HomeMy WebLinkAbout2001-11-13 - AGENDA REPORTS - 38 ACRE PARKLAND PURCHASE (2)CITY OF SANTA CLARITA
AGENDA REPORT
NEW BUSINESS
City Manager
Item to be presente4 by: Steve Stark
DATE: November 13, 2001
SUBJECT: APPROVAL OF DOCUMENTS RELATED TO THE PURCHASE OF
38 -ACRES OF PARKLAND AND ISSUANCE OF $3,200,000 IN
CERTIFICATES OF PARTICIPATION
DEPARTMENT: Administrative Services
RECOMMENDED ACTION
1. City Council approve a trust agreement, a site lease, and a lease agreement, and
authorize the taking of certain actions in connection with the execution and delivery of
$3,200,000 in Certificates of Participation (COP) for Parkland Acquisition.
2. City Council convene to the Public Finance Authority (PFA) and have the Public
Finance Authority approve documents in connection with the execution and delivery of
$3,200,000 in Certificates of Participation (COP) for Parkland Acquisition.
BACKGROUND
During the budget study sessions in June of this year, the City Council directed staff to
explore the option of purchasing the 38 -acre RABP for the City. On August 28, the City
Council authorized staff to enter into formal negotiations with the owners of the property.
As a result, staff was directed by the City Manager to complete all the due diligence
necessary in order to prepare a reasonable offer to the Business Park owners. The City
Manager then met with the owners on several occasions to discuss a purchase price and
terms. The final terms the Council agreed to on the October 9 City
following: Council meeting are the
L The City will pay $5.5 million for the acquisition of the Ruether Avenue Business Park
Property.
2. The City will pay $2.3 million in cash up front to the Owners of RABP.
3• The balance of the price will be financed over fifteen years with the use of Certificates
of Participation (Cop's) with no penalty for early payoff (the City's intent is to pay the
COP's early within a five-year period). The COP proceeds will be deposited into escrow
for the balance of the purchase price.
Agenda Item: 3
APPROVAL OF DOCUMENTS
November 13, 2001— Page 2
4. Under the COP's financing, the City will lease the Property to the PFA, pursuant to a
Site Lease (the PFA pays to the City the COP proceeds). The PFA then leases the
Property back to the City for annual lease payments, pursuant to a Lease Agreement.
Zions Bank will purchase the COP's for $3.2 million (the PFA assigns its rights to
receive the lease payments to the Bank by giving the Bank certificates evidencing the
Bank's participation in the lease payments), and the lease payments will be paid to the
Bank as holder of the COP's. The City agrees to annually appropriate funds to make
the lease payments. The interest rate on the COP's is 4.2% for the first five years, then
on 11/1/06 and 11/1/11, adjusts to 85% of the then current FHLB's five-year rate.
5. The City will make a lease payment of approximately $725,000 annually for five years,
beginning November 2002, assuming the City prepays the lease in shorter time period
than the 15 -year amortization.
6. Ruether Avenue Business Park will pay for the costs of issuing the COP's and related
real estate fees ($32,000) from its sale proceeds. The City will pay its share of the
escrow fees.
7. Spirit Properties will provide the City access to the property by installing a cul-de-sac
at the end of Ruether Avenue, adjacent to the northern portion of the property at no
cost.
8. Spirit Properties will secure storm drain easements from the Santa Clarita Business
Park at no cost to the City.
Tonight's action by the City Council and the City's PFA is to approve documents in
connection with the execution and delivery of $3.2 million in COP's. This commonly used
method of finance in local government is being requested by the City of the City's Public
Finance Authority. By taking this action, the City Council will be meeting its obligation to
Pay the balance of the $5.5 million for the Ruether Avenue Business Park with proceeds
from the issuance of COP's.
Moreover, this action is one of the final steps in the acquisition of the Ruether Avenue
Business Park property. The final transaction will be completed after the funding is in
place and the property is transferred and recorded in the City's name by the escrow
company. The transfer or closing is scheduled for November 15.
ALTERNATIVE ACTIONS
1. The City Council may choose not to issue COP's for the purchase of the Ruether Avenue
Business Park and opt for a different financing method.
2. Other action as determined by the City Council.
APPROVAL OF DOCUMENTS
November 13, 2001— Page 3
FISCAL
The City will be paying a lease payment of approximately $725,000 each year for five years,
assuming the City prepays the lease in a shorter time period than the 15 -year amortization.
This will have to be allocated each year from the City's general fund, beginning in fiscal
year 2002-2003.
ATTACHMENTS
Resolution of the City of Santa Clarita, Authorizing Approval of Action Related to the
Execution and Delivery of $3,200,000 in COP.
Resolution of the Board of the Santa Clarita Public Finance Authority, Authorizing
Approval of Action Related to the Execution and Delivery of $3,200,000 in COP.
Trust Agreement with Bank of New York (Available in City Clerk's reading File).
Site Lease and Lease Agreement (Available in City Clerk's reading File).
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