HomeMy WebLinkAboutFIN Lease Agreements for SREF Financing____________________________________________________________________________________
FOR CITY CLERK ONLY
File No.: 2-9-31 x 12-22
Council Meeting: 1/16/2018
Disposition: Passed Ordinance 1952 to Print
Agenda Item No: 7.b
Meeting Date: January 16, 2018
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Finance
Prepared by: Mark Moses,
Finance Director
City Manager Approval: ______________
TOPIC: LEASE AGREEMENTS TO SUPPORT FINANCING OF ESSENTIAL PUBLIC SAFETY
FACILITY PROJECTS
SUBJECT: AN ORDINANCE OF THE CITY OF SAN RAFAEL APPROVING A SITE LEASE AND
LEASE AGREEMENT RELATING TO THE SAN RAFAEL JOINT POWERS
FINANCING AUTHORITY LEASE REVENUE BONDS, SERIES 2018 AND THE
FINANCING OF CERTAIN PUBLIC SAFETY FACILITIES
RECOMMENDATION: PASS ORDINANCE TO PRINT
BACKGROUND: Since the City Council approved the Essential Public Safety Facilities Strategic Plan
on July 20, 2015, the City Council Finance Committee has received periodic reports from the City’s
Financial Advisor, PFM, regarding the construction financing options for the funding of the first three
projects: the Public Safety Center, Fire Station 52 and Fire Station 57. Thus far, the projects have been
funded on a pay as you go basis from a portion of the Measure E Transactions and Use Tax, of which
one-third (1/4 percent of the 3/4 percent tax) of the proceeds have been, and continue to be, dedicated
to these projects. The County of Marin also provides a share of the funding for Fire Station 57. The City
intends to go the tax-exempt municipal bond market to finance the remainder of the projects in
March 2018 at which time all three projects will be well underway. The source of repayment of the
bonds will be the City’s General Fund, specifically those Measure E funds set aside by City Council
direction.
The current financing timeline calls for the acquisition of a bond rating in February 2018 and formal
authorization to sell bonds at the March 5, 2018 regular meetings of the San Rafael City Council and
San Rafael Joint Powers Financing Authority.
The content of this report was reviewed and discussed by the City Council Finance Committee at its
meeting of January 9, 2018, at which time staff was directed to proceed with bringing this item to the full
City Council.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
ANALYSIS: Recently, City staff collaborated with its financial advisor, PFM, to complete the assembly
of the financing team. Jones Hall is now engaged as bond and disclosure counsel and Raymond James
as underwriter. The underwriter has recommended lease revenue bonds as the best financing structure
for the purpose of marketing bonds at a cost that is most economical to the City.
Lease revenue bonds are common throughout California and well-understood in the municipal bond
market. Under this structure, bonds used to construct a facility are repaid from lease revenues paid by
the City pursuant to a lease between the City and the issuer of the bonds as consideration for use and
occupancy of the Public Safety Center and Fire Stations. In this case, the issuer of the bonds will be the
San Rafael Joint Powers Financing Authority (SRJPFA). The SRJPFA will issue the bonds on behalf of
the City and assign the lease to the trustee for the benefit of the bondholders.
The City Charter requires all lease agreements with terms in excess of five years to be approved by
ordinance. The City’s financing team would be best served by having the flexibility to move forward with
the marketing and sale of the bonds immediately following the approval of bond documents and
issuance terms by the City Council, currently planned for March 5, 2018. By moving forward with the
ordinance approving the related lease documents now, and securing final adoption of the ordinance on
February 5, 2018, the underwriter will be able to move forward with the marketing of the bonds on
March 7, 2018.
The approval of the ordinance does not authorize the issuance of bonds or obligate the City in any way.
Staff is seeking this ordinance to be passed in advance of the bond issuance simply to comply with the
terms set forth in the City Charter which require an ordinance for lease agreements. Adoption of an
ordinance requires readings at two council meetings, different from the approval to issue bonds which
requires only one council meeting. The complete terms under which the City is authorized to sell bonds
must be approved by the City Council prior to the incurrence of any debt obligations. If, for some
reason, the City were to choose not to pursue a lease revenue bond issuance, the documents would
not be executed and the ordinance would have no effect.
FISCAL IMPACT: There is no direct cost associated with the recommended action. The action is
recommended only to maintain maximum flexibility with respect to the timing of the financing of capital
improvements associated with the Essential Public Safety Facilities projects.
RECOMMENDED ACTION: Pass Ordinance to Print
ATTACHMENTS:
1. Ordinance
2. Site Lease
3. Lease Agreement
4. Proof of Publication
ORDINANCE NO. 1952
AN ORDINANCE OF THE CITY OF SAN RAFAEL APPROVING, AUTHORIZING
AND DIRECTING EXECUTION OF A SITE LEASE AND A LEASE AGREEMENT
RELATING TO THE SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2018 (PUBLIC SAFETY FACILITIES
PROJECT) AND THE FINANCING OF CERTAIN PUBLIC SAFETY FACILITIES
LOCATED IN THE CITY
WHEREAS, the City of San Rafael (the "City") and the California Municipal Finance
Authority have entered into an Amended and Restated Joint Exercise of Powers Agreement
continuing the existence of the San Rafael Joint Powers Financing Authority (the "Authority") for
the purpose, among others, of having the Authority issue its bonds to be used to finance the
acquisition, construction and improvement of certain public capital improvements; and
WHEREAS, for the purpose of raising funds necessary to finance certain public capital
improvements of the City, consisting generally of the construction of a new public safety center
and two replacement fire stations (the "Facilities"), the Authority proposes. to authorize the
issuance of its Lease Revenue Bonds, Series 2018 (Public Safety Facilities Project) (the "Bonds")
under the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of
Title 1 of the Government Code of the State of California; and
WHEREAS, certain of the proceeds received from the sale of the Bonds will be used by
the City to acquire and construct the Facilities; and
WHEREAS, pursuant to a Site Lease (the "Site Lease"), the form of which is on file with
the City Clerk of the City, the Authority will lease from the City the real property defined therein
(collectively, the "Leased Property), initially consisting of the new public safety center to be located
on 5th Avenue between C Street and D Street, the City's Fire Station 52 located at 210 Third
Street, and the City's Fire Station 57 located at 3530 Civic Center Drive; and
WHEREAS, pursuant to a Lease Agreement (the "Lease Agreement"), the form of which
is on file with the City Clerk of the City, the City will lease the Leased Property from the Authority,
and the Authority will use the lease payments received from the City under the Lease Agreement
to pay debt service on the Bonds; and
WHEREAS, the City has duly considered such transactions and wishes at this time to
approve said transactions in the public interest of the City; and
WHEREAS, the City is required by Article III, Section 12 of the City Charter of the City of
San Rafael and by Article 9 of Chapter 5 of Part 1 of Division 2 of Title 5 of the California
Government Code (commencing with Section 54240 of said Code) to authorize the act of entering
into the Site Lease and Lease Agreement by ordinance which is subject to referendum.
NOW, THEREFORE, THE COUNCIL OF THE CITY OF SAN RAFAEL DOES ORDAIN AS
FOLLOWS:
DIVISION 1:
The Site Lease and the Lease Agreement, both relating to the Leased Property, and both
between the Authority and the City, are hereby approved, and the Mayor, the Vice Mayor, the City
Manager or the Assistant City Manager (each a "Designated Officer"), each acting alone, are
hereby authorized and directed to execute the Site Lease and the Lease Agreement, with such
changes, insertions and omissions as may be approved by such official executing the Site Lease
and Lease Agreement, and by the City Attorney.
DIVISION 2:
This Ordinance shall be subject to the provisions and requirements of Article VII, Section
7 of the City Charter of the City, and shall also be subject to referendum pursuant to Section
54242 of the California Government Code.
DIVISION 3:
If any section, subsection, sentence, clause or phrase of this Ordinance is for any reason
held to be invalid, such decision shall not affect the validity of the remaining portions of this
Ordinance. The Council hereby declares that it would have adopted the Ordinance and each
section, subsection, sentence, clause or phrase thereof, irrespective of the fact that anyone or
more sections, subsections, sentences, clauses or phrases be declared invalid.
DIVISION 4:
This Ordinance shall be published once in full before its final passage in a newspaper of
general circulation, published, and circulated in the City of San Raf ,and shall be in full force
and effect 30 days after its final passage.
ATTEST:
LINDSAY LARA, Interim City Clerk
The foregoing Ordinance No 1952 was read and introduced at a Regular Meeting of the City
Council of the City of San Rafael, held on the 16th day of January, 2018, and ordered passed to
print by the following vote, to wit:
AYES:
NOES:
ABSENT:
COUNCILMEMBERS: Bushey, Colin, Gamblin, McCullough & Mayor Phillips
COUNCILMEMBERS: None
COUNCILMEMBERS: None
and will come up for adoption as an Ordinance of the City of San Rafael at a Regular Meeting of
the Council to be held on the 5th day of February 2018. v-/J
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LINDSAY LARA, Interim City Clerk
2
41390-03 SM:SRF 1/04/2018
1/08/2018
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall
A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Scott R. Ferguson, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER
TAX UNDER SECTION 11929 OF THE REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
SITE LEASE
This SITE LEASE (this “Site Lease”), dated for convenience as of March 1, 2018, is
between the CITY OF SAN RAFAEL, a charter city and municipal corporation duly organized
and existing under the Constitution and laws of the State of California, as lessor (the
“City”), and the SAN RAFAEL JOINT POWERS FINANCING AUTHORITY, a joint powers authority
duly organized and existing under the laws of the State of California, as lessee (the
“Authority”).
B A C K G R O U N D :
1. The City of San Rafael (the “City”) wishes to finance the acquisition and
construction of certain public safety improvements consisting generally of a new public
safety center and two replacement fire stations (collectively, the “Project”).
2. To that end, the City has proposed to lease to the Authority certain real
property and improvements, initially consisting of the City’s new public safety facility, the
City’s Fire Station 52, and the City’s Fire Station 57, including land and improvements
thereon, as more particularly described in Appendix A attached hereto and by this
reference incorporated herein (the “Leased Property”), under this Site Lease, in
consideration of the payment by the Authority of an upfront rental payment (the “Site
Lease Payment”) sufficient to provide funds for the acquisition and construction of the
Project.
3. The Authority has authorized the issuance of its San Rafael Joint Powers
Financing Authority Lease Revenue Bonds, Series 2018 (Public Safety Facilities Project)
in the aggregate principal amount of $___________ (the “Bonds”) under an Indenture of
Trust dated as of March 1, 2018 (the “Indenture”), between the Authority and MUFG
Union Bank, N.A., as trustee (the “Trustee”), for the purpose of providing the funds to
enable the Authority to pay the Site Lease Payment to the City in accordance with this Site
Lease.
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4. In order to provide revenues which are sufficient to enable the Authority to
pay debt service on the Bonds, the Authority has agreed to lease the Leased Property
back to the City under a Lease Agreement dated as of the date hereof (the “Lease”), a
memorandum of which has been recorded concurrently herewith, under which the City
has agreed to pay semiannual Lease Payments as the rental for the Leased Property
thereunder.
5. The lease payments made by the City under the Lease have been assigned
by the Authority to the Trustee for the security of the Bonds under an Assignment
Agreement dated as of the date hereof between the Authority as assignor and the Trustee
as assignee, which has been recorded concurrently herewith.
A G R E E M E N T :
In consideration of the above recitals and of the mutual covenants contained
herein, and for other valuable consideration, the parties hereto do hereby agree as follows:
SECTION 1. Lease of Property to Authority. The City hereby leases the Leased
Property to the Authority and the Authority hereby leases the Leased Property from the
City, on the terms and conditions hereinafter set forth.
SECTION 2. Term; Possession. The term of this Site Lease commences on the
date of recordation of this Site Lease and ends on the date on which the Indenture is
discharged in accordance with Section 10.03 thereof, but under any circumstances not
later than June 1, 2044. The provisions of this Section 2 are subject in all respects to any
other provisions of this Site Lease relating to the termination hereof.
SECTION 3. Rental. The Authority shall pay to the City as and for rental of the
Leased Property hereunder, the Site Lease Payment equal to $___________. The Site
Lease Payment is due and payable upon the issuance of the Bonds and the execution
and delivery hereof, and will be paid from the proceeds of the Bonds. The Authority and
the City hereby find and determine that the total amount of the Site Lease Payment does
not exceed the fair market value of the leasehold interest in the Leased Property which is
conveyed hereunder by the City to the Authority. No other amount of rental is due and
payable by the Authority for the use and occupancy of the Leased Property under this Site
Lease.
As provided in the Indenture, a portion of the proceeds of the Bonds will be applied
to make the Site Lease Payment by depositing the full amount thereof with the Trustee to
be held, invested and administered in accordance with the Indenture for the purpose of
financing the acquisition and construction of the Project.
SECTION 4. Leaseback to City. The Authority shall lease the Leased Property back
to the City under the Lease.
SECTION 5. Assignments and Subleases. Unless the City is in default under the
Lease, the Authority may not assign its rights under this Site Lease or sublet all or any
portion of the Leased Property, except as provided in the Assignment Agreement and in
the Lease, without the prior written consent of the City.
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SECTION 6. Substitution or Release of Property. If the City exercises its option
under Section 3.2 of the Lease to substitute property for the Leased Property in whole or
in part, such substitution shall also operate to substitute property for the Leased Property
which is leased hereunder. If the City exercises its option under Section 3.3 of the Lease
to release a portion of the Leased Property from the Lease, such substitution shall also
operate to release such portion of the Leased Property hereunder. The description of the
Leased Property which is leased under the Lease shall conform at all times to the
description of the Leased Property which is leased hereunder.
SECTION 7. Right of Entry. The City reserves the right for any of its duly authorized
representatives to enter upon the Leased Property, or any portion thereof, at any
reasonable time to inspect the same or to make any repairs, improvements or changes
necessary for the preservation thereof.
SECTION 8. Termination. The Authority agrees, upon the termination of this Site
Lease, to quit and surrender the Leased Property in the same good order and condition
as the Leased Property was in at the time of commencement of the term hereof,
reasonable wear and tear excepted, and agrees that all buildings, improvements and
structures then existing upon the Leased Property shall remain thereon and title thereto
shall vest thereupon in the City for no additional consideration.
SECTION 9. Default. If the Authority defaults in the performance of any obligation
on its part to be performed under the terms of this Site Lease, which default continues for
30 days following notice and demand for correction thereof to the Authority, the City may
exercise any and all remedies granted by law, except that no merger of this Site Lease
and of the Lease shall be deemed to occur as a result thereof and no such remedy may
include termination hereof; provided, however, that so long as the Lease remains in effect,
the Lease Payments payable by the City under the Lease shall continue to be paid to the
Trustee.
SECTION 10. Quiet Enjoyment. The Authority at all times during the term of this
Site Lease shall peaceably and quietly have, hold and enjoy all of the Leased Property,
subject to the provisions of the Lease and subject only to Permitted Encumbrances (as
that term is defined in the Lease).
SECTION 11. Waiver of Personal Liability. All liabilities under this Site Lease on
the part of the Authority are solely corporate liabilities of the Authority as a public entity,
and the City hereby releases each and every member and officer of the Authority of and
from any personal or individual liability under this Site Lease. No member or officer of the
Authority or its governing board shall at any time or under any circumstances be
individually or personally liable under this Site Lease for anything done or omitted to be
done by the Authority hereunder.
SECTION 12. Taxes. The City covenants and agrees to pay any and all
assessments of any kind or character and also all taxes, including possessory interest
taxes, levied or assessed upon the Leased Property and any improvements thereon.
SECTION 13. Eminent Domain. If the whole or any part of the Leased Property or
any improvements thereon is taken by eminent domain proceedings, the interest of the
Authority shall be recognized and is hereby determined to be the amount of the then
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unpaid Lease Payments payable under the Lease and the balance of the award, if any,
shall be paid to the City.
SECTION 14. Partial Invalidity. If any one or more of the terms, provisions,
covenants or conditions of this Site Lease shall to any extent be declared invalid,
unenforceable, void or voidable for any reason whatsoever by a court of competent
jurisdiction, the finding or order or decree of which becomes final, none of the remaining
terms, provisions, covenants and conditions of this Site Lease shall be affected thereby,
and each provision of this Site Lease shall be valid and enforceable to the fullest extent
permitted by law.
SECTION 15. Notices. Any notice, request, complaint, demand or other
communication under this Site Lease shall be given by first class mail or personal delivery
to the party entitled thereto at its address set forth below, or by telecopy, telex or other
form of telecommunication, at its number set forth below. Notice shall be effective either
(a) upon transmission by telecopy, telex or other form of telecommunication, (b) 48 hours
after deposit in the United States mail, postage prepaid, or (c) in the case of personal
delivery to any person, upon actual receipt. The City, the Authority and the Trustee may,
by written notice to the other parties, from time to time modify the address or number to
which communications are to be given hereunder.
If to the Authority City of San Rafael
or the City: 1400 Fifth Avenue
San Rafael, CA 94901
Attention: City Manager
If to the Trustee: MUFG Union Bank, N.A.
___________ Street, Suite ___
San Francisco, California 9_____
Attention: _______________
SECTION 16. Amendment of this Site Lease. The Authority and the City may at
any time amend or modify any of the provisions of this Site Lease, but only (a) with the
prior written consent of the Owners of a majority in aggregate principal amount of the
Outstanding Bonds; or (b) without the consent of any of the Bond Owners, but only if such
amendment or modification is for any one or more of the following purposes:
(i) to make clear any ambiguity, or to cure, correct or supplement any
defective provision contained herein, or in any other respect
whatsoever as the Authority and the City may deem necessary or
desirable, provided that, in the opinion of Bond Counsel, such
modifications or amendments do not materially adversely affect the
interests of the Owners of the Bonds;
(ii) to amend any provision hereof relating to the Tax Code, to any extent
whatsoever but only if and to the extent such amendment will not
adversely affect the exclusion from gross income of interest on the
Bonds under the Tax Code, in the opinion of Bond Counsel;
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(iii) to conform to any amendment of the Indenture which is made thereto
in accordance with Section 9.01 of the Indenture; or
(iv) for the purpose of effectuating any substitution or release of property
under Section 6.
SECTION 17. Governing Law. This Site Lease shall be construed in accordance
with and governed by the Constitution and laws of the State of California.
SECTION 18. Third-Party Beneficiary. The Trustee is hereby made a third-party
beneficiary under this Site Lease with all rights of a third-party beneficiary.
SECTION 19. Binding Effect. This Site Lease inures to the benefit of and is binding
upon the Authority, the City and their respective successors and assigns, subject,
however, to the limitations contained herein.
SECTION 20. Section Headings. All section headings contained herein are for
convenience of reference only and are not intended to define or limit the scope of any
provision of this Site Lease.
SECTION 21. Execution in Counterparts. This Site Lease may be executed in any
number of counterparts, each of which shall be deemed to be an original but all together
shall constitute but one and the same lease. It is also agreed that separate counterparts
of this Site Lease may be separately executed by the Authority and the City, all with the
same force and effect as though the same counterpart had been executed by both the
Authority and the City.
SECTION 22. Defined Terms. All capitalized terms used herein and not otherwise
defined have the respective meanings given those terms in the Indenture.
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IN WITNESS WHEREOF, the City and the Authority have caused this Site Lease
to be executed by their respective officers thereunto duly authorized, all as of the day and
year first above written.
CITY OF SAN RAFAEL, as lessor
By
City Manager
Attest:
City Clerk
SAN RAFAEL JOINT POWERS FINANCING
AUTHORITY, as lessee
By
Executive Director
Attest:
Secretary
A-1
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of that certain real property situated in the City of
San Rafael, County of Marin, State of California, which is more particularly described as
follows:
41390-03 SM:SRF 1/04/2018
1/08/2018
LEASE AGREEMENT
Dated as of March 1, 2018
between the
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY,
as lessor
and the
CITY OF SAN RAFAEL,
as lessee
Relating to
$___________
San Rafael Joint Powers Financing Authority
Lease Revenue Bonds, Series 2018
(Public Safety Facilities Project)
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TABLE OF CONTENTS
ARTICLE I
Definitions; Rules of Interpretation
SECTION 1.1. Definitions ...................................................................................................... 2
SECTION 1.2. Interpretation ................................................................................................. 2
ARTICLE II
Covenants, Representations and Warranties
SECTION 2.1. Covenants, Representations and Warranties of the City .............................. 2
SECTION 2.2. Covenants, Representations and Warranties of the Authority ...................... 4
ARTICLE III
Deposit and Application of Funds; Substitution and
Release of Property
SECTION 3.1. Deposit of Moneys ......................................................................................... 5
SECTION 3.2. Substitution of Property ................................................................................. 5
SECTION 3.3. Release of Property ....................................................................................... 6
ARTICLE IV
Lease of Leased Property; Term of This Lease; Lease
Payments:
SECTION 4.1. Lease of Leased Property ............................................................................. 7
SECTION 4.2. Term .............................................................................................................. 7
SECTION 4.3. Lease Payments ............................................................................................ 7
SECTION 4.4. Source of Payments; Covenant to Budget and Appropriate ......................... 8
SECTION 4.5. Additional Rental Payments .......................................................................... 9
SECTION 4.6. Quiet Enjoyment ............................................................................................ 9
SECTION 4.7. Title ................................................................................................................ 9
ARTICLE V
Maintenance; Taxes; Insurance; and Other Matters
SECTION 5.1. Maintenance, Utilities, Taxes and Assessments ......................................... 10
SECTION 5.2. Modification of Leased Property .................................................................. 10
SECTION 5.3. Liability and Property Damage Insurance ................................................... 11
SECTION 5.4. Casualty Insurance ...................................................................................... 11
SECTION 5.5. Rental Interruption Insurance ...................................................................... 11
SECTION 5.6. Recordation Hereof; Title Insurance ........................................................... 12
SECTION 5.7. Insurance Net Proceeds; Form of Policies .................................................. 12
SECTION 5.8. Installation of City’s Personal Property ....................................................... 12
SECTION 5.9. Liens ............................................................................................................ 13
SECTION 5.10. Advances ................................................................................................... 13
ARTICLE VI
Damage, Destruction and Eminent Domain; Use of Net
Proceeds
SECTION 6.1. Application of Net Proceeds ........................................................................ 13
SECTION 6.2. Termination or Abatement Due to Eminent Domain ................................... 13
SECTION 6.3. Abatement Due to Damage or Destruction ................................................. 13
ARTICLE VII
Other Covenants of the City
SECTION 7.1. Disclaimer of Warranties ............................................................................. 14
SECTION 7.2. Access to the Leased Property ................................................................... 14
SECTION 7.3. Release and Indemnification Covenants ..................................................... 14
SECTION 7.4. Assignment and Subleasing by the City ...................................................... 15
SECTION 7.5. Amendment Hereof ..................................................................................... 15
SECTION 7.6. Tax Covenants ............................................................................................ 16
SECTION 7.7. Continuing Disclosure ................................................................................. 17
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ARTICLE VIII
Events of Default and Remedies
SECTION 8.1. Events of Default Defined ............................................................................ 18
SECTION 8.2. Remedies on Default ................................................................................... 18
SECTION 8.3. No Remedy Exclusive ................................................................................. 20
SECTION 8.4. Agreement to Pay Attorneys' Fees and Expenses ...................................... 20
SECTION 8.5. No Additional Waiver Implied by One Waiver ............................................. 20
SECTION 8.6. Application of Proceeds ............................................................................... 20
SECTION 8.7. Trustee and Bond Owners to Exercise Rights ............................................ 20
ARTICLE IX
Prepayment of Lease Payments
SECTION 9.1. Security Deposit .......................................................................................... 21
SECTION 9.2. Optional Prepayment ................................................................................... 21
SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent
Domain .................................................................................................... 21
SECTION 9.4. Credit for Amounts on Deposit .................................................................... 22
ARTICLE X
Miscellaneous
SECTION 10.1. Notices ....................................................................................................... 22
SECTION 10.2. Binding Effect ............................................................................................ 22
SECTION 10.3. Severability ................................................................................................ 22
SECTION 10.4. Net-net-net Lease ...................................................................................... 22
SECTION 10.5. Third Party Beneficiary .............................................................................. 22
SECTION 10.6. Further Assurances and Corrective Instruments ....................................... 23
SECTION 10.7. Execution in Counterparts. ........................................................................ 23
SECTION 10.8. Applicable Law .......................................................................................... 23
SECTION 10.9. Authority and City Representatives ........................................................... 23
SECTION 10.10. Captions .................................................................................................. 23
APPENDIX A DESCRIPTION OF THE LEASED PROPERTY
APPENDIX B SCHEDULE OF LEASE PAYMENTS
LEASE AGREEMENT
This LEASE AGREEMENT (this “Lease”), dated for convenience as of March 1, 2018,
is between the SAN RAFAEL JOINT POWERS FINANCING AUTHORITY, a joint powers authority
duly organized and existing under the laws of the State of California, as lessor (the
“Authority”), and the CITY OF SAN RAFAEL, a charter city and municipal corporation duly
organized and existing under the Constitution and laws of the State of California, as lessee
(the “City”).
B A C K G R O U N D :
1. The City of San Rafael (the “City”) wishes to finance the acquisition and
construction of certain public safety improvements consisting generally of a new public
safety center and two replacement fire stations (collectively, the “Project”).
2. To that end, the City has proposed to lease to the Authority certain real
property and improvements, initially consisting of the City’s new public safety facility, the
City’s Fire Station 52, and the City’s Fire Station 57, including land and improvements
thereon, as more particularly described in Appendix A attached hereto and by this
reference incorporated herein (the “Leased Property”), under a Site Lease, dated the
date hereof (the “Site Lease”), in consideration of the payment by the Authority of an
upfront rental payment (the “Site Lease Payment”) sufficient to provide funds for the
acquisition and construction of the Project. The Site Lease is being recorded concurrently
with a memorandum of this Lease.
3. The Authority has authorized the issuance of its San Rafael Joint Powers
Financing Authority Lease Revenue Bonds, Series 2018 (Public Safety Facilities Project)
in the aggregate principal amount of $___________ (the “Bonds”) under an Indenture of
Trust dated as of March 1, 2018 (the “Indenture”), between the Authority and MUFG
Union Bank, N.A., as trustee (the “Trustee”), for the purpose of providing the funds to
enable the Authority to pay the Site Lease Payment to the City in accordance with the Site
Lease.
4. In order to provide revenues that are sufficient to enable the Authority to pay
debt service on the Bonds, the Authority has agreed to lease the Leased Property back to
the City under this Lease, under which the City agrees to pay semiannual Lease Payments
as the rental for the Leased Property.
5. The lease payments made by the City under this Lease have been assigned
by the Authority to the Trustee for the security of the Bonds under an Assignment
Agreement dated as of the date hereof, between the Authority as assignor and the Trustee
as assignee, which has been recorded concurrently herewith.
6. The City and the Authority have found and determined that all acts and
proceedings required by law necessary to make this Lease, when executed by the City
and the Authority, the valid, binding and legal obligations of the City and the Authority, and
to constitute this Lease a valid and binding agreement for the uses and purposes herein
set forth in accordance with its terms, have been done and taken, and the execution and
delivery of this Lease have been in all respects duly authorized.
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A G R E E M E N T :
In consideration of the above recitals and of the mutual covenants contained
herein, and for other valuable consideration, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
SECTION 1.1. Definitions. Unless the context clearly otherwise requires or unless
otherwise defined herein, the capitalized terms in this Lease have the respective meanings
given them in the Indenture.
SECTION 1.2. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular
includes the plural and vice versa and the use of the neuter, masculine, or feminine gender
is for convenience only and includes the neuter, masculine or feminine gender, as
appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are
solely for convenience of reference, do not constitute a part hereof and do not affect the
meaning, construction or effect hereof.
(c) All references herein to “Articles,” “Sections” and other subdivisions are to
the corresponding Articles, Sections or subdivisions of this Lease; the words “herein,”
“hereof,” “hereby,” “hereunder” and other words of similar import refer to this Lease as a
whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Covenants, Representations and Warranties of the City. The City
makes the following covenants, representations and warranties to the Authority, the
Trustee as of the date of the execution and delivery of this Lease:
(a) Due Organization and Existence. The City is a charter city and
municipal corporation duly organized and validly existing under the
Constitution and laws of the State of California, has full legal right,
power and authority under the laws of the State of California to enter
into the Site Lease and this Lease and to carry out and consummate
all transactions contemplated hereby, and by proper action the City
has duly authorized the execution and delivery of the Site Lease and
this Lease.
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(b) Due Execution. The representatives of the City executing the Site
Lease and this Lease have been fully authorized to execute the same
under a resolution and ordinance duly adopted by the City Council of
the City.
(c) Valid, Binding and Enforceable Obligations. The Site Lease and this
Lease have been duly authorized, executed and delivered by the City
and constitute the legal, valid and binding obligations of the City
enforceable against the City in accordance with their respective
terms.
(d) No Conflicts. The execution and delivery of the Site Lease and this
Lease, the consummation of the transactions therein and herein
contemplated and the fulfillment of or compliance with the terms and
conditions thereof and hereof, do not and will not conflict with or
constitute a violation or breach of or default (with due notice or the
passage of time or both) under any applicable law or administrative
rule or regulation, or any applicable court or administrative decree or
order, or any indenture, mortgage, deed of trust, lease, contract or
other agreement or instrument to which the City is a party or by which
it or its properties are otherwise subject or bound, or result in the
creation or imposition of any prohibited lien, charge or encumbrance
of any nature whatsoever upon any of the property or assets of the
City, which conflict, violation, breach, default, lien, charge or
encumbrance would have consequences that would materially and
adversely affect the consummation of the transactions contemplated
by the Site Lease and this Lease or the financial condition, assets,
properties or operations of the City.
(e) Consents and Approvals. No consent or approval of any trustee or
holder of any indebtedness of the City or of the voters of the City, and
no consent, permission, authorization, order or license of, or filing or
registration with, any governmental authority is necessary in
connection with the execution and delivery of the Site Lease and this
Lease, or the consummation of any transaction therein and herein
contemplated, except as have been obtained or made and as are in
full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or
other governmental authority pending or, to the knowledge of the City
after reasonable investigation, threatened against or affecting the
City or the assets, properties or operations of the City which, if
determined adversely to the City or its interests, would have a
material and adverse effect upon the consummation of the
transactions contemplated by or the validity of the Site Lease and this
Lease, or upon the financial condition, assets, properties or
operations of the City, and the City is not in default with respect to
any order or decree of any court or any order, regulation or demand
of any federal, state, municipal or other governmental authority, which
default might have consequences that would materially and adversely
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affect the consummation of the transactions contemplated by the Site
Lease and this Lease or the financial conditions, assets, properties
or operations of the City.
SECTION 2.2. Covenants, Representations and Warranties of the Authority. The
Authority makes the following covenants, representations and warranties to the City, the
Trustee as of the date of the execution and delivery of this Lease:
(a) Due Organization and Existence. The Authority is a joint exercise of
powers authority duly organized and existing under a joint powers
agreement and the laws of the State of California; has power to enter
into this Lease, the Site Lease, the Assignment Agreement and the
Indenture; is possessed of full power to own and hold, improve and
equip real and personal property, and to lease the same; and has
duly authorized the execution and delivery of each of the aforesaid
agreements and such agreements constitute the legal, valid and
binding obligations of the Authority, enforceable against the Authority
in accordance with their respective terms.
(b) Due Execution. The representatives of the Authority executing this
Lease, the Site Lease, the Assignment Agreement and the Indenture
are fully authorized to execute the same pursuant to official action
taken by the governing body of the Authority.
(c) Valid, Binding and Enforceable Obligations. This Lease, the Site
Lease, the Assignment Agreement and the Indenture have been duly
authorized, executed and delivered by the Authority and constitute
the legal, valid and binding agreements of the Authority, enforceable
against the Authority in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of this Lease, the Site
Lease, the Assignment Agreement and the Indenture, the
consummation of the transactions herein and therein contemplated
and the fulfillment of or compliance with the terms and conditions
hereof, do not and will not conflict with or constitute a violation or
breach of or default (with due notice or the passage of time or both)
under any applicable law or administrative rule or regulation, or any
applicable court or administrative decree or order, or any indenture,
mortgage, deed of trust, lease, contract or other agreement or
instrument to which the Authority is a party or by which it or its
properties are otherwise subject or bound, or result in the creation or
imposition of any prohibited lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of the Authority,
which conflict, violation, breach, default, lien, charge or encumbrance
would have consequences that would materially and adversely affect
the consummation of the transactions contemplated by this Lease,
the Site Lease, the Assignment Agreement and the Indenture or the
financial condition, assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or
holder of any indebtedness of the Authority, and no consent,
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permission, authorization, order or license of, or filing or registration
with, any governmental authority is necessary in connection with the
execution and delivery of this Lease, the Site Lease, the Assignment
Agreement or the Indenture, or the consummation of any transaction
herein or therein contemplated, except as have been obtained or
made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or
other governmental authority pending or, to the knowledge of the
Authority after reasonable investigation, threatened against or
affecting the Authority or the assets, properties or operations of the
Authority which, if determined adversely to the Authority or its
interests, would have a material and adverse effect upon the
consummation of the transactions contemplated by or the validity of
this Lease, the Site Lease, the Assignment Agreement or the
Indenture, or upon the financial condition, assets, properties or
operations of the Authority, and the Authority is not in default with
respect to any order or decree of any court or any order, regulation
or demand of any federal, state, municipal or other governmental
authority, which default might have consequences that would
materially and adversely affect the consummation of the transactions
contemplated by this Lease, the Site Lease, the Assignment
Agreement or the Indenture or the financial conditions, assets,
properties or operations of the Authority.
ARTICLE III
DEPOSIT AND APPLICATION OF FUNDS; SUBSTITUTION
AND RELEASE OF PROPERTY
SECTION 3.1. Deposit of Moneys. On the Closing Date, the Authority will cause
the proceeds of sale of the Bonds to be deposited with the Trustee. The Trustee shall
deposit such proceeds in accordance with Section 3.02 of the Indenture.
SECTION 3.2. Substitution of Property. The City has the option at any time and
from time to time, to substitute other real property (the “Substitute Property”) for the
Leased Property or any portion thereof (the “Former Property”), upon satisfaction of all
of the following requirements which are hereby declared to be conditions precedent to
such substitution:
(a) No Event of Default has occurred and is continuing, as certified in
writing by the City.
(b) The City has filed with the Authority and the Trustee, and caused to
be recorded in the office of the Marin County Recorder sufficient
memorialization of an amendment hereof that adds the legal
description of the Substitute Property to Appendix A and deletes
therefrom the legal description of the Former Property, and has filed
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and caused to be recorded corresponding amendments to the Site
Lease and Assignment Agreement.
(c) The City has obtained a CLTA policy of title insurance insuring the
City’s leasehold estate hereunder in the Substitute Property, subject
only to Permitted Encumbrances, in an amount at least equal to the
estimated value thereof.
(d) The City has certified in writing to the Authority and the Trustee that
the Substitute Property serves the municipal purposes of the City and
constitutes property which the City is permitted to lease under the
laws of the State of California, and has been determined to be
essential to the proper, efficient and economic operation of the City
and to serve an essential governmental function of the City.
(e) The Substitute Property does not cause the City to violate any of its
covenants, representations and warranties made herein, as certified
in writing by the City.
(g) The City has filed with the Authority and the Trustee a written
certificate of the City or other written evidence stating that the useful
life of the Substitute Property at least extends to June 1, 2034, that
the estimated value of the Leased Property, after substitution of the
Substitute Property and release of the Former Property, is at least
equal to the aggregate Outstanding principal amount of the Bonds,
and the fair rental value of the Leased Property, after substitution of
the Substitute Property and release of the Former Property, is at least
equal to the Lease Payments thereafter coming due and payable
hereunder.
(h) The City has mailed written notice of such substitution to each rating
agency which then maintains a rating on the Bonds.
Upon the satisfaction of all such conditions precedent, the Term of this Lease will
thereupon end as to the Former Property and commence as to the Substitute Property,
and all references to the Former Property will apply with full force and effect to the
Substitute Property. The City is not entitled to any reduction, diminution, extension or
other modification of the Lease Payments whatsoever as a result of any substitution of
property under this Section. The Authority and the City will execute, deliver and cause to
be recorded all documents required to discharge the Site Lease, this Lease and the
Assignment Agreement of record against the Former Property and to cause the Substitute
Property to become subject to all of the terms and conditions of the Site Lease, this Lease
and the Assignment Agreement.
SECTION 3.3. Release of Property. The City has the option at any time and from
time to time to release any portion of the Leased Property from this Lease (the “Released
Property”) provided that the City has satisfied all of the following requirements which are
hereby declared to be conditions precedent to such release:
(a) No Event of Default has occurred and is continuing, as certified in
writing by the City.
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(b) The City has filed with the Authority and the Trustee, and caused to
be recorded in the office of the Marin County Recorder sufficient
memorialization of an amendment hereof, the Site Lease and the
Assignment Agreement which removes the Released Property from
the Site Lease, the Assignment Agreement and this Lease.
(c) The City has certified in writing to the Authority and the Trustee that
the value of the property which remains subject to this Lease
following such release is at least equal to the aggregate Outstanding
principal amount of the Bonds, and the fair rental value of the property
which remains subject to this Lease following such release is at least
equal to the Lease Payments thereafter coming due and payable
hereunder.
(d) The City has mailed written notice of such release to each rating
agency which then maintains a rating on the Bonds.
Upon the satisfaction of all such conditions precedent, the Term of this Lease will
thereupon end as to the Released Property. The City is not entitled to any reduction,
diminution, extension or other modification of the Lease Payments whatsoever as a result
of such release. The Authority and the City shall execute, deliver and cause to be
recorded all documents required to discharge the Site Lease, this Lease and the
Assignment Agreement of record against the Released Property.
ARTICLE IV
LEASE OF LEASED PROPERTY; TERM OF THIS LEASE;
LEASE PAYMENTS
SECTION 4.1. Lease of Leased Property. The Authority hereby leases the Leased
Property to the City and the City hereby leases the Leased Property from the Authority,
upon the terms and conditions set forth in this Lease.
SECTION 4.2. Term. The Term of this Lease commences on the Closing Date and
ends on the date on which the Indenture is discharged in accordance with Section 10.03
thereof, but under any circumstances not later than June 1, 2044. The provisions of this
Section are subject to the provisions of Sections 6.2 and 6.3 relating to the taking in
eminent domain, damage and destruction of the Leased Property in whole or in part.
SECTION 4.3. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Sections 6.2 and 6.3 and the
provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns,
the Lease Payments in the respective amounts specified in Appendix B attached to this
Lease, to be due and payable in immediately available funds on the Interest Payment
Dates immediately following each of the respective Lease Payment Dates specified in
Appendix B, and to be deposited by the City with the Trustee on each of the Lease
Payment Dates specified in Appendix B. Any amount held in the Bond Fund, the Interest
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Account and the Principal Account on any Lease Payment Date (other than amounts
resulting from the prepayment of the Lease Payments in part but not in whole under Article
IX, and amounts required for payment of past due principal or interest on any Bonds not
presented for payment) will be credited towards the Lease Payment then required to be
paid hereunder. The City is not required to deposit any Lease Payment with the Trustee
on any Lease Payment Date if the amounts then held in the Bond Fund, the Interest
Account and the Principal Account are at least equal to the Lease Payment then required
to be deposited with the Trustee. The Lease Payments payable in any Rental Period are
for the use of the Leased Property during that Rental Period.
(b) Effect of Prepayment. If the City prepays all Lease Payments in full under
Sections 9.2 or 9.3, the City’s obligations under this Section will thereupon cease and
terminate. If the City prepays the Lease Payments in part but not in whole under Sections
9.2 or 9.3, the principal components of the remaining Lease Payments will be reduced in
integral multiples of $5,000 among Lease Payment Dates on a basis which corresponds
to the principal maturities of the Bonds which are redeemed thereby; and the interest
component of each remaining Lease Payment will be reduced by the aggregate
corresponding amount of interest which would otherwise be payable with respect to the
Bonds thereby redeemed under Section 4.01 of the Indenture.
(c) Rate on Overdue Payments. If the City fails to make any of the payments
required in this Section, the payment in default will continue as an obligation of the City
until the amount in default has been fully paid, and the City agrees to pay the same with
interest thereon, from the date of default to the date of payment at the highest rate of
interest on any Outstanding Bond.
(d) Fair Rental Value. The aggregate amount of the Lease Payments and
Additional Rental Payments coming due and payable during each Rental Period constitute
the total rental for the Leased Property for such Rental Period, and are payable by the City
in each Rental Period for and in consideration of the right of the use and occupancy of,
and the continued quiet use and enjoyment of the Leased Property during each Rental
Period. The parties hereto have agreed and determined that the total Lease Payments
represent the fair rental value of the Leased Property. In making that determination,
consideration has been given to the estimated value of the Leased Property, other
obligations of the City and the Authority under this Lease, the uses and purposes which
may be served by the Leased Property and the benefits therefrom which will accrue to the
City and the general public.
(e) Assignment. The City understands and agrees that all Lease Payments have
been assigned by the Authority to the Trustee in trust, under the Assignment Agreement,
for the benefit of the Owners of the Bonds, and the City hereby assents to such
assignment. The Authority hereby directs the City, and the City hereby agrees to pay to
the Trustee at its Office, all payments payable by the City under this Section and all
amounts payable by the City under Article IX.
SECTION 4.4. Source of Payments; Covenant to Budget and Appropriate. The
Lease Payments are payable from any source of available funds of the City, subject to the
provisions of Section 6.3. The City covenants to take all actions required to include the
Lease Payments in each of its budgets during the Term of this Lease and to make the
necessary appropriations for all Lease Payments and Additional Rental Payments. The
foregoing covenant of the City contained constitutes a duty imposed by law and each and
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every public official of the City is required to take all actions required by law in the
performance of the official duty of such officials to enable the City to carry out and perform
the covenants and agreements in this Lease agreed to be carried out and performed by
the City.
SECTION 4.5. Additional Rental Payments. In addition to the Lease Payments, the
City shall pay when due the following amounts of Additional Rental Payments in
consideration of the lease of the Leased Property by the City from the Authority hereunder:
(a) all fees and expenses incurred by the Authority in connection with or
by reason of its leasehold estate in the Leased Property, when due,
(b) all reasonable compensation to the Trustee for all services rendered
under the Indenture and for all reasonable expenses, charges, costs,
liabilities, legal fees and other disbursements incurred in and about
the performance of its powers and duties under the Indenture,
(c) the reasonable fees and expenses of such accountants, consultants,
attorneys and other experts as may be engaged by the Authority or
the Trustee to prepare audits, financial statements, reports, opinions
or provide such other services required under this Lease or the
Indenture,
(d) amounts coming due and payable as Excess Investment Earnings in
accordance with Section 7.6(e), and
(e) the reasonable out-of-pocket expenses of the Authority in connection
with the execution and delivery of this Lease or the Indenture, or in
connection with the issuance of the Bonds, including but not limited
to any and all expenses incurred in connection with the authorization,
sale and delivery of the Bonds, or incurred by the Authority in
connection with any litigation which may at any time be instituted
involving this Lease, the Bonds, the Indenture or any of the other
documents contemplated hereby or thereby, or otherwise incurred in
connection with the administration of this Lease.
SECTION 4.6. Quiet Enjoyment. Throughout the Term of this Lease, the Authority
shall provide the City with quiet use and enjoyment of the Leased Property and the City
will peaceably and quietly have and hold and enjoy the Leased Property, without suit,
trouble or hindrance from the Authority, except as expressly set forth in this Lease. The
Authority will, at the request of the City and at the City’s cost, join in any legal action in
which the City asserts its right to such possession and enjoyment to the extent the
Authority may lawfully do so. Notwithstanding the foregoing, the Authority has the right to
inspect the Leased Property as provided in Section 7.2.
SECTION 4.7. Title. Upon the termination of this Lease (other than under Section
8.2(b) hereof), all right, title and interest of the Authority in and to the Leased Property
transfers to and vests in the City. The Authority shall take any and all steps and execute
and record any and all documents reasonably required by the City to consummate any
such transfer of title.
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ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS
SECTION 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the
Term of this Lease, as part of the consideration for the rental of the Leased Property, all
improvement, repair and maintenance of the Leased Property are the responsibility of the
City, and the City will pay for or otherwise arrange for the payment of all utility services
supplied to the Leased Property, which may include, without limitation, janitor service,
security, power, gas, telephone, light, heating, water and all other utility services, and will
pay for or otherwise arrange for the payment of the cost of the repair and replacement of
the Leased Property resulting from ordinary wear and tear or want of care on the part of
the City or any assignee or sublessee thereof. In exchange for the Lease Payments herein
provided, the Authority agrees to provide only the Leased Property. The City waives the
benefits of subsections 1 and 2 of Section 1932, Section 1933(4) and Sections 1941 and
1942 of the California Civil Code, but such waiver does not limit any of the rights of the
City under the terms of this Lease.
The City shall also pay or cause to be paid all taxes and assessments of any type
or nature, if any, charged to the Authority or the City affecting the Leased Property or the
respective interests or estates therein; provided that with respect to special assessments
or other governmental charges that may lawfully be paid in installments over a period of
years, the City shall pay only such installments as are required to be paid during the Term
of this Lease as and when the same become due.
The City may, at its expense and in its name, in good faith contest any such taxes,
assessments, utility and other charges and, in the event of any such contest, may permit
the taxes, assessments or other charges so contested to remain unpaid during the period
of such contest and any appeal therefrom unless the Authority notifies the City that, in its
reasonable opinion, by nonpayment of any such items the interest of the Authority in the
Leased Property will be materially endangered or the Leased Property or any part thereof
will be subject to loss or forfeiture, in which event the City shall promptly pay such taxes,
assessments or charges or provide the Authority with full security against any loss which
may result from nonpayment, in form satisfactory to the Authority and the Trustee.
SECTION 5.2. Modification of Leased Property. The City has the right, at its own
expense, to make additions, modifications and improvements to the Leased Property or
any portion thereof. All additions, modifications and improvements to the Leased Property
will thereafter comprise part of the Leased Property and become subject to the provisions
of this Lease. Such additions, modifications and improvements may not in any way
damage the Leased Property, or cause the Leased Property to be used for purposes other
than those authorized under the provisions of state and federal law; and the Leased
Property, upon completion of any additions, modifications and improvements made
thereto under this Section, must be of a value which is not substantially less than the value
thereof immediately prior to the making of such additions, modifications and
improvements.
The City will not permit any mechanic’s or other lien to be established or remain
against the Leased Property for labor or materials furnished in connection with any
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remodeling, additions, modifications, improvements, repairs, renewals or replacements
made by the City under this Section; except that if any such lien is established and the
City first notifies or causes to be notified the Authority of the City’s intention to do so, the
City may in good faith contest any lien filed or established against the Leased Property,
and in such event may permit the items so contested to remain undischarged and
unsatisfied during the period of such contest and any appeal therefrom and shall provide
the Authority with full security against any loss or forfeiture which might arise from the
nonpayment of any such item, in form satisfactory to the Authority. The Authority will
cooperate fully in any such contest, upon the request and at the expense of the City.
SECTION 5.3. Liability and Property Damage Insurance. The City shall maintain or
cause to be maintained throughout the Term of this Lease, but only if and to the extent
available from reputable insurers at reasonable cost in the reasonable opinion of the City,
a standard commercial general liability insurance policy or policies in protection of the
Authority, the City, and their respective members, officers, agents, employees and
assigns. Said policy or policies shall provide for indemnification of said parties against
direct or contingent loss or liability for damages for bodily and personal injury, death or
property damage occasioned by reason of the operation of the Leased Property. Such
policy or policies shall provide coverage in such liability limits and be subject to such
deductibles as the City deems adequate and prudent. Such insurance may be maintained
as part of or in conjunction with any other insurance coverage carried by the City, and may
be maintained in whole or in part in the form of self-insurance by the City, subject to the
provisions of Section 5.7, or in the form of the participation by the City in a joint powers
agency or other program providing pooled insurance. The proceeds of such liability
insurance must be applied toward extinguishment or satisfaction of the liability with respect
to which paid.
SECTION 5.4. Casualty Insurance. The City shall procure and maintain, or cause
to be procured and maintained, throughout the Term of this Lease, casualty insurance
against loss or damage to all buildings situated on the Leased Property, in an amount at
least equal to the lesser of (a) 100% of the replacement value of the insured buildings, or
(b) 100% of the aggregate principal amount of the Outstanding Bonds. Such insurance
must, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft,
vehicle damage, smoke and such other hazards as are normally covered by such
insurance, and must include earthquake insurance if available at reasonable cost from
reputable insurers in the judgment of the City. Such insurance may be subject to such
deductibles as the City deems adequate and prudent. Such insurance may be maintained
as part of or in conjunction with any other insurance coverage carried by the City, and may
be maintained in whole or in part in the form of the participation by the City in a joint powers
agency or other program providing pooled insurance; provided that such insurance may
not be maintained by the City in the form of self-insurance. The Net Proceeds of such
insurance must be applied as provided in Section 6.1.
SECTION 5.5. Rental Interruption Insurance. The City shall procure and maintain,
or cause to be procured and maintained, throughout the Term of this Lease, rental
interruption or use and occupancy insurance to cover loss, total or partial, of the use of
any portion of the Leased Property constituting buildings or other improvements as a result
of any of the hazards covered in the insurance required by Section 5.4, in an amount at
least equal to the maximum such Lease Payments coming due and payable during any
consecutive two Fiscal Years. Such insurance may be maintained as part of or in
conjunction with any other insurance coverage carried by the City, and may be maintained
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in whole or in part in the form of the participation by the City in a joint powers agency or
other program providing pooled insurance; provided that such insurance may not be
maintained by the City in the form of self-insurance. The Net Proceeds of such insurance,
if any, must be paid to the Trustee and deposited in the Bond Fund, to be applied as a
credit towards the payment of the Lease Payments allocable to the insured improvements
as the same become due and payable.
SECTION 5.6. Recordation Hereof; Title Insurance. On or before the Closing Date
the City shall, at its expense, (a) cause the Site Lease, the Assignment Agreement and
this Lease, or a memorandum hereof or thereof in form and substance approved by Bond
Counsel, to be recorded in the office of the Marin County Recorder, and (b) obtain a CLTA
title insurance policy insuring the City’s leasehold estate hereunder in the Leased
Property, subject only to Permitted Encumbrances, in an amount at least equal to the
aggregate principal amount of the Bonds. All Net Proceeds received under any such title
insurance policy must be deposited with the Trustee in the Bond Fund to be credited
towards the prepayment of the remaining Lease Payments under Section 9.3.
SECTION 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance
maintained under Sections 5.4, 5.5 and 5.6 must name the Trustee as loss payee so as
to provide that all proceeds thereunder are payable to the Trustee. The City shall pay or
cause to be paid when due the premiums for all insurance policies required by this Lease.
All such policies shall provide that the Trustee is given 30 days’ notice of each expiration,
any intended cancellation thereof or reduction of the coverage provided thereby. The City
must file with the Trustee annually, within 90 days following the close of each Fiscal Year,
a certificate of the City stating that all policies of insurance required hereunder are then in
full force and effect. The Trustee has no responsibility for the sufficiency, adequacy or
amount of any insurance or self-insurance herein required and is fully protected in
accepting payment on account of such insurance or any adjustment, compromise or
settlement of any loss.
If any insurance maintained under Section 5.3 is provided in the form of self-
insurance, the City must file with the Trustee annually, within 90 days following the close
of each Fiscal Year, a statement of the risk manager of the City or an independent
insurance adviser engaged by the City identifying the extent of such self-insurance and
stating the determination that the City maintains sufficient reserves with respect thereto.
If any such insurance is provided in the form of self-insurance by the City, the City has no
obligation to make any payment with respect to any insured event except from those
reserves.
SECTION 5.8. Installation of City’s Personal Property. The City may at any time
and from time to time, in its sole discretion and at its own expense, install or permit to be
installed other items of equipment or other personal property in or upon the Leased
Property. All such items shall remain the sole property of the City, in which neither the
Authority nor the Trustee has any interest, and may be modified or removed by the City at
any time, provided that the City must repair all damage to the Leased Property resulting
from the installation, modification or removal of any such items. Nothing in this Lease
prevents the City from purchasing or leasing items to be installed under this Section under
a lease or conditional sale agreement, or subject to a vendor’s lien or security agreement,
as security for the unpaid portion of the purchase price thereof, so long as no such lien or
security interest attaches to any part of the Leased Property.
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SECTION 5.9. Liens. The City may not, directly or indirectly, create, incur, assume
or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with
respect to the Leased Property, other than as herein contemplated and except for such
encumbrances as the City certifies in writing to the Trustee do not materially and adversely
affect the leasehold estate of the City in the Leased Property hereunder. If any such
mortgage, pledge, lien, charge, encumbrance or claim does materially and adversely
affect the leasehold estate of the City in the Leased Property hereunder, the City will
promptly, at its own expense, take such action as may be necessary to duly discharge or
remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is
responsible; provided that the City is not required to do so prior to the time when such
mortgage, pledge, lien, charge, encumbrance or claim actually causes such material
adverse effect. The City will reimburse the Authority for any expense incurred by it in
order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or
claim.
SECTION 5.10. Advances. If the City fails to perform any of its obligations under
this Article V, the Authority may (but is not required to) take such action as it deems
necessary to cure such failure, including the advancement of money, and the City shall
repay all such advances as Additional Rental Payments hereunder, with interest at the
rate set forth in Section 4.3(c).
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET
PROCEEDS
SECTION 6.1. Application of Net Proceeds. The Trustee, as assignee of the
Authority under the Assignment Agreement, has the right to receive all Net Proceeds. As
provided in the Indenture, the Trustee will deposit all Net Proceeds in the Insurance and
Condemnation Fund to be applied as set forth in Section 5.07 of the Indenture.
SECTION 6.2. Termination or Abatement Due to Eminent Domain. If the Leased
Property is taken permanently under the power of eminent domain or sold to a government
threatening to exercise the power of eminent domain, the Term of this Lease thereupon
ceases as of the day possession is taken. If less than all of the Leased Property is taken
permanently, or if the Leased Property is taken temporarily, under the power of eminent
domain, then:
(a) this Lease shall continue in full force and effect with respect thereto
and does not terminate by virtue of such taking, and the parties waive
the benefit of any law to the contrary; and
(b) the Lease Payments are subject to abatement in an amount
determined by the City such that the resulting Lease Payments
represent fair consideration for the use and occupancy of the
remaining usable portions of the Leased Property.
SECTION 6.3. Abatement Due to Damage or Destruction. The Lease Payments
are subject to abatement during any period in which by reason of damage or destruction
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(other than by eminent domain which is hereinbefore provided for) there is substantial
interference with the use and occupancy by the City of the Leased Property or any portion
thereof. The Lease Payments are subject to abatement in an amount determined by the
City such that the resulting Lease Payments represent fair consideration for the use and
occupancy of the remaining usable portions of the Leased Property not damaged or
destroyed. Such abatement will continue for the period commencing with such damage
or destruction and ending with the substantial completion of the work of repair or
reconstruction. In the event of any such damage or destruction, this Lease continues in
full force and effect and the City waives any right to terminate this Lease by virtue of any
such damage and destruction.
ARTICLE VII
OTHER COVENANTS OF THE CITY
SECTION 7.1. Disclaimer of Warranties. THE AUTHORITY AND THE TRUSTEE
MAKE NO AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE
CONTEMPLATED BY THE CITY OF THE LEASED PROPERTY OR ANY PORTION
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO
THE LEASED PROPERTY OR ANY PORTION THEREOF. THE CITY
ACKNOWLEDGES THAT THE AUTHORITY IS NOT A MANUFACTURER OF ANY
PORTION OF THE LEASED PROPERTY OR A DEALER THEREIN, THAT THE CITY
LEASES THE LEASED PROPERTY AS-IS, IT BEING AGREED THAT ALL OF THE
AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. The Authority has no
liability for incidental, indirect, special or consequential damages, in connection with or
arising out of this Lease for the existence, furnishing, functioning or use of the Leased
Property by the City.
SECTION 7.2. Access to the Leased Property. The City agrees that the Authority
and any Authorized Representative of the Authority, and the Authority’s successors or
assigns, have the right at all reasonable times to enter upon and to examine and inspect
the Leased Property or any part thereof. The City further agrees that the Authority, any
Authority Representative and the Authority’s successors or assigns may have such rights
of access to the Leased Property or any component thereof as reasonably necessary to
cause the proper maintenance of the Leased Property if the City fails to perform its
obligations hereunder; provided, however, that neither the Authority nor any of its assigns
has any obligation to cause such proper maintenance.
SECTION 7.3. Release and Indemnification Covenants. The City agrees to
indemnify the Authority, the Trustee and their respective officers, agents, successors and
assigns, against all claims, losses and damages, including legal fees and expenses,
arising out of any of the following:
(a) the use, maintenance, condition or management of, or from any work
or thing done on the Leased Property by the City,
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(b) any breach or default on the part of the City in the performance of any
of its obligations under this Lease,
(c) any negligence or willful misconduct of the City or of any of its agents,
contractors, servants, employees or licensees with respect to the
Leased Property,
(d) any intentional misconduct or negligence of any sublessee of the City
with respect to the Leased Property,
(e) the acquisition, construction, improvement and equipping of the
Leased Property, or the authorization of payment of the costs thereof,
or
(f) the acceptance and performance of the duties of the Trustee under
the Indenture, the Assignment Agreement and under this Lease.
No indemnification is made under this Section or elsewhere in this Lease for willful
misconduct or negligence under this Lease by the Authority, the Trustee or their respective
officers, agents, employees, successors or assigns.
SECTION 7.4. Assignment and Subleasing by the City. The City may sublease the
Leased Property, or any portion thereof, subject to all of the following conditions:
(a) this Lease and the obligation of the City to make Lease Payments
hereunder must remain obligations of the City, as certified in writing
by the City;
(b) the City must, within 30 days after the delivery thereof, furnish or
cause to be furnished to the Authority and the Trustee a true and
complete copy of such sublease;
(c) no such sublease by the City may cause the Leased Property to be
used for a purpose which is not authorized under the provisions of
the laws of the State of California, as certified in writing by the City;
and
(d) the City must furnish to the Authority and the Trustee a written opinion
of Bond Counsel stating that such sublease does not cause the
interest on the Bonds to become included in gross income for
purposes of federal income taxation or to become subject to personal
income taxation by the State of California.
SECTION 7.5. Amendment Hereof. The Authority and the City may at any time
amend or modify any of the provisions of this Lease, but only: (a) with the prior written
consents of the Owners of a majority in aggregate principal amount of the Outstanding
Bonds; or (b) without the consent of the Trustee or any of the Bond Owners, but only if
such amendment or modification is for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City contained in this
Lease, other covenants and agreements thereafter to be observed,
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or to limit or surrender any rights or power herein reserved to or
conferred upon the City;
(ii) to make such provisions for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective provision
contained herein, to conform to the original intention of the City and
the Authority;
(iii) to modify, amend or supplement this Lease in such manner as to
assure that the interest on the Bonds remains excluded from gross
income under the Tax Code;
(iv) to amend the description of the Leased Property to reflect accurately
the property originally intended to be included therein, or in
connection with any substitution or release of property under Sections
3.2 or 3.3;
(v) to obligate the City to pay additional amounts of rental for the use and
occupancy of the Leased Property, but only if (A) such additional
amounts of rental are pledged or assigned for the payment of any
bonds, notes, leases or other obligations the proceeds of which are
applied to finance or refinance the acquisition or construction of any
real or personal property for which the City is authorized to expend
funds subject to its control, (B) the City has obtained and filed with
the Trustee an appraisal showing that the appraised value of the
Leased Property is at least equal to the aggregate principal amount
of the Outstanding Bonds and all such other bonds, notes, leases or
other obligations, and (C) the City has filed with the Trustee written
evidence that the amendments made under this clause (v) will not of
themselves cause a reduction or withdrawal of any rating then
assigned to the Bonds; or
(vi) in any other respect whatsoever as the Authority and the City deem
necessary or desirable, if in the opinion of Bond Counsel such
modifications or amendments do not materially adversely affect the
interests of the Owners of the Bonds.
No such modification or amendment may (a) extend or have the effect of extending
any Lease Payment Date or reducing any Lease Payment or any premium payable upon
the prepayment thereof, without the express consent of the Owners of the affected Bonds,
or (b) modify any of the rights or obligations of the Trustee without its written assent
thereto. If the Trustee’s consent to such modification or amendment is required, the
Trustee shall be entitled to the same documents as it would be entitled to under Article IX
of the Indenture for such type of modification or amendment.
SECTION 7.6. Tax Covenants.
(a) Private Business Use Limitation. The City shall assure that the proceeds of
the Bonds are not used in a manner which would cause the Bonds to satisfy the private
business tests of Section 141(b) of the Tax Code or the private loan financing test of
Section 141(c) of the Tax Code.
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(b) Federal Guarantee Prohibition. The City may not take any action or permit
or suffer any action to be taken if the result of the same would be to cause the Bonds to
be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code.
(c) No Arbitrage. The City may not take, or permit or suffer to be taken by the
Trustee or otherwise, any action with respect to the proceeds of the Bonds or of any other
obligations which, if such action had been reasonably expected to have been taken, or
had been deliberately and intentionally taken, on the Closing Date, would have caused
the Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Tax Code.
(d) Maintenance of Tax Exemption. The City shall take all actions necessary to
assure the exclusion of interest on the Bonds from the gross income of the Owners of the
Bonds to the same extent as such interest is permitted to be excluded from gross income
under the Tax Code as in effect on the Closing Date.
(e) Rebate of Excess Investment Earnings to United States. The City shall
calculate or cause to be calculated the Excess Investment Earnings in all respects at the
times and in the manner required under the Tax Code. The City shall pay the full amount
of Excess Investment Earnings to the United States of America in such amounts, at such
times and in such manner as may be required under the Tax Code. Such payments shall
be made by the City from any source of legally available funds of the City, and shall
constitute Additional Rental Payments hereunder.
The City shall keep or cause to be kept, and retain or cause to be retained for a
period of six years following the retirement of the Bonds, records of the determinations
made under this subsection (e). In order to provide for the administration of this subsection
(e), the City may provide for the employment of independent attorneys, accounta nts and
consultants compensated on such reasonable basis as the City may deem appropriate.
The Trustee has no duty or obligation to monitor or enforce compliance by the City of any
of the requirements under this subsection (e).
SECTION 7.7. Continuing Disclosure. The City shall comply with and carry out all
of the provisions of the Continuing Disclosure Certificate executed by the City as of the
Closing Date, as originally executed and as it may be amended from time to time in
accordance with its terms. Notwithstanding any other provision of this Lease, failure of
the City to comply with such Continuing Disclosure Certificate will not constitute an Event
of Default, although any Participating Underwriter (as that term is defined in such
Continuing Disclosure Certificate) or any Owner or beneficial owner of the Bonds may take
such actions as may be necessary and appropriate to compel performance by the City of
its obligations under this Section, including seeking mandate or specific performance by
court order.
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1. Events of Default Defined. Any one or more of the following events
constitute an Event of Default hereunder:
(a) Failure by the City to pay any Lease Payment or other payment
required to be paid hereunder at the time specified herein.
(b) Failure by the City to observe and perform any covenant, condition or
agreement on its part to be observed or performed, other than as
referred to in the preceding subsection (a), for a period of 30 days
after written notice specifying such failure and requesting that it be
remedied has been given to the City by the Authority or the Trustee.
If in the reasonable opinion of the City the failure stated in the notice
can be corrected, but not within such 30-day period, the failure will
not constitute an Event of Default if the City commences to cure the
failure within such 30-day period and thereafter diligently and in good
faith cures the failure in a reasonable period of time, such period of
time not to be longer than 180 days after the delivery of such default
notice.
(c) The filing by the City of a voluntary petition in bankruptcy, or failure
by the City promptly to lift any execution, garnishment or attachment,
or adjudication of the City as a bankrupt, or assignment by the City
for the benefit of creditors, or the entry by the City into an agreement
of composition with creditors, or the approval by a court of competent
jurisdiction of a petition applicable to the City in any proceedings
instituted under the provisions of the Federal Bankruptcy Code, as
amended, or under any similar acts which may hereafter be enacted.
SECTION 8.2. Remedies on Default. Whenever any Event of Default has happened
and is continuing, the Authority may exercise any and all remedies available under law or
granted under this Lease. Notwithstanding anything herein or in the Indenture to the
contrary, neither the Authority nor the Trustee may accelerate the Lease Payments or
otherwise declare any Lease Payments not then in default to be immediately due and
payable. Each covenant hereof to be kept and performed by the City is expressly made
a condition and upon the breach thereof the Authority may exercise any and all rights
granted hereunder; except that no termination of this Lease may be effected either by
operation of law or acts of the parties hereto, except only in the manner herein expressly
provided. Upon the occurrence and during the continuance of any Event of Default, the
Authority may exercise each and every one of the following remedies, subject in all
respects to the limitations set forth in Section 8.3.
(a) Enforcement of Payments Without Termination. If the Authority does
not elect to terminate this Lease in the manner hereinafter provided
for in subparagraph (b) hereof, the City agrees to and shall remain
liable for the payment of all Lease Payments and the performance of
all conditions herein contained and shall reimburse the Authority for
any deficiency arising out of the re-leasing of the Leased Property,
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or, if the Authority is unable to re-lease the Leased Property, then for
the full amount of all Lease Payments to the end of the Term of this
Lease, but said Lease Payments and/or deficiency shall be payable
only at the same time and in the same manner as hereinabove
provided for the payment of Lease Payments hereunder,
notwithstanding such entry or re-entry by the Authority or any suit in
unlawful detainer, or otherwise, brought by the Authority for the
purpose of effecting such re-entry or obtaining possession of the
Leased Property or the exercise of any other remedy by the Authority.
The City hereby irrevocably appoints the Authority as the agent and
attorney-in-fact of the City to enter upon and re-lease the Leased
Property upon the occurrence and continuation of an Event of Default
and to remove all personal property whatsoever situated upon the
Leased Property, to place the Leased Property in storage or other
suitable place in the County of Marin for the account of and at the
expense of the City, and the City hereby exempts and agrees to save
harmless the Authority from any costs, loss or damage whatsoever
arising or occasioned by any such entry upon and re-leasing of the
Leased Property and the removal and storage of the Leased Property
by the Authority or its duly authorized agents in accordance with the
provisions herein contained. The City agrees that the terms of this
Lease constitute full and sufficient notice of the right of the Authority
to re-lease the Leased Property in the event of such re-entry without
effecting a surrender of this Lease, and further agrees that no acts of
the Authority in effecting such re-leasing shall constitute a surrender
or termination of this Lease irrespective of the term for which such re-
leasing is made or the terms and conditions of such re-leasing, or
otherwise, but that, on the contrary, in the event of such default by
the City the right to terminate this Lease shall vest in the Authority to
be effected in the sole and exclusive manner hereinafter provided for
in subparagraph (b) hereof. The City agrees to surrender and quit
possession of the Leased Property upon demand of the Authority for
the purpose of enabling the Leased Property to be re-let under this
paragraph, and the City further waives the right to any rental obtained
by the Authority in excess of the Lease Payments and hereby
conveys and releases such excess to the Authority as compensation
to the Authority for its services in re-leasing the Leased Property.
(b) Termination of Lease. If an Event of Default occurs and is continuing
hereunder, the Authority at its option may terminate this Lease and
re-lease all or any portion of the Leased Property. If the Authority
terminates this Lease at its option and in the manner hereinafter
provided on account of default by the City (and notwithstanding any
re-entry upon the Leased Property by the Authority in any manner
whatsoever or the re-leasing of the Leased Property), the City
nevertheless agrees to pay to the Authority all costs, loss or damages
howsoever arising or occurring payable at the same time and in the
same manner as is herein provided in the case of payment of Lease
Payments and Additional Rental Payments. Any surplus received by
the Authority from such re-leasing shall be deposited in the Bond
Fund. Neither notice to pay rent or to deliver up possession of the
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premises given under law nor any proceeding in unlawful detainer
taken by the Authority shall of itself operate to terminate this Lease,
and no termination of this Lease on account of default by the City
shall be or become effective by operation of law, or otherwise, unless
and until the Authority shall have given written notice to the City of
the election on the part of the Authority to terminate this Lease. The
City covenants and agrees that no surrender of the Leased Property,
or of the remainder of the Term hereof or any termination of this
Lease shall be valid in any manner or for any purpose whatsoever
unless stated or accepted by the Authority by such written notice.
(c) Proceedings at Law or In Equity. If an Event of Default occurs and
continues hereunder, the Authority may take whatever action at law
or in equity may appear necessary or desirable to collect the amounts
then due and thereafter to become due hereunder or to enforce any
other of its rights hereunder.
SECTION 8.3. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Authority is intended to be exclusive and every such remedy is cumulative
and in addition to every other remedy given under this Lease or now or hereafter existing
at law or in equity. No delay or omission to exercise any right or power accruing upon the
occurrence of any Event of Default impairs any such right or power or operates as a waiver
thereof, but any such right and power may be exercised from time to time and as often as
may be deemed expedient. In order to entitle the Authority to exercise any remedy
reserved to it in this Article VIII it is not necessary to give any notice, other than as
expressly required in this Article VIII or by law.
SECTION 8.4. Agreement to Pay Attorneys’ Fees and Expenses. If the Authority
or the City defaults under any of the provisions of this Lease and the nondefaulting party
employs attorneys or incurs other expenses for the collection of moneys or the
enforcement or performance or observance of any obligation or agreement on the part of
the defaulting party herein contained, the defaulting party will on demand therefor pay to
the nondefaulting party the reasonable fees of such attorneys and such other expenses
so incurred by the nondefaulting party; provided, however, that the Trustee shall not be
required to expend its own funds for any payment described in this Section.
SECTION 8.5. No Additional Waiver Implied by One Waiver. If the Authority or the
City breaches any agreement in this Lease and thereafter the other party waives the
breach, such waiver is limited to the particular breach so waived and does not operate to
waive any other breach hereunder.
SECTION 8.6. Application of Proceeds. All net proceeds received from the re-lease
of the Leased Property under this Article VIII, and all other amounts derived by the
Authority or the Trustee as a result of the occurrence of an Event of Default, must be paid
to and applied by the Trustee in accordance with Section 7.03 of the Indenture.
SECTION 8.7. Trustee and Bond Owners to Exercise Rights. Such rights and
remedies as are given to the Authority under this Article VIII have been assigned by the
Authority to the Trustee under the Assignment Agreement for the benefit of the Bond
Owners, to which assignment the City hereby consents. The Trustee and the Bond
Owners shall exercise such rights and remedies in accordance with the Indenture.
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ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
SECTION 9.1. Security Deposit. Notwithstanding any other provision of this Lease,
the City may on any date secure the payment of the Lease Payments allocable to the
Leased Property in whole or in part by depositing with the Trustee an amount of cash
which, together with other available amounts on deposit in the funds and accounts
established under the Indenture, is either:
(a) sufficient to pay such Lease Payments, including the principal and
interest components thereof, in accordance with the Lease Payment
schedule set forth in Appendix B, or
(b) invested in whole or in part in non-callable Federal Securities in such
amount as will, in the opinion of an independent certified public
accountant, (which opinion must be addressed and delivered to the
Trustee), together with interest to accrue thereon and together with
any cash which is so deposited, be fully sufficient to pay such Lease
Payments when due under Section 4.3(a), as the City instructs at the
time of said deposit.
If the City makes a security deposit under this Section with respect to all unpaid
Lease Payments, and notwithstanding the provisions of Section 4.2, (a) the Term of this
Lease will continue, (b) all obligations of the City under this Lease, and all security
provided by this Lease for said Lease Payments, will thereupon cease and terminate,
excepting only the obligation of the City to make, or cause to be made all of said Lease
Payments from such security deposit, and (c) under Section 4.7, title to the Leased
Property will vest in the City on the date of said deposit automatically and without further
action by the City or the Authority. Said security deposit constitutes a special fund for the
payment of Lease Payments in accordance with the provisions of this Lease.
SECTION 9.2. Optional Prepayment. The City has the option to prepay the principal
components of the Lease Payments in whole, or in part in any integral multiple of $5,000,
from any source of legally available funds, on any date on or after June 1, 20__, at a
prepayment price equal to the aggregate principal components of the Lease Payments to
be prepaid, together with the interest component of the Lease Payment required to be
paid on such Interest Payment Date, and together with a prepayment premium equal to
the premium (if any) required to be paid on the resulting redemption of Bonds under
Section 4.01(a) of the Indenture. Such prepayment price shall be deposited by the Trustee
in the Redemption Fund to be applied to the redemption of Bonds under Section 4.01(a)
of the Indenture. The City shall give 10 days’ written notice to the Trustee of its intention
to prepay the Lease Payments under this Section.
SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent
Domain. The City shall prepay the principal components of the Lease Payments allocable
to the Leased Property in whole or in part on any date, from and to the extent of any Net
Proceeds of insurance award or eminent domain award with respect to the Leased
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Property theretofore deposited in the Redemption Fund for that purpose under Article VI
hereof and Section 5.07 of the Indenture. Such Net Proceeds, to the extent remaining
after payment of any delinquent Lease Payments, will be credited towards the City’s
obligations under this Section and applied to the corresponding redemption of Bonds
under Section 4.01(b) of the Indenture.
SECTION 9.4. Credit for Amounts on Deposit. If the principal components of the
Lease Payments are prepaid in full under this Article IX, such that the Indenture is
discharged by its terms as a result of such prepayment, at the written election of the City
filed with the Trustee any or all amounts then on deposit in the Bond Fund (and the
accounts therein) will be credited towards the amounts then required to be so prepaid.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Notices. Any notice, request, complaint, demand or other
communication under this Lease shall be given by first class mail or personal delivery to
the party entitled thereto at its address set forth below, or by facsimile transmission or
other form of telecommunication, at its number set forth below. Notice shall be effective
either (a) upon transmission by facsimile transmission or other form of telecommunication,
(b) 48 hours after deposit in the United States of America first class mail, postage prepaid,
or (c) in the case of personal delivery to any person, upon actual receipt. The Authority,
the City or the Trustee may, by written notice to the other parties, from time to time modify
the address or number to which communications are to be given hereunder.
If to the Authority City of San Rafael
or the City: 1400 Fifth Avenue
San Rafael, CA 94901
Attention: City Manager
If to the Trustee: MUFG Union Bank, N.A.
___________ Street, Suite ___
San Francisco, California 9_____
Attention: ________________
SECTION 10.2. Binding Effect. This Lease inures to the benefit of and binds the
Authority, the City and their respective successors and assigns.
SECTION 10.3. Severability. If any provision of this Lease is held invalid or
unenforceable by any court of competent jurisdiction, such holding will not invalidate or
render unenforceable any other provision hereof.
SECTION 10.4. Net-net-net Lease. This Lease is deemed and construed to be a
“net-net-net lease” and the City hereby agrees that the Lease Payments are an absolute
net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.
SECTION 10.5. Third-Party Beneficiary. The Trustee is hereby made a third-party
beneficiary hereunder with all rights of a third party beneficiary.
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SECTION 10.6. Further Assurances and Corrective Instruments. The Authority and
the City shall, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements hereto and such further
instruments as may reasonably be required for correcting any inadequate or incorrect
description of the Leased Property hereby leased or intended so to be or for carrying out
the expressed intention of this Lease.
SECTION 10.7. Execution in Counterparts. This Lease may be executed in several
counterparts, each of which is an original and all of which constitute but one and the same
instrument.
SECTION 10.8. Applicable Law. This Lease is governed by and construed in
accordance with the laws of the State of California.
SECTION 10.9. Authority and City Representatives. Whenever under the
provisions of this Lease the approval of the Authority or the City is required, or the Authority
or the City is required to take some action at the request of the other, such approval or
such request shall be given for the Authority and for the City by an Authorized
Representative thereof, and any party hereto may conclusively rely upon any such
approval or request.
SECTION 10.10. Captions. The captions or headings in this Lease are for
convenience only and in no way define, limit or describe the scope or intent of any
provisions or Section of this Lease.
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IN WITNESS WHEREOF, the Authority and the City have caused this Lease to be
executed in their respective names by their duly authorized officers, all as of the date first
above written.
SAN RAFAEL JOINT POWERS FINANCING
AUTHORITY, as lessor
By
Executive Director
Attest:
Secretary
CITY OF SAN RAFAEL, as lessee
By
City Manager
Attest:
City Clerk
A-1
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of that certain real property situated in the City of
San Rafael, County of Marin, which is more particularly described as follows:
B-1
APPENDIX B
SCHEDULE OF LEASE PAYMENTS
Lease
Payment Date*
Principal
Component
Interest
Component
Aggregate
Lease Payment
6/1/2018
12/1/2018
6/1/2019
12/1/2019
6/1/2020
12/1/2020
6/1/2021
12/1/2021
6/1/2022
12/1/2022
6/1/2023
12/1/2023
6/1/2024
12/1/2024
6/1/2025
12/1/2025
6/1/2026
12/1/2026
6/1/2027
12/1/2027
6/1/2028
12/1/2028
6/1/2029
12/1/2029
6/1/2030
12/1/2030
6/1/2031
12/1/2031
6/1/2032
12/1/2032
6/1/2033
12/1/2033
6/1/2034
* Lease Payment Dates are the Business Day immediately preceding each date listed in the
schedule
STAFF REPORT APPROVAL
ROUTING SLIP
Staff Report Author: Mark Moses Date of Meeting: 01/16/2018
Department: Finance
Topic: LEASE AGREEMENTS TO SUPPORT FINANCING OF ESSENTIAL PUBLIC SAFETY
FACILITY PROJECTS
Subject: AN ORDINANCE OF THE CITY OF SAN RAFAEL APPROVING A SITE LEASE AND LEASE AGREEMENT
RELATING TO THE SAN RAFAEL JOINT POWERS FINANCING AUTHORITY LEASE REVENUE BONDS, SERIES 2018 AND
THE FINANCING OF CERTAIN PUBLIC SAFETY FACILITIES
Type: (check all that apply) ☐ Consent Calendar ☐ Public Hearing
☐ Discussion Item ☐ Resolution ( ☒ Ordinance
☐ Professional Services Agreement ☐ Informational Report
*If PSA, City Attorney approval is required prior to start of staff report approval process
Was agenda item publicly noticed? ☒ Yes ☐No Date noticed:
1/5 or 1/6
☐Mailed ☐Site posted ☒Marin IJ
Due Date Responsibility Description Completed
Date Initial / Comment
DEPARTMENT REVIEW
FRIDAY
noon
Director Director approves staff
report is ready for ACM,
City Attorney & Finance
review.
1/4/2018
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CONTENT REVIEW
MONDAY
morning
Assistant City Manager
City Attorney
Finance
ACM, City Attorney &
Finance will review items,
make edits using track
changes and ask questions
using comments. Items will
be returned to the author
by end of day Wednesday.
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DEPARTMENT REVISIONS
FRIDAY
noon
Author Author revises the report
based on comments
receives and produces a
final version (all track
changes and comments
removed) by Friday at
noon.
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☐
ACM, CITY ATTORNEY, FINANCE FINAL APPROVAL
MONDAY Assistant City Manager ACM, City Attorney & Click here to ☐
morning
City Attorney
Finance
Finance will check to see
their comments were
adequately addressed and
sign-off for the City
Manager to conduct the
final review.
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TUES
noon
City Manager Final review and approval Click here to
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