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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 -2- 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. -3- 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 -4- 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. -5- 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 -6- APPROVED AS TO LEGAL FORM: ,2001 By: City Attorney CORPUS CHRISTI REGIONAL ECONOMIC DEVELOPMENT CORPORATION By:_ Name: Title: -7-