City of Lafayette Staff Report
For:
City Council
By:
Tracy Robinson, Administrative Services Director
Date Written:
June 2, 2008
Meeting Date:
June 8, 2008
Subject:
Second Loan Agreement, and First Amendment to Loan Agreement,
between the Lafayette Redevelopment Agency and the Lafayette Library
and Learning Center Foundation
Background
The
Lafayette Redevelopment Agency ("RDA") entered into a Loan Agreement with the Lafayette
Library and Learning Center Foundation ("LLLCF") in May of last year for construction of the Lafayette
Library and Learning Center (the "First Loan").
The LLLCF has now offered to loan the RDA an additional $2.5 million for construction purposes (the
"Second Loan").
Analysis
Most of the terms of the Second Loan Agreement are similar to the terms of the May, 2008 Loan
Agreement. However, the key provisions to emphasize include:
•
Funds will be conveyed to RDA July 1, 2009;
•
Interest will be 8%, compounded annually or a fraction thereof;
• The
6.25%
interest rate on the First Loan will be increased to
6.5%
while the Second Loan remains
outstanding;
•
The loan, and interest accrued thereon, will be repaid in one lump sum out of the proceeds from the
next RDA bond issuance, or on December 1, 2012, whichever is earlier;
•
Like the First Loan, the Second Loan will be unsecured. However, the First Loan will have seniority
pursuant to the terms of the Second Loan Agreement; and
•
Loan repayments will be used by LLLCF in accordance with the usage and funding
agreements previously adopted by the City, RDA, and LLLCF.
Recommendation
Review and consider the loan agreements between the Lafayette Redevelopment Agency and the
Lafayette Library and Learning Center Foundation.
SECOND LOAN
AGREEMENT
THIS SECOND LOAN AGREEMENT ("Second Loan Agreement" or
"Agreement"), dated as of June ____, 2009, is made by and between the Lafayette
Redevelopment Agency (the "Agency") and the Lafayette Library and Learning Center
Foundation (the "Foundation") in light of the following recitals. The Agency and the Foundation
are sometimes collectively referred to in this Agreement as "Parties" and individual referred to as
"Party".
RECITALS
WHEREAS, the Agency is a duly constituted redevelopment agency under the
laws of the State of California and pursuant to such laws has duly proceeded with the
redevelopment of its Lafayette Redevelopment Project Area (the "Project Area");
WHEREAS, the Redevelopment Plan for said Project Area provides for tax
increment financing in accordance with the provisions of Chapter 6, Part 1 of Division 24 of the
Health and Safety Code of the State of California and Section 16 of Article XVI of the
Constitution of the State of California;
WHEREAS, in furtherance of the Redevelopment Plan for the Project Area, and
after, complying with the requirements of Health & Safety Code Sections 33445 and 33679, the
Agency previously entered into that certain Loan Agreement with the Agency, dated May 12,
2008 (the "Loan Agreement") to assist in financing the Lafayette Library and Learning Center
(the "Project") by bolTowing $9,000,000 from the Foundation under the Loan Agreement to be
used by the Agency to pay for a portion of the. cost of the Project (the "First Loan");
WHEREAS, the Agency has now determined that it requires an additional
$2.5
million in additional funding for construction of the Project;
WHEREAS, in furtherance of the Redevelopment Plan for the Project Area, and
after complying with the requirements of Health & Safety Code Sections 33445 and 33679, the
Agency has determined to assist in financing the Project by borrowing $2.5 million from the
Foundation under this Second Loan Agreement to be used by the Agency to pay for a portion of
the cost of the Project (the "Second Loan"); and
WHEREAS, Health and Safety Code Section 33132 and 33600 authorizes the
Agency to borrow or accept financial assistance for the agency's activities, powers, and duties.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:
Section 1.
Incorporation of Recitals.
The recitals, including the defined
terms, set forth above, are hereby restated and incorporated in this Second Loan Agreement as if
restated in full.
ORANGE\MSUBRAMANIAN\57266.2
Section 2.
Definitions.
Unless the context otherwise requires, the terms
defined in this Section 1 shall, for all purposes of this Second Loan Agreement and of any
amendment hereto, and of any certificate, opinion, estimate or other document herein mentioned,
have the meanings herein specified
"Agency" means the Lafayette Redevelopment Agency, a redevelopment agency
and public body, corporate and politic, duly organized and existing under and by virtue of the
laws of the State of California.
"Bonds"
means all tax allocation bonds or other evidences of indebtedness
outstanding as of the date hereof or issued in the future by the Agency and secured by Tax
Increment Revenues which are sold to parties other than the City or any subordinate agency of
the City or the Foundation.
"City" means the City of Lafayette, a California municipal corporation.
"Foundation" means the Lafayette Library and Learning Center Foundation, a
non-profit public benefit corporation duly organized and existing under and by virtue of the laws
of the State of California.
"Foundation Repayment Bonds" means Bonds anticipated to be issued by the
Agency during calendar year 2012 for the purpose of, among other things, repaying the Second
Loan.
"Law" means the Community Redevelopment Law of the State of California,
constituting Part 1 of Division 24 of the Health and Safety Code of the State of California and the
acts amendatory thereof and in supplement thereto.
Whenever reference is made in this Second
Loan Agreement to the Law, reference is made to the law as in force on the date of the execution
of this Second Loan Agreement, unless the context otherwise requires.
"Project" has the meaning set forth in the Recitals.
"Project Area" has the meaning set forth in the Recitals.
"Tax Increment Revenues" means all taxes allocated to, and paid into a special
fund of the Agency for the Project Area pursuant to Article 6 of Chapter 6 of the Law and
Section 16 of Article XVI of the Constitution of the State of California, and as provided in the
redevelopment plan for the Project Area, including all payments and reimbursements, if any, to
the Agency specifically attributable to
ad valorem
taxes lost by reason of tax exemptions and tax
rate limitations; excluding amounts required to be deposited in the Agency's low and moderate
income housing fund pursuant to the Law.
Section 3.
Loan.
The Foundation hereby agrees to lend to the Agency the
amount of two million five hundred thousand dollars
($2,500,000),
which it shall convey to
Agency on July 1, 2009 (the "Second Loan"). The Agency agrees to use the Second Loan to pay
the construction costs for the Project as they become due and agrees that such amounts will be
ORANGE\MSUBRAMANIAN\57266.2
2
used to cover a portion of the total construction cost of the Project and for no other purpose.
Section 4.
Source of Repayment; Subordination to Bond. The Agency agrees
to make all loan payments hereunder from Tax Increment Revenues or any other source of legally
available funds. Agency's obligations under this Second Loan Agreement are subordinate and
junior to any Bonds and shall also be subordinate and junior to other indebtedness or form of
obligation incurred prior to the effective date of this Second Loan Agreement.
The Agency
hereby pledges and grants a security interest in the Tax Increment Revenues to the Foundation as
security for the loan payments; provided, that such pledge and security interest shall be at all
times subordinate to the obligation of the Agency to pay debt service on all Bonds. The
Foundation agrees that, in the event the Agency does not have sufficient funds after payment of
debt service on Bonds to repay the Second Loan, the shortfall, to the extent that it is accrued
interest, shall be treated as additional advances hereunder which increase the outstanding loan
balance and the Agency shall not be declared in default hereunder. Notwithstanding any default
by the Agency hereunder, under no circumstances shall the amounts due to the Foundation
hereunder be subject to acceleration.
Section
5.
Modification of First Loan; Amendment of Loan Agreement. The
parties agree that the Loan Agreement shall be modified to increase the interest rate of the First
Loan to
6.5%
as of July 1, 2009, as long as the Second Loan remains outstanding.
Section 6.
Loan Repayment, Interest Rate. The Agency and the Foundation
agree that the outstanding Second Loan balance will accrue interest, compounded annually, or a
fraction thereof, at the commercially reasonable rate of 8% per annum commencing on July 1,
2009 until Agency issues and receives the proceeds for the Foundation Repayment Bonds, or
otherwise until the balance of the Second Loan is fully repaid. Any accrued and unpaid interest
as of June 30th of each year shall be added to the principal balance of the Second Loan as of that
date.
The Agency agrees that it will repay the Second Loan and accrued interest as follows:
(a)
Upon issuance of the Foundation Repayment Bonds, and receipt of the
proceeds therefrom, the Agency shall re-pay the Foundation the full amount of the Second Loan,
and all interest accrued thereon to such date, in one payment.
(b)
With the Foundations consent, which will not be unreasonably withheld, the
Agency at any time may elect to prepay all or any portion of the outstanding Second Loan
balance prior to the issuance of the Foundation Repayment Bonds without penalty from any
source of legally available funds. The Agency shall pay interest accrued on the outstanding
Second Loan through the date of payoff.
(c) If the Agency has legally available funds that are not committed to the
repayment of Bonds and other indebtedness or form of obligation incurred prior to the effective
date of this Second Loan Agreement, it shall repay the Second Loan and all interest accrued
thereon in full by December 1, 2012 unless an alternative agreement is reached with the
Foundation.
Section 7.
Use of Loan Repayments.
The Foundation shall use all loan
ORANGE\MSUBRAMANIAN\57266.2
3
repayments in accordance with the usage and funding agreements previously adopted by the City,
Agency and Foundation.
Section 8.
Amendments.
This Second Loan Agreement may be amended
from time to time by the parties hereto for any purpose by an instrument in writing signed by a
duly authorized representative of the Agency and the Foundation. These amendments may allow
for the Foundation to sell some or all of the loan to third parties or for the repayment schedule to
be adjusted if mutually approved by the Parties.
Both the Agency and the Foundation shall
cooperate with one another to approve amendments that are not harmful to either party, which
amendments shall be approved by a majority of the Board of Trustees in the case of the
Foundation.
No amendment shall conflict with any covenants of the Agency made to owners of
Bonds issued prior to such Amendment.
Section 9.
Representations and Warranties of the Foundation.
The Foundation hereby makes the following representations and warranties to the
Agency:
(a)
The Foundation is a duly organized and existing non-profit public benefit
corporation under the laws of the State of California, has full legal power and authority to enter
into this Second Loan Agreement and has duly authorized the execution and delivery of this
Second Loan Agreement in accordance with its Bylaws and Articles of Incorporation.
(b)
To the extent that the funds used by the Foundation to make the loan
hereunder have been obtained from gifts, donations, grants or bequests, the use of such funds for
such purpose is not inconsistent with the terms of any such gifts, donations, grants or bequests.
(c)
The Foundation is wholly independent of, and is not controlled, either
indirectly or directly by, the City or the Agency. This Second Loan Agreement is made as an
arm's length transaction.
(d)
The making of the loan and the execution and delivery of this Second
Loan Agreement will not constitute a breach or default of any other obligation of the Foundation
pursuant to any contract, agreement, indenture, mortgage, deed of trust or any other instrument.
Section 10.
Representations and Warranties of the Agency.
The Agency
hereby makes the following representations and warranties to the Foundation:
(a)
The Agency is a duly organized and existing agency of the State of
California under the Law, has full legal power and authority to enter into this Second Loan
Agreement and has duly authorized and approved the execution and delivery of this Second Loan
Agreement and the performance of the Agency's obligations hereunder.
(b)
The Agency will, apply the proceeds of the loan hereunder solely to the
cost of the Project and will not use such proceeds in a way such that, under the laws in existence
as of the date hereof, the interest payable on the Foundation Repayment Bonds would not be
ORANGE\MSUBRAMANIAN\57266.2
4
excludable from gross income for federal and State of California income tax purposes.
(c)
The Agency reasonably expects that it will have sufficient funds to pay all
payments to the Foundation hereunder when due.
(d)
The Agency is wholly independent of, and is not controlled by and does
not control, either indirectly or directly, the Foundation.
This Second Loan Agreement is made
as an arm's length transaction.
(e)
The execution and delivery by the Agency of this Second Loan
Agreement, the making of the loan, the performance of the Agency's obligations hereunder and
the consummation of the transactions contemplated hereby will not result in the violation of any
law, statute, rule, regulation, order,
writ, injunction, judgment or decree of any court or
governmental authority to or by which the Agency is bound and will not conflict with, or result in
a breach or violation of, any of the terms or provisions of, or constitute (with due notice or lapse
of time or both) a default under, any lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which the Agency is a party or by which it is bound
or to which any of its properties or assets is subject.
(f)
No consent, approval, authorization or other order of any governmental
authority or other third-party is required to be obtained by the Agency in connection with the
authorization, execution and delivery of this Second Loan Agreement or with the authorization
and making of the loan or the performance of the Agency's obligations hereunder.
Section 11.
Notices. Whenever it shall be necessary for either Party to serve
notice on the other regarding this Agreement, such notice shall be served either in person, by
certified mail, return receipt requested to the addresses below.
Agency:
City of Lafayette Redevelopment Agency
3675
Mt. Diablo Blvd., # 210
Lafayette, California
94549
Attn: Executive Director
Foundation:
Lafayette Library and Learning Center Foundation
P.O. Box 1472
Lafayette, California
94549
Attn:
Treasurer
Such notice shall be deemed made when personally delivered or when mailed, forty-eight
(48) hours after deposit in the U.S.
Mail, first class postage prepaid and addressed to the Party at
its applicable address.
Actual notice shall be deemed adequate notice on the date actual notice
occurred, regardless of the method of service.
Section 12.
Legal Costs. In the event of any legal action between the Agency
and the Foundation arising out of the obligations of the Parties pursuant to this Agreement, the
ORANGE\MSUBRAMANIAN\57266.2
5
prevailing Party will be entitled to payment of its costs and expenses, including its attorneys'
fees.
Section 13.
Binding Effect; Successors.
The Foundation shall not assign,
hypothecate, or transfer, either directly or by operation of law, this Agreement or any interest
herein without the prior written consent of the Agency, which may be given in the Agency's sole
and absolute discretion, but shall not be unreasonably withheld.
Any attempt to do so in
violation of this provision shall be null and void, and any assignees, hypothecates or transferees
shall acquire no right or interest by reason of such attempted assignment, hypothecation or
transfer.
This Agreement shall bind and inure to the benefit of the Parties and their respective
heirs, legal representatives, successors and assigns and all of the Parties hereto shall be jointly
and severally liable hereunder.
Section 14.
Counterparts.
This Agreement may be executed in counterparts
each of which shall be deemed an original and all of which together shall constitute one and the
same instrument which shall be binding upon the Parties notwithstanding that the Parties may not
be signatories to the same counterpart or counterparts. The Parties may integrate their respective
counterparts by attaching the signature pages of each separate counterpart to a single counterpart.
Section 12.
Further Assurances. Whenever requested to do so by the other
Party, each Party shall execute, acknowledge, and deliver any further conveyances, assignments,
confirmations, satisfactions, release, powers of attorney, instruments of further assurance,
approvals, consents, and any further instruments or documents that are necessary, expedient, or
proper to complete anything contemplated by this Agreement. In addition, each Party shall do
any other acts and execute, acknowledge, and deliver any requested documents in order to cany
out the intent and purpose of this Agreement.
Section 14.
Modifications. All
modifications to this Agreement must be in
writing and signed by the Parties, and shall be follow the requirements for amendments set forth
in Section 8 of this Agreement.
Section
15.
Third-Party Rights.
Nothing in this Agreement, express or
implied, is intended to confer any rights or remedies upon any person, other than the Parties and
their respective successors and assigns.
Section 16.
Governing Law; Choice of Venue.
This Agreement shall be
governed and construed in accordance with California law. Venue shall be Contra Costa County.
Section 17.
Severability.
If any provision of this Agreement becomes or is
declared by a court to be illegal, unenforceable or void, that clause will be omitted and the
remainder of the Agreement will continue in full force and effect. Such holding shall in no way
affect the validity or enforceability of this Agreement.
Section 18.
Entire
Agreement.
This Agreement constitutes the entire
agreement between the Agency and the Foundation concerning the matters described herein and
supersedes any and all other agreements, contracts, covenants, resolutions or other arrangements
ORANGE\MSUBRAMANIAN\57266.2
6
with respect to the subject matter hereof.
IN WITNESS HEREOF, the parties hereto have executed this Second Loan
Agreement as of the day and year first above written.
LAFAYETTE LIBRARY AND LEARNING CENTER FOUNDATION
By:
[Title]
LAFAYETTE REDEVELOPMENT AGENCY
By:
Executive Director
ORANGE\MSUBRAMANIAN\57266.2
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT ("First Amendment"),
dated as of June ____,2009, is made by and between the Lafayette Redevelopment Agency (the
"Agency") and the Lafayette Library and Learning Center Foundation (the "Foundation") in light
of the following recitals. The Agency and the Foundation are sometimes collectively referred to
in this First Amendment as "Parties" and individual referred to as "Party".
RECITALS
WHEREAS, the Agency is a duly constituted redevelopment agency under the
laws of the State of California and pursuant to such laws has duly proceeded with the
redevelopment of its Lafayette Redevelopment Project Area (the "Project Area");
WHEREAS, the Redevelopment Plan for said Project Area provides for tax
increment financing in accordance with the provisions of Chapter 6, Part 1 of Division 24 of the
Health and Safety Code of the State of California and Section 16 of Article XVI of the
Constitution of the State of California;
WHEREAS, in furtherance of the Redevelopment Plan for the Project Area, and
after complying with the requirements of Health & Safety Code Sections 33445 and 33679, the
Agency previously entered into that certain Loan Agreement with the Agency, dated May 12,
2008 (the "Loan Agreement") to assist in financing the Lafayette Library and Learning Center
(the "Project") by borrowing $9,000,000 from the Foundation under the Loan Agreement to be
used by the Agency to pay for a portion of the cost of the Project (the "First Loan");
WHEREAS, the Agency has now determined that it requires an additional
$2.5
million in additional funding for construction of the Project;
WHEREAS, in furtherance of the Redevelopment Plan for the Project Area, and
after complying with the requirements of Health & Safety Code Sections 33445 and 33679, the
Agency has determined to assist in financing the Project by borrowing
$2.5
million from the
Foundation under a Second Loan Agreement to be used by the Agency to pay for a portion of the
cost of the Project (the "Second Loan");
WHEREAS, as a condition of entering into the Second Loan Agreement, the
Parties have agreed to amend the Loan Agreement to provide that the
6.25%
interest rate on the
First
Loan shall be increased to
6.5%
as of July 1, 2009 while the Second Loan remains
outstanding; and
WHEREAS, Health and Safety Code Section 33132 and 33600 authorizes the
Agency to borrow or accept financial assistance for the agency's activities, powers, and duties.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:
Section 1.
Incorporation of Recitals.
The recitals, including the defined
terms, set forth above, are hereby restated and incorporated in this First Amendment as if restated
ORANGE \MSTJBRAMANIAN\57556 .1
in full.
Section 2.
Amendment of Loan Agreement. Section 3 of the Loan Agreement
shall be and hereby is amended to read as follows:
"Section 3.
Loan Repayment; Interest Rate. The Agency and the Foundation
agree that the outstanding loan balance will accrue interest, compounded annually, at the rate of
6.25%
per annum commencing on the date of disbursement of the loan amount by the
Foundation to the Agency until the balance of the loan is fully repaid. Agency and Foundation
further agree that the interest rate on the outstanding loan balance shall be increased to
6.5%
per
annum from July 1, 2009 until the Second Loan, provided for in the Second Loan Agreement
dated June
,
2009 by and between the Agency and the Foundation, is repaid in full. Any
accrued and unpaid interest as of June 30th of each year shall be added to the principal balance of
the Loan as of that date. The Agency agrees that it will repay the loan and accrued interest as
follows:
(a)
Subject to Section 4, upon issuance of the Foundation Repayment Bonds,
the Agency shall pay the Foundation the sum of $4,000,000 from the proceeds of the Foundation
Repayment Bonds, which shall include accrued interest and principal, if accrued interest to date
is less than $4,000,000.
(b)
If the Foundation Repayment Bonds are issued on or prior to June 30,
2016, then on June 30, 2017 and each successive June 30th, the Agency shall pay interest
installments to the Foundation equal to the amount of interest shown in Exhibit A-i and shall pay
principal installments equal to the amounts shown in Exhibit A- 1 until the loan balance and all
accrued interest therein is fully repaid. If the Foundation Repayment Bonds are issued after June
30, 2016, then the parties shall renegotiate the amortization schedule as shown in Exhibit A-i to
provide the Foundation with payment as quickly as possible given the Agency's senior
obligations
and sources of funds and all interest that is not paid shall be added to the accrued
balance.
(c)
With the Foundation's consent which will not be unreasonably withheld,
the Agency at any time may elect to prepay all or any portion of the outstanding loan balance
without penalty from any source of legally available funds. In the event of a prepayment by the
Agency, the annual principal payments required pursuant to Section 3(b) shall be reduced in each
year (pro rata) by an amount equal to the percentage of the outstanding loan balance so prepaid.
(d)
If the Agency has available funds that are not committed to the repayment
of Bonds and other indebtedness or form of obligation incurred prior to the effective date of this
Agreement, it must repay the loan and accrued interest in full December 31, 2039 unless an
alternative agreement is reached with the Foundation."
Section 4.
No Other Amendments.
Except as set forth in this First
Amendment, the Loan Agreement remains in full force and effect according to its terms.
Section
5.
Incorporation of Amendment. From and after the execution of this
First
Amendment by the parties, whenever the term Loan Agreement appears in the Loan
Agreement or Second Loan Agreement it shall be read and understood to mean the Loan
ORANGE\MStJBRAMANIPN\57556.1
2
Agreement as amended by the First Amendment.
Section 6.
Entire Agreement. This First Amendment, together with the Loan
Agreement, constitutes the entire agreement between the Agency and .the Foundation concerning
the matters described herein and supercedes any and all other agreements, contracts, covenants,
resolutions or other arrangements with respect to the subject matter hereof.
Section 7.
Counterparts.
This
First Amendment may be executed in
counterparts, each of which shall be deemed an original and all of which together shall constitute
one and the same instrument and shall be binding upon the Parties notwithstanding that the
Parties may not be signatories to the same counterpart or counterparts. The Parties may integrate
their respective counterparts by attaching the signature pages of each separate counterpart to a
single counterpart.
Section 8.
Severability. If any provision of this First Amendment becomes or
is declared by a court to be illegal, unenforceable or void, that clause will be omitted and the
remainder of the First Amendment will continue in full force and effect. Such holding shall in no
way affect the validity of this First Amendment.
IN WITNESS HEREOF, the parties hereto have executed this First Amendment
as of the day and year first above written.
LAFAYETTE LIBRARY AND LEARNING CENTER FOUNDATION
By:
[Title]
LAFAYETTE REDEVELOPMENT AGENCY
By:
Executive Director
ORANGE\MSUBRAMANIAN\57556.1
4.
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement"), dated as of May 12, 2008, is
made by and between the Lafayette Redevelopment Agency (the "Agency") and the Lafayette
Library and Learning Center Foundation (the "Foundation"). The Agency and the Foundation are
sometimes collectively referred to in this Agreement as "Parties" and individually referred to as
"Party". This Agreement is made in light of the following recitals:
RECITALS
WHEREAS, the Agency is a duly constituted redevelopment agency under the
laws of the State of California and pursuant to such laws has duly proceeded with the
redevelopment of its Lafayette Redevelopment Project Area (the Project Area'); and
WHEREAS, the Redevelopment Plan for said Project Area provides for tax
increment financing in accordance with the provisions of Chapter 6, Part 1 of Division 24 of the
Health and Safety Code of the State of California and Section 16 of Article XVI of the
Constitution of the State of California; and
WHEREAS, in furtherance of the Redevelopment Plan for the Project Area, and
after complying with the requirements of Health & Safely Code Sections
33445
and 33679, the
Agency has determined to assist in financing the Lafayette Library and Learning Center (the
8project") by borrowing from the Foundation under this Loan Agreement an amount to be used
by the Agency to pay for a portion of the cost of the Project; and
WHEREAS, Health and Safety Code Section 33132 and 33600 authorizes the
Agency to borrow or accept financial assistance for the agency's activities, powers, and duties.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
it is agreed by and between the parties hereto, as follows:
Section 1.
Defmitions.
Unless the context otherwise requires, the terms defined
in this Section 1 shall, for all purposes of this Loan Agreement and of any amendment hereto,
and of any certificate, opinion, estimate or other document herein mentioned, have the meanings
herein specified.
"Agency" means the Lafayette Redevelopment Agency, a redevelopment agency
and public body, corporate and politic, duly organized and existing under and by virtue of the
laws of the State of California.
"Bonds"
means all tax allocation bonds or other evidences of indebtedness
outstanding as of the date hereof or issued in the future by the Agency and secured by Tax
Increment Revenues which are sold to parties other than the City or any subordinate agency of
the City or the Foundation.
NDEXD__JUW
2;
2008
"City" means the City of Lafayette, a California municipal corporation.
"Foundation'
means the Lafayette Library and Learning Center Foundation, a
non-profit public benefit corporation duly organized and existing under and by virtue of the laws
of the State of California.
"Foundation Repayment Bonds" means Bonds expected to be issued by the
Agency during calendar year 2015 for the purpose of, among other things, repaying a portion of
the Loan.
itLawn
means the Community Redevelopment Law of the State of California,
constituting Part 1 of Division 24 of the Health and Safety Code of the State of California and the
acts amendatory thereof and in supplement thereto.
Whenever reference is made in this Loan
Agreement to the Law, reference is made to the law as in force on the date of the execution of
this Loan Agreement, unless the context otherwise requires.
"Project" has the meaning set forth in the Recitals.
'tProject Area" has the meaning set forth in the Recitals.
"Tax Increment Revenues" means all taxes allocated to, and paid into a special
fund of the Agency for the Project Area pursuant to Article 6 of Chapter 6 of the Law and
Section 16 of Article XVI of the Constitution of the State of California, and as provided in the
redevelopment plan for the Project Area, including all payments and reimbursements, if any, to
the Agency specifically attributable to
ad valorem
taxes lost by reason of tax exemptions and tax
rate limitations; excluding amounts required to be deposited in the Agency's low and moderate
income housing fund pursuant to the Law.
Section 2. Loan. The Foundation hereby agrees to lend to the Agency the amount
of nine million dollars ($9,000,000) on May
15,
2008.
The Agency agrees to use the loan
amount to pay the construction costs for the Project as they become due and agrees that such
amounts will be used to cover a portion of the total construction cost of the Project and for no
other purpose.
Section 3. Loan Repayment: Interest Rate. The Agency and the Foundation agree
that the outstanding loan balance will accrue interest, compounded annually, at the rate of
6.25%
per annum commencing on the date of disbursement of the loan amount by the Foundation to the
Agency until the balance of the loan is fully repaid.
Any accrued and unpaid interest as of June
30th of each year shall be added to the principal balance of the Loan as of that date. The Agency
agrees that it will repay the loan and accrued interest as follows:
(a)
Subject to Section 4, upon issuance of the Foundation Repayment Bonds,
the Agency shall pay the Foundation the sum of $4,000,000 from the proceeds of the Foundation
Repayment Bonds, which shall include accrued interest and principal, if accrued interest to date
is less than $4,000,000.
2
(b)
If the Foundation Repayment Bonds are issued
Qfl
or prior to June 30,
2016,
then on June 30, 2017 and each successive June 30th, the Agency shall pay interest
installments to the Foundation equal to the amount of interest shown in Exhibit A- 1 and shall pay
principal installments equal to the amounts shown in Exhibit A-i until the loan balance and all
accrued interest therein is fully repaid. If the Foundation Repayment Bonds are issued after June
30, 2016, then the parties shall renegotiate the amortization schedule as shown in Exhibit A-I to
provide the Foundation with payment as quickly as possible given the Agency's senior
obligations and sources of funds and all interest that is not paid shall be added to the accrued
balance.
(e)
With the Foundation's consent which will not be unreasonably withheld,
the Agency at any time may elect to prepay all or any portion of the outstanding loan balance
without penalty from any source of legally available funds. In the event of a prepayment by the
Agency, the annual principal payments required pursuant to Section 3(b) shall be reduced in each
year (pro rata) by an amount equal to the percentage of the outstanding loan balance so prepaid.
(d)
If the Agency has available funds that are not conunitted to the repayment
of Bonds and other indebtedness or form of obligation incurred prior to the effective date of this
Agreement, it must repay the loan and accrued interest in full by December 31, 2039 unless an
alternative agreement is reached with the Foundation.
Section 4. Source of Repayment; Subordination to Bonds. The Agency agrees to
make all loan payments hereunder from Tax Increment Revenues or any other source of legally
available funds,
Agency's obligations under this Agreement are subordinate and junior to any
Bonds and shall also be subordinate and junior to other indebtedness or form of obligation
incurred prior to the effective date of this Agreement. The Agency hereby pledges and grants a
security interest in the Tax Increment Revenues to the Foundation as security for the loan
payments; provided, that such pledge and security interest shall be at all times subordinate to the
obligation of the Agency to pay debt service on all Bonds.
The Foundation agrees that, in the
event the Agency does not have sufficient funds after payment of debt service on Bonds to make
the scheduled payments hereunder, the shortfall, to the extent that it is accrued interest, shall be
treated as additional advances hereunder which increase the outstanding loan balance and the
Agency shall not be declared in default hereunder.
Not withstanding Section 3(a), if the
Foundation Repayment Bonds are issued and are less than the sum of $4,000,000, the Agency
shall endeavor to use unencumbered revenue to pay interest due pursuant to Section 3(b) above
to the Foundation equal to the amounts shown in Exhibit A-i, and if possible, principal
installments.
Notwithstanding any default by the Agency hereunder, under no circumstances
shall the amounts due to the Foundation hereunder be subject to acceleration.
Section
5.
Amendments. This Loan Agreement may be amended from time to
time by the parties hereto for any purpose by an instrument in writing signed by a duly authorized
representative of the Agency and the Foundation.
These amendments may allow for the
Foundation to sell some or all of the loan to third parties or for the repayment schedule to be
adjusted if mutually approved by the Parties.
Both the Agency and the Foundation shall
cooperate with one another to approve amendments that are not harmful to either party, which
3
amendments shall be approved by a majority of the Board of Trustees in the case of the
Foundation.
No amendment shall conflict with any covenants of the Agency made to owners of
Bonds issued prior to such amendment.
Agency:
Section 6. Representations and Warranties of the Foundation.
The Foundation hereby makes the following representations and warranties to the
(a)
The Foundation is a duly organized and existing non-profit public benefit
corporation under the laws of the State of California, has full legal power and authority to enter
into this Loan Agreement and has duly authorized the execution and delivery of this Loan
Agreement in accordance with its Bylaws and Articles of Incorporation.
(b)
To the extent that the funds used by the Foundation to make the loan
hereunder have been obtained from gifts, donations, grants or bequests, the use of such funds for
such purpose is not inconsistent with the terms of any such gifts, donations, grants or bequests.
(c)
The Foundation is wholly independent of, and is not controlled, either
indirectly or directly by, the City or the Agency.
This Loan Agreement is made as an arm's
length transaction.
-
(d)
The making of the loan and the execution and delivery of this Loan
Agreement will not constitute a breach or default of any other obligation of the Foundation
pursuant to any contract, agreement, indenture, mortgage, deed of trust or any other instrument.
Section 7.
Representations and Warranties of the_Agency. The Agency hereby
makes the following representations and warranties to the Foundation:
(a)
The Agency is a duly organized and existing agency of the State of
California under the Law, has full legal power and authority to enter into this Loan Agreement
and has duly authorized and approved the execution and delivery of this Loan Agreement and the
performance of the Agency's obligations hereunder.
(b)
The Agency will apply the proceeds of the loan hereunder solely to the
cost of the Project and will not use such proceeds in a way such that, under the laws in existence
as of the date hereof, the interest payable on the Foundation Repayment Bonds would not be
excludable from gross income for federal and State of California income tax purposes.
(c)
The Agency reasonably expects that it will have sufficient funds to pay all
payments to the Foundation hereunder when due.
(d)
The Agency is wholly independent of, and is not controlled by and does
not control, either indirectly or directly, the Foundation.
This Loan Agreement is made as an
arm's length transaction.
4
(e)
The execution and delivery by the Agency of this Loan Agreement, the
making of the loan, the performance of the Agency's obligations hereunder and the
consummation of the transactions contemplated hereby will not result in the violation of any law,
statute, rule, regulation, order, writ, injunction, judgment or decree of any court or governmental
authority to or by which the Agency is bound and will not conflict with, or result in a breach or
violation of, any of the terms or provisions of, or constitute (with due notice or lapse of time or
both) a default under, any lease, loan agreement, mortgage, security agreement, trust indenture or
other agreement or instrument to which the Agency is a party or by which it is bound or to which
any of its properties or assets is subject.
(f)
No consent, approval, authorization or other order of any governmental
authority or other third-party is required to be obtained by the Agency in connection with the
authorization, execution
and delivery of this Loan Agreement or with the authorization and
making of the loan or the performance of the Agency's obligations hereunder.
Section 8. Notices.
Whenever it shall be necessary for either Party to serve
notice on the other regarding this Agreement, such notice shall be served either in person, by
certified mail, return receipt requested to the addresses below.
Agency:
City of Lafayette Redevelopment Agency
3675
Mt. Diablo Blvd., # 210
Lafayette, California
94549
Attn:
Executive Director
Foundation:
Lafayette Library and Learning Center Foundation
P. 0. Box 1472
Lafayette, California
94549
Attn:
Treasurer
Such notice shall be deemed made when personally delivered or when mailed, forty-eight
(48) hours after deposit in the U.S.
Mail, first class postage prepaid and addressed to the Party at
its applicable address.
Actual notice shall be deemed adequate notice on the date actual notice
occurred, regardless of the method of service.
Section 9. Legal Costs. In the event of any legal action between the Agency and
the Foundation arising out of the obligations of the Parties pursuant to this Agreement, the
prevailing Party will be entitled to payment of its costs and expenses, including its attorneys'
fees.
Section 10.
Binding Effect Successors.
The Foundation shall not assign,
hypothecate, or transfer, either directly or by operation of law, this Agreement or any interest
herein without the prior written consent of the Agency, which may be given in the Agency's sole
and absolute discretion, but shall not be unreasonably withheld.
Any attempt to do so in
violation of this provision shall be null and void, and any assignees, hypothecates or transferees
shall acquire no right or interest by reason of such attempted assignment, hypothecation or
transfer.
This Agreement shall bind and inure to the benefit of the Parties and their respective
heirs, legal representatives, successors and assigns and all of the Parties hereto shall be jointly
and severally liable hereunder.
Section 11. Counterparts. This Agreement may be executed in counterparts each
of which shall be deemed an original and all of which together shall constitute one and the same
instrument which shall be binding upon the Parties notwithstanding that the Parties may not be
signatories to the same counterpart or counterparts.
The Parties may integrate their respective
counterparts by attaching the signature pages of each separate counterpart to a single counterpart.
Section 12. Further Assurances.
Whenever requested to do so by the other Party,
each Party shall execute, acknowledge,. and deliver any further conveyances, assignments,
confirmations, satisfactions, release, powers of attorney, instruments of further assurance,
approvals, consents, and any further instruments or documents that are necessary, expedient, or
proper to complete anything contemplated by this Agreement. In addition, each Party shall do
any other acts and execute, acknowledge, and deliver any requested documents in order to cany
out the intent and purpose of this Agreement.
Section 13.
Modifications.
All
modifications to
this Agreement must be in
writing and signed by the Parties, and shall follow the requirements for amendments set forth in
Section
5
hereof.
Section 14. Third-Party Rights. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the Parties and their respective successors and
assigns, any rights or remedies.
Section 15. GoverningLaw; Choice of Venue. This Agreement shall be governed
and construed in accordance with California law. Venue shall be Contra Costa County.
Section 16. Severability.
If
any provision of this Agreement becomes or is
declared by a court to be illegal, unenforceable or void, that clause will be omitted and the
remainder of the Agreement will continue in full force and effect. Such holding shall in no way
affect the validity or enforceability of this Agreement.
Section 17. Entire Agreement.
This Loan Agreement constitutes the entire
agreement between the Agency and the Foundation concerning the matters described herein and
supersedes any and all other agreements, contracts, covenants, resolutions or other arrangements
with respect to the subject matter hereof.
IN WITNESS HEREOF, the parties hereto have executed this Loan Agreement as
of the day and year first above written.
6
LAFAYETI'E LIBRARY AND LEARNING CENTER FOUNDATION
Treasurer
LAFAYETTE RE9qVELOPMENT AGENCY
By:
Mike Anderson,
4/'
(J
Chair
ATTEST:
ç7
me Robbins,
)4//J4
Board Secretary
7
LOAN AGREEMENT
By
and
among
LAFAYETTE REDEVELOPMENT AGENCY
and
the
LAFAYETTE
LIBRARY AND
LEARNING CENTER FOUNDATION
May 12, 2008
Exhibit A-i
Interest and Principal Repayment Schedule
(Assuming Issuance of Foundation Repayment Bonds on June 30, 20i6)
Payment Date*
_____________________
Interest Payment
Amount
Principal Payment
Amount'
6/30/2008
-
-
6/30/2009
-
-
6/30/2010
-
-
6/30/2011
-
6/3012012
-
6/3012013
-
-
6/30/2014
-
-
6/30/2015
-
-
6130/2016
-
$
4,000,000.00
6/30/2017
$
223,373.67
-
6130/2018
232,685,56
-
6/30/2019
242,385.64
-
6130/2020
252,490.09
-
6130/2021
263,015,77
-
6/30/2022
273,980.24
-
6/30/2023
285,401.80
-
6/30/2024
297,299.48
-
6/30/2025
309,693.15
-
6/30/2026
322,603.49
-
6/30/2027
336,052.02
-
6/30/2028
1,051234.80
600,000.00
6/30/2029
1,013,734.80
2,500,000.00
6/30/2030
857,484.80
2,700,000.00
6/30/2031
688,734.80
2,900,000.00
6/30/2032
507,484.80
3,100,000.00
6/30/2033
313,734.80
3,300,000.00
6/30/2034
107,484,80
1,719,756.87
'Principal includes repayment of accrued interest.
