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HomeMy WebLinkAboutReso 1980-10380 70 . , RESOLUTION NO. 10380 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING LEASE FINANCING FOR THE PURPOSE OF PROVIDING FOR THE CONSTRUCTION, DEVELOPMENT AND FINANCING OF CERTAIN MARINA, RECREATION AND RELATED AND APPURTENANT FACILITIES BY CHULA VISTA R-V PARK, INC. The City Council of the City of Chula Vista does hereby resolve as follows: WHEREAS, the City is authorized by Article 2 of Chapter 5 of Part 2 of Division 3 of Title 4 of the California Government Code, and by Chapter 6 of Part 1 of Division 2 of Title 5 of said Code, to enter into a lease of marina, recreation and related appurtenant facilities, and WHEREAS, Chula Vista R-V Park, Inc. (the "Developer") has requested the City to enter into a lease for the purpose of providing financing for marina and related and appurtenant facil- ities to be constructed and developed by the Developer within the City of Chula Vista and the City wishes to induce the Developer to construct and develop said facilities in the City, and WHEREAS, it is in the public interest, for public benefit and in the furtherance of the public purposes of the City that the City Council authorize such lease. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista as follows: 1. The City Council of the City of Chula Vista hereby authorizes the entering into of one or more leases by and between Municipal Funding Corporation of America as lessor and the City as lessee for the purpose of providing financing to the Developer for the construction and development of all or any portion of a recre- ational vehicle park, marina, restaurant, delicatessen, ship chandlery, bait and tackle shop, and related and appurtenant facili ties (the "Project"), in a principal amount of not to exceed Ten Million Dollars ($10,000,000), to be located near J Street and the Chula Vista Tidelands in the City of Chula Vista. Such lease or leases may be in the form of a sublease. 2. The entering into of such lease or leases shall be upon such terms and the conditions as may be mutually agreed upon by the City, the Developer and said lessor of the Project, and shall be subject to the completion of all proceedings for the entering into of said lease by the City. 3. The proceeds of said financing shall include such related and necessary issuance expenses, administrative costs, debt service reserves and interest payments as may be required to accomplish successfully the financing. Approved as to form by ~-eY~~<~ George D. Lindberg, City. ttorney P ul G. Desrochers, Community Development Director ...-,. j ./ / ADOPTED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF CHtLA VISTA, CALIFORNIA, this 20th. . 19'11 1 ,by the following vote, to-wit: day of January AYES: NAYES: ABSTAIN: ABSENT: Councilmen Cox, Gi11ow~ Hyde councilmen McCand1iss CcdlCilmen Councilmen Scott None D.)~~~~ I Mayor of the City 0 Chula Vista ATT~#' ~ ~'~-r Cit Cieri( STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) 55. CITY OF CHULA VISTA ) I, JENNIE M. FULASZ, CMC, CITY CLERK of the City of Chula Vista, California, DO HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUT10N NO. 10380 ,and that the eame has not been amended or repealed. DATED City Clerk ( seal) CC-660 103 '$0 REPORT: CITY SPONSORSHIP FOR FINANCING FOR THE CHULA VISTA MARINA AND RV PARK ( The reso I uti ons to be cons idered th i s eveni ng ha ve been di vi ded into tWJ categori es; one for the marina and one for the RV park. The consultants have not yet sized the amount of the issue/issues and therefore, at this time, suggest that separate financing be authorized although for economy sake every effort will be made to consol idate the tl'lO developments into one financing package. The following dis- cussion is based upon the total issue although two issues would be structured to provide the same assurances. . While we have to look at the worst case possibility in order to establish probability of default, the positive aspects of the development must be addressed: Portland, Oregon; Ventura, Redwood City and Richmond California to name a few have recently participated in this type of financing through MUFCOA. An extensive feasibility study by Leisure Systems, Inc., an outside independent consultant, i ndi cates a mos t successful project. There is a 100% usage of the 7,200 boat slips in the San Diego region; while there are over 30,000 boats registered in the same area. ( The Copley report on the visitor industry in this City indicates a need for water-related activity on the Bayfront; development of which would cause more visitor uses such as motels and restaurants. The potential income to the City in T.O.T. from the RV park is projected at $68,000 annually, while the sales tax from the marina and support facilities is estimated to be $85,000 for the first full year. d. ..... 0 lO'Z With these positive aspects we must also consider the meaning of City sponsorship. The proposed issue will be the first such proposal in the six years that I have been with the City that directly involves City liability. In order to prevent actual use of municipal monies, I have asked for and received certain guarantees from the developer that, in my opinion, with the support of the municipal financial consultants, would protect the City to the fullest extent possible. Enumerated below are the safeguards that are proposed to be provided: a. The developer proposes to provide the City with monthly profit and loss statements and audited yearly reports on the financial condition of the project. b. The developer proposes to guarantee a $1 million fund to be utilized by the City in the case of a shortfall of principal and interest payments after the initial start-up period. c. As part of the bond issue, a full year's interest and principal payment is provided for the protection of the bond- holders. This fund could only be utilized if a technlcal default is declared; nevertheless, this is a "protective layer" before City funds would have to be util ized. It is proposed to annex the development site to. the Bayfront Redevelopment Project so that in the event of possible default of the developer,. tax increment funds could be utilized. l ~,- '.'. -,",_,__ ......:O~'.:'lwr~""-~ -~ 'C e. If default occurred, the City would have up to two years to obtain a new operator thru the Port District. In addition, all of the improvements would be in the ownership of the City. Thus, any accrued appreciation would become an asset of the City. Income from ongoing operations would also affect public costs. The proposed issuance of securities would be for a period of 20 years, the afore- mentioned reserve fund would be utilized for the 20th annual payment.-therefore adding to the amount of the issue. In addition, one year's interest is funded for the construction portion of the project. The net proceeds to the developer is approximately $7.5 million. Cost for City involvement along with consultant fees would also be funded from the issue. For the life of the issue, the City would also be reimbursed for its direct costs and staff time. Within the next six to eight weeks, the issue will be sized and the exact details of this proposal will be provided. If the conditions are not as delineated herein, or if the bond market is not down to adequate (feasible) interest rates, then the issue will not be presented to you for approval which is necessary in order to conduct a sale of the securities. ( l