending on December 31, 2047 at a nominal rent of $1.00 per year, (b) Corporation will under a Lease Purchase and Sublease Agreement ("Lease') sublease the land and Building to City from year -to -year at a base rental equal to the annual debt service on the Certificates of Participation ( "COPs') to be issued by the Corporation; City will be responsible to insure, maintain and keep the land and Building in good repair and condition, (c) COPS will be issued and sold by the Corporation in a principal amount not to exceed $25.5 million with a net effective interest rate as a whole upon issuance not to exceed 5.5% percent pursuant to a Mortgage and Indenture of Trust ( "Indenture ") between the Corporation and Wells Fargo, as trustee ( "Trustee "), (d) the net proceeds from the sale of the CDP's (estimated to be $22 million) will be made available to the City under the Lease and Indenture forthe construction of the Building, (e) upon City paying base rentals sufficient to discharge the Indenture, or, at City's option, payment of a purchase price equal to the balance of the COPS' principal and accrued interest, titre to the Building will be conveyed to the City and the Ground Lease, Lease and Indenture will terminate, and (f) the transactions do not create a City debt or multiple fiscal year financial obligation, City has no obligation to make any payment with respect to the COPs except in connection with the payment of base rental for the year for BACKGROUND (Continued) which funds have been appropriated. The City may terminate its obligation underthe Lease on an annual basis. If City does not appropriate the base rental for any fiscal year, the Lease may be terminated and City will be required to vacate the Building. The foregoing is only a brief description of the transactions and is qualified by the more complete information contained in the Ground Lease, Lease and Indenture which may be reviewed for specific and full details of the transactions. FINANCIAL IMPACT See background.