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HomeMy WebLinkAbout089 - 07/05/2011 - APPROPRIATING PRIOR YEAR RESERVES IN THE WATER FUND FOR THE PURPOSE OF PROVIDING A LOAN TO FCDM, INC ORDINANCE NO. 089, 2011 OF THE COUNCIL OF THE CITY OF FORT COLLINS l APPROPRIATING PRIOR YEAR RESERVES IN THE WATER FUND FOR THE PURPOSE OF PROVIDING A LOAN TO FCDM, INC. FOR THE/EXHIBITS OF THE FORT COLLINS MUSEUM/DISCOVERY SCIENCE CENTER-PROJECT AND APPROPRIATING UNANTICIPATED REVENUE IN THE CAPITAL PROJECTS FUND WHEREAS, on November 1, 2005, Fort Collins voters passed Ordinance No. 092, 2005, approving the "Building on Basics" ("BOB") tax for certain capital projects, and WHEREAS, $6,000,000 was included in the BOB cap, al project program for construction of a new combined-use facility for the Fort Collins Mu bum/Discovery Science Center ("the Project"); and WHEREAS, in March 2008, the City and t Discovery Center, a Colorado non-profit corporation, d/b/a Discovery Science Center (the " PC"), now officially known as FCDM, Inc., entered into an operating agreement for the const ction and operation of the Project; and WHEREAS,the Project will be jointly wned,managed,and funded by the City and the NPC and will expand the educational experien of city residents by providing a broader array of scientific, cultural and historical exhibits i a single location, and will also provide an exciting new City amenity; and WHEREAS, the NPC has ra' ed$3,617,000 for museum exhibits,with$1.2 million of that amount coming from pledges to b paid between 2011 and 2017; and WHEREAS, the muse exhibits will be limited until the entire amount of$1.2 million is available to complete the ex it experience; and WHEREAS, in o der that the Project can open in 2012 with a more complete exhibit experience, and in orde o avoid the inefficiencies that would result if the exhibit installation were to be delayed,the Ci Council believes that it is in the best interest of the City to appropriate from reserves in the Wat Fund the amount of$1,200,000 and to transfer that amount to the Capital Projects Fund in t form of a loan to the NPC for the Project (the "NPC Loan"); and WHE AS, City staff has prepared a proposed promissory note (the "Note") and a loan agreement in e form entitled "Loan and Security Agreement Between the City of Fort Collins, Colorado a d FCDM, Inc. for Funding Exhibits of the Fort Collins Museum/Discovery Science Center Pr ect" (the "Loan Agreement") attached hereto as Exhibit "A"; and HEREAS, Article V, Section 12, of the City Charter permits the City Council to provide direction as to the investment of City funds; and DEFEATED ON FIRST READING 1-6 WHEREAS,while the NPC Loan does not fit within the categories of approved investments established in the Investment Policy approved by the City Council in 2008,the City Council finds that,based on the interest rate,the collateral provided for the NPC Loan, and other conditions in the Loan Agreement, the NPC Loan is a suitable investment for the Water Fund reserves;/d WHEREAS, the NPC Loan will not necessitate any increase in water a'tes above those already projected by staff, and after investing the Water Fund reserves in the 7C Loan, the Water Fund will still have a sufficient balance of reserve funds to meet reserve fund requirements, assuming that the projected rate increases are implemented; and WHEREAS, in the event that the timing of, or unanticipated need for, Water Utility capital improvements results in a need for the NPC Loan funds to be restooed to the Water Fund, it is the intent of the Council to provide a replacement funding source fo�the NPC Loan; and WHEREAS,Article V,Section 9,of the City Charter per its the City Council to appropriate by ordinance at any time during the fiscal year such funds fpr expenditure as may be available from reserves accumulated in prior years, notwithstanding that such reserves were not previously appropriated. WHEREAS, Article V, Section 9, of the Cit Charter authorizes the City Council to make supplemental appropriations by ordinance at anytime during the fiscal year,provided that the total amount of such supplemental appropriations,in combination with all previous appropriations for that fiscal year,does not exceed the current estimate of actual and anticipated revenues to be received during the fiscal year; and WHEREAS, City staff has deter ned that the appropriation of the revenue as described herein will not cause the total amount ppropriated in the Capital Project fund to exceed the current estimate of actual and anticipated7Tr enues to be received in that fund during any fiscal year. NOW, THEREFORE, B ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Sec/io Tha there is hereby appropriated from Water Fund reserves the amount of ONE MILO DRED THOUSAND DOLLARS ($1,200,000) for the purpose of making a l C to fund exhibit costs for the Project. SecThat the Note,Loan Agreement, and related documents are hereby approved on substanrms and conditions contained therein, subject to modifications in form and substance or may, in consultation with the City Attorney, deem to be desirable and. necessary te interests of the City. Se 'on 3. That there is hereby appropriated from unanticipated revenue in the Capital Projects and the sum of ONE MILLION TWO HUNDRED THOUSAND DOLLARS ($1, 200,0 ) for expenditure on the Project. -2- Introduced,considered favorably on first reading,and ordered published this 5th day of July, A.D. 2011, and to be presented for final passage on the 19th day of July, A.D. 2011. Mayor ATTEST: City Clerk Passed and adopted on final reading on the 19th day of July, A. . 2011. May r ATTEST: City Clerk -3- EXHIBIT A LOAN AND SECURITY AGREEMENT BETWEEN THE CITY OF FORT COLLINS, COLORADO AND FCDM, INC. FOR FUNDING EXHIBITS OF THE FORT COLLI S MUSEUM/DISCOVERY SCIENCE CENTER PROJECT THIS LOAN AND SECURITY AGREEMENT (the."Agreement")is made this day of July, 2011, by and between the CITY OF FORT COLLYas O, a municipal corporation (the "City"), and FCDM, Inc., a Colorado nonn (the "NPC"). RECITALS 1. The NPC is a nonprofit corporation that was formerlycovery Center d/b/a Discovery Science Center. The primary purpose of the/NPC is to support the construction and operation of the Fort Collins Museum/Discovery Science Center joint facility project(the "Project"). 2. In March 2008, the City and the NPC entere into an operating agreement for the funding and operation of the Project (the "Operating A eement"). The Operating Agreement describes the Project as consisting of, among other/things, the "Facility". The Facility is defined in the Operating Agreement as the land, buildings and associated improvements that make up the physical plant for the Proje/eenmade, 3. In the Operating Agreemenagreed to provide no less than $1,100,000 for acquisition or creation of Pits. The NPC has raised $2,975,000 for Project exhibits, which includes th ,200,000 from pledges to the NPC by private donors. These pledges have already and are anticipated to be collected by the NPC in future years (the "Outstanding Pledges"). 4. The Project is expecte o be open to the public in 2012. In order to help fund the exhibit costs so that the Proj t can open with a more complete exhibit experience for its patrons, the City and the NPC w uld like the funds represented by the Outstanding Pledges be made available in 2011, ' stead of the schedule by which the NPC anticipated collection of Outstanding Ple es. In the spirit of the Operating Agreement, the NPC desires to make the funds available but will require financing in order to do so. The parties acknowledge that the cost of the fi ncing will reduce the NPC's capital available for future support for the Project. 5. The City d the NPC are willing to enter into this Loan and Security Agreement to provide for the tension of credit by the City to the NPC, as Borrower, and for the creation of a securi interest in certain property of the Borrower to secure repayment of the Loan, all on the to s and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein con ained, the parties agree as follows: 1 Section 1. The Loan. After the effective date of this Agreement (the "Effective Date"), the adoption of the required ordinances and resolutions by the City, the approval of the Agreement by the NPC Board of Directors, and the execution of a promissory note and other documents as may reasonably be required, the NPC agrees to pay to the City the principal sum actually transferred by the City to the capital project account for the Project on the NPC's'behalf, but not to exceed One Million Two Hundred Thousand Dollars ($1,200,000). The NPC agrees and acknowledges that the loan proceeds will be transferred by the City to the City's capital project account for the Project, and will not be disbursed to the NPC. Section 2. Interest. Interest on the Loan will accrue at a rate equal to %. Section 3. Payment Terms. The Loan and accrued interest wil/1 be due and payable by the NPC to the City as set forth in the payment schedule contained on`Exhibit A, attached hereto and incorporated into this Agreement. All unpaid principal of the/Loan, interest, default interest, fees and charges for the Loan will mature on the December 32017 (the "Maturity Date"). Section 4. No Prepayment Penalty. The NPC, inlits sole discretion, may prepay all or any portion of the Loan at any time and any such prepayment will be without any prepayment penalty. If a prepayment is made, the funds will be applied first to any interest that has accrued and then the balance of the payment will be applied to the reduction of principal. Section 5. Security Agreement. As security for the Loan, the Borrower agrees: (a) that any unpaid p ncipal and interest due and payable to the City on the Maturity Date will be nsidered a documented expenditure under Section 3.1 of the Operating Agree nt for purposes of determining the City's Ownership Interest in the Facility (b) that surplus Institution Revenue, defined in Section 7.2 and Section 7.3 of t Operating Agreement, will be used, if necessary, to pay the principal and ' terest due on the Loan. (c to execute a promissory note (the "Note") substantially in the form of Exhibit . (d) that Borrower grants to the City a security interest in all of the rrower's rights to payment under any and all donor pledge agreements, ncluding the Outstanding Pledges, that represent unrestricted pledges or pledges and other assets donated for Project Exhibits (the "Collateral"). This Agreement does not grant the City a security interest in pledge agreements that are specifically, by the terms of the pledge agreement, for pledges by private donors that are to be used solely for the purpose of construction or operation of the Project. 2 (1) Borrower represents that it has not previously granted a security interest in any of the Collateral. (2) Borrower agrees that if it is in default under this Agreement or the Note, the City may notify any donor whose pledge to the NPC constitutes Collateral for the City's security interest and request payment directly to the Ci 3�, on behalf of the NPC. Section 6. Default. Upon the occurrence of any of the events listed belowin this Section 6, all of the obligations of the Borrower under the Note and this Agreemen/and any other documents executed by Borrower in connection with the loan contemplated by�this Agreement ("Loan Documents"), at the option of the holder thereof, shall become immediately due and payable: / (a) the Borrower, without the consent of the City, allows the creation of any lien or encumbrance on the Collateral. (b)the Borrower fails to comply with any of the terms, covenants or conditions contained in this Agreement, theNote, or the other Loan Documents, and the situation is not remedied within 10 business days after Borrower's receipt of written notice from the City. / (c) a petition in bankruptcy is filed by or against the Borrower and is not dismissed within 60 days, or a receiver or trustee of the Borrower is appointed, or the Borrower makes an assignjnent for the benefit of creditors, or Borrower is adjudged insolvent by any state or federal court of competent jurisdiction. If Borrower is in default, in addition to the remedies provided in the Note or this Agreement, the City shall have any and all rights andremedies permitted under applicable law. Section 7. Waiver. N consent or waiver, express or implied, or the acceptance of a late payment, or the failure to force any of Borrower's obligations under this Agreement, the Note, or other Loan docume s, will be construed as a waiver of any breach or default by Borrower. Section 8. ttorne 's Fees and Costs. In the event either party commences any proceeding to enforc this Agreement, or the Note, or other Loan Documents, the prevailing party therein shall e entitled to an award of all of its costs and expenses incurred therein and in connection there ith, including its reasonable attorney's fees. Secti 9. Assignment• This Agreement, the Note, and the Loan Documents, are nonassign le and nontransferable by Borrower, by operation of law, or otherwise, and any attempt do so shall be null and void. This Agreement, the Note, and the Loan Documents may be ful assigned by the City. 3 Section 10. Notice. Any notice required with respect to the Agreement or the Not` e, is to be delivered in writing to be accomplished by personal delivery or mailing postage prepaid by the United States Postal Service, or other commercial carrier to the following addresses: If to the City City of Fort Collins Director of Finance PO Box 580 Fort Collins, CO 80522-0580 If to the NPC Executive Director FCDM, Inc. 200 Mathews St. Fort Collins, CO 80524. F Section 11. Entire Agreement. This Agreement will be construed according to its fair meaning, as if prepared by both Parties. This Agreement, and the documents executed pursuant to the Agreement, contain the sole and entire agreement and understanding of the parties with respect to the subject matter of the Agreement, and incorporate all prior discussions, negotiations and understandings. This Agreement cannot be changed, modified or amended, except in writing, executed by both parties. This Agreement is solely for the benefit of Borrower, and no person shall be deemed a third party be7ciary of this Agreement. Section 12. GoverningLaw!TThhis Agreement will be construed and interpreted in accordance with the laws of the Stat of Colorado. CITY: CITY OF FORT COLLINS, COLORADO, a municipal corporation By: Karen Weitkunat, Mayor' ATTEST: By: Wanda ajiceck, City Clerk APPRO D AS TO FORM: By: ,Assistant City Attorney 4 FCDM, Inc.: By: Board President 5 Exhibit A to the Exhibits Loan Agreement Non Profit Corporation Exhibit Pledges Loan agreement from City's Water Fund to Museum Non-Profit Corporation Loan Amount 1,200,000.00 Start Date -Au -11 Interest Rate 3.750% ` Matures /31-Dec-17 Years 6 5112 Time in Years Date Payment Interest Principal Balance 1-Aug-11 1,20050,,000000.00 0.42 31-Dec-11 268,750.00 18,750.00 25 ,000.00 9 .00 1.42 31-Dec-12 285,625.00 35,625.00 0,000.00 700,000.00 2.42 31-Dec-13 126,250.00 26,250.00 100,000.00 600,000.00 3.42 31-Dec-14 322,500.00 22,500.00 300,000.00 300,000.00 4.42 31-Dec-15 111,250.00 11,250.00 100,000.00 200,000.00 5.42 31-Dec-16 107,500.00 7,500.00 100,000.00 100,000.00 6.42 31-Dec-17 103,750.00 3,750.00 100,000.00 - 1,325,625.00 125,625.00 1,200,000.00 Dates and rates are preliminary. Specifics will b set after the loan is authorized. The interest rate equals the current prime len,ing rate of 3.25% plus .5% Draft June 13, 2011 F -- r Exhibit B to the Exhibits Loan Agreement PROMISSORY NOTE $1,200,000 July , 2011 FOR VALUE RECEIVED, FCDM, Inc., ("Borrower"), promises to pay to the order THE CITY OF FORT COLLINS, COLORADO, a municipal corporation ("Lender"), at 'its office at 300 LaPorte Avenue, Fort Collins, Colorado 80522, in lawful money of the Uni d States of America the principal amount of One Million Two Hundred Thousand Dollar ($1,200,000). This Promissory Note is issued pursuant to the Loan and Security Agreement between the City of Fort Collins and FCDM, Inc. dated July_, 2011. Capitalized terms sed herein but not defined herein have the meanings given such terms in the Loan Agreerdent. The obligations of Borrower evidenced by this Promissory Note are payable in accordance with the terms and conditions of the Agreement. / The rate of interest borne by this Promissory Note is af�fixed rate equal to % per annum ("Interest Rate"). Final payment of all unpaid Pr�fncipal and accrued interest, plus any default interest, fees and charges owing under this Note,,)Aiill be due and payable on December 31, 2017 (the "Maturity Date"). The annual interest rat,e� of this Promissory Note is computed on a 360 day year basis, multiplied by the actual number of days elapsed. The Loan may be drawn 100% upon exec ion of the Loan Documents, or in part from time to time, but not more frequently than mont ly. Unless otherwise agreed to or as may be required by applicable law, payments will be applied first to any accrued interest; then to/principal; then to any late charges; and then to any unpaid collection costs. / If Lender refers this Note to an attorney for collection or seeks legal advice following a default beyond all cure periods allowed under this Note, or the Lender is the prevailing party in any action instituted on this Note,/or if any other judicial or non judicial action, suit or proceeding is instituted by Lender or any future holder of this Note, and an attorney is employed by Lender to appear in any such action or proceeding, or to reclaim, seek relief from a judicial or statutor/ee , sequester, pr ect, preserve or enforce Lender's interest in this Note, the Loan Documr any other s urity for this Note (including, but not limited to, proceedings under federal uptcy law in connection with any state or federal tax lien), then Borrower promiseay reaso le attorneys' fees and reasonable costs and expenses incurred by Lender and/or iorney in onnection with the above-mentioned events. If not paid within ten (10) days aftch fees ecome due and written demand for payment is made, such amount shall be due on nd or ay be added to the principal, at the Lender's discretion. p ment or installment due under this Note is not paid when it becomes due and payabler er recognizes that the Lender will incur extra expenses for both the adminiscost of handling delinquent payments and the cost of funds incurred by Lenderafter thedate. Therefore, Borrower shall, in such event, without further notice, and without prejudicthe right of Lender to collect any other amounts provided to be paid herein, includinfault interest or to declare a default hereunder, pay to Lender to cover such expenses incurred as a result of any installment payment due being not received within ten (10) days of its due date, a "late charge" of five percent (5%) of the amount of such delinquent payment. Except as otherwise provided herein, the Borrower waives presentment and demand f r payment, notice of acceleration or of maturity, protest and notice of protest and nonpayment, bringing of suit and diligence in taking any action to collect sums owing hereunder an grees that its liability on this Note shall not be affected by any release or change in any security for the payment of this Note or release of anyone liable hereunder. No extension of time the payment of this Note, or any installment or other modification of the terms ma; by the Lender with any person now or hereafter liable for the payment of this Note, shall affect the original liability under this Note of the Borrower, even provided the Borrower is a party to such agreement. In no event whatsoever shall the amount paid, or agreed to be paid, to the holder of this Note for the use, forbearance or retention of the money to be loaned hereunder ("Interest") exceed the maximum amount permissible under applicable law/If the performance or fulfillment of any provision hereof or of any of the Loan Documents or any agreement between Borrower and the Lender of this Note shall result in Interest,exceeding the limit for interest prescribed by law, then the amount of such Interest shall be reduced to such limit. If, from any circumstance whatsoever, the Lender of this Note should receive as Interest, an amount which would exceed the highest lawful rate, the amount which would be excessive Interest shall be applied to the reduction of the principal balance owing (or, at the option of the Lender, be paid over to Borrower) and not to the payment of Interest. If any provision hereof or any of the Loan Documents shall, for any reason and to any extent, be invalid or unenforceable, then the remainder of the document or instrument in which such provision is contained and any of theyher Loan Documents shall not be affected thereby but instead shall be enforceable to the aaximum extent permitted by law. Borrower and Lender hereby owingly, voluntarily, and intentionally waive any rights they may have to a trial by jury in espect of any litigation based hereon or arising out of, under or in connection with this note any course of conduct, course of dealing, statements (whether oral or written) or actions of t e other party. This Promissory N to shall be construed in accordance with the laws of the State of Colorado. IN WITNES WHEREOF, Borrower has duly executed this Promissory Note as of the day and year first ove written. BORROWER: FCDM, Inc. By: Executive Director - 2 -