SR-205-003 (282)
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OCT 2 2 lit
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CA:RMM:lmd076a
C~ty Council Meetlng 10-22-85
Santa Monica, Cal~fornia
SUPPLEMENTAL
STAFF REPORT
TO:
Mayor and Clty Council
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FROM: C~ty Staff
SUBJECT: F~nancial Rating for Certificates of
Participation Pertainlng to Certa~n
Airport Facilitles
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This supplemental Staff Report and attachments reflect
varlous revislons and clarifications to the relevant legal
doc~~ents appl~cable to the issuance of the above-referenced
Certlficates of Partic1pation.
These changes were required in order to sat1sfy financial
rating agencles (e.g. S~andard & Poors) requlrements con-
cerning protectlons for the Certificate holders' interests.
It 1S lrnportant that the City obtaln a satisfactory ratin~
so that the Certlf1cates wlll be marketable.
The speclfic revlsions are highlighted in the attached
coples of the Lease Agreement Pertaining to Airport Facilities
("Lease Agreement"), Ground Lease and Trust Agreement. Briefly,
the revlsions are as follows:
1. Lease A9reernent.
a) Page 10, Section 401 "Term of Agreement II
The term has been modified to provide that in the
event the Certificates have not been paid, or pro-JtI)()~
VlSlon for payment thereof been made, the Lease l( ~;q
te rm shall be extended until ten (10) days after OCT 22 1985
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all the Certlflcates have been paid, but in no
event wll1 the Lease term be extended beyond
October 1, 2017.
Since the Lease payments do not commence
unt11 the Facllities are useable, any delays in
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completing construction would delay payments to
the Certlflcate holders.
This extenslon provlsion is lntended to
assure protect1on for the Certlflcate holders lf
there are such constructlon delays.
b) Page 15, Section 503. PubllC Llabl11ty Insurance
and Section 505. Fire and Special Extended
Coverage Endorsement.
Each of these insurance provisions now
speciflcally states that the deductible or self-
lnsured retention shall be in an amount not to
exceed $500,000 or such lesser amount as
authorlzed by Clty'S liabllity lnsurance program.
Additlonally, any self-insured retention shall be
actuarlally sound.
c) Page 16, Sectlon 507 nForm of Insurance Pollclesn
ThlS section now requlres that before a plan
of self-lnsurance may be provided by Clty, or
prlor to any change in such plan, a certlficate
of an actuary or lndependent lnsurance consultant
or other quaIl fled person acceptable to Trustee,
shall be flIed with the Trustee statlng that the
plan of self-lnsurance or change in such plan,
when effectlve would afford adequate protection
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to the Clty, Lessor and Trustee agalnst loss and
damage from the hazards and risks required to be
covered.
2. Ground Lease
a) Page 2, Sectl.on 3. "Term."
The term of the Ground Lease has also
been mOdlfl.ed to provlde for an extension
beyond October 1, 2007 in the event that Lease
paYMents have not been paid. Such extension shall
be until ten (10) days after all Certificates
have been pal.d or provislon for payment has been
made, except that the term shall ln no event
extend beyond October 1, 2017.
3. Trust Agreement
a) Page 5, (PerMltted Investments) subsections (iv),
(v) and (Vl) have each added a requl.rement that
the partlcular descrlbed lnvestments be rated
AA or better by Standard & Poor's Corporatlon.
b) Page 12 Sectlon 406 "Establishment and Ap:pllcatl.On
of Special RedeMption Fund"
ThlS provision has been mOdlfl.ed so that
lnstead of stating a speciflc dollar amount for
the Speclal Redemption Account, it requlres the
Clty to pay to Trustee for deposit in such account
an aMount sufflcient, when comblned with amounts
aval.lable In other accounts wlthln the Airport
Facilltles Fund, to redeero the Certiflcates lf
requlred pursuant to Section 6l4{b).
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