HomeMy WebLinkAboutAgenda Statement 1985/11/26 Item 6 COUNCIL AGENDA STATEMENT
Item 6
Meeting Date 11/26/85
ITEM TITLE: Public Hearing: Issuance of $4.4 Million Principal Amount
Variable Rate Demand Charter City Revenue Bonds for the Home
Depot, Inc. , for the construction of a home improvement center.
a) Resolution // ' 3 Authorizing the sale of $4.4 million
Principal Amount Variable Rate Demand Charter City Revenue
Bonds for the Home Depot, Inc. Project, and approving related
loan documents.
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SUBMITTED BY: Community Development Directo5ths Vote: Yes No X )
REVIEWED BY: City Manager9
Earlier this year, the City Council passed an inducement resolution for the
construction of an 80,000 square foot home improvement center by the Home
Depot to be located at I-805 and "H" Street. At this time the Council is
requested to hold a public hearing on the proposed issuance, consider and
approve the final bond documents and authorize issuance and sale of the bonds
totaling $4.4 million.
RECOMMENDATION: That the Agency hold the public hearing and adopt the
resolution authorizing the issuance and sale of $4.4 million principal amount
of variable rate demand charter city revenue bonds for the Home Depot, Inc. ,
approving Indenture of Trust, Loan Agreement and related documents, approving
placement memorandum and authorizing action.
BOARDS/COMMISSIONS RECOMMENDATION: On March 21 , 1985, the City Council
approved an inducement resolution for the Home Depot in the amount of $2.5
million. This amount was increased to $3 million at the City Council meeting
of May 7, 1985. A reaffirmation of the inducement resolution was passed on
October 1 , 1985 for the purpose of validating the proposed bond issue.
DISCUSSION: The City of Chula Vista has an annual IDB bond allocation of
$4.649 million. At this time, no other applications for IDB financing has
been received. It would be virtually impossible to approve a new application
for funding before the end of the year when a sunset provision on the current
legislation takes effect. IDB funding authority not approved by the end of
the year cannot be carried forward or reserved.
The Home Depot project is estimated to cost $6 million. They have received
approval for a $3 million issue. The Company is requesting to increase this
amount to $4.4 million from the City's uncommitted allocation.
Page 2, Item 6
Meeting Date 11/26/85
The Council is also requested to approve issuance documents including the
indenture of Trust, loan agreement and related documents. Finally, the
Council is requested to approve the placement memorandum and authorize
official action.
The indenture, between the City and Trustee (Dai-Ichi Kangyo Bank of
California) defines the terms and conditions of the bonds and rights of the
owners. The Loan Agreement, between the City, The Home Depot, Inc. and
Dai-Ichi Kangyo Bank of California defines the terms of the loan and the
obligations of each party concerning issuance, repayment and servicing.
Security Pacific Capital Markets Group (Security Pacific National Bank) is the
placement agent. The placement memorandum describes the bonds and the
financing to be accomplished.
FISCAL IMPACT: Repayment of the bonds will be the responsibility of The
Home Depot and will not constitute a financial obligation on the part of the
City. The bonds will be secured by the land and improvements comprising the
proposed project.
The City receives a service fee of 1/8 of one percent ( .125 per cent) for the
processing of bond document. This fee will total $5,500 from the proposed
project.
WPC 1950H
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