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HomeMy WebLinkAbout00-05 - Lease Agreement Relating to Victoria St, REM Validation ProceedingsRESOLUTION NO. 00-5- A O -5 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COSTA MESA, CALIFORNIA, PROVIDING FOR APPROVAL OF A LEASE AMENDMENT IN CONNECTION WITH THE LEASE AGREEMENT RELATING TO VICTORIA STREET, AUTHORIZING IN REM VALIDATION PROCEEDINGS WITH RESPECT THERETO, AND PROVIDING FOR OTHER MATTERS PROPERLY RELATING THERETO. WHEREAS, the City of Costa Mesa (the "City") is a municipal corporation with the authority to lease real property in order to achieve its public purposes; and WHEREAS, the Costa Mesa City Hall & Public Safety Facilities, Inc. (the "Corporation") was formed as a public benefit nonprofit corporation authorized by its articles of incorporation and bylaws to assist the City by acquiring and leasing real and personal property to the City; and WHEREAS, as described below, the Corporation has been dissolved and the City is the successor to all of the assets of the Corporation; and WHEREAS, the City and the Corporation entered into an agreement entitled "Lease Agreement relating to Victoria Street", dated as of October 1, 1988 (the "Lease Agreement"), whereby (1) the City agreed to acquire certain real property and lease said real property to. the Corporation, and (2) the Corporation agreed to undertake the demolition of existing improvements on the real property to make said property ready for street improvements and to sublease the real property to the City; and WHEREAS, pursuant to the Lease Agreement, the initial parcel of property was acquired and the Lease Agreement recorded as Document Number 89-115981, Official Records of `the County Recorder in the County of Orange, and thereafter, additional parcels of property were acquired and amendments to the Lease Agreement numbered 1 through 110 relating to such parcels of property were so recorded (collectively, as so recorded, the "Leased Property"); and WHEREAS, the costs of acquisition of the Lease Property and the demolition and removal of existing structures and improvements on the Lease Property were financed by the issuance by the Corporation of $17,000,000.00 Costa. Mesa City Hall & Public Safety Facilities, Inc. Lease Revenue Bonds 1988 Series A (Victoria Street) (the "1988 Bonds") and debt service on the 1988 Bonds was payable principally from lease payments to be paid by the City pursuant to the Lease Agreement; and WHEREAS, the Lease Agreement, as originally entered into, contemplated that the improvements to be made to the Lease Property (the Street Improvements) would - be financed by an additional series of bonds to be issued by the Corporation and that the Lease Agreement would be amended accordingly to provide for the payment of debt service on such additional series of bonds by the payment by the City of additional lease payments pursuant to the Lease Agreement; and WHEREAS, the City determined, instead, to finance the costs of construction of the Street Improvements, as well as certain other facilities of the City, by the issuance by the Costa Mesa Public Financing Authority (the "Authority") of $15,000,000.00 Costa Mesa Public Financing Authority 1990 Lease Revenue Bonds (Public Facilities Project) (the "1990 Bonds"), and in order to facilitate the financing, debt service on the 1990 Bonds was payable principally from lease payments to be paid by the City pursuant to the lease to the Authority and leaseback by the City of certain municipal golf course facilities (the "1990 Golf Courses Lease") rather than by lease payments to be made pursuant to the Lease Agreement; and WHEREAS, in order to achieve interest rate savings, in 1993, the City caused the refinancing of the 1988 Bonds, together with certain other obligations of the City, by the issuance by the Authority of its $18,970,000.00 Costa Mesa Public Financing Authority Refunding Revenue Bonds, 1993 Series A (Public Facilities Project) (the "1993 Bonds"), and in order to facilitate the refinancing, debt service on the 1993 Bonds is payable principally from lease payments to be paid by the City pursuant to the lease to the Authority and leaseback by the City of the City's Civic Center (the "1993 Civic Center Lease") rather than by lease payments to be made pursuant to the Lease Agreement; and WHEREAS, to achieve additional interest rate savings, in 1998, the City caused the refinancing of the 1990 Bonds by the issuance by the Authority of $13,715,000.00 Costa Mesa Public Financing Authority Revenue Bonds, 1998 Series A (Public Facilities Project) (the "1998 Bonds"), and debt service on the 1998 Bonds is payable. principally from lease payments to be paid by the City pursuant to an amended 1990 Golf Courses Lease, rather than pursuant to the Lease Agreement; and WHEREAS, the City has used and desires to continue to use certain moneys (the "Gas Tax Moneys") deposited in its Special Gas Tax Street Improvement Fund to pay a portion of the lease payments payable pursuant to the Lease Agreement, the 1990 Golf Courses Lease (as originally executed and as amended) and the 1993 Civic Center Lease; and WHEREAS, the State Controller's Office, in its final audit report of the City's Special Gas Tax Street Improvement Fund for the fiscal year ended June 30, 1993, determined that the use of Gas Tax Moneys to pay lease payments pursuant to the 1990 Golf Courses Lease was not permitted by applicable state law, and the California Appellate Court upheld the determination of the State Controller's Office in City of Costa Mesa v Connell; and WHEREAS, the State Controller's Office has, heretofore, approved the use of Gas Tax Moneys to pay lease payments pursuant to the Lease Agreement and the Appellate Court stated in City of Costa Mesa v Connell that "the sublease of a street is probably distinguishable from the sublease of golf courses and the former might well justify the expenditures of state gas tax funds"; and WHEREAS, since the Lease Agreement provides for the direct lease of the applicable portions of Victoria Street as described in the Lease Agreement and the prior amendments thereto remain on record in the office of the Orange County Recorder, the City, the City as the successor to the Corporation, and the Authority desire to amend the Lease Agreement to include the lease of the Street Improvements financed with the proceeds of the 1990 Bonds and to further amend the Lease Agreement to provide for the payment by the City of lease payments ("Base Rental Payments") attributable to the costs of the financing of the Street Improvements with the proceeds of the 1990 Bonds as subsequently refinanced with the proceeds of the 1998 Bonds, as well as to amend the Lease Agreement to provide for the payment by the City of lease payments attributable to the costs of refinancing the Lease Agreement pursuant to the refinancing of the 1988 Bonds with the proceeds of the . 1993 Bonds; and WHEREAS, because of the adverse determination by the State Controller's Office with respect to the use of Gas Tax Moneys, the City desires that the effective date of such amendment to the Lease Agreement shall be as of July 1, 1993, (being the beginning of. the first fiscal year subsequent to the audit. by the State Controller's Office referenced, above), and shall apply with respect to the use of Gas Tax Moneys subsequent to July 1, 1993, to pay lease payments applied to the costs of financing and refinancing the Lease Agreement as provided in such amendment of the Lease Agreement; and WHEREAS, the above described amendments to the Lease Agreement are set. forth in Lease Amendment No. 111 dated as of February 1, .2000, by and among the City, the City as successor to the Corporation, and the Authority ("Lease Amendment No. 111 "), the form of which is on file with the City Clerk; and WHEREAS, the, City Council, with the aid of its staff, has reviewed Lease Amendment No. 111 and desires to approve Lease Amendment No. 111 and authorize its execution and delivery; and WHEREAS, because of the determinations of the California Appellate Court in City of Costa Mesa v Connell, the City Council believes it would be prudent to obtain. a further judicial determination of the validity of Lease Amendment No..111 and the resulting amendment of the Lease Agreement; NOW, THEREFORE, IT IS HEREBY ORDERED AS FOLLOWS: SECTION 1. Approval of Lease Amendment No. 111. The City Council hereby approves Lease Amendment No. 111 in substantially the form on file with the City Clerk together with any additions thereto or changes therein deemed necessary or advisable by the City Attorney. The Mayor is hereby authorized and directed to execute, and the City Clerk is hereby authorized and directed to attest and affix the seal of the City to the final form of Lease Amendment No. 111 for and in the name and on behalf of the City, and the Mayor's execution thereof shall be conclusive evidence of approval of any such additions and changes. The City Council hereby authorizes the delivery and performance of Lease Amendment No. 111. SECTION 2. Judicial Validation. The City Attorney is hereby authorized and directed to initiate and prosecute to conclusion an action on behalf of the City pursuant to Section 860 and following of the Code of Civil Procedure of the State of California for the purpose of establishing the validity of Lease Amendment No. 111 and the resulting amendment of the Lease Agreement. Section 3. Official Action. The Mayor, the City Manager, the City Attorney, the City Clerk, and other officials of the City are hereby authorized and directed to take such actions and to execute such other agreements, documents, and certificates as may be .necessary to effect the purposes of this Resolution and the judicial validation action authorized and directed by SECTION 2 hereof. SECTION 4. This Resolution shall be effective immediately upon adoption. PASSED AND ADOPTED this 7 h day of February, 2000. ATTEST: Deputy City Clerk,/6f the City of Costa Mesa STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss CITY OF COSTA MESA ) May oft a City o Costa Mesa If APPRO ED AS TO FORM l ITY AI "0RNEY I, MARY T. ELLIOTT, Deputy City Clerk and ex -officio Clerk of the City Council of the City of Costa Mesa, hereby certify that the above and foregoing Resolution No. 00 -Ib was duly and regularly passed and adopted by the said City Council at a regular meeting thereof, held on the 7' day of February, 2000. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Seal of the City of Costa Mesa this 8 h day of February, 2000. Deputy Cityerk and ex -officio Clerk of the City Coun . of the City of Costa Mesa