HomeMy WebLinkAbout024718 RES - 12/18/2001RESOLUTION
APPROVING AN ECONOMIC DEVELOPMENT GRANT AGREEMENT
BETWEEN THE CITY OF CORPUS CHRISTI AND THE CORPUS CHRISTI
REGIONAL ECONOMIC DEVELOPMENT CORPORATION; AND
PROVIDING FOR SEVERABILITY
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF CORPUS CHRISTI, TEXAS, THAT:
SECTION 1. The City Manager is hereby authorized to execute the "Economic
Development Grant Agreement" between the City of Corpus Christi, Texas, and the Corpus Christi
Regional Economic Development Corporation, a substantial copy of which is attached hereto as
Exhibit A and incorporated herein for all purposes.
SECTION 2. If for any reason any section, paragraph, subdivision, clause, phrase, word or
provision of this resolution shall be held invalid or unconstitutional by final judgment of a court of
competent jurisdiction, it shall not affect any other section, paragraph, subdivision, clause, phrase,
word or provision of this resolution, for it is the definite intent of this City Council that every section,
paragraph, subdivision, clause, phrase, word or provision hereof be given full force and effect for its
purpose.
ATTEST:
Armando Chapa
City Secretary
APPROVED THIS THE lq
Mayor, The City of Corpus Christi
__ DAY OF ~-~o.,-/~., 2001:
James R. Bray, Jr., City Attorney
1JRB4000.008
Corpus Christi, Texas
, 00,
The above resolution was passed by the following vote:
Samuel L. Neal, Jr.
Brent Chesney
Javier D. Colmenero
Henry Garrett
Bill Kelly
Rex A. Kinnison
John Longoria
Jesse Noyola
Mark Scott
1JRB4000.008
ECONOMIC DEVELOPMENT GRANT AGREEMENT
This Economic Development Grant Agreement is by and between the CITY OF
CORPUS CHRISTI, TEXAS, a home-rule city and municipal corporation (the "City") and the
CORPUS CHRISTI REGIONAL ECONOMIC DEVELOPMENT CORPORATION, a Texas
non-profit corporation (the "CCREDC').
Recitals:
Whereas, the City has leased a portion of the Corpus Christi International Airport
("Airport") to the CCREDC by a one-year Ground Lease approved by the City Council on
December 18, 2001, and it is anticipated that the City Council will finally approve a long-term
Ground Lease for the same property on or about January 15, 2002 (the one-year and long-term
leases being collectively referred to herein as the "Ground Lease");
Whereas, the Ground Lease authorizes the CCREDC to sublease a portion of said
property to VISION TECHNOLOGIES AEROSPACE, LTD., a Texas limited partnership ("VT
Aero") by a Sublease (the "Sublease") consistent with the terms and conditions of the Ground
Lease, pursuant to which the CCREDC will be obligated to construct "Hangar 1" and "Hangar 2"
(each as defined in the Sublease), and will be further obligated to make certain ramp and site
improvements to provide access to and from Hangar 1 and Hangar 2;
Whereas, it is anticipated that the CCREDC will arrange for the issuance by the Corpus
Christi Industrial Development Corporation of its industrial development revenue bonds (the
"Bonds") in an amount not to exceed the principal sum of $18,000,000 in order to obtain
sufficient funds for the construction of hangars and improvements required under the terms of
the Sublease and will enter into a Loan Agreement (the "Loan Agreement") to provide for the
payment of the principal and interest on the Bonds together with the various fees and expenses
associated with the Bonds;
Whereas, a letter of credit (the "Letter of Credit") from BANK OF AMERICA, N.A. (the
"Bank") is anticipated to be issued to provide additional security for the Bonds, in favor of the
trustee of the Bonds, and the Bank has represented that it will not issue the Letter of Credit
without, among other collateral, the financial commitments of the City, the County of Nueces
(the "County"), and the Port of Corpus Christi Authority of Nueces County (the "Port") to
provide funding for economic development activities of the CCREDC under certain
circumstances;
Whereas, the Bank and the CCREDC will enter into a credit agreement (the "Credit
Agreement") and the CCREDC will enter into various other financing documents in connection
with the issuance of the Bonds and the Letter of Credit, which collectively with the Bonds, the
Letter of Credit and the Credit Agreement shall be referred to as the "Financing Documents";
Whereas, the City has adopted a Resolution on December 18, 2001; establishing an
economic development program to encourage the promotion and development of aviation and
commercial activities at the Airport, in order to diversify the economy of the City, and to
promote employment within the City in sectors which experience underemployment;
Whereas, the City desires that the Bank issue said Letter of Credit and further desires the
CCREDC to be able to utilize the proceeds from the sale of the Bonds to construct said hangars
and make such other improvements as an inducement and to enable VT Aero to hire employees
who reside in the City of Corpus Christi thereby increasing its tax revenues from VT Aero and
its employees and enhancing the quality of life for its citizens consistent with the economic
development program described in the Resolution, and in connection with the issuance of the
Bonds the City acknowledges that an essential element of the financing structure for the
proposed issuance of the Bonds is that the Bank have assurances that the CCREDC will utilize
any economic development grant funds made available under this Agreement to enhance the
ability of the CCREDC to meet its financial obligations under the Credit Agreement;
Whereas, the City is willing to enter into this Economic Development Grant Agreement
with the CCREDC pursuant to the Ordinance and the provisions of Chapter 380 of the Texas
Local Government Code to provide economic development funding to the CCREDC under
certain circumstances on an incremental basis, prior to the end of each of the terms for Hangar 1
and Hangar 2 set forth in the Sublease, or at the end of such time thereafter if the said Sublease
terms are extended by CCREDC and VT Aero, and to continue in effect until the CCREDC's
obligations under the Loan Agreement, the Bonds, the Letter of Credit, and the Financing
Documents have been discharged in full; and
Whereas, the parties to this Economic Development Grant Agreement intend this
Agreement to be a standby obligation, to provide funding only on an incremental basis as needed
prior to the end of the each of the terms for Hangar 1 and Hangar 2 set forth in the Sublease, or at
the end of such time of any sublease of Hangar 1 and Hangar 2 by CCREDC, including any
extension of the Sublease with VT Aero for so long as the Bonds remain outstanding or a
payment obligation to the Bank exists under the Letter of Credit, but in no event beyond
December 31, 2022;
NOW, THEREFORE, for valuable consideration received to the satisfaction of the City
and the CCREDC, and for the third party benefit of the Bank as the issuer of said Letter of
Credit, the parties do hereby agree as follows:
Agreement:
1. Funding. Subject to the limitations stated in this Agreement, the amount of funding
required from the City under this Agreement shall be an amount equal to one-third (1/3rd) of the
annual payments due under the Financing Documents by the CCREDC. These payments are
designed to pay the principal and interest installments arising under the Bonds together with the
trustee fees, remarketing fees, Letter of Credit fees, and other fees associated therewith. The
obligation of the City to provide the funding shall commence on each Payment Demand Date (as
hereinafter defined) and shall be payable annually thereafter until the Payment Termination Date
(as hereinafter defined). Notwithstanding anything to the contrary contained in this Agreement,
the City's maximum payment obligation hereunder shall be limited to $6,060,000 in the
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aggregate. Furthermore, if the initial sublease term for Hangar 1 under the Sublease ends on or
before April 30, 2008, the City's payment obligations hereunder shall in no event exceed the
following amounts in the years specified:
Years
Maximum Payment
2007 -2008
$300,000 per year
2009 -2021
$420,000 per year
If, however, the initial sublease term for Hangar I under the Sublease ends on or after May 31,
2008, the City's payment obligations hereunder shall in no event exceed the following amounts
in the years specified:
Years
Maximum Payment
2008- 2009
$300,000 per year
2010 -2022
$420,000 per year
2. Payment Demand Date. The Payment Demand Date shall be determined as follows:
(a)
In the event VT Aero gives notice to the CCREDC, in accordance with the terms of
the Sublease, that it is not exercising its rights to continue the Sublease for either or
both hangars upon the expiration of their respective initial lease terms or at the end of
such time thereafter if the said Sublease terms are extended by CCREDC and VT
Aero; and
(b)
In the event that the CCREDC has not procured another subtenant to assume and
extend the duties of VT Aero under the Sublease as to such hangars or otherwise
provide for the payment of all of the CCREDC's obligations under the Financing
Documents after the expiration the Sublease;
(c) Then the Payment Demand Date shall be that date 123 days prior to the expiration of
each sublease term under the Sublease as to such hangar or hangars.
In the event that the CCREDC procures another subtenant to assume and extend the duties of
VT Aero under the Sublease as to such hangar or hangars or otherwise provide for the payment
of all of the CCREDC's obligations under the Financing Documents, a new Payment Demand
Date may be triggered in the same manner if such subtenant gives notice to the CCREDC that it
is not exercising its rights to continue the Sublease for either or both hangars. The City's
obligations under this Agreement shall be reinstated in such event until all of the CCREDC's
obligations under the Financing Documents and the Bonds have been paid and discharged in full.
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3. Payment Termination Date. The funding required under this Agreement shall
continue on the same date of each year following the Payment Demand Date until the earlier to
occur of (a) the date the CCREDC has procured another subtenant acceptable to the City, and
such other subtenant has assumed and agreed to extend the duties of VT Aero under the Sublease
as to such hangar or hangars or otherwise provide for the payment of all of the CCREDC's
obligations under the Financing Documents after the expiration of the Sublease, or (b) the Bonds
have been discharged in full and all obligations of the CCREDC in connection with the
Financing Documents have been discharged in full (the "Payment Termination Date").
4. Determination of Funding Amount. In the event that the Sublease expires as to only
Hangar 1 or Hangar 2, the amount of funding required under this Agreement shall be limited as
follows. The exact amount of funding required under this Agreement shall be further reduced by
an amount equal to one-third (1/3rd) of the amount of any partial Sublease payments, any
settlement amounts, or any other funds available to pay the obligations arising under the Loan
Agreement received by the CCREDC and paid to the trustee for the Bonds for the following
Sublease year prior to the Payment Demand Date. In the event that the CCREDC receives any
such payments or funds after the Payment Demand Date, an amount equal to one-third (1/3rd) of
any such funds shall be rebated to the City by the CCREDC. In addition, should the Sublease be
terminated prior to its stated expiration date as a result of an event of default caused by VT Aero,
the exact amount of funding required under this Agreement shall not include amounts due and
owing by VT Aero to the CCREDC under the terms of the Sublease or to the Bank under the
Letter of Credit.
5. Place for Payment. The funding required under this Agreement shall be paid to the
CCREDC at its offices at 800 N. Shoreline Drive, Suite 1300 South, Corpus Christi, Texas, in
imanediately available funds or by wire transfer to an account designated by the CCREDC by
written notice not less than five (5) days prior to a Payment Demand Date.
6. Term. The term of this Agreement shall commence upon the date of execution
below and continue until December 31, 2022. Notwithstanding the foregoing, on the date that
the Loan Agreement and the Bonds are discharged in full and all obligations under any letter of
credit issued in connection with the Bonds (including the Letter of Credit) have been discharged
in full, this Agreement shall terminate and be of no further force or effect.
7. Notices. All notices shall be in writing, and if sent by mail shall be sent by certified
mail, return receipt requested, postage prepaid, or by overnight delivery service, or by facsimile
as addressed below:
If to the City:
City Manager
City of Corpus Christi
P. O. Box 9277
Corpus Christi, Texas 78469
Ph: (361) 880-3220
Fax: (361) 880-3839
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If to the CCREDC:
President
Corpus Christi Regional Economic Development Corporation
800 N. Shoreline Drive, Suite 1300 South
Corpus Christi, Texas 78401
Ph: (361) 882-7448
Fax: (361) 882-9930
If to the Bank:
Bank of America, N.A.
Attn: Ted Puckett
500 North Shoreline Boulevard
Corpus Christi, Texas 78471
Ph: (361) 881-6797
Fax: (361) 881-6809
or to such other address as may be designated in writing from time to time. All notices sent by
certified mail are deemed received on the third business day after mailing. All notices sent by
overnight delivery are deemed received on the next business day after being sent. All notices sent
by facsimile are deemed received on the day sent. Any party may change its address by giving
notice to all other parties as set out herein.
8. Appropriations. The obligations of the City hereunder are subject to the
appropriation of funds for such purposes in furore years in accordance with the City Charter,
applicable State law and any other regulatory requirements applicable to the City. Any payment
made by the City pursuant to this Agreement shall be made out of current revenues available to
the City.
9. Subordination of City's Payment Obligations. The City's payment obligations
under this Agreement and any security interest in, lien on, or pledge of these obligations are and
will be subordinate to the lien on, pledge of, and security interest in the revenues of the City
securing the currently outstanding bonds of the City, and the City reserves the right to issue
bonds and other securities and enter into agreements that constitute securities that are secured by
a lien on, pledge of, and security interest in its revenues and other income superior to the
obligation of the City to make the payments required by this Agreement or to any lien on, pledge
of, or security interest in such revenues and income asserted by the CCREDC or the Bank in
connection with this Agreement.
10. Information Regarding the City. The City retains the right to approve any
information regarding the City, including without limitation the City's financial information,
proposed to be used in connection with the issuance of the Bonds or the Letter of Credit.
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11. Severability. If any portion of this Agreement or the application thereof to any
person or circumstance shall be held to be invalid or unconstitutional by any court of competent
jurisdiction, the remainder of this Agreement shall not be affected thereby and shall continue to
be enforceable in accordance with its terms.
12. Non-Waiver of Rights. It is understood and agreed that no failure or delay in
exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise thereof or the exercise of
any right, power or privilege under this Agreement.
13. Governing Law. The provisions of this Agreement shall be construed in accordance
with the laws of the State of Texas.
14. Venue. Venue for any action brought under this Agreement lies in Nueces County,
Texas, exclusively, where the Agreement was executed and will be performed.
15. Headings. The titles and headings in this Agreement are used only for reference, and
in no way define or limit the scope or intent of a provision of the Agreement.
16. Execution in Counterparts. This Agreement may be executed in any number of
counterparts. Each counterpart, when so executed, shall be deemed to be an original and taken
together they shall constitute but one and the same agreement.
17. Assignment; No Termination. The CCREDC's rights under this Agreement are
being assigned to the Bank as collateral to secure the performance of the CCREDC's obligations
under the Credit Agreement, the Loan Agreement, the Letter of Credit and the other Financing
Documents. Neither the CCREDC nor the City shall have any right to terminate this Agreement
without the prior written consent of the Bank. The City acknowledges that the Bank would not
issue the Letter of Credit but for the City's representation to provide said funding to the
CCREDC as set forth herein. The Bank has acknowledged to the City that it recognizes that,
anything in this Section 17 to the contrary, there is no constraint imposed by this Section 17 on
the ability of the City to exercise its rights not to appropriate funds to fund all or any portion of
the grant as set forth in Section 8 of this Agreement.
18. Successors and Assigns. All of the terms, covenants and agreements herein
contained shall be binding upon and shall inure to the benefit of the successors and assigns of the
City, the CCREDC and the Bank.
EXECUTED on ,2001.
CITY OF CORPUS CHRISTI
ATTEST:
By:
City Manager
By:
City Secretary
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APPROVED AS TO LEGAL FORM:
,2001
By:
City Attorney
CORPUS CHRISTI REGIONAL ECONOMIC
DEVELOPMENT CORPORATION
By:_
Name:
Title:
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