HomeMy WebLinkAboutItem 08 - Certificates of ObligationIme wmw� . 9 --
MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: ROGER NELSON, CITY MANAGER A,
MEETING DATE: JUNE 19, 2001
SUBJECT: RESOLUTION DIRECTING PUBLICATION OF A NOTICE OF
INTENTION TO ISSUE CERTIFICATES OF OBLIGATION
RECOMMENDATION:
City Council to consider approving a Resolution directing publication of a Notice of
Intention to issue City of Grapevine, Texas, Combination Tax and Revenue Certificates of
Obligation, Series 2001, and providing an effective date.
FUNDING SOURCE:
Certificates of Obligation issue for the purpose of acquisition of the Palace Arts Center.
BACKGROUND:
This item is placed on the agenda in order to authorize the sale of Certificates of Obligation
to obtain funds for the project.
The Certificate proceeds will provide permanent financing for the Palace Theatre
Restoration Project. Recent actions by the Federal Reserve have resulted in an
advantageous interest rate environment for permanent financing of the project . Our
financial advisor anticipates an interest rate of 5.25% or less. A rate in this range is lower
than the bank loan agreement secured on May 17, 2000. The six banks which originally
participated in the bank financing agreement consortium support the City's decision for
permanent financing.
In order for the City to complete the refinancing of the Palace Theatre Restoration note and
comply with State law, the City Attorney and Bond Counsel advised that the City should
purchase the facility and then lease it back to the Heritage Foundation. To complete the
transaction, the City will enter into a triple net lease with the Foundation. The Foundation
will maintain, repair and operate the project. The term of the lease shall be concurrent with
the City's Certificates of Obligation. The Foundation's rent for the project shall be equal
to the City's combined principal and interest payments on the Certificates of Obligation. As
security for the lease payments, the Foundation will pledge all net revenues from
June 14, 2001 (9:23AM)
operations of the Palace, all unencumbered private donations, all local and federal grants,
and all net Foundation revenue from its projects, operations and festivals. After the CO's
have been paid in full, the City will convey the theater back to the Foundation, to the extent
authorized by law, for one dollar and other good and valuable consideration at that time.
The City Attorney is preparing the appropriate documents to accommodate the sale by the
Heritage Foundation. Funds received from the Certificates of Obligation sale will be used
to pay off the bank note which was used for interim financing. A copy of the City Attorney's
memorandum addressing the required procedures is attached.
The amount contained in the CO Notice provision is sized conservatively (oversized) to
allow for unforeseen eventualities between now and the time of the sale of the CO's. The
estimated actual requirements for the Certificates of Obligation are listed below:
Palace Arts Center property acquisition cost
(Estimated closing date in August) $4,331,568
Cost for Debt Issuance 53,432
Total $4,385,000
The sale date is currently scheduled for July 17, 2001 and the anticipated closing date for
the Palace acquisition is August 21, 2001.
Staff recommends approval.
WAG/cjc
H: Palace -School BondSale
June 14, 2001 (9:23AM)
RESOLUTION NO.
A RESOLUTION RELATING TO THE GIVING OF NOTICE OF INTENTION
TO ISSUE CITY OF GRAPEVINE, TEXAS COMBINATION TAX AND
REVENUE CERTIFICATES OF OBLIGATION, SERIES 2001 AND
PROVIDING AN EFFECTIVE DATE
WHEREAS, the City of Grapevine, Texas (the "City"), pursuant to Chapter 271,
Subchapter C, Texas Local Government Code, as amended, is authorized to issue its certificates
of obligation for the purpose of paying contractual obligations to be incurred for the purposes set
forth below; and
WHEREAS, the City Council of the City has found and determined that a notice of
intention to issue certificates of obligation should be published in accordance with the
requirements of applicable law;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF GRAPEVINE, TEXAS, THAT:
Section 1. The findings and determinations set forth in the preambles hereto are
hereby incorporated by reference for all purposes.
Section 2. The City Secretary of the City is hereby authorized and directed to issue a
notice of intention to issue certificates of obligation in substantially the following form:
"NOTICE OF INTENTION TO ISSUE CITY OF GRAPEVINE,
TEXAS COMBINATION TAX AND REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2001
"NOTICE IS HEREBY GIVEN that on July 17, 2001, the City Council of
the City of Grapevine, Texas, at 7:30 p.m. at a regular meeting of the City
Council to be held at the City Hall, 200 Main Street, Grapevine, Texas, the
regular meeting place of the City Council, intends to pass an ordinance
authorizing the issuance of not to exceed $4,500,000 principal amount of
Certificates of Obligation for the purpose of paying contractual obligations for:
(i) acquisition of the Palace Arts Center, located at 300 S. Main Street, Grapevine,
Texas for use as a music hall, opera house and theater (the "Project"); and (ii) to
pay for professional services of attorneys, financial advisors and other
professionals in connection with the Project and the issuance of the Certificates.
The Certificates shall bear interest at a rate not to exceed fifteen percent (15%)
per annum, and shall have a maximum maturity date of not later than forty (40)
years after their date. Said Certificates shall be payable from the levy of a direct
and continuing ad valorem tax against all taxable property within the City
sufficient to pay the interest on this series of Certificates as due and to provide for
the payment of the principal thereof as the same matures, as authorized by
Chapter 271, Subchapter C, Texas Local Government Code, as amended, and
from all or a part of the surplus revenues of the City's waterworks and sewer
system, such pledge of surplus revenues being limited to $1,000.
GRA325/1
Dallas ResolutionforNoticeofIntent-GrapevineCO2001
"THIS NOTICE is given in accordance with law and as directed by the City Council of
the City of Grapevine, Texas.
"GIVEN THIS June 19, 2001.
/s/ Linda Huff
City Secretary
City of Grapevine, Texas"
Section 3. The foregoing notice shall be published once a week for two consecutive
weeks, the date of the first publication being not less than the fourteenth (14th) day prior to the
date set forth in the foregoing notice for passage of the ordinance authorizing the Combination
Tax and Revenue Certificates of Obligation. Such notice shall be published in a newspaper of
general circulation in the area of the City of Grapevine, Texas.
Section 4. That this resolution shall take effect from and after the date of its passage.
GRA325/71005
Dallas ResolutionforNoticeoflntent-GrapevineCO2001
-2-
PASSED, APPROVED AND EFFECTIVE June 19, 2001.
F. -W="
City Secretary, City of Grapevine, Texas
Mayor, City of Grapevine, Texas
APPROVED AS TO FORM:
an
City Attorney, City of Grapevine, Texas
Signature Page for Intent Resolution
Jun -12-01 10 : �32.m From -Boyle & Lowry
DATE
TO
FROM;
June 7, 2001
9726507105 T-979 P-002/004 F-947
Attorneys and Cbuaselors
4201 WingTen, Suite 108
Irving, Texas 75062
(972)650-7100
Fax (972)650-7105
Bill Gaither, Director Administrative Services Via Fax: 8187-410-3005
Fred Werner, Finance Manager
Roger Nelson, City Manager
Linda liuff.. City Secretary
Rob Collins, Bond Counsel
Ben Brooks, Bond Counsel
E. Day Hutchison
John F. Boyle, Jr., City Attorney
Via Fax: 817-410-3005
Via Fax: 817-410-3002
Via Fax- 817-410-3004
Via Fax: 214-220-7716
Via Fax: 214-220-7716
Via Fax: 214-220-7716
IZE: City of Grapevine (the City) - Palace Theatre Project (the Project)
Pursuant to the Attorney General's Opinion precluding the City from issuing Bonds to
pay the City's obligation to the six (6) Bank consortium, the City is now giving notice to issue
C
.ertiflc.ates' of Obligation in the amount of $4,500,000 to purchase the Palace Theatre from the
(3rapevine Heritage Foandation Dime Fomi,dation.).
The schedule, as I understand it, is to approve the giving of notice of intention to issue
pursuant to Chapter 271, Texas Local Government Code, on June 19, 2001. OnJuly l7,2001,
the City Council will approve an Ordinance authorizing the issuance of $4,500,000 for paying
the contractual obligation to purchase the Project and to pay for costs of sale and professional
services. The Bond Sale should close in mid-August.
The steps I recommend the City and the Foundation to take preceding the closing of'
the Dond Sale are the following:
1. Passage by the City Council of a nunc pro t-unc Chapter 380 resolution
recognizing and ratifying all prior action taken by the City and the Foundation
relative to the initial acquisition and reconstruction of the Project. A copy of the
proposed City Council Resolution is attached. A similar Resolution is being -
prepared for the Foundation.
9726507105
Jun -12-01 10:04am From -Boyle & Lowry 9726507105 T-979 P.003/004 F-947
Bill Gaither, Director Administrative Services
Fred -Werner, Finance Manager
Roger Nelson, City Manager
Linda Huff, City Secretary
Rob Collins, Bond Counsel
Ben Brooks, Bond Counsel
E. Ray Hutchison
June 7, 2001
Page 2
2. City and Foundation enter into agreements incorporating the following terms:
(a)
Contract of Sale of the Project from Foundation to the City for cash
consideration equal to the total amount due to the consortiums,
including principal, interest, and other customer and necessary charges_
An Appraisal of the property is to be acquired by the Foundation that
supports the cash consideration paid by the City to the Foundation.
(b)
Upon payment of the notes and receipt of a full and complete release
from all of the consortiums, the Foundation will issue a Warranty Deed
to the City for the Project. An Owner's Title Policy with the survey
exceptions deleted will be provided by the Foundation.
(c)
City will enter into a triple net Lease with the Foundation for the
Foundation to maintain, repair and operate the Project. The term of the
Lease shall be concurrent with the City's Certificates of Obligation. The
foundation's rent for the Project shall be equal to the City's payment of
its $4,500,000 in Certificates of Obligation. As security for the Lease
payments, the Foundation pledges all net revenue from operations of the
Palace, all unencumbered private donations, all local and federal grants,
and all net Foundation revenue from its projects, operations and
(d)
After all CO's have been paid in full, the City will convey the project to
the Foundation, to the extent authorized by law, for $1.00 and other
good and valuable consideration.
If there are any problems with this procedure or if there are any additional ideas,
please advise-, otherwise, I shall continue to draft these documents, namely:
Foundation Nunc Pro Tunc Resolution.
2. Contract of Sale,
3- Warranty Deed.
9726507205
Jun -12-01 10:04am From—Boyle & Lowry 9726507105 T-979 P.004/004 F-947
Bill Gaither, Director Administrative Services
Fred Werner, Finance Manager
Roger Nelson, City Manager
Linda Huff, City Secretary
Rob Collins, Bond Counsel
Ben Brooks, Bond Counsel
E. Ray Hutchison
June 7, 2401
Page 3
4. Triple Net Lease.
0. Option to purchase at such time as the CO's are paid in full. Special Warranty
deed from City to Foundation.
Thanks.
Enclosure
D:%0rapevtne\gv-palace iheazre\gv-paIncc 6.7.01 gaither,we=er, nelson, huff, Collins, brooks, hutchisoa.wpd
9726507105
11:53am Frof^-Boyle & Lowry
9726507105
CITY OF GRAPEVINE
RESOLUTION NO.
T-981 P-002/004 F-949
N ApPROVING AND RATUFYING AGREEMENTS
ARESOLUTIO CITY OF
BETW
EEN TM CITY AND A CONSORTIUM OF
TO I
FNANCE THE ACQUISITION,
GRAPEVINE BANKS ON OF THE O
O • HISTRIC
CONSTRUCTIN AND RIENOVATI•lo 000.00 AND
p,4 -LACE THEATRE IN THE AJAOUNT OF $3,90 ,
BETWEEN
THE
CITY AND THE'
L0,AdN -FOUNDATION pURSUANT TO AN
GRAPEVINE T4EP"TAGE RAM ESTABLISHED
ECONOMIC, DEVELOPMENT PROG
pURSIJANT TO CHAPTER $So OF THE TEXAS LOCAL
GOVERNME-N-T CODE NTUNC PRO T13NC TO MARCH 7, 2000,
THE DATE THE DOCVWINTS ANI) AGIIIEEmENTS WERE
REVIEWED AND APPROVED By THE CITY OF GRAPEVINE -
CITY COINCIL.
WIlEp,AS, the City Council ba,5 concluded that the acquisition, recon5truCtic'-*'
F
-tiction of tbe. Palace Theatre in historic Downtown Grapevine, contiguous
,r'd constT
to the new City Hall will enhance the historic district, improve property values,
rejuvenate ai:id accelerate commercial and retail activity and stimulate business and
commercial activity throughout the City; and
WHEREAS, to accomplish the undertaking, the City has negotiated Loan
Agreements with a consortium of six (6) City of Grape -vine National Bank, Banks, nainely, Worth
Texas
National Bank, First State Bank of Texas. Independent
National Bank, Texas Bank, and Frost Bank (Consortium) to acquire a loan in the
of $3,soo,000, the proceeds, ofwhi--h will be used to acq'uire the Palace Theatre,
aDer that -,will ignite growthin the Downtown are
reconstruct wad const-rUct it m-.n
a-ad
NNTHE REAS) the loans to be entered into by the City with the Consortium are
cured excess hotel and raotel tax revenue and
legal, valid and binding agreements Se by annual appropriation; and
the City's available funds subject to
WHEREAS, the City has concluded that the Grapevine Heritage Foundation,
a 501(c)(3) corporation created by the City for the purpose of promoting Historic
Downto-,a,,n Grape-virie, is the most appropriate party to acquire, construct, reconstruct,
maintain and operate the Palace Theatre; and
WBE REAS, Texas Local Government Code, Chapter 38o, provides that the
goverai-ng body of a municipality mestablish and provide for the administration of
tv may
one or more programs. including programs for the making of loans and grants of public
, r_1ng
Jun -12-01 11:53am From -Boyle & Lowry 9726507105 T-981 P.003/004 F-948
DRAFT
money and prov:icb-ng personnel and services of the municipality to promote local
economic development and to stimulate business and commercial activity in the
municipality; and
WB ER.EAS, the City Council wishes to establish an incentive program under
Texas Local Government Code, Chapter 380, to provide a program that will encourage
retail and commercial business activity in Historic Downtown Grapevine by the
acquisition, construction and reconstruction of the Palace Theatre on Main Street
contigunous to the new City Hall by the Grapevine Heritage Foundation; and
WIIEREA.S. the effective date of the approval of the loans from the Consortium,
the establishment of the Chapter 380 program under Texas Local Government Code,
and the approval of the Loan Documents with the Consortium and the transaction
between the City and the Grapevine Heritage Foundation is nunc pro tune March 7,
2000.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITE' OF GRAPEVINE;
Section 1. That all matters stated in the preamble are found to be true and
correct and are incorporated into the body of the Resolution as if copied in their
entirety,
Section 2. That the Financing Agreements and all Loan Agreements and
Doctum, encs and all terms incorporated therein between the City and the Consortium
for the City to borrow $3,800,000 to acquire, construct and reconstruct the Palace
Theatre are hereby approved, subject to approval of all documents by the City Attorney
and the City's Director of Administrative Services, and the Mayor, William D. Tate, or
the City Manager, Roger Nelson, are authorized and directed to sign all necessary and
appropriate documents on behalf of the City.
Section . That pursuant to Chapter 380 of the Texas Local Government Code
a program, to stimulate business and commercial activity in the City is hereby
established as follollvs:
(A) The City acquires the historic Palace Theatre and borrows $3,800,000.00
from a Consortium of six (6) Banks, for the purpose of acquiring,
reconstructing and constructing the Palace Theatre in Historic Downtown
Grapevine contiguous to the new City Hall.
(D) That the City enter into valid and binding Agreements with the
Grapevine Heritage Foundation (Foundation), a 501 (c)(3) corporation,
created by the City to promote Historic Downtown Grapevine and to
2
9726507105
Jun -12-01 11 :53am From—Boyle & Lowry 9726507105 T-981 P-004/004 F-949
MT;Ikml
A
stimulate its business development to allow the Foundation to acquire,
reconstruct, t_ construct, operate and maintain the Palace Theatre and
pledge to repay the $3,800,000 Note to the City from private donations,
the operational revenues from the Palace, and a lien against the
Property.
(C) That the Mayor or City Manager shall approve and execute all necessary
documents between the City and the Foundation to carry out this
program, after said documents have been approved by the City Attorney
and City's Director of Administrative Services.
Section 4. That the effectived�acealltransactionsdescribed in Sections 1,
2 and 3 is hereby declared nunc pro to bel
7, 20W
Section 5. The this Resolution shall take effect from and after its passage.
PASSED the _ day of May, 2001,
City Secretary, Linda Huff
City Attorney, John F. Boyle, Jr.
D:\Grope,line\gv,rcsoluTions\E7v-res Palace theatre ag= imlthbanks,P6
3
Mayor William D. Tate