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HomeMy WebLinkAboutAgenda Statement 1985/07/23 Item 8:y the City Council of COUNCIL AGENDA STATEMENT Chula Vista, California Item 8 ed Meeting Date 7/23/85 ITEM TITLE: Resolution /.7.-//e C Approving and authorizing execution of first supplemental trust indenture relating to variable rate commercial development revenue bonds for the South Bay Ambulatory Surgery Associates project SUBMITTED BY: Community Development Director 5ths Vote: Yes No X ) REVIEWED BY: City Manager 1/V40:2' The financing for the surgi-center was closed last December without having obtained a rating from one of the New York rating agencies. The rating agencies have been asked to rate the bonds so that they can be sold publicly. The agencies require certain provisions which were not originally part of the financing documentation. For this reason, Council is requested to approve certain changes in the indenture agreement. A copy of the letter from the underwriter' s counsel requesting the changes is attached. This information has been reviewed by our bond counsel , Jones Hall Hill & White, and found to be acceptable from the City' s standpoint. We are further advised by bond counsel that the changes are technical in nature and do not substantially change any of the approved documents. RECOMMENDATION: That the Council adopt the resolution approving the first supplemental trust indenture by and between the City of Chula Vista and the Golden State Sanwa Bank relative to the South Bay Ambulatory Surgery Associates project. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: At the time of approval of the financing documents for the surgical center, this project was financed as a private placement with the understanding that an effort would be made shortly after approval for public placement of the bonds. In order to qualify for public placement, the project must be rated by an approved rating agency. The rating agencies have been asked to rate the bonds and require certain provisions which were not originally a part of the documentation. These provisions are described in the first supplemental trust indenture attached to the resolution. They include the "authority" for the first supplemental indenture, amendments to the definition of certain terms including "Act of Bankruptcy," amendments to provisions relative to bonds purchased by the bank, and amendments to the revenue fund provision concerning the disbursement of funds on each interest payment date. It is the determination of our bond counsel and staff that the changes included in the first supplemental trust indenture are technical in nature and do not substantially change the meaning or intent of any of the financing documents. FISCAL IMPACT: Not applicable. wpc 1656H JONES HALL HILL & WHITE, A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW KENNETH I. JONES FOUR EMBARCADERO CENTER ANDREW C. HALL.JR. SUITE 1950 SHARON STANTON WHITE SAN FRANCISCO 94111 CHARLES F.ADAMS STEPHEN R. CASALEOOIO (415) 391-5780 WILLIAM H. MADISON PHILIP NELSON LEE AUTOMATIC TELECOPIER EDSELL M. EADY,JR. (415) 091-5784 PAUL J. THIMMIO BRIAN D. QUINT ROBERT J. HILL JOROEN L.NIELSEN OF COUNSEL TRACY E. CONNER July 9, 1985 JOHN PAUL THOMAS Mr. Fred Kassman ji, E C E I V E D City of Chula Vista JUL 1 1985 276 Fourth Avenue Chula Vista, California 92010 Community Development Dept. Re: South Bay Ambulatory Surgery Associates Financ ng Dear Fred: • As you know, we closed this financing last December without the luxury of first having obtained a rating from one of the New York rating agencies. The rating agencies have now been asked to rate the bonds, and as we guessed they require certain provisions which were not originally a part of the documentation. For this reason, we have been asked that certain changes be made in the indenture. A copy of the letter from underwriter's counsel requesting the changes is enclosed for your file. We have reviewed these proposed changes and find them acceptable from the City's standpoint; they are primarily technical in nature, as you can see. • have prepared a resolution for consideration by the City Council which approves the First Supplemental Trust Indenture, copies of which are enclosed. Following the adoption of the Resolution, the Mayor and City Clerk should sign two copies of the First Supplemental Trust Indenture and return them to me for distribution to the Trustee. Also, the City has been requested to file a letter with the Trustee pertaining to the characterization of loan payments as "in advance" rather than "in arrears". This letter appears in order to us. It should be re- typed on City letterhead and signed by Paul or some other City official, and the original should be returned to me so that I can file it with the Trustee along with the First Supplemental Trust Agreement. If you have any questions, please give me a call. All in all, we fully expected that revisions like these would be required after the bond closing, so that this request does not come as any surprise. Verj ruly yours, Cha es F. Adams cc: Mark J. Saladino (wfencl.) Janis Penton (w/encl.) Andrew Bard (w/encl.) '3/4nJN 24 19,95 JONES, DAY, REAVIS Sc POGUE AUSTIN CLEVELAND CROCKER TOWER-SUITE 1400 TELEPHONE:213.489-3939 COLUMBUS TELEX:194911 333 SOUTH GRAND AVENUE CABLE:AfTO'RNEYS LOS ANGE DALLAS WASHINGTON LOS ANGELES, CALIFORNIA 90071 TELECOPIER;213-499.7155 5810:sgh 013380-003-022 June 21, 1985 Charles F. Adams , Esq. Jones , Hall, Hill and White Four Embarcadero Center, Suite 1950 San Francisco, CA 94111 Re: City of Chula Vista Variable Rate Demand Demand Commercial Mortgage Revenue Bonds (South Bay Ambulatory Associates Project) 1984 Series A • Dear Chick: Enclosed are clean and blacklined copies of the Supplemental Trust Indenture for adoption by the City of Chula Vista. Language was added to Section 5 in order to prevent disbursement on an interest payment date of developer payments made in advance. If this document meets with your approval, please forward it to the City Council for adoption at its next meeting. Also enclosed is a draft letter which I ask that you forward to the City together with the Supplemental Trust Indenture, for preparation on the City's letterhead. Because the Trustee must, for internal accounting purposes , maintain a current loan balance, it is necessary that payments from the developer be characterized as "in advance" or "in arrears" , thereby facilitating identification of the principal and interest components of each payment. Very truly yours , MARK J. SALADINO Enclosures cc: Distribution list attached, w/encl.