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November 12, 2002
<br />
<br />Financial Impact:
<br />
<br />· In the short-term, interest will decrease due to the current variable rates being less
<br />than the "swap" (fixed) rates. In the long-term, given that rates are not expected to
<br />remain at current levels, the City's liability will be fixed and not subject to significant
<br />increases once interest rates begin to rise.
<br />
<br />· This action is one of prudent financial management that is cost-beneficial due to
<br />current market conditions and one that will be viewed positively by the rating agencies
<br />as future risk is being limited.
<br />
<br /> Motion by Mr. Whitehurst, and seconded by Mr. Benn, to adopt the following
<br />resolutions, and was adopted by the following vote:
<br />
<br />02-325(A):
<br />
<br />"A RESOLUTION AUTHORIZING THE EXECUTION OF AN INTEREST RATE
<br />PROTECTION AGREEMENT ON BEHALF OF THE CITY OF PORTSMOUTH,
<br />VIRGINIA, AND THE PERFORMANCE OF CERTAIN ACTIONS RELATING
<br />THERETO, WITH RESPECT TO THE CONSTRUCTION FINANCING FOR THE
<br />PERFORMING ARTS CENTER.
<br />
<br /> WHEREAS, the Industrial Development Authority of the City of Portsmouth,
<br />Virginia (the "Authority"), on March 23, 2000 issued its $10,000,000 Taxable Public
<br />Facility Revenue Note (Performing Arts Center), Series 2000 (the "2000 Note") to
<br />finance the construction of the Portsmouth Performing Arts Center (the "Portsmouth
<br />Performing Arts Center"); and
<br />
<br /> WHEREAS, the City, on March 14, 2000, adopted a resolution authorizing the
<br />issuance of a general obligation guarantee of the City in the principal amount of
<br />$10,000,000 to guarantee the payment of principal of and interest of the 2000 Note (the
<br />"2000 City Guarantee"); and
<br />
<br /> WHEREAS, the City, on January 23, 2001, adopted a resolution authorizing a
<br />$3.0 million increase in the 2000 City Guarantee (the "2001 City Guarantee" together
<br />with the 2000 City Guarantee, the "City Guarantee"); and
<br />
<br /> WHEREAS, the Authority on July 19, 2001 issued its $13,000,000 Taxable
<br />Variable Rate Public Facility Revenue Bonds (Performing Arts Center Project), Series
<br />2001 (the "2001 Bonds") to finance (i) the acquisition, construction, equipping and
<br />improvement of the Portsmouth Performing Arts Center, (ii) the refunding of the 2000
<br />Note and (iii) the costs of issuing the 2001 Bonds (collectively, the "Project"); and
<br />
<br /> WHEREAS, the City, on March 23, 2000, entered into a Cooperation Agreement
<br />with the Authority, as amended by the First Amendment to Cooperation Agreement
<br />dated March 28, 2001, (collectively, the "Original Cooperation Agreement"); and
<br />
<br /> WHEREAS, the issuance of the 2001 Bonds to provide long-term financing of the
<br />Performing Arts Center necessitated a second amendment to the Original Cooperation
<br />Agreement; and
<br />
<br /> WHEREAS, the City, on July 1, 2001, entered into the Second Amendment to
<br />Cooperation Agreement with the Authority (the "Second Amendment to Cooperation
<br />Agreement" and together with the Original Cooperation Agreement, the "Cooperation
<br />Agreement"); and
<br />
<br /> WHEREAS, the City, under the Cooperation Agreement, is obligated to pay to
<br />the Authority an amount sufficient to provide adequate funds for debt service on the
<br />2001 Bonds, including all payment obligations owed by the Authority to any financial
<br />institution providing credit enhancement to secure and provide payment of principal,
<br />interest or purchase price on the 2001 Bonds; and
<br />
<br /> WHEREAS, the City's obligations under the Cooperation Agreement are secured
<br />by the City Guarantee; and
<br />
<br />
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