04/08/1981 Meeting - Laserfiche WebLink

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e e e certificates of participation which are similar to bonds. Council directed staff to return to council with an implementation plan which staff is now submitting for approval. Staff is asking for first reading of an ordinance which authorizes the execution of legal documents that implement this financing plan. He introduced Joel Kaplan, City Attorney's Office; Howard Rankin, Rankin, McMurry, et. al.; and Dennis Ciocca, E. H. Hutton, to explain the documents and to speak on the bond market conditions. Mr. Tashman explained that during early meetings with bond counsel and the underwriters, it became clear that a certain amendment to the Hilton Hotel agreement that the council approved last June would have to be modified. That agreement, drafted on the request of Councilor Obie, set up language providing that if operating deficits of the center were extremely large, the hotel developer would take over the conference center. Under that provision, the conference center would be operated for the exclusive benefit of the hotel. In the course of arranging the financing, it became clear that this provision would jeopardize the tax-exempt nature of the financing. The conference center would be a private facility. Mr. Tashman asked council to rescind the authorization to staff to execute Section 3 of the Addendum to Agreement amending the Agreement of June 25, 1980, between the City, the ERA, and the Sixth Avenue Hotel Associates. Mr. Kaplan asked for a first reading of the ordinance authorizing execution of documents to proceed with the financing. Next week, they will ask for a second reading. May 15 is scheduled for issuance of the bond certificates. He expected minor changes. Mr. Kaplan explained the way the transaction works. The ERA deeds to a trustee (a bank), development rights of the site above a certain elevation. The trustee will appoint the ERA as its agent to build the conference center. Simultaneously, the trustee will enter into a lease agreement with the City of Eugene (21 years). After that time the City has the option of purchasing the conference center for $100. The trustee will then syndicate its landlord's interest in the lease through certificates of participation (similar to bonds). The rent the City pays on the lease is going to be determined by the principal amount (not known now) and the interest rate (not known now). The documents are a lease urchase a reement (between the trustee and the City of Eugene) and the trust indenture between the trustee and the City) with provisions for security and default, and the rights of the owners of certificates of participation. It outlines and defines the security interest that the owners have, which is that of a landlord. They can foreclose on that interest and the trustee can take over operation and ownership if the City defaults. The City is required in the trust indenture to make an annual appropriation in its budget. The City does not have the right to levy a special tax to pay for the rent. The City is obligated to pay the rent to the extent that funds are available and appropriations are made in its budget. Another document will be an intergovernmental agreement between the City and the agency. The agency agrees to reimburse the City, from tax allocation revenues, all funds that the City expends on principal, interest, taxes, insurance, etc. There will be an appropriation in the City budget for payment to the trustees of rent and other expenses. On the revenue side, there will be the exact same amount coming in from the agency. The next document is the agency agreement MINUTES--Eugene City Council April 8, 1981 Page 15