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HomeMy WebLinkAbout088 - 07/19/2011 - APPROPRIATING PRIOR YEAR RESERVES IN THE WATER FUND FOR THE PURPOSE OF PROVIDING A LOAN TO FCDM, INC ORDINANCE NO. 088, 2011 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROPRIATING PRIOR YEAR RESERVES IN THE WATER FUND FOR THE PURPOSE OF PROVIDING A LOAN TO FCDM, INC. FOR THE FORT COLLINS MUSEUM/DISCOVERY SCIENCE CENTER PROJECT WHEREAS, on November 1, 2005, Fort Collins voters passed Ordinance No. 092, 2005, approving the "Building on Basics" ("BOB") tax for certain capital projects; WHEREAS, $6,000,000 was included in the BOB capital project program for construction of a new combined—use facility for the Fort Collins Museum/Discovery Science Center("Project"); and WHEREAS, the City and Discovery Center, a Colorado non-profit corporation, d/b/a Discovery Science Center, now officially know as FCDM, Inc. (the "NPC"), entered into an operating agreement for the construction and operation of the Project; and WHEREAS, the Project will be jointly owned, managed, and funded by the City and the NPC; and WHEREAS, the City Council, through various appropriation ordinances, has previously appropriated $15,109,666 for the construction of the Project, which appropriations include $4,561,916 in anticipated revenues raised by the NPC and its predecessor; and WHEREAS, in January 2010, the City entered into a design—build contract for the construction of the Project and construction commenced in August 2010; and WHEREAS, construction on the Project is continuing and the Project will incur additional construction costs through December 31, 2011; and WHEREAS, $875,000 of the NPC funds previously appropriated by the City Council for construction of the Project is in the form of donor pledges that are to be paid between 2011 and 2014, so the majority of these donor funds are not available at this time to be applied to the remaining construction costs of the Project; and WHEREAS, the $875,000 in NPC funds is needed to help cover the remaining construction costs that are likely to be incurred by the City to complete the Project; and WHEREAS, in order to avoid delaying the opening of the Project, and to avoid the potentially significant and additional contract expenses that may result if construction of the Project is suspended, the City Council believes that it is in the best interest of the City to appropriate from reserves in the Water Fund the amount of$875,000 and to transfer that amount to the Capital Projects Fund in the form of a loan to the NPC for the Project (the "NPC Loan"); and WHEREAS, City staff has prepared a proposed promissory note (the "Note") and a loan agreement in the form entitled "Loan and Security Agreement Between the City of Fort Collins, Colorado and FCDM, Inc. for Funding the Fort Collins Museum/Discovery Science Center Project" (the "Loan Agreement") attached hereto as Exhibit"A"; and WHEREAS, Article V, Section 12, of the City Charter permits the City Council to provide direction as to the investment of City funds; and 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 loan, and other conditions in the Loan Agreement, the NPC loan is a suitable investment for the Water Fund reserves; and WHEREAS, the NPC Loan will not necessitate any increase in water rates above those already projected by staff, and after investing the Water Fund reserves in the NPC 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 restored to the Water Fund, it is the intent of the Council to provide a replacement funding source for the NPC Loan; and WHEREAS, Article V, Section 9, of the City Charter permits the City Council to appropriate by ordinance at any time during the fiscal year such funds for expenditure as may be available from reserves accumulated in prior years, notwithstanding that such reserves were not previously appropriated. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That there is hereby appropriated from Water Fund reserves the amount of EIGHT HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($875,000) for the purpose of making a loan to the NPC for its remaining share of the construction costs for the Project. Section 2. That the Note, Loan Agreement, and related documents are hereby approved on substantially the terms and conditions contained therein, subject to modifications in form and substance as the Mayor may, in consultation with the City Attorney, deem to be desirable and necessary to protect the interests of the City. -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. `�r '�ZN yor ATTEST: �e L •Cpl OIR City Clerk Passed and adopted on final reading on the 19th day of July, A.D. 2011. M yor ATTEST: OF FORT Gam,• •••O� • •� i SEAL s • City Clerk c°<ORaoo -3- EXHIBIT A LOAN AND SECURITY AGREEMENT BETWEEN THE CITY OF FORT COLLINS, COLORADO AND FCDM, INC. FOR FUNDING THE FORT COLLINS 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 COLLINS, COLORADO, a municipal corporation (the "City"), and FCDM, Inc., a Colorado nonprofit corporation (the "NPC"). RECITALS 1. The NPC is a nonprofit corporation that was formerly known as the Discovery Center d/b/a Discovery Science Center. The 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 entered into an operating agreement for the funding and operation of the Project (the "Operating Agreement"). 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 Project. 3. In the Operating Agreement, the NPC agreed to provide no less than $2,500,000 for design and construction of the Project. Subsequently, the NPC has committed to provide an additional $ 2,061,961.00 , for a total of$4,561,916. By Ordinance No. 117, 2010, the City Council appropriated this amount into the City's capital project fund for the construction of the Project. 4. Included in the amount committed by the NPC are amounts the NPC anticipates receiving from pledges by private donors, in the aggregate amount of$875,000, which the donors have committed to fund in years 2012 through 2014 (the "Outstanding Pledges"). 5. Construction of the Project is expected to be completed in November 2011. In order to help fund the remaining construction costs, the City and the NPC would like the funds represented by the Outstanding Pledges be made available by the NPC in 2011, instead of the schedule by which the NPC anticipated collection of Outstanding Pledges. In the spirit of the Operating Agreement, the NPC desires to make the funds available to the City, but will require financing in order to do so. Although private lenders have expressed some interest in providing financing to the NPC, the proposed terms are unfavorable. The parties acknowledge that the cost of the financing will reduce the NPC's capital available for future support for the Project. .6. The City and the NPC are willing to enter into this Loan and Security Agreement to provide for the extension of credit by the City to the NPC, as Borrower, and for the creation of a 1 security interest in certain property of the Borrower to secure repayment of the Loan, all on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties agree as follows: 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 Eight Hundred Seventy Five Thousand Dollars ($875,000). 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 will 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 31, 2014 (the "Maturity Date"). Section 4. No Prepayment Penalty. The NPC, in its 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 principal and interest due and payable to the City on the Maturity Date will be considered a documented expenditure under Section 3.1 of the Operating Agreement for purposes of determining the City's Ownership Interest in the Facility. (b) that any surplus Institution Revenue, defined in Section 7.2 and Section 7.3 of the Operating Agreement, will be used, if necessary, to pay the principal and interest due on the Loan. (c) to execute a promissory note (the "Note") substantially in the form of Exhibit B. (d) that Borrower grants to the City a security interest in all of the Borrower's rights to payment under any and all donor pledge agreements, including the Outstanding Pledges, that represent unrestricted pledges or pledges 2 for the construction or operation of the Project (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 the creation or acquisition of Project exhibits or other designated Project components. (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 City, on behalf of the NPC. Section 6. Default. Upon the occurrence of any of the events listed below in this Section 6, all of the obligations of the Borrower under the Note and this Agreement 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, the Note, 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 assignment 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 and remedies permitted under applicable law. Section 7. Waiver. No consent or waiver, express or implied, or the acceptance of a late payment, or the failure to enforce any of Borrower's obligations under this Agreement, the Note, or other Loan documents, will be construed as a waiver of any breach or default by Borrower. Section 8. Attorney's Fees and Costs. In the event either party commences any proceeding to enforce the Agreement, or the Note, the prevailing party therein shall be entitled to an award of all of its costs and expenses incurred therein and in connection therewith, including its reasonable attorney's fees. 3 Section 9. Assignment. This Agreement, the Note, and the Loan Documents, are nonassignable and nontransferable by Borrower, by operation of law, or otherwise, and any attempt to do so shall be null and void. This Agreement, the Note, and the Loan Documents may be fully assigned by the City. Section 10. Notice. Any notice required with respect to the Agreement or the Note, 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. 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 beneficiary of this Agreement. Section 12. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Colorado. CITY: CITY OF FORT COLLINS, COLORADO, a municipal corporation By: Karen Weitkunat, Mayor ATTEST: By: 4 Wanda Krajiceck, City Clerk APPROVED AS TO FORM: By: Assistant City Attorney FCDM, Inc.: By: Board President 5 Exhibit A to the Building Loan Agreement Non Profit Corporation Building Pledges Loan agreement from City's Water Fund to Museum Non-Profit Corporation Loan Amount 875,000.00 Start Date 1-Au -11 Interest Rate 3.500% - Matures 31-Dec-14 Years 3 5/12 Time in Years Date Payment Interest Principal Balance - 1-Aug-11 875,000.00 1.42 31-Dec-12 393,385.42 43,385.42 350,000.00 525,000.00 2.42 31-Dec-13 443,375.00 18,375.00 425,000.00 100,000.00 3.42 31-Dec-14 103,500.00 3,500.00 100,000.00 - 940,260.42 65,260.42 875,000.00 Dates and rates are preliminary. Specifics will be set after the loan is authorized. The interest rate equals the current prime lending rate of 3.25% plus 0.25% Draft June 13, 2011 i Exhibit B to the Building Loan Agreement PROMISSORY NOTE $875,000 July_, 2011 FOR VALUE RECEIVED, FCDM, Inc., ("Borrower"),promises to pay to the order of THE CITY OF FORT COLLINS, COLORADO, a municipal corporation("Lender"), at its office at 300 LaPorte Avenue, Fort Collins, Colorado 80524, in lawful money of the United States of America the principal amount of Eight Hundred Seventy Five Thousand Dollars ($875,000). This Promissory Note is issued pursuant to the Loan and Security Agreement between the City of Fort Collins and FCDM, Inc. dated July_, 2011, between Borrower and Lender(the "Agreement"). Capitalized terms used herein but not defined herein have the meanings given such terms in the Loan Agreement. 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 a fixed rate equal to % per annum ("Interest Rate"). Final payment of all unpaid Principal and accrued interest, plus any default interest, fees and charges owing under this Note, will be due and payable on December 315 2014 (the"Maturity Date"). The annual interest rate 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 execution of the Loan Documents, or in part from time to time,but not more frequently than monthly. 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 statutory stay, sequester, protect, preserve or enforce Lender's interest in this Note, the Loan Documents or any other security for this Note (including,but not limited to, proceedings under federal bankruptcy law or in connection with any state or federal tax lien), then Borrower promises to pay reasonable attorneys' fees and reasonable costs and expenses incurred by Lender and/or its attorney in connection with the above-mentioned events. If not paid within ten(10) days after such fees become due and written demand for payment is made, such amount shall be due on demand or may be added to the principal, at the Lender's discretion. If any payment or installment due under this Note is not paid when it becomes due and payable, Borrower recognizes that the Lender will incur extra expenses for both the administrative cost of handling delinquent payments and the cost of funds incurred by Lender after the due date. Therefore, Borrower shall, in such event, without further notice, and without prejudice to the right of Lender to collect any other amounts provided to be paid herein, including default 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 for 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 and agrees 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 for the payment of this Note, or any installment or other modification of the terms made 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 the other Loan Documents shall not be affected thereby but instead shall be enforceable to the maximum extent permitted by law. Borrower and Lender hereby knowingly, voluntarily, and intentionally waive any rights they may have to a trial by jury in respect of any litigation based hereon or arising out of, under or in connection with this note or any course of conduct, course of dealing, statements (whether oral or written) or actions of the other party. This Promissory Note shall be construed in accordance with the-laws of the State of Colorado. IN WITNESS WHEREOF, Borrower has duly executed this Promissory Note as of the day and year first above written. BORROWER: FCDM, Inc. By: Executive Director - 2 -