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HomeMy WebLinkAboutApproving and Authorizing a lease for construction and equipping of a new public works service center ORDINANCE No. 9203-01 Passed by the Common Council of the City of Soutli Bend, Indiana March 12, Attest: Attest: 20 01 Presented by me to the Mayor of the Ciry of South Bend, Indiana March 13, 20 01 City Clerk President of Common Council City Clerk Apprk~~Pdgrnd signed by me March 13 20 01 Mayor ORDINANCE NO. 1 2 ~ 3" o' AN ORDINANCE OF THE CITY OF SOUTH BEND, INDIANA, COMMON COUNCIL APPROVING AND AUTHORIZING THE EXECUTION OF A LEASE FOR THE CONSTRUCTION AND EQUIPPING OF A NEW PUBLIC WORKS SERVICE CENTER, PLEDGING COUNTY OPTION INCOME TAX REVENUES TO THE PAYMENT OF RENTALS THEREFORE AND REGARDING CERTAIN RELATED MATTERS STATEMENT OF PURPOSE AND INTENT The City of South Bend, Indiana (the "City"), has previously investigated the necessity for the construction and equipping of a new public works service center located at 730 United Drive in the City (the "Project"). The City has also previously investigated alternative methods for paying for the Project. There has been filed with the Common Council of the City (the "Common Council") a petition certified by the St. Joseph County Auditor, which petition has been signed by at least fifty (50) owners of real property subject to taxation by the City and addressed to the Common Council, requesting that the Common Council enter into a lease whereby the Project will be completed with the assistance of a not-for-profit building corporation and leased to the City pursuant to the provisions of Indiana Code 36-1-10, as amended. The City of South Bend Building Corporation (the "Building Corporation") has been organized as an Indiana not-for-profit corporation for the purpose of constructing and leasing public improvements, including the Project, to the City. A form of lease between the Building Corporation and the City (the "Lease") has been prepared and submitted to the Common Council for its consideration. The Lease, as presented to the Common Council, provides for the lease of the Project for a term not to exceed twenty (20) years (the "Term"). The Term under the proposed Lease would begin with respect to the Project on the date the Project is completed. The lease rentals payable under the Lease (the "Rentals") by the City with respect to the Project shall not exceed $900,000 per year and shall be payable semiannually on each July 15 and January 1 S, beginning on the later of: (i) the date that the Project is completed; or (ii) July 15, 2002. Lease rentals payable under the Lease by the City for the Project shall be payable on such dates solely from the county option income tax revenues (the "COIT Revenues") distributed to the City pursuant to I.C. 6-3.5-6 (the "Act"). As a result, the Project does not constitute a "controlled project" as such term is defined by IC 6-1.1-20-1.1 because such Rentals shall be payable from funds other than property taxes that are exempt from the levy limitations of IC 6-1.1-18.5 r NOW, THEREFORE, BE IT ORDAINED BY THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, AS FOLLOWS: 1. The petition of taxpayers of the City filed with the Common Council at this meeting is hereby approved. 2. The Common Council hereby determines that a need exists for the completion of the Project and the funds needed therefor exceed the funds presently available to the City. 3. Having held a public hearing regarding the Lease for which notice was provided in accordance with Indiana Code 5-1-3, the Common Council hereby approves the Lease in the form presented to this meeting. The Lease with the Building Corporation as lessor provides for a fair and reasonable rental, and further, the execution of the proposed lease is necessary and wise. The Mayor and Clerk of the City are hereby authorized to execute and attest, respectively, the Lease in the form presented to this meeting with such changes as may be necessary or appropriate on the advice of counsel with such execution and attestation to evidence approval of such changes; provided, however, that any such changes may not (i) increase the term of the Lease or increase the rentals payable by the City under the Lease with respect to the Project or (ii) alter the scope and nature of the Project described in the Lease. 4. The Clerk of the City shall cause to be published a notice of execution of the Lease according to law following such execution. 5. All actions taken to publish the notice of the public hearing regarding the Lease are hereby approved and ratified. 6. The Common Council hereby approves of the use of the Building Corporation for purposes of financing and leasing the Project to the City. The Common Council hereby further approves of the sale and issuance by the Building Corporation of its lease rental revenue bonds in one or more series in an aggregate principal amount not to exceed $10,000,000 (the "Bonds"). 7. The Rentals payable under the Lease are payable solely from the COIT Revenues distributed to the City pursuant to the Act and set aside as hereinafter provided. Neither the full faith and credit nor the taxing power of the City shall be pledged to the payment of the Rentals. 8. The COIT Revenues distributed to the City pursuant to the Act shall be used and applied by the City only as provided in this Ordinance and in strict accordance with the provisions of the Act. All of such COIT Revenues shall be segregated and kept in special accounts separate and apart from all other funds of the City and shall be used and applied in payment of rentals for leases, including without limitation the Lease, and the principal of and interest on bonds which by their respective terms aze payable from such revenues and to maintain a reasonable reserve, in accordance with this Ordinance. The COIT Revenue Fund is hereby created and is hereby designated and constituted as the fund for the payment of such amounts. Said Fund shall be ::ODMA\PCDOCSI.SBDOCSI\85906\2 - 2 - continued until all such amounts have been paid pursuant to such leases or bonds. In addition, there is hereby created and established (i) a COIT Obligations Fund and a COIT Reserve Fund (which two funds the City hereby covenants and agrees to cause to be kept and maintained so long as needed for the purposes set forth herein), and (ii) an COIT Excess Fund. All of the COIT Revenues distributed to the City pursuant to the Act shall be set aside in said funds in the following order of priority and to the extent indicated below: (1) COIT Obligations Fund (2) COIT Reserve Fund; and (3) COIT Excess Fund. (a) COIT Obligations Fund. As soon as possible upon receipt by the City of its COIT Revenue distribution (each, a "Distribution"), but in any event not later than the fifteenth (15~') day following such distribution, there shall be set aside from the COIT Revenue Fund and paid into the COIT Obligations Fund a sufficient amount for the payment of all amounts due on any lease or bonds which by their respective terms are payable from such fund and, with respect to bonds which may be payable from such fund, the necessary fiscal agency charges for paying the principal of and interest on such bonds. If the City receives monthly Distributions, the monthly payments into the COIT Obligations Fund shall be in an amount equal to at least one-sixth (1/6) of the amount payable during the then next succeeding six (6) calendar months of (i) rentals, including without limitation the Rentals, payable from COIT Revenues under any lease, including without limitation, the Lease and (ii) principal of and interest on bonds payable by their terms from COIT Revenues. If the City receives distributions semiannually, the semiannual payments into the COIT Obligations Fund shall be in an amount equal to at least the total amount payable during the then next succeeding six (6) calendar months of (i) rentals, including without limitation the Rentals, payable from COIT Revenues under any lease, including without limitation, the Lease and (ii) principal of and interest on bonds payable by their terms from COIT Revenues. In the even that the City receives only an annual distribution of COIT Revenues, the annual payment into the COIT Obligations Fund shall be in an amount equal to at least the total amount payable during the then next succeeding twelve (12) months of (i)~rentals, including without limitation the Rentals, payable from COIT Revenues under any lease, including without limitation, the Lease and (ii) principal of and interest on bonds payable by their terms from COIT Revenues. Such payments shall continue as provided herein until such time as the COIT Obligations Fund shall contain an amount sufficient to pay all of the obligations of the City then outstanding which by their terms are payable from such fund. (b) COIT Reserve Fund. To the extent that there are bonds outstanding issued by the City which by their terms require that the City maintain a reserve therefor, an amount from each Distribution shall next be set apart and paid into the COIT Reserve Fund, if needed, and used to make deposits into the COIT Obligations Fund in the event of any deficiency at any time in such fund with respect to such bonds so that the sum in the COIT Reserve Fund shall equal the least of (i) the maximum annual debt service on the Bonds, (2) one and one-quarter (1-1/4) times the average annual debt service on the Bonds, or (3) ten ::ODMA\PCDOCS\SBDOCSI\85906\2 - 3 - ~ a percent (10%) of the proceeds of the Bonds, within the meaning of Section 148(d) of the Internal Revenue Code of 1986, as amended (the "Debt Service Reserve Requirement"), and thereafter no deposit shall be made into the COIT Reserve Fund so long as there shall be on deposit therein an amount equal to the Debt Service Reserve Requirement. (c) COIT Excess Fund. Any remaining COIT Revenues distributed to the City pursuant to the Act shall be deemed excess funds and shall be deposited in the COIT Excess Fund for appropriation and use as permitted by law. In the event of any deficiency at any time in the (i) COIT Obligations Fund for the purposes of paying the rentals on leases or interest on or principal of bonds, which by their terms are payable from COIT Revenues or the (ii) COIT Reserve Fund for purposes of maintaining in said fund the Debt Service Reserve Requirement with respect to bonds -which contain such a requirement, funds may be withdrawn from the COIT Excess Fund for deposit into said COIT Obligations Fund or COIT Reserve Fund in the amount of such deficiency. All moneys in said funds shall be segregated and kept separate and apart from all other funds of the City and shall be deposited in lawful depositories of the City and continuously held and secured or invested as provided by law. Interest earned in each such fund shall be credited to such fund except that the amount of interest earned on the COIT Reserve Fund when added to the amount on deposit in the COIT Reserve Fund shall not exceed the Debt Service Reserve Requirement, and any such excess shall be deposited into the COIT Excess Fund. 9. The City reserves the right to enter into additional leases or authorize and issue bonds, payable out of its COIT Revenues, ranking on a parity with the rentals payable under the Lease, for the purpose of financing the cost of additional projects (the "Parity Obligations"). The authorization and issuance of Parity Obligations shall be subject to the following conditions precedent: (a) Rental payments under all leases and the principal of and interest on all bonds which are, respectively, in accordance with their terms, payable from COIT Revenues shall have been paid in accordance with their terms. (b) All required deposits into the COIT Obligations Fund and the COIT Reserve Fund shall have been made in accordance with the provisions of this Ordinance. (c) Either: (1) the COIT Revenues distributed to the City pursuant to the Act in the fiscal year immediately preceding the entering into or issuance of any such Parity Obligations shall be not less than one hundred thirty-five percent (135%) of the maximum annual interest and principal requirements of all the then outstanding obligations, including without limitation the Lease, payable from amounts that the City receives from COIT Revenues and the additional Parity Obligations; or (2) the COIT Revenues distributed to the City pursuant to the Act for the first full fiscal year immediately succeeding the issuance of any such Parity Obligations shall be projected by a certified public accountant to be at least equal to one hundred thirty-five percent (135%) of the total of the maximum annual rentals ::oDMn~cDOCS~ssDOCS~~ss9o6~z - 4 - .. ~ or interest and principal requirements of all the then outstanding obligations including without limitation the Lease, payable from amounts that the City receives from COIT Revenues and the Parity Obligations proposed to be issued. For purposes of this subsection, the records of the City shall be analyzed and all showings prepared by a certified public accountant or independent financial adviser employed by the City for that purpose. (d) Lease rentals on any leases and the principal of and interest on any bonds which constitute Parity Obligations shall be payable semiannually on the fifteenth days of January and July in the years such amounts are payable. Except as otherwise provided in this Section 9, so long as the City is obligated to make lease rental payments under the Lease, no Parity Obligations pledging any portion of the COIT Revenues distributed to the City pursuant to the Act shall be authorized, executed or issued by the City except such as shall be made subordinate and junior in all respects to the rentals payable under the Lease, unless the City exercises its option to purchase the Project under the Lease coincidentally with the delivery of such Parity Obligations. 10. The provisions hereof shall be construed to create a trust in the COIT revenues and this Ordinance shall not be repealed or amended in any manner which would serve to adversely affect the pledge made herein by the Common Council on behalf of the City. 11. This Ordinance shall be in full force and effect from and after its passage by the Common Council and approval by the Mayor. COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA By: Member of the Common C ci 1st READING ~--?'~-0~ PUBLIC HEARIt~G3-\~.-0~ 3rd READING '3-1L-0 ~ NOT APPROVED REfERP.ED PASSED 3'~Z"~~ - S ::ODMA\PCDOCS\SBDOCS 1\85906\2 COMMITTEE REPORT TO THE COMMON COUNCIL OF THE CITY OF SOUTH BEND: Your Committee of the Whole, to whom was referred: BILL NO. 19-O1 A BILL OF THE CITY OF SOUTH BEND, INDIANA COMMON COUNCIL APPROVING AND AUTHORIZING THE EXECUTION OF A LEASE FOR THE CONSTRUCTION AND EQUIPPING OF A NEW PUBLIC WORKS SERVICE CENTER, PLEDGING COUNTY OPTION INCOME TAX REVENUES TO THE PAYMENT OF RENTALS THEREFORE AND REGARDING CERTAIN RELATED MATTERS Respectfully report that they have examined the matter and that in their opinion, this bill is being recommended to the full Council with a favorable recommendation Andrew Udj ak Chairman 1316 COUNTY-CITY BUILDIfdG 227 W. JEFFERSON BOULEVARD SOUTH BEND, INDIANA 46601-1830 PxoNE219/235-9251 Fax 219/235-9171 TDD 219/235-5567 CITY OF SOUTH BEND STEPHEN ,J. LUECKE~ MAYOR DEPARTMENT OF PUBLIC WORKS GARY A. GILOT~ P.E. DIRF.GTUR OF PUBLIC WORKS Ms. Charlotte Pfeifer, President South Bend Common Council 41'' Floor, County-City Building South Bend, Indiana 46601 February 21, 2001 RE: Ordinance to authorize financing for new Public Works Service Center Dear Ms. Pfeifer: -This is to transmit a draft ordinance providing for a lease agreement that will authorize the financing for the Public Works Service Center Project. The draft lease agreement is also attached for the Council's consideration. The Public Works Service Center is indeed an exciting project that has been discussed for some time and was included in part in the 2001 Capital Improvement Plan (CIP). The Public Works Director will be present and take a lead role in presenting this project to the Common Council in any committee hearings and regular Council meetings. The new Public Works Service Center will be located on 7.8 acres of land immediately north of the Municipal Services Facility(MSF) on Sample Street. We have acquired the land and are making good progress on demolishing the old Building 69 warehouse and clearing the land for the new project. The space is needed to effectively and efficiently house the Street Department, Traffic and Lighting, and Sewer Department as one cohesive operation under one roof (rather than the present situation with three separate locations). The area that the Street Department vacates in the Municipal Services Facility is a critical prerequisite element to solving the space needs of the Police and Fire departments. The ordinance authorizes a lease through a Building Corporation that would issue a maximum of $ 10,000,000 in revenue bonds. The bonds would be repaid over a 20 year term through County Option Income Tax (COIT) revenues paid under the terms of the lease and not exceeding $ 900,000 per year. The project schedule calls for the bonds to be sold by May 2, 2001 so that we can have occupancy of the building by December 2001 with our first lease rental payment being due July 15, ENGINEERING ENVIRONMENTAL SERVICES CENTRAL SERVICES CARL LITTRELL, P.E. JOHN J. DILLON, PH.D. MATT CHLEBOWSKI 219/235-9251 219/277-8515 219/235-9316 Fax 219/235-9171 Fax 219/277-8980 FAx 219/235-9007 STREETS SAM HENSLEY 219/235-9244 FAx 219/235-9272 WATER WORKS JOHN F. STANCAT[ 219/235-9322 Fax 219/235-9728 Page Two February 21, 2001 2002. We would like to keep the project moving on schedule as the architects believe the project will take 7-8 months to construct. We will have some earlier deadlines on the completion of the new salt dome which is part of the project. We are currently in the process of using a Qualification Based Selection (QBS) process to hire an architect to help us remodel the Municipal Service Facility (MSF) to meet the needs of our Police and Fire departments. The MSF remodel design will be completed in 2001 and ready for implementation in 2002. The commitment for this financing is from COIT on advice of bond counsel to enhance the simplicity and therefore the marketability of these bonds. However, for internal equitable allocation ofbenefits and costs based on the relative area of office, garage, covered storage and paved yard we have determined that the Sewer Utility will utilize 12.3 percent of the project and will therefore support 12.3 percent of the lease rent obligation. I look forward to discussing this project with you. If you have any questions or need more information ahead of your regular deliberative process please contact me at 235-5923. Sincerely, ~~~~~ ,!~~ G~ Gary A. Gilot, P.E., Director Public Works c: Mayor Stephen J. Luecke .. f ~ _~ r