HomeMy WebLinkAboutAgenda Statement 1982/03/09 Item 8a, 8bCOUNCIL AGENDA STATEMENT
Item 8a, 8b
Res 1 uti ons~~ ~ 9~ a)
ITEM TI LE:
Meeting Date 3/9/82
Authorizing Issuance of Bonds or Other Obligations to Finance
Construction of Exempt Marina and Recreational Facilities by
Income Property Group
~p 7 9 / b) Authorizing Issuance of Bonds or Other Obligations to Finance
Construction of Non-Exempt Marina and Recreational Facilities
by Income Property Group
SUBMITT D BY: Community Development Director ~ (4/5ths Vote: Yes No X )
Upon the direction of the City Council/Redevelopment Agency, I have been attempting to
assi tin the development of the financing plan for the construction of a 600-slip
mari a and 250-space R/V park at the "J" Street marina tidelands area of the City.
Last ear after several months of consideration, the City Council rejected the financing
prop sal wherein the full faith and credit of the City would back the issuance of such
bond At this time, I am proposing that the City consider participating as a sponsor
for ndustrial development type bonds that would not require the full faith and credit
of t e City. The two resolutions that are before you this evening do not commit the
City to the actual financing but are inducement resolutions that provide the means to
init ate the process. The City still has time after reviewing all the documents to
with raw its sponsorship. Therefore, it is my
RECD MENDATION: That the Council
Adop the resolutions in order to start the process of preparing documents relative
to t e sale of industrial development type bonds or other similar financing instruments
for he construction and financing of the marina and RV park.
BOARS/COMMISSIONS RECOMMENDATION:
The an Diego Unified Port District is expected to review the application of the
Wils n Group to transfer its leasehold interest in the marina and RV park to Income
Prop rty Group of San Diego for the development of the facilities at the "J" Street
mari a. This action is expected to be forthcoming today and will be reported to you
orally. The general design of the facilities have already been reviewed by appropri-
ate ity staff and the Council last year. Building permits have, in fact, been
issu d for the grading of the RV park.
DISCUSSION:
At t is time, our financing team, consisting of bond counsel from Jones Hall Hill &
Whit underwriters from Merrill Lynch and Miller and Schroeder, myself, and repre-
sentatives of Income Property Group have met in an attempt to develop a financing
plan that would not require City backing.
It no appears that the Income Property Group partnership has sufficient capability
to pa ticipate with several lending institutions in a loan-to-lender industrial de-
velop ent type bond offering. The underwriter and legal counsel assure me that the
City ill not have to provide its financial backing, but only sponsorship of a tax
exemp security that will be made with a financial institution. The financial insti-
tutio will then issue a time certificate of deposit to provide repayment of the bond,
and t en, in turn, will loan funds to the developer for the construction of the marina
and R park. Recently, the City of Fullerton participated in such an issue for a
civic theater.
Form A-1~3 (Rev. 11,/79) Continued
Page 2, Item ga. 8b
P~eeting Date 3/9/82
Two
1 awe
smal
i ntc
C i tv
resolutions are required because of the particular requirements of applicable
The major issue will be under the Docks & Wharfs legislation while the
ler issue will be under the ancillary provisions of such laws. These both fall
the Charter City Industrial Commercial Bond ordinance recently passed by the
COUnCII. Attached is a letter from bond counsel regarding the need for two resolutions.
As previously stated, I will provide you with the information as the program is more
full developed. These resolutions do not commit the City to the issuance of such
secu ities but only initiate the process. Representatives of the underwriter, or
deve oper, or both will be present this evening to respond to your questions.
FI~JA~VCIAL IMPACT:
Unde this plan, the City will receive a sponsorship fee, but in no way will be
obli ated for the securities issued. Therefore, all expenses incurred by staff
will be reimbursed through this fee.
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c.TONES HALL HILL BC WHITE,
A PROFESSIONAL LAW CORPORATION
ATTORNEYS AT LAW
ETH I. JONES FOUR EMBARCADERO CENTER
EW C. HALL, JR. SUITE 1fl50
RT J. HILL SAN FRANCISCO 94111
ON STANTON WHITE
LES F. ADAMS (415) 391`5780
iEN R. CASALEGGIO
AM H. MADISON
P N. LE E
March 3, 1982 , ~ ` ;3 <' ~ s~,a ;
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Mr. Paul G. Desrochers kia,jE~, r,, .,
Community Development Director
City of Chula Vista ,., r
276 Fourth Avenue ~"r'~^-~~' '!~ t: ~~, v;~,: , :;~ ~;~,~~
Chula Vista CA 92010 J
Re: Inducement Resolutions for Income Property Group
Dear Paul:
I am enclosing one copy of the two inducement resolutions required for
the marina and recreational vehicle park financings by Income Property Group.
The only difference between the two resolutions, aside from the titles, is
that one authorizes up to $13,000,000 in financing and the other authorizes up
to $10,000,000 in financing. We need two resolutions because federal tax law
requires one resolution for each issue of bonds, and we are certain that two
bond issues will be needed for the total financing. In all likelihood, one
large bond issue (around $12,000,000) will be for the facilities which are
considered "exempt" facilities under federal tax law, and the other bond issue
will be for $1,000,000 and will finance the "non-exempt" facilities. The
problem is that if the cost of the non-exempt facilities can't be financed in
full using this method, there is a chance that Income Property Group will
elect to form a new "unrelated" partnership to finance a portion of the
project, in which event the second bond issue could be as high as $10,000,000
and the first would be reduced accordingly. Also, we don't now know exactly
what the "exempt" and "non-exempt" facilities are. Because we need to
preserve flexibility, the inducement resolution for the "non-exempt"
facilities therefore contains the $10,000,000 figure, and the project
descriptions in each resolution are identical and include the entire project.
If anyone is confused, blame it on federal tax law and on the need to retain
flexibility.
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Ver ru yours,
i.
Charles F. Adams