12/01/1997 Park Board Packet - Laserfiche WebLink

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r �1 • Obligation to make Lease payments (while not normally debt) constitutes a moral obligation for which the public agency covenants to seek annual appropriations. Although Lease may not qualify as debt, default would adversely affect the public agency's credit rating and market access. The public agency would need to demonstrate commitment to acquisition and financing. (This might be accomplished through letters, public resolution, etc.) ■ Indemnification of TPL by the public agency against general and environmental liability, including evidence of insurance. ■ Remoteness of default assured by forfeit of property and principal (including 20% down payment) paid to date. ■ Credit rating based on rating of debt of the public agency executing Lease. (This might be enhanced by creating a larger reserve from private or foundation contributions.) Security for COPS: Interest and principal of the COPS would be payable from (1) payments on the Lease and (2) a 10% reserve fund, established from the CON as described below. In addition, Trustee would retain title to the property until the final payment. ■ Reserve Funds: COPS in each Lease would be secured by a reserve fund, funded from COPS proceeds at the outset of the financing, equal to 10% of COPS in that Lease. Amount in COPS reserve fund would be used to offset the final principal payments due under Lease. Documents: ■ Lease from TPL to the public agency, in form of a lease/purchase agreement (where title is conveyed at final payment), through which the public agency purchases the land over time for its appraised value plus an annual interest cost. Majority of lease agreement would be standardized with a separate part describing the aspects specific to each transaction. ■ Assignment agreement, through which TPL assigns title and Lease (including right to receive Lease payments over term) to Trustee. ■ Trust indenture, through which Trustee receives Lease, issues COPS to investors, gives proceeds to TPL and forwards Lease payments to investors. Majority of trust indenture would be standardized with a separate part describing the aspects specific to each transaction. ■ Contract of Purchase in which an Underwriter agrees to purchase the CON from the Trustee at a stated discount (1%) for subsequent sale to investors. ■ Representation Agreement in which the public agency agrees to be represented by the Underwriter in its disclosures to investors. ■ Official Statement of the public agency which sets out current economic circumstances of the governmental entity and the specifics of Lease and CON.