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Resolution authorizing an Amendment and Supplement to Amended and Restated Cooperation Agreement between the County of Allegheny, Commonwealth of Pennsylvania and the Redevelopment Authority of Allegheny County and Related Action
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WHEREAS, the development of the economy, the creation of new job opportunities and the retention of existing job opportunities and providing decent, safe and sanitary housing have been and continue to be items of significant priority of the County of Allegheny (the “County”); and
WHEREAS, it is in the best interest of the citizens of the County for the County to continue to assist in the promotion and development of manufacturing facilities, industrial facilities, commercial facilities, specialized facilities, housing, and other projects which will enhance the economy of the County and promote the welfare of the citizens of the County; and
WHEREAS, in order to achieve the foregoing purposes, the County has heretofore directed the Redevelopment Authority of Allegheny County (the “Redevelopment Authority”) to create the “Allegheny County Economic Development Fund” (the “Development Fund”); and
WHEREAS, in order to provide funding for the Development Fund, the Redevelopment Authority, at the request of the County, has heretofore issued its Special Tax Development Bonds, Taxable Series of 1995 (the “1995 Bonds”) and Taxable Series of 1999 (the “1999 Bonds”) each in the aggregate principal amount of $25,000,000 pursuant to a trust indenture dated as of September 1, 1995, as heretofore supplemented and amended and as further supplemented and amended by the Third Supplemental Indenture, as described below (the “Trust Indenture”), between the Redevelopment Authority and J.P. Morgan Trust Company, National Association, as successor trustee to Mellon Bank, N.A., as trustee (the “Trustee”); and
WHEREAS, the 1995 Bonds, the 1999 Bonds and any additional bonds issued under the Trust Indenture (collectively, the “Bonds”) are payable out of the 1% sales tax levied by the County on the price of tangible personal property and certain services (including hotel occupancy) (“RAD Tax”) authorized by Act 77 of the Pennsylvania General Assembly (P.L. 529), approved December 22, 1993 (16 P.S. §6101-B, et seq.) (“Act 77”);
WHEREAS, the County assigned to the Redevelopment Authority, pursuant to the Amended and Restated Cooperation Agreement dated as of November 1, 1999 (the “Cooperation Agreement”) between the County and the Redevelopment Authority, a portion of the County allocation of RAD Tax receipts in the amounts and for the semiannual periods set forth in Exhibit A (the “Original Assigned Receipts”) to the Cooperation Agreement as security inter alia for the Bonds (A copy of Exhibit A for the unexpired balance of the period set forth therein is attached hereto as Exhibit A); and
WHEREAS, concurrently with the execution of the Cooperation Agreement, the County, the Redevelopment Authority and the Treasurer of the Commonwealth of Pennsylvania (the “Treasurer”) entered into an Amended and Restated Intercept Agreement (the “Amended Intercept”) dated November 18, 1999 whereby the parties agreed that the Original Assigned Receipts as collected and deposited with the Treasurer pursuant to Act 77 would, to the extent authorized by Act 77, be paid monthly to the Trustee for deposit to the Trust Indenture before distribution of any amounts to the County, until the full amounts of the Assigned Receipts had been deposited in each semiannual payment period by the Treasurer with the Trustee; and
WHEREAS, the Original Assigned Receipts were pledged and assigned by the Redevelopment Authority to the Trustee under the Trust Indenture to secure payment of principal of and interest on the Bonds, Administrative Expenses (as defined in the Cooperation Agreement) and to replenish the debt service reserve fund established under the Trust Indenture; and
WHEREAS, inter alia, Section 1(c) of the Cooperation Agreement recited that “Any Bonds issued by the Authority shall be in such aggregate principal amount and shall bear interest at such rates and shall mature on such dates and in such amounts so that the debt service on the Bonds shall be payable solely from amounts received by the Authority as [Original] Assigned Receipts”; and
WHEREAS, on September 1, 2005, the Redevelopment Authority currently refunded the 1995 Bonds by issuing its Special Tax Development Refunding Bonds, Taxable Series of 2005 (the “2005 Bonds”); and
WHEREAS, the Authority now proposes to advance refund the 1999 Bonds by issuing its Special Tax Development Refunding Bonds, Taxable Series of 2006 (the “2006 Bonds”) so as to achieve present value savings pursuant to the Trust Indenture, which shall include a Third Supplemental Trust Indenture dated as of February 1, 2006 between the Trustee and the Redevelopment Authority (the “Third Supplemental Indenture”); and
WHEREAS, the 2006 Bonds will be issued bearing interest at a variable rate which will be adjusted weekly, with a maximum rate that shall never exceed 18% per annum (the “Maximum Rate”), and which interest will be paid monthly (rather than semi-annually) to Bondholders; and
WHEREAS, the 2006 Bonds may be converted from variable rate bonds with a weekly adjustment to the interest rate, to bonds bearing interest at a fixed rate to maturity; and
WHEREAS, while the 2006 Bonds bear interest at a variable rate, the payment of principal or purchase price of and interest on the 2006 Bonds will be payable under a direct pay letter of credit initially issued for a 5-year term by National City Bank of Pennsylvania (the “Bank”) (the “Credit Facility”) issued pursuant to a Reimbursement and Security Agreement between the Redevelopment Authority and the Bank (the “Reimbursement Agreement”); and
WHEREAS, to reduce interest rate risk exposure, an interest rate cap (the “Cap”) will be purchased at the time of issue and delivery of the 2006 Bonds pursuant to which the provider, National City Bank of Pennsylvania (the “Cap Provider”), for a period of 3 years, will pay any amount of interest accruing on the 2006 Bonds in excess of an annual rate of approximately 7.25%; and
WHEREAS, based on their analysis of historic interest rate trends, the existence of the Cap and the ability to convert the interest rate borne by the 2006 Bonds to a fixed rate to maturity, the Redevelopment Authority and the County do not expect that the annual debt service payable on the 2006 Bonds will ever exceed the Original Assigned Receipts; and
WHEREAS, to obtain the necessary consent of the issuer of the bond insurance policy guaranteeing payments on the 2005 Bonds to the issuance of the 2006 Bonds and to induce National City Bank of Pennsylvania to issue the Credit Facility, it is necessary for the County, at this time, to enter into a supplement and amendment to the Cooperation Agreement (the “Amended Cooperation Agreement”) authorizing the payment by the Treasurer to the Trustee in the future, if such amounts ever become due, of such additional amount of the County allocation of the RAD Tax as would be necessary to pay any debt service on the 2006 Bonds or to reimburse the Bank for draws under the Credit Facility in excess of the Original Assigned Receipts up to the amount required to pay debt service on the 2006 Bonds at an assumed interest rate equal to the Maximum Rate; a computation of such maximum additional amount of the County allocation of RAD Tax receipts is set forth on the attached Exhibit B (the “Supplemental Assigned Receipts”, and, together with the Original Assigned Receipts, the “Assigned Receipts”); and
WHEREAS, the Authority is establishing, pursuant to the Third Supplemental Indenture, a 2006 Debt Service Reserve Account (the “2006 DSR Account”) which will be funded at the time of issuance of the 2006 Bonds in an amount equal to one-half of the maximum principal and interest payable on the 2006 Bonds in any Bond year, with interest being calculated at the Maximum Rate, and which funds will be available to pay principal, interest and sinking fund payments on the 2006 Bonds, or to reimburse the issuer of the Credit Facility for moneys advanced to the holders of the 2006 Bonds for such required payments, in the event of unavailability of funds in the RAD Tax Receipts Account established under the Trust Indenture; and
WHEREAS, the County and the Redevelopment Authority will enter into a Further Amended and Supplemented Intercept Agreement (the “Further Amended Intercept Agreement”) with the Treasurer pursuant to which the Treasurer will agree to pay such amount, if any, of the Supplemental Assigned Receipts to the Trustee from time to time as shall be set forth in a certification from the Trustee to the Treasurer for deposit in the Debt Service Fund, Sinking Fund, Administrative Expense Account, and/or Debt Service Reserve Fund, as the case may be, established under the Trust Indenture.
Be it resolved by the Council of Allegheny County as follows:
Section 1. The issuance of the 2006 Bonds by the Redevelopment Authority is hereby approved, such 2006 Bonds and other Bonds together with obligations under the Reimbursement Agreement to be payable out of the Assigned Receipts. The County is authorized to enter into the Amended Cooperation Agreement and the Further Amended Intercept Agreement with the Treasurer to direct the Treasurer to pay the amount of the Assigned Receipts and the Supplemental Assigned Receipts to the Trustee to the extent needed to satisfy the requirements of the Trust Indenture.
Section 2. The Chief Executive or his authorized representative shall negotiate and execute such agreements, certificates and documents as may be necessary or appropriate to implement the purposes of this Resolution.
Section 3. The Director of the Department of Development and the Director of Budget and Finance are authorized and directed to take all actions which are necessary and proper for the implementation of this Resolution.
Section 4. If any provision of this Resolution shall be determined to be unlawful, invalid, void or unenforceable, then that provision shall be considered severable from the remaining provisions of this Resolution, which shall be in full force and effect.
Section 5. Any Resolution or Ordinance or part thereof conflicting with the provisions of this Resolution is hereby repealed so far as the same affects this Resolution.