HomeMy WebLinkAboutJ-1 - Acquisition of 5.5 Parcels (Doan Property) in Cannery Village at the Southwest Corner of 30th Street and Villa Way for the construction of a Public Parking FacilityCity Council Meeting February 8. 1988
Agenda Item No.
CITY OF NEWPORT BEACH
TO: City Council
FROM: Planning Department
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BY THE CITY COUNCIL
CITY OF NEWPORT BEACH
F E B 8 1988
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SUBJECT: Acquisition of 5.5 Parcels (Doan Property) in Cannery Village
at the Southwest Corner of 30th Street and Villa Way for the
construction of a Public Parking Facility.
Suggested Action:
If desired,
1. Review the Draft Purchase Agreement and authorize staff to conclude
negotiations with the Seller and execute the Purchase Agreement; and
2. Review the Draft Financing Agreement with First Continental Financial
Corporation and, if desired, authorize staff to execute the financing
agreement; and
3. Authorize staff to enter into Escrow for the purchase of the site,
consummate the transaction, and close escrow.
Background
The City Council Off -Street Parking Committee and staff have been discussing
the acquisition of the property at the southwest corner of 30th Street and
Villa Way since February of 1986. In June of 1987, staff indicated to the
property owner the City's desire to purchase the property for fair market
value, which was to be determined by an appraisal.
On July 29, 1987, staff met with the Off -Street Parking Committee and
briefed them on the progress of negotiations for the Doan property. The
Committee indicated their intention to recommend to the City Council that
the site be condemned under the power of eminent domain.
At its meeting of August 10, 1987, the City Council directed staff to retain
an appraiser to establish fair market value for the property.
At its meeting of January 11, 1988, the City Council adopted a Resolution
88-5, declaring the necessity to acquire the property by Eminent Domain, and
directed staff to prepare the draft purchase agreement and financing
agreements and bring them back to the City Council for review prior to their
execution.
TO: City Council - 2.
Analysis
Attached for the review and consideration of the City Council are the draft
sales agreement and financing agreements. Although there may be some
changes between these drafts and the final documents, any revisions will be
minor and will not effect the general terms or conditions of either docu-
ment. It is anticipated that these documents will be completed and executed
prior to February 15, 1988, which is when staff intends to open escrow. At
this point in time, it is anticipated that escrow will close on April 1,
1988.
Respectfully Submitted,
PLANNING DEPARTMENT
JAMES D. HEWICKER, Director
By. &==
Chris Gustin
Senior Planner
CG:WP:S&PAGMT.CSR
Attachments for City Council Only:
1. Draft Purchase Agreement
2. Draft Financing Agreement
(THIS IS A DRAFT FOR DISCUSSION PURPOSES ONLY)
CONTRACT FOR SALE OF REAL PROPERTY
This Contract entered into this day of ,
1988, by and between the CITY OF NEWPORT BEACH, a Municipal
Corporation and Charter City (Buyer), and PELICAN
PROPERTIES, (Seller), is made with reference
to the following:
A. Seller is the owner of certain real property
located in the Cannery Village area of the City of Newport Beach,
County of Orange, commonly known as 430-30th Street, and legally
described in Exhibit A to this Contract;
B. Buyer has designated the real property on the
Cannery Village Specific Area Plan as a parking lot and intends
to purchase the property for that purpose;
C. Buyer has commissioned an appraisal of the
property, and the appraiser has determined the fair market value
of the property and improvements to be $1,036,000.00;
D. Buyer has adopted all resolutions, and taken all
actions necessary to initiate condemnation proceedings and
intends to condemn the property in the absence of this agreement;
E. Seller, in the face of the pending condemnation of
the property, has agreed to sell, and Buyer has agreed to
purchase, the property under the terms and conditions specified
in this agreement.
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NOW, THEREFORE, the parties agree as follows:
1. Consideration:
Buyer, in consideration of Seller's agreement to
sell and convey the property shall;
A. Pay Seller the sum of $1,036,000.00 payable as
follows:
i. The sum of $ on execution of
this Contract, as a deposit to be applied on the purchase price
at close of escrow. The amount shall be payable by certified
check drawn to the order of the escrow holder;
ii. The balance of the purchase price shall
be paid into escrow during normal business hours at least three
(3) days prior to the scheduled close of escrow. The balance
shall be payable by cashier's check drawn to the order of Seller.
B. Buyer gives Seller the option to purchase in -
lieu parking spaces, up to the maximum number of spaces initially
proposed for the parking lot. The option to purchase the spaces
shall commence one year after close of escrow or on the date
Seller's application for a use permit for the properties
described in Exhibit B is approved and final, whichever shall
first occur. Nothing in this agreement shall be construed as a
commitment by Buyer to approve a use permit or other entitlement
for the property or a limitation on the usual discretion vested
in the Planning Commission and City Council with respect to such
matters. These in -lieu spaces may be applied to satisfy the
parking requirements of Title 20 of the Newport Beach Municipal
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Code, but only with respect to the properties described in
Exhibit B, and only with respect to the night-time parking
requirements of the uses of those properties. The purchase of
in -lieu spaces by Seller does not convey any proprietary interest
in the property to Seller, Seller's tenants, their customers or
successors, nor does the purchase -of an in -lieu space convey any
exclusive or non-exclusive right to park on the property. Seller
shall be entitled to purchase in -lieu parking spaces located on
the property at the then current rate, provided, however, the
maximum cost to Seller of each in -lieu space located on the
property shall not exceed $500.00 during the first five (5) years
after the option is exercised. At the end of the first five (5)
year period, the cost to Seller of each in -lieu space, for the
next five (5) years, shall be 75% of the then current rate, or
$500.00, whichever is less with the cost prorated if spaces
purchased for a portion of any year.
2. Escrow:
A. Opening of Escrow.
An escrow shall be opened to consummate the
sale of the property according to the terms of this agreement at
the office of (Escrow Holder). The
escrow shall be opened within ( ) days after the
execution of this Contract. Written escrow instructions in
accordance with the terms of this Contract shall be prepared by
the parties jointly, and the instructions shall be signed by the
parties and delivered to the Escrow Holder within (�) days
of the execution,of this Contract. Buyer and Seller also agree
to deposit with Escrow Holder all instruments, documents and
other items identified in the escrow instructions or reasonably
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required by the Escrow Holder to close the sale on the date
specified below.
B. Closing Date.
The escrow sha-11 be closed on the date the
deed is recorded. The escrow shall be considered to be in a
condition to close when the Escrow Holder is authorized under the
instructions, and when the Escrow Holder is otherwise able, to
record. the grant deed. The escrow must be in a condition to
close no later than April 1, 1988, unless the closing date is
extended pursuant to the terms of this Contract or by amendments
to the escrow instructions.
C. Prorations.
Special assessments or other liens shall be
prorated between Buyer and Seller on the basis of a thirty (30)
day month as of the date on which escrow closes. Property tax
payments due on or before April 10, 1988 shall be paid by Seller,
and Seller shall be entitled to file a claim or application for
tax refund with the County of Orange. Buyer shall cooperate with
Seller in any effort to cancel, or receive a refund for payment
of, taxes assessed, and paid by Seller, during the 1987/1988-tax
year, but Seller shall be solely responsible for the filing of
claims or applications for refund as well as the payment of any
fees or costs associated with the pursuit of the request for a
refund or a cancellation.
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D. Closing Costs.
Seller shall pay the cost of the preliminary
report and title insurance policy required by this Contract, the
cost of preparing, executing and acknowledging the grant deed and
all other instruments necessary to convey title. Buyer shall pay
the cost of recording the grant deed and any other instruments
required to convey title to Buyer. The escrow fee, other than
the cost specified above, shall be shared equally by Buyer and
Seller.
E. Vesting of Title.
On the close of escrow, title shall be vested
in the City of Newport Beach, a Municipal Corporation and Charter
City.
3. Additional Terms and Conditions:
A. Preliminary Title Report.
Within ( ) days after the execution of
this Contract, Seller shall furnish Buyer with a preliminary
report of the title to the property and each document shown as an
exception or encumbrance in the report. This shall be prepared
at Seller's expense. Within ten (10) days after delivery of the
report and related documents to Buyer, Buyer shall notify Seller,
in writing, of any objection to any exception in the preliminary
title report. If Buyer makes a timely objection to any exception
in the report, and the exception is not eliminated within twenty
(20) days of Seller's receipt of the objection, this Contract
shall be terminated. Buyer's failure to object in this manner to
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any exception in the preliminary report shall be an approval by
Buyer of that exception.
B. Marketable Title.
Buyer's obligation to purchase the property is
subject to the conveyance to Buyer of good and marketable title
to the property as evidenced by a standard coverage title
insurance policy issued by in the amount of
$1,036,000.00, insuring that title of the property is vested in
Buyer free and clear of all title defects, liens, encumbrances,
conditions, covenants, restrictions, and other adverse interests
of record, or known to Seller, subject only to those exceptions
approved by Buyer in writing and any exceptions shown on the
preliminary title report were not disapproved by Buyer pursuant
to this Contract. Seller shall be responsible for all costs and
expenses incurred in securing the title policy.
C. Delivery of Possession/Possession During
Escrow.
Buyer acknowledges that the property is
currently occupied by (tenant) pursuant to a
written agreement that expires Tenant
utilizes the property as a commissary. Seller shall deliver to
Buyer at close of escrow, sole and exclusive possession of the
property unencumbered by lease, rental agreement or other form of
tenancy or possessory right. However, Buiyer, at its sole
discretion, may waive or modify the possession requirements by
serving written notice on Seller and the escrow holder on or
before March 1, 1988. The notice shall specify revisions to the
escrow instructions necessary to implement the waiver or
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Warranty.
D. Failure of Condition and Seller's Breach of
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Except as provided in Section 3.04, if any of
the conditions set forth in this Agreement fails to occur, or if
Buyer notifies Seller in writing prior to the close of escrow of
Seller's breach of any of the warranties set forth in this
Agreement, then Buyer may cancel the escrow, terminate this
contract, recover the amounts paid by Buyer to the escrow holder
toward the purchase price of the property. Buyer shall exercise
this power to terminate by complying with any applicable notice
requirements specified in the relevant condition and, in other
cases, by providing written notice to Seller and the escrow
holder as provided in Section The exercise of this power
shall not waive any other rights Buyer may have against Seller
for breach of this Contract. Seller shall instruct the escrow
holder, in escrow instructions delivered pursuant to this
Agreement, to refund to Buyer all money and all instruments
deposited in escrow by Buyer pursuant to this Contract upon
failure of a condition or conditions or breach for warranty or
warranties in receipt of a termination notice. In the event of
such termination, Seller shall bear any costs and expenses of
escrow.
E. Seller's Election to Remedy Defects.
Notwithstanding any provision of _this
Agreement to the contrary, Seller shall have the right to remedy
certain violations of this contract prior to the close of
escrow. This right to remedy shall be subject to the following
requirements and restrictions:
1. Buyer shall immediately notify Seller, in
writing, of Buyer's discovery, prior to close of escrow, of
violation of any of the provisions of this Agreement. For
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purposes of this Section,the foregoing violations shall be
referred to as "defects."
2. If Buyer fails to give Notice, Buyer
shall have waived the defect and the defect shall not be a
violation of this Agreement. If.Buyer gives notice, Seller may
elect to remedy the defect by giving Buyer written notice of this
election within ten (10) days of receiving Buyer's notice.
Seller's notice of election to remedy shall specify the number of
days, up to a maximum of ten (10), that escrow shall be postponed
so that Seller may remedy the defect. If Seller fails to provide
a timely notice of election or fails to remedy the defect prior
to the close of escrow, including any extension of escrow
pursuant to this Section, then Buyer, at its election, may do
either of the following:
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a. Terminate this Agreement without any
liability on the part of either party; or
b. Purchase the property without a
reduction in the purchase price and without any liability for the
unremedied defect or defects on the part of seller. The failure
by Buyer to make such an election shall be deemed an election of
Option A.
3. Seller shall instruct the escrow holder
to immediately refund the Buyer all money and instruments
deposited in escrow to Buyer pursuant to this Agreement on
termination pursuant to this Section, and on receipt of notice of
that termination from Buyer. In the event of such termination,
Seller shall bear any costs and expenses of escrow.
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4. Rights and Warranty:
A. Right of Buyer to Enter Property.
Seller grants to Buyer, or Buyer's agents, the
right, at any time and from time. to time within ten (10) days
after the opening of escrow for this transaction, to enter on to
the property to conduct tests and investigations provided that:
1. The entry shall be conducted at the sole
cost and expense of Buyer;
2. The entry occurs during reasonable
business hours;
3. The entry does not unreasonably interfere
with possession by the current tenant;
4._ Buyer shall indemnify and hold Seller
harmless from any costs or liability resulting from the entry;
and
5. Buyer shall give tenant written notice of
the intention to enter at least twenty-four (24) hours prior to
the date and time of entry.
B. Warranties of Seller.
Seller Warrants that:
1. Seller owns the property, free and clear
of all liens, licenses, claims, encumbrances, easements,
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encroachments on the property from adjacent property,
encroachments by improvements on the property onto adjacent
property, and rights of way of any nature not disclosed by the
public record;
2. Seller has no knowledge of any pending
litigation involving the property;
3. Seller has no knowledge of any violations
of, or notices concerning defects or non-compliance with, any
applicable Building Code or other code, statute, regulation,
ordinance, judicial, or judicial holding pertaining to the
property;
4. Seller is not in default under any
contract, or encumbrance relating to property;
5. The property and improvements on the
property are in good condition, reasonable wear and tear,
excepted, and Seller has no knowledge of any material defects in
the property;
6. Seller will continue, during escrow, to
maintain the property in good condition or repair.
C. Survival of Warranties.
All warranties and other obligations described
in this Section, elsewhere in this Agreement, shall survive
delivery of the deed.
5. Miscellaneous Provisions:
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I�
A. Liquidated damages.
If Buyer defaults in the performance of this
Agreement, the parties agree that Seller shall be released from
any obligation to sell property to Buyer and may retain, as
liquidated damages, the deposit paid by Buyer on execution of
this agreeement. The parties further agree that the amount of
liquidated damages- established by this provision is a reasonable
estimate, under the circumstances existing on the date of
execution of this Agreement, of what Seller's damages would be in
the event of a default by Buyer.
B. Assignment.
Buyer may not assign this contract without
Seller's prior written consent which shall not be unreasonably
withheld.
C. Time is of the essence.
Time is of the essence in this Agreement.
D. Notices.
Any notice required to be given pursuant to
this Agreement shall be in writing and shall be deemed to be
properly given when delivered to the person specified below or
when deposited in the United States mail, first class postage
prepaid, and addressed as follows:
Robert L. Wynn, City Manager
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3300 Newport Boulevard
P.O. Box 1768
Newport Beach, CA 92658-8915
Dorothy Doan
Pelican Properties
E. Entire Agreement.
This Agreement and the attached Exhibits
constitute the entire Agreement between the parties relating to
the sale of property. Any prior agreements, promises,
negotiations or representations not expressly set forth in this
Agreement are of no force and effect. Any amendment to this
Agreement shall be of no force and effect unless it is in writing
and signed by Buyer and Seller.
F. Arbitration.
Any controversy or claim arising out of this
Agreement or a breach thereof shall be settled by arbitration in
accordance with the rules of the American Arbitration
Association, and judgment on the award rendered by the
arbitrators maybe entered in any court having jurisdiction.
G. Waiver.
The waiver by any party of a breach of any
provision of this Agreement shall not be deemed a continuing
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waiver, or a waiver of any subsequent breach, of that or any
other provision of this Contract.
Dated
Dated
SELLER
BUYER
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Poo
� G.
FIRST CONTINENTAL FINANCIAL CORPORATION
December 30, 1987
*VIA FEDERAL EXPRESS*
Mr. George Pappas
Director
Finance Department
City of Newport Beach
3300 Newport Boulevard
Newport Beach, California 92663
Dear Mr. Pappas:
First Continental Financial Corporation ("FCFC") is pleased to submit the
following commitment for financing for the City of Newport Beach (the "City"):
Project:
Total Project Cost:
City's Down Payment:
Net Amount Financed:
Purchase Option:
Lease Payment Deposit Mode:
Lease Payment Deposit Amount:
Term:
APR:
Acquisition of land, demolition of existing
structures, and construction of parking
facilities
$1,200,000.00
$ 500,000.00
$ 700,000.00
$1.00 (End of Term)
60 monthly payments in arrears
$13,693.59
60 months
6.49172%
The interest rate, payment structure and payment amount quoted herein assumes an
immediate funding of the $700,000.00 net project cost (the "Proceeds"), $500,000
of which will be immediately disbursed to acquire the land. The remaining
$200,000.00 of proceeds will be disbursed to the City for deposit in a special
account to be established by .,the City. The City may choose to reinvest such
funds in Qualified Instruments pending disbursement during the construction
period. Such reinvestment of funds will further reduce the City's effective
cost.
This commitment is subject to the terms and conditions as itemized on the
attached Exhibit "A." This commitment together with Exhibit A supersedes FCFC's
previous commitment dated November 19, 1987.
ti080 North Cenral Expressway •Suite 850 • Dallas, Texas 75206 • (314) 3-3-^900
1
Mr. George Pappas
December 30, 1987
Page Two
Thank you again for the opportunity to be of service to the City of Newport
Beach. Should you have any questions concerning this commitment, or should you
desire any additional information, please do not hesitate to contact me by
telephone at (214) 373-7900.
Sincerely,
l�
Mary Kathryn Long
Senior Financial Analyst
MKL/cjl
cc: Mr. Chris Gustin, Senior Planner
City of Newport Beach
C,
EXHIBIT A
TERMS AND CONDITIONS
This commitment is subject to the following terms and conditions:
1. Unless written notice of award is received by FCFC from the City prior to
5:00 PM C.S.T on January 15, 1988, the lease payment deposit and A.P.R.
quoted in this commitment will adjust based on the 20-year Bond Buyer
Index. FCFC reserves the right to rescind this bid at any time prior to
receiving written notice of an award of this transaction.
2. The acquisition of the land and the execution of and delivery of all
documents contemplated or reasonably required in connection therewith must
be fully executed by all parties and delivered to FCFC on or before
February 15, 1988.
3. The City will make monthly lease payment deposits on the first day of each
month during the term of the contract commencing 30 days after closing.
The monthly amount will be deposited into a debt service sinking fund
established with a corporate trustee mutually acceptable to the City and
FCFC. Such sinking fund will be invested pursuant to a guaranteed,
federally backed investment agreement arranged by FCFC and used to pay
semiannual lease payments when due. If the City makes all monthly lease
payment deposits when due, it is anticipated that there will be sinking
fund balances sufficient to pay the semiannual lease payments when due.
4. The City will be responsible for and will provide proof of title, casualty,
property damage, and public liability insurance. The City will be
responsible for the fees and expenses of its counsel, the trustee, and any
costs related to the acquisition of the land not borne by the seller
thereof. The cost of title insurance may, at the City's option, be added
to the issue size and funded through proceeds.
5. FCFC shall receive, at its expense, the written opinion of recognized bond
counsel that the interest portion of each Lease payment is exempt from
federal income taxation under Section 103 of the Internal Revenue Code of
1986, as amended.
6. Counsel for the City shall prepare and deliver its written opinion to FCFC
that, among other things, the contract and other lease documents have been
duly authorized, executed and delivered by the City and the contract and
other documentation constitute legal, valid and binding obligations of the
City.
FlItSTCONTINENTAL
CORPORATION
7. The City will be billed for any property taxes assessed, in the form of
excess rentals.
8. All taxes, including property taxes, will be the responsibility of the
Ci ty.
9. The City will agree to the assignment of the lease by FCFC for financing
purposes only.
10. The City shall designate the transaction as a designated qualified bond
issue for purposes of bank qualification under Section 265 of the Internal
Revenue Code of 1986, as amended (the "Code").
11. The City will qualify for the $5,000,000.00 exemption from the rebate
provisions of the Code.
12. The City shall be required to establish a reserve fund of 10% of the issue
size, to be funded from proceeds of the issue. The reserve fund, like the
invested sinking fund, will be deposited with the trustee and invested
pursuant to a guaranteed investment contract arranged by FCFC. Earnings on
the reserve fund will be applied to each semiannual lease payment and the
principal amount thereof applied to the final lease payment.
13. The City shall provide written certification acceptable to FCFC's tax
counsel that it is the owner/operator of the facilities financed through
this transaction.
14. The City will execute and file of record a First Lien Mortgage and Deed of
Trust granting to FCFC a first lien security interest in and to the land
and the improvements. If requested by FCFC, the City will pledge as
additional security for the lease the parking revenues received from the
project and the 270 new parking meters being installed within the vicinity
of the project.
MINUTES AND CERTIFICATION PERTAINING
TO PASSAGE OF A RESOLUTION
RELATING TO THE REAL PROPERTY LEASE/PURCHASE AGREEMENT
FOR THE CANNERY VILLAGE PARKING FACILITY AND
DESIGNATION AS A QUALIFIED TAX EXEMPT OBLIGATION
On February 8, 1988, the City Council of the City of
Newport Beach convened its regular meeting at 7:30 P.M. in the
City Council Chambers located at 3300 Newport Boulevard, Newport
Beach, the meeting being open to the public, the agenda being
properly posted, and all other legal requirements having been
satisfied, the meeting was called to order and roll was called of
the duly constituted members of the City Council, which officers
and members are as follows:
John J. Cox, Jr.
Mayor
Don Strauss
Member
of
the
Council
Phil Maurer
Member
of
the
Council
Phil Sansone
Member
of
the
Council
Clarence Turner
Member
of
the
Council
Ruthelyn Plummer
Member
of
the
Council
Evelyn Hart
Member
of
the
Council
and all members were present except the following
absentees, None thus constituting a quorum.
Whereupon, among other business, a written resolution bearing the
following caption was introduced
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH RELATING TO THE REAL
PROPERTY/LEASE PURCHASE AGREEMENT FOR THE
CANNERY VILLAGE PARKING FACILITY AND
DESIGNATION AS A QUALIFIED TAX EXEMPT
OBLIGATION.
The Resolution, a full, true and correct copy of which
is attached hereto, was read, considered and reviewed by the City
Council.
Thereupon, it was moved by Councilmember Plummer that
the Resolution be passed and adopted. The presiding officer put
the motion to the vote of the members of the City Council and the
Resolution was passed and adopted by the following vote:
Ayes: Cox, Hart, Maurer, Plummer, Sansone, Strauss, Turner
Noes:
The motion included request that
these Minutes to correctly reflect that
members of the City Council of the City of
approved the Resolution, and the attached
the Resolution is hereby certified to be a
of the original on file among the official
Newport Beach, all on this 8th d:
ATTEST:
City Clerk
the City Clerk prepare
the duly constituted
Newport Beach properly
and following copy of
true and correct copy
records of the City of
RESOLUTION NO. 88-10
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH RELATING TO THE REAL PROPERTY
LEASE/PURCHASE AGREEMENT FOR THE CANNERY
VILLAGE PARKING FACILITY AND DESIGNATION AS A
QUALIFIED TAX EXEMPT OBLIGATION
WHEREAS, in connection with the acquisition and
construction of a paved and metered municipal parking facility in
the Cannery Village area of Newport Beach (the Project), the City
Council has found and determined that it is necessary and in the
best interests of the City of Newport Beach that it enter into a
Real Property Lease/Purchase Agreement (the Lease) with First
Continental Financial Corporation as Lessor (the Lessor);
WHEREAS, Lessor has requested that the Lease be
designated as as "qualified tax exempt obligation" for purposes
of the Internal Revenue Code of 1986 (the Code); and
WHEREAS, pursuant to Section 265(b)(3) of the Code, it
is found and determined that it is appropriate to designate the
Lease as a qualified tax exempt obligation.
NOW, THEREFORE, BE IT RESOLVED by the City Council of
the City of Newport Beach:
Section 1: The City Council hereby designates the Lease
as "qualified tax exempt obligation" for purposes of Section
265(b)(3) of the Code;
Section 2: The City declares that the Lease is not a
"private activity bond" as defined in the Code and that neither
the City nor any of its subordinate entities reasonably expect to
issue in excess of $5,000,000 aggregate amount of qualified tax
exempt obligations during the calendar year in which the Lease is
issued; and the City hereby covenants not to designate more than
$5, 0^vv aggregate €moiiiii of gliai i f cd to"zi E2iC�Tipt {ibi igati'vila
during the calendar year in which the Lease is issued;
Section 3: The City hereby represents that it has not
previously, during calendar year 1988, designated any obligation
as a "qualified tax exempt obligation."
ADOPTED this 8th day _r '"
ATTEST:
zz l e
City Clerk