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SR-121085-11C ~ 'e e ;!-tJ3-- 00/-- b 5 CA:RMM:lmdl14/hpw city Council Meeti~~ 12-10-85 Santa Monica, California STAFF REPORT 1/ -c. DEe 1 0 1985 TO: Mayor and city council FROM: city Attorney SUBJECT: Resolution Authorizing and Approving Issuance of Revenue Bonds Pertaining to the Santa Monica YMCA Project and Execution of Agreements and Other Actions Necessary for Issuance of Such Bonds INTRODUCTION This Staff Report requests that the City Council adopt two resolutions whereby the City of Santa Monica would approve the issuance of revenue bonds pertaining to the Santa Monica YMCA Project and authorize City staff to execute necessary Agreements and other documentation in order to effect such bond issuance. The resolutions would also approve a Preliminary Official statement and Bond Purchase Agreement. The actual issuance of these revenue bonds is contingent on various factors including, but not limited to, review and approval of all Agreements and documentation related to such bonds by both Bond Counsel (Morrison & Foerster) and the City Attorney's office. A key requirement which the YMCA must satisfy is the issuance by an appropriate bank of a letter of credit satisfactory to the City and Bond Counsel. The Letter of Credit must be in an amount equal to the dollar value of the bond - 1 - II-c DEe 1 0 \985 e e issuance in order to secure payment to bond holders and assure completion of the Project improvements. BACKGROUND On October 1, 1985, the City Council adopted Ordinance Number 1345 (CCS) specifying the powers and procedures for issuance of revenue bonds for purposes of financing facilities in the City of Santa Monica by "participating parties." This Ordinance authorized the City to issue bonds secured by revenues of a private activity or Project. The city is empowered by the Ordinance to issue revenue bonds backed solely by non-profit corporations I such as the YMCA, for purposes of constructing facilities of public benefit within the City of Santa Monica. The effective date for this Ordinance was october 31, 1985. At its October 22, 1985 meeting, the City Council adopted Resolution Number 7110 (CCS) declaring the City of Santa Monica.s intent to issue revenue bonds pertaining to the Santa Monica YMCA proj ect in order to provide financing assistance to the Santa Monica YMCA. THE SANTA MONICA YMCA PROJECT The Santa Monica YMCA capital development Project includes acquisition and construction of improvements and additions to the YMCA facilities located on Sixth Street in the City of Santa Monica, including, without limitation, acquisition of property for a parking site, construction of a subterranean parking structure, gymnasium, enclosed swimming pool, handball/racquet - 2 - e e ball courts, locker and shower facilities, as well as expansion and refurbishment of the existing facilities through the issuance and sale of revenue bonds in a principal amount not to exceed $3.5 million. The estimated total cost of such acquisition, construction, and improvements is approximately $6.5 million. The YMCA plans to raise approximately $3.5 million through public and private donations. In the event that the $3.5 million campaign goal is not realized, the proj ect is structured in various phases so that those financed by the proposed revenue bonds could be performed first. In compliance with the Ordinance, the Santa Monica YMCA, as a participating party, submitted an application for financing to the City for its review. Such application included information necessary to evaluate the financial reliability and stability of the Santa Monica YMCA. Additionally, information on the feasibility of the proposed Project was presented including estimates of the maximum amount of financing to be required, a description and itemization of the costs of the proposed Project, and a written agreement to pay all administrative expenses incurred by the City in connection with the proposed Project. CONDITIONS AND REQUIREMENTS TO ISSUANCE OF THE SANTA MONI~A YMCA REVENUE BONDS Among the numerous conditions and requirements which must be satisfied prior to the actual issuance of the revenue bonds for the proposed Project are the following: - :3 - e e 1. Loan Agreement. Subject to review and approval by the city Attorney's office and Bond Counsel,the city would enter into an agreement with the YMCA to lend the net proceeds of the revenue bonds to the YMCA for purposes of paying the casts of the project. A loan repayment schedule will be structured to meet scheduled debts or payments on the bands. Pursuant to a Deed of Trust, the City would also take a security interest in the financed property as collateral far the loan. 2. Indenture of Trust. Subject to review and approval by the City Attorney's office and Bond Counsel, the City would enter into an Indenture of Trust Agreement with Security Pacific National Bank as Trustee, relating to the $3.5 million issuance of revenue bonds. Such Indenture of Trust will set forth the terms for issuance of the bonds, appoint Security Pacific National Bank as Trustee ("Trustee"), and provide for the City'S assignment to the Trustee of its rights under the Loan Agreement with Santa Monica YMCA, as well as any collateral documents as security for the bonds. It should be noted that the bonds will not constitute a debt of the city and will be payable solely from the revenues derived under the Loan Agreement. The term "Revenues" is defined in both the Loan Agreement and Indenture of Trust as: naIl rents, receipts, installment payments, and other income derived by the Issuer (City of Santa Monica) or the Trustee under the Agreement, the Deed of - 4 - e e Trust, the Letter of Credit, or any insurance policy on or in connection with the Project or otherwise in respect of the Project, and any income or revenues derived from the investment or deposit of any money in any fund or account established pursuant to the Indenture, including all repayment installments and other payments made by the Borrower (Santa Monica YMCA) pursuant to the Loan Agreement, excluding any payments made by the Borrower pursuant to its obligations under the Loan Agreement to pay any costs incurred by the Trustee or City in connection with the Project or as well as any sums necessary for borrower to fulfill its obligation to indemnify both city and Trustee." 3. Preliminary and Final Official statements. Both Bond Counsel and the city Attorney's office will review and approve Preliminary and Final Official statements for use by Drexel, Burnham, Lambert, Inc., Underwriter, in the marketing of the bonds to the public. 4. Bond Purchase Aqreement. Subject to review and approval by the City Attorney's office and Bond Counsel, the City will enter into a Bond Purchase Agreement among the City of Santa Monica, the Santa Monica YMCA, and Drexel, Burnham, Lambert, - 5 - . e Inc., as the purchaser of the bonds. Such Bond Purchase Agreement will establish the purchase price and interest rates on the bonds. 5. Letter of Credit. The Santa Monica YMCA will be required to obtain a satisfactory Letter of Credit prior to closing and issuance of the Bonds in the amount of $3.5 million. Such Letter of Credit must be issued by an appropriate bank or other financial institution and approved by Bond Counsel. The purpose of the Letter of Credit is the absolute guarantee of timely repayment of principal and interest on the bonds. The Santa Monica YMCA is currently awaiting a commitment by California First, a subsidiary of Bank of Tokyo, to issue the Letter of Credit necessary for this bond issuance. Approval has already been received from Lloyd's Bank, which would be participating with the Bank of Tokyo to provide the irrevocable Letter of Credit. 6. Collateral and Other Agreements Required by the Letter of Credit Issuer-Bank. The Letter of Credit Issuer-Bank will require the Santa Monica YMCA to enter into a Reimbursement Agreement with it, whereby the Santa Monica YMCA would be responsible for all fees incurred by the Letter of Credit Issuer-Bank and for reimbursing the issuer-bank for any draws against such Letter of Credit. It is anticipated that the Letter of Credit Issuer-Bank will require additional collateral documents to secure its rights under the Reimbursement Agreement. Al though the ci ty is not a party to such Agreements, both the City Attorney's office and Bond Counsel will have an opportunity - 6 - e e to review and approve all such Agreements and documentation between the YMCA and the Letter of Credit Issuer-Bank related to this bond issuance. NONLIABILITY OF CITY AND ITS OFFICERS, AGENTS, AND EMPLOYEES As will be reflected in the Preliminary and Final Official statements, the YMCA Revenue Bonds would be special obligations of the City as Issuer. Such bonds would not consti tute an indebtedness within the meaning of any constitutional provision or statutory limitation, and would not give rise to a pecuniary liability of the City nor be a charge against the City's general credit or taxing power. Furthermore, officers, agents, or employees of City would not be liable personally on the Bonds or be subj ect to any personal liability by reason of the issuance of such Bonds or by reason of the representations, warranties, covenants, obligations, or agreements of City contained in the Bond Purchase Agreement, the Indenture of Trust, or the Loan Agreement. FISCAL/BUDGETARY IMPACT The Santa Monica YMCA delivered a letter to city dated October 29, 1985, confirming the YMCA's agreement to pay all reasonable and necessary expenses incurred by the city in the administration of the provisions of Ordinance Number 1345 (CCS) with respect to the issuance of revenue bonds to finance the Santa Monica YMCA Project. This includes, without limitation, compensation to City agents, employees, and staff, fees and - 7 - e e expenses of agents, trustees, bond counsel, and financing consultants, as well as costs of printing and advertising. The YMCA is responsible to pay such fees and costs regardless of whether or not the proposed bond issuance occurs and whether or not the bonds are issued and sold. A deposit of $25,000 was delivered by the YMCA to City as an advance towards expenses which would be incurred in connection with the proposed Project. On October 22, 1985, the City council increased the appropriation authority of Account No. 01-200-261-000-506 by $25,000, reflecting the YMCA's $25,000 deposit. RECOMMENDATION It is respectfully recommended that the city Council take the following actions: 1. Adopt a resolution approving issuance of the Santa Monica YMCA Revenue Bonds and approving and authorizing execution of a Loan Agreement, Indenture of Trust, and other Agreements and actions related to issuance of Revenue Bonds for the YMCA Project. 2. Adopt a resolution approving a preliminary Official Statement and Bond Purchase Agreement, and authorizing and directing certain actions with respect thereto. PREPARED BY: Robert M. Myers, City Attorney Linda A. Moxon, Deputy City Attorney - 8 - .,. t e e CA:RMM:llmdlI5a/hpw City Council Meeting 12-10-85 Santa Monica, California RESOLUTION NUMBER 7133 (CCS) (City council Series) RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA APPROVING ISSUANCE OF REVENUE BONDS FOR THE SANTA MONICA YMCA PROJECT AND APPROVING AND AUTHORIZING EXECUTION OF A LOAN AGREEMENT, INDENTURE OF TRUST, AND OTHER AGREEMENTS AND ACTIONS NECESSARY FOR SUCH BOND ISSUANCE WHEREAS, on October 22 , 1985, the Ci ty Council adopted Resolution Number 7110 (CCS) declaring its intention to issue revenue bonds to assist in the financing of the acquisition and construction of facilities at the Santa Monica Family YMCA, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: SECTION 1. Issuance of Revenue Bonds in the maximum principal amount of $3,500,000 for the purposes of assisting in the financing of the Santa Monica YMCA Project is hereby approved. SECTION 2. The Indenture of Trust, dated as of December I, 1985 (the "Indenturen), by and between City and Security Pacific National Bank, substantially in the form of that on file in the City Attorney's office, is hereby approved. Subject to review and approval by the City Attorney and Bond Counsel, the City - 1 - *' e e Manager and the City Clerk are authorized and directed to execute the Indenture on behalf of the City, subject to section 5 hereof. SECTION 3. The Loan Agreement, dated as of December I, 1985 (the IILoan Agreement"), by and between the City and the Santa Monica Young Men's Christian Association, as Borrower, with respect to the santa Monica YMCA proj ect, substantially in the form of that on file in the City Attorney's office, is hereby approved. Subject to review and approval by the City Attorney and Bond Counsel, the City Manager and the City Clerk are authorized and directed to execute the Loan Agreement on behalf of the City, subject to section 5 hereof. SECTION 4. The Indenture and Loan Agreement may be modified, prior to their execution and delivery, by the City Manager upon the advice of the City Attorney and Bond Counsel, provided that such modification is consistent with the essential terms thereof and with the limitations set forth herein. Both the City Attorney1s and city Manager's approval of such modifications shall be conclusively established by their execution of the Indenture and Loan Agreement. SECTION 5. The Indenture and Loan Agreement shall not be executed by the City Manager, City Attorney or City Clerk until (a) this city Council shall have approved an agreement with Drexel Burnham Lambert, Incorporated for the purchase of the Bonds described in the Indenture, and (b) an irrevocable Letter of Credit, as required by the Loan Agreement and Indenture is - 2 - .. e e obtained by the Santa Monica YMCA to secure payment of principal and interest on the bonds. SECTION 6. The City Clerk shall certify to the adoption of this Resolution and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: ~~.\ ROBERT M. MYERS City Attorney 0=- ~ - 3 - e e Adopted and approved this 10th day of December, 1985. (/ f..ht.. P. ~ ~~ Mayor ~ I hereby certIfy that the foregoing Resolution No. 7133(CGS) was duly adopted by the CIty Council of the CIty of Santa MonIca at a meetIng thereof held on December 10, 1985 by the folloWIng CounCIl vote: Ayes: Councilmembers: Conn, Epstein, A. Katz, H. Katz, and Mayor Reed Noes: Councllmembers: None AbstaIn: Councllmembers: None Absent: Councllmembers: JennIngs and Zane ATTEST: /} ~ ;/ ~v/ /;, ~u----. CIty Clerk ~. ~ t:; /I. 4J/(f4f r~~ (J .... Absent. _ ~~ r ~~_ P_R~O~Of_ _\9JX~ KY111::-\.'\_OJ'fI_E;.R" P~R~O!\T BEFORE MNTHING ITl;:'lK1DUliV\' C>UKIGIN.i\L LO be signed, sealed and e r-. .~ -...... =: ,~ -...... ;-- f. ::; :::: - ~ -7 - - -l :J :. .; :> ~ j ) ) BEFORE DISrRI~UTIO~ CHE~K CONTENT OF ALL DISTRIBUTION CF RESOLUTION # ~33 /$/~/J.s-- /1- L- IVti CouncIl MeetIng Date Agenda Item # Was It amended" 'I,.'OTE . AffirJ11atlve' ~egative' AbstaIn- \EWSPAPER PUBLICATIO~ (Date' e FOR CITY_CkERK'S ACTION ORDINANCE # Introduced: Adopted: AIl'JAYS Pl.i13LISH AOOPTED ORDINANCES* *Cross out Attorney's approval flIed In Vault. ) ) Depart~ent orIgInatIng staff report ( '~a~a6e~ent Servl~e? Lynne Barrette urdInances only AgencY mentioned In document or staff report <=2 (certIfIed?) ..... ) SUDJect f~le (agend& 0s~ke,) 1 AIrport ParkIng Auth. AudItorum Personnel BUIldIng Dept. PlannIng EnVIron. Servo PolIce (en- forcement?) Flnance PurchaSIng . FIre Recr/Parks General Serv Transportation Llbrary Treasurer Counter file Others' Manager SI'm FOUR COPES OF .;;.1. ORDI\ANC17 CO:J,ED SYSTD1S, Attn- Peteyn Maci'earj e 120 r!alD r::r"e~ AV0~1 ~ew Jersev_07717 .. 'I , .... SE\D FOUR COPIES OF ALL ORDPh!>!I'FS TO: FR.ISJDDJG JUDGE SANTA ~.lO;.nCA )1U:\ICIPAL COURT 1 72,) 1-.1/UN STREET SA~TA MONICA, CA 90401 1 / -----.... *Check Cede SectJ..ons before sendmg. TOTAL COPIES .3 ,.." .. e e CA:RMM:lmdl16ajhpw City Council Meeting 12-10-85 Santa Monica, California RESOLUTION NUMBER 7l34(CCS) (City council Series) RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA APPROVING THE PRELIMINARY OFFICIAL STATEMENT AND BOND PURCHASE AGREEMENT, AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: SECTION 1. The Bond Purchase Agreement, by and among Drexel Burnham Lambert, Incorporated (the "Underwriterll), the Santa Monica Young Men's Christian Association (the "YMCA"), and the City, relating to the purchase and sale of Revenue Bonds to aid the YMCA in financing certain improvements at the Santa Monica Family YMCA (the "Purchase Agreement"), substantially in the form of that on file in the city Attorney's office, is hereby approved. Subject to review and approval by the City Attorney and Bond Counsel, the City Manager and the city Clerk are authorized and directed to complete and execute the Purchase Agreement on behalf of the City and the purchase price of the Bonds set forth in the Purchase Agreement shall not be less than 96-1/2% of the aggregate par value of the Bonds. - 1 - " e e The Purchase Agreement may be modified, prior to its execution and delivery, by the city Manager upon the advice of the city Attorney and Bond Counsel, provided that such modification is consistent with the essential terms thereof and wi th the 1 imi tations set forth above. The City A ttorney I sand the City Manager's approval of such modifications shall be conclusively established by their execution of the Purchase :- Agreement. SECTION 2. The Mayor, City Manager, city Clerk, and other officials of the City are hereby authorized and directed to execute such other agreements, documents, and certificates as may . be required by the Purchase Agreement or otherwise necessary to effect its purposes. SECTION 3. Subject to review and approval by the City Attorney and Bond Counsel, the preliminary Official statement, dated as of December 10, 1985, relating to the Revenue Bonds, - substantially in the form of that on file in the City Attorney's office, is hereby approved for use by the Underwriter in the offering and sale to the public of the Revenue Bonds. SECTION 4 . The City Manager is authorized to approve corrections and additions to the Preliminary Official Statement by supplement or amendment thereto, or otherwise as appropriate, provided that any such corrections or additions shall be necessary to cause the information contained therein to conform with facts materials to the Revenue Bonds or to the proceedings - 2 - ..- e e of the City, or that such corrections or additions relate to form rather than substance. SECTION 5. The City Manager is authorized and directed to cause the Preliminary Official statement to be modified into the form. of a Final Official statement and to execute said Final Official statement, dated as of the date of the City'S execution of the Purchase Agreement. SECTION 6. The City Clerk shall certify to the adoption of this Resolution and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: ~\.-. ~ ROBERT M. MYERS City Attorney - 3 - . .. ~l . . e e Adopted and approved this 10th day of December, 1985. t4~~~n 2 I Mayor ........... I hereby certIfy that the foregoing Resolution No. 7134(CCS) was duly adopted by the City Council of the CIty of Santa MonIca at a meeting thereof held on December 10, 1985 by the followIng CouncIl vote: Ayes: Councllmembers: Conn, EpsteIn, A. Katz, H. 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