1990-03-07 Minutes - Laserfiche WebLink

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Summary of Selected Provisions of the Lease The Lease sets forth the terms and provisions under which the Authority will lease the • Improvements to the Commission. The term of the Lease is 22 years beginning on the date the Improvements are completed and ready for use. The term of the Lease may terminate at the earlier of (a) the exercise of the purchase option and payment of the option price, or (b) the payment or defeasance of all obligations of the Authority incurred to finance the Improvements, to refund such obligations or refunding obligations, or to improve the Improvements. The Authority represents that it is possessed of, or will acquire, a good and indefeasible estate in fee simple or an insurable right-of-way easement in the real estate. During the term of the Lease, the Commission agrees to pay rental for the Improvements directly to the Trustee; all such payments shall be considered as payments to the Authority. As additional rental, the Commission agrees to pay all fees, charges and reimbursement of expenses of the Trustee under the Trust Agreement and expenses of the Authority incurred in the performance of its obligations under the Lease. The first semiannual lease rental payment of $295,500 will be due on the day the Improvements are completed and ready for use or January 31, 1993 whichever is later. (The Lease currently states that the first semiannual lease payment will be due on the day. the Improvements are completed and ready for use or July 31, 1991, whichever is later; however, the Authority intends to amend the Lease prior to bond closing to reflect the later timing of the initial lease payment.) Thereafter, the rentals will be payable in advance in semiannual installments on July 31 and January 31 of each year as provided in the lease payment schedule included as Exhibit D in the Lease (contained in Appendix III of this Official Statement). After the sale of the Bonds, the lease rentals will be reduced as provided in the Lease. In addition, the Authority intends to reduce the lease rentals further by providing that the first lease payment shall not be due. until the later of January 31, 1993 or the day on which the Improvements are completed • and ready for use (i.e., the lease payments scheduled prior to such date will be eliminated altogether), and that the lease payment scheduled for January 31, 1993 will be reduced to an amount which when combined with capitalized interest will be sufficient to pay debt service on the Bonds on February 1, 1993 and a reasonable amount for administrative fees. The Lease will be what is known as a Net Lease meaning the rent shall be absolutely net to the Authority and all other expenses in connection with the Improvements shall be those of the Commission. The Commission shall be obligated to pay as its expenses, without reimbursement from the Authority, all costs of taxes and assessments, if any, and maintenance, operation and use in connection with the Improvements. During the full term of the Lease, the Commission, at its own expense, will carry insurance for physical loss or damage in an amount equal to the greater of the purchase option price or 100% of the full replacement cost of the Improvements, and rental value insurance which is equal to the full rental for two years against physical loss or damage. The Commission will also maintain public liability and property damage insurance during the term of the Lease. Such insurance may be provided under the public liability self-insurance program of the City of South Bend. In the event the Improvements are partially or totally destroyed so as to render the Improvements unfit for their intended use, it will be the obligation of the Authority to reconstruct the Improvements if it is determined (i) the cost of reconstruction does not exceed the amount of insurance proceeds and (ii) such reconstruction can be completed within the period of time covered by the rental value insurance. If either or both conditions cannot be met, the insurance proceeds will. be applied to the redemption of all outstanding Bonds. The rental shall be abated pro rata during the period in which the Improvements are destroyed and unfit for • their intended use. -4-