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HomeMy WebLinkAbout3922_CCv0001.pdf RESOLUTION NO. 3922 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDLANDS , CALIFORNIA APPROVING AND AUTHORIZING THE EXECUTION OF INSTALLMENT SALE AGREEMENTS (SECURITY AGREEMENTS) RELATING TO RECREATIONAL FACILITIES AND RELATED DOCUMENTS BE IT RESOLVED by the City Council of the City of Redlands , California (the "City Council" and the "City , " respectively) , as follows : Section 1 . Findings . It is hereby found, determined and declared by this City Council as follows : (a) It is in the best interests of the citizens of the City that the City purchase certain land (the "Facilities Site" ) and to cause to be constructed thereon a multi-use recreational facility (the "Building" ) , the Facility Site and the Building collectively being referred to herein as the "Facilities , " and it is further in the best interests of the citizens of the City that the City sell the Facilities to The Young Men' s Christian Association of Redlands , a California nonprofit corporation (the "YMCA" ) . (b) It is further in the best interests and for the common benefit of the citizens of the citizens of the City that the City. (i) Purchase the Facilities from Redlands Financial Services , Inc . , a California corporation (the "Initial Seller" ) pursuant to a certain Installment Sale Agreement (Security Agreement ) Relating to Recreational Facilities , dated as of September 1983 , (the "First Installment Sale Agreement" ) ; (ii) Enter into that certain Installment Sale Agreement (Security Agreement ) Relating to Recreational Facilities , dated as of September _, 1983 , (the "Second Installment Sale Agreement") by and between the City, as seller, and the YMCA, as purchaser. (c) The City is authorized: (i) To purchase property , both real and personal , and any interest therein for park and recreational purposes ; and (ii) To sell or otherwise dispose of any property , both real and personal , and any interest therein for park and recreational purposes . (d) The obligations of the City under and pursuant to the First Installment Sale Agreement shall be special limited obligations of the City payable solely from the sources therein provided and shall not constitute a general obligation indebtedness of the City within the meaning of any provision of the Constitution of the State of California, or any statutory limitation or requirement applicable to the City concerning the i creation of indebtedness . Section 2 . Approval of First Installment Sale Agreement . The First Installment Sale Agreement , a copy of which Agreement is on file in the office of the City Clerk, has been reviewed to the extent deemed necessary and is hereby approved in the form submitted to this meeting, and Resolution No. 3922 -2- the Mayor is hereby authorized and directed to execute , acknowledge and deliver said Agreement on behalf of the City , with such changes , insertions or omissions therein as do not change the substance thereof and as may be approved by the City Attorney, and the City Clerk is hereby authorized to attest to said signature and to affix thereto the corporate seal of the City. Section 3 . Approval of Second installment Sale Agreement . The Second Installment Sale Agreement , a copy of which Agreement is on file in the office of the City Clerk, has been reviewed to the extent deemed necessary and is hereby approved in the form submitted to this meeting , and the Mayor is hereby authorized and directed to execute , acknowledge and deliver said Agreement on behalf of the City, with such changes , insertions or omissions therein as do not change the substance thereof and as may be approved by the City Attorney , and the City Clerk is hereby authorized to attest to said signature and to affix thereto the corporate seal of the City. Section 4 . Grant Deeds . The Mayor is authorized to accept on behalf of the City a grant deed from the Initial Seller to the City in the form presented to this meeting and to cause the recordation of a grant deed from the City to the YMCA in the form presented to this meeting . Resolution No . 3922 -3- Section 5 . Assignment of Interest in Deed of Trust . That certain Assignment of Beneficial Interest in Deed of Trust dated as of September _, 1983 , whereby the City assigns to the Initial Seller its interest as beneficiary under a Deed of Trust dated as of September _, 1983 , by and among the YMCA, as trustor, , as trustee , and the City , as beneficiary, a copy of which Assignment is on file in the office of the City Clerk, is hereby approved and the Mayor is hereby authorized and directed to execute said Assignment on behalf of the City and the City Clerk is hereby authorized to attest to said signature and to affix thereto the corporate seal of the City . Section 6 . Other Acts . The officers of the City , including but not limited to the Mayor, the City Clerk and the City Manager, are hereby authorized and directed, jointly and severally , to do any and all things , to execute and deliver any and all documents , which may be required under the terms of the First Installment Sale Agreement , the Second Installment Sale Agreement or this Resolution and to execute such instruments and take such other action as may be required or appropriate for the performance of the duties imposed thereby or to carry out the purposes thereof and such actions previously taken by such officers are hereby ratified and confirmed . Resolution No. 3922 -4- LAW OFFICES OF i BEST, ®EST & KRIEGER September 14, 1983 MEMORANDUM TO : MAYOR, CITY COUNCIL AND CITY MANAGER FROM: SPECIAL COUNSEL RE : INSTALLMENT SALE FINANCING OF REDLANDS YMCA The Young Men' s Christian Association of Redlands (the "YMCA") has requested the City Council to assist the YMCA in the financing of a multi-use recreational facility to be located in the City and operated by the YMCA. The YMCA wishes to reduce its "cost" of borrowed funds for the project by means of obtaining tax-exempt financing through the City. Redlands Federal Savings and Loan Association ("Redlands Federal") , in turn, has indicated that it is pre- pared to make such financing available to the YMCA for the project at a lower tax-exempt interest rate. Accordingly , we have prepared the attached documents in order to make such a tax-exempt arrangement available to the YMCA by means of an "installment sale" arrangement . under this arrangement , Redlands Financial Services , Inc . ("Financial Services") , a financial services entity related. I to Redlands Federal , will acquire title to the project and sell the project to the City pursuant to the terms of an Installment Sale Agreement (the "First Installment Sale Agree- ment'") . The City will be required to make purchase payments LAW OFFICES OF BEST, BEST & KRIEGER (whish obligation will not involve financial liability to the City as is discussed below) to Financial Services in an amount equal to the debt service on the funds that will be advanced by Redlands Federal for the project. A portion of each of these purchase payments will be treated as tax-exempt interest. The City, in turn, will resell the project to the YMCA pursuant to another Installment Sale Agreement (the "Second Installment Sale Agreement") . The YMCA will be required to make purchase payments under the Second Install- ment Sale Agreement in an amount equal to the purchase pay- ments required of the City under the First Installment Sale Agreement. Additionally, the YMCA will give a Deed of Trust on the project to further secure its obligation. The City, in turn, pursuant to the attached Assignment of Beneficial Interest Under Deed of Trust , will assign the Deed of Trust to Financial Services . Finally, Financial Services will assign its rights to receive purchase payments to Redlands Federal in return for the advance of funds in the amount of $750 , 000 by Red- lands Federal for the purpose of completing the project. Pursuant to the provisions of Section 3 . 07 (b) of the First Installment Sale Agreement , the obligation of the City to make purchase payments is a special obligation and -2- LAW OFFICES OF BEST, BEST & KRIEGER is payable solely from payments made by the YMCA under the Second Installment Sale Agreement. In the event of default by the YMCA in repaying Redlands Federal , the City will not bear any financial liability for such repayment . The attached Resolution authorizes the City to enter into this installment sale arrangement , including the execution of the First Installment Sale Agreement and the Second Installment Sale Agreement , together with Grant Deeds relating to the project and the assignment of the City' s interest in the Deed of Trust on the project . Also attached is a proposal letter from our firm for our services being rendered in this transaction as Special Counsel , which includes the preparation of the legal documents and the delivery of our approving opinion as to the validity of the documents and the tax-exempt status of the interest component of the purchase payments under the First Installment Sale Agreement under both federal and California tax laws . These fees , of course , are being paid from the proceeds of the loan being made by Redlands Federal to the YMCA. 1 GLEN E . STEPHENS FRANCIS J . BAUM -3-