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HomeMy WebLinkAboutCC 12 WTR SYS LEASE 11-17-80DATE: November 12, 1980 CONSENT CALENDAR No. 12 11~l 7~0. Inter-Corn TO: FROM: SUBJECT: HONORABLE MAYOR AND CITY CO(3NCIL DAN BLANKENSHIP, CITY ADMINISTRATOR APPROVAL OF ~ SYSTEM n~ASE On November 10, 1980, the City of Tustin Water Corporation m~t and considered a variety of actions. The Board became the Board of the Tustin Water Works Corporation and approved a lease between the two corporations. Then, the Corporation approved a lease with the City. It is now appropriate for the City Council to approve the lease between the City and City of Tustin Water .Corporation. The terms of the lease are those contained in the Purchase D~reement but the legal consultants believed that the County Auditor-Controller and Tax Collector would have less problems in certifying the property as tax exempt if the provisions were spelled out in a document actually labeled as a lease. Upon approval, the application will be filed for tax exempt status on the system, or at least that part within the City limits. ~ED ACTION: Minute Order approving the Water System Lease with the City of Tustin Water Corporation and authorizing the Mayor and City Clerk to sign on behalf of the City. Respectfully submitted, City Administrator DB:dmt CITY OF TUSTIN WATER CORPORATION LEASE THIS LEASE, dated as of November 1, 1980, by and between the CITY OF TUSTIN, a municipal corporation organized and existing under the laws of the State'of California (hereinafter referred to as "City"), and the CITY OF TUSTIN WATER CORPORA- TION, a nonprofit corporation organized and existing under the laws of the State of California (hereinafter referred to as the "Corporation"); W I T N E S S E T H: WHEREAS, the Corporation has been formed by a group of public spirited citizens for the purpose of acquiring Tustin Water Works, a ~California Corporation, from the proceeds of lease revenue bonds to be issued by the Corporation and, upon the acquisition thereof, to lease to the City all of the prop- erty of Tustin Water Works (the "System"). Said System is more particularly described as all and singular the wells, pipelines, plants, properties, equipment, real and personal property, treatment, storing and distribution facilities of the TWW Cor- poration situated in the County of Orange with all and singular the franchises, licenses, rights of way, easements, permits and privileges and other rights appertaining or belonging as the same now exist and as the same and any and all parts thereof may hereafter exist or be improved, added to, enlarged, extended or acquired in said County of Orange, including all and singular the lands, easements and rights of way described in Exhibit "A" attached hereto and made a part hereof; and WHEREAS, the Corporation, the City and the Shareholders of Tustin Water Works (the "Shareholders") entered into an agree- ment dated as of the 3rd day of March, 1980 (the "Pdrchase Agreement") which provides for the sale of all of the stock of Tustin Water Works to the Corporation; and WHEREAS, pursuant to the Purchase Agreement the Corporation agreed to reorganize Tustin Water Works into a nonprofit corpo- ration; and WHEREAS, the Corporation has acquired all of the stock of Tustin Water Works and Tustin Water Works has been reorganized into a nonprofit corporation named Tustin Water Works Corpora- tion (herein referred to as the "TWW Corporation"); and WHEREAS, the TWW Corporation has leased the System to the Corporation pursuant to a Lease dated as of Novmeber 1, 1980 entitled "Tustin Water Works Corporation Lease"; and WHEREAS, pursuant to the Purchase Agreement, the City is to maintain and operate the System and to pay to the Corporation for payment to the Shareholders the payments of principal and interest on the Purchase Price until such time as the Corpora- tion issues its lease revenue bonds to pay the Purchase Price in full; at which time the Corporation will lease the System to the City to provide the revenues to the Corporation to pay the principal and interest on its lease revenue bonds; and WHEREAS, to further memoralize 'the agreement of the parties as set forth in Section 19 of the Purchase Agreement, the Corporation now desires to lease the System to the City; NOW, THEREFORE, in consideration of the payment of rent and the performance of the mutual promises and agreements herein contained at the time and in the manner specified, the parties hereto agree as follows: SECTION 1. Lease to the City -- Maximum Term. The Corporation hereby leases to the City, and the City hereby accepts and rents the System from the Corporation. The term of this Lease shall Commence on the date hereof. Unless the term is earlier terminated or extended as hereinafter pro- vided, the term of this Lease shall end on the earlier of (i) October 31, 2005, or (ii) upon the payment or provision for payment of all principal, interest and premiums, if any, or other sums due the Corporation as provided in Section 5 of the Purchase Agreement (the "Corporation's Obligations"). If, on October 31, 2005, the Corporation's Obligations shall not be fully paid and retired, or provisions for such payment has not been made, and if the rental payable under any lease with the City shall have been abated at any time and for any reason, then the term of this Lease shall be extended'until the date the Corporation's Obligations shall be fully paid and retired,. or provision for such payment has been made. The Corporation may terminate this agreement on any date upon giving the City twenty ~20) days prior written notice; provided, however, the Corporation may only exercise this option if it issues lease revenue bonds for the payment of the Shareholders in full. and a new lease is entered into by and between the Corporation and the City. Any rent accrued for the rental period in which the Lease is terminated shall be paid to the Corporation upon termi- nation.· SECTION 2. Rental. The City agrees to pay to the corporation from, but only from, the revenues as defined in Section 19 of the Purchase Agreement as full consideration for the use of the System during each year of this Lease the amounts of principal and interest that the City agrees to pay the Corporation as set forth in Sec- tion 5 of the Purchase Agreement. Said rental payments shall be paid to the Corporation not less than three (3) days prior to the date the Corporation must make the payments to the Share- holders as set forth in said Section 5. -2- SECTION 3. Net-Net-Net Lease. The City as additional rent further agrees to pay all: (a) taxes and assessments'of any nature whatso- ever, including, but not limited to, excise taxes, ad valorem taxes, ad valorem and specific lien special assessments and gross receipt taxes, if any, levied upon the System or upon the Corporation's interest therein, or upon the rental income derived therefrom, except State and Federal income taxes; (b) insurance premiums; (c) administrative costs of the Corporation, including, without limiting the generality of the fore- going, wage expenses, compensation and indemnification of the Trustee under the Indenture or under any secur- ity instrument referred to in Section 7 hereof, fees and charges of auditors, accountants, engineers and attorneys, and all other necessary administrative costs of the Corporation or charges required to be paid by the Corporation in order to comply with the terms of the bonds, notes or other obligations or the Indenture or any other security instrument referred to in Sec- tion 7 hereof, and to defend the Corporation and its members, directors, officers, consultants and employees in any matter relating to the acquisition, construc- tion, financing or operation of the facilities; and (d) costs and expenses which the Corporation may incur in consequence of or because, of any default by Corporation under this Lease, including reasonable attorneys' fees and costs of suit or action at law to enforce the terms and conditions of this Lease, said payments to be made within thirty-five (35) days after City has been furnished statements of amount due or receipted bills or ~ancelled checks showing payment by the Corporation. This Lease shall be deemed and construed to be a "net-net- net" lease, and the City agrees that the rents provided for herein shall be an absolute net return to the Corporation, free and clear of any expenses, charges or set-offs whatsoever. SECTION 4. Changes During Term of this Lease. The City shall have the right during the term of this Lease to make alterations or improvements or attach fixtures, equip- ment or structures to the System if said.alterations, improve- ments, fixtures, equipment and structures are necessary or -3- beneficial for the use of the System. Any improvements or addi- tions to the System or portions thereof shall be deemed to be part of the System. SECTION 5. Title to System. Title to the System, all structural additions thereto, and all fixtures, equipment and apparatus placed therein shall remain in the TWW Corporation during the term of this Lease, and shall vest in the City after the Corporation's Obligations have been paid. The City has the right at any time during the term of this Lease to purchase the System at a purchase price sufficient to retire the Corporation's Obligations. In that event, the Cor- poration agrees to exercise its option to purchase the System from the TWW Corporation as provided in the Tustin Water Works Corporation Lease. SECTION 6. Eminent Domain. (a) If the whole of the System shall be taken perma- nently under the power of eminent domain, the term of this Lease shall cease as of the day possession shall be so taken. If less than the whole of the System shall be taken permanently, or if the whole of the System shall be taken temporarily, under the power of eminent domain, this Lease shall continue in full force and effect and shall not be terminated by virtue of such taking and the parties' waive the benefit of any law to the contrary. (b) Any award made shall be paid to the Corporation and City as their respective interests may appear. SECTION 7. Mortgage of System. The Corporation may finance the acquisition of the System by the sale and issuance of its lease revenue bonds to the extent permitted by law. The Corporation may assign, transfer, mortgage, hypothe- cate or encumber the Corporation's interest under this Lease (including the right to receive rental payments) to any bona fide lender or lenders (including purchasers or holders of notes, bonds or other obligations of the Corporation), and the Corporation may execute any and all instruments necessary therefor, including, without limitation, instruments providing for the paying of rent directly to a trustee for such lender or lenders. Any such lender or lenders may be granted the right, prior to termination of this Lease: -4- (a) To do any act or thing required of the Cor- poration in order to prevent a forfeiture of the Corporation's rights hereunder, and all such acts or things so done shall be as effec.tive to prevent a for- feiture of the Corporation's rights hereunder as if done by the Corporation; (b) To realize on the security of the mortgaged system and to acquire and succeed to the interest of the Corporation hereunder by foreclosure or by a deed or assignment in lieu of foreclosure, and thereafter at such lender's option to convey or assign the inter- est in or title to said System to any other person subject to all the terms, conditions and covenants of this Lease. SECTION 8. Notices. Any notices or filings required to be given or made under this Lease shall be served or made in the following manner: upon the City by serving the City Clerk personally or by registered mail addressed to the City Clerk, 300 Centennial Way, Tustin, California 92680, or such other place as may hereafter be desig- nated in writing by the City, upon the Corporation and the TWW Corporation by registered mail addressed to the Corporation or the TWW Corporation at the aforementioned address. SECTION 9. Section Headings, Severability. The paragraph headings contained herein are for conven- ience and reference and are not intended to define or limit the scope of any provision of this Lease. If any section, subsection, sentence, clause or phrase of this Lease, or the application thereof to either party or any other person or circumstance, is for any reason held invalid, it shall be deemed severable and the validity of the remainder of the Lease or the application of such provision to the other party or to any person or circumstance shall not be affected thereby. IN WITNESS WHEREOF, the City has caused this Lease to be executed by the Mayor and attested by the City Clerk thereof, and the Corporation has caused this Lease to be executed by the -5- President of the Board of Directors and attested by the Secre- tary thereof, as of the day and year first above written. CITY OF TUSTIN By Mayor ATTEST: By (SEAL) City Clerk ATTEST: (SEAL) CITY OF TUSTIN WATER CORPORATION t,/ P~sident ~ z SecEetary -6- STATE OF CALIFORNIA ) ) SS. COUNTY OF ORANGE ) On this __ day of , 1980, before me, the undersigned, a Notary Public in and for said State, personall~ appeared , known to me to be the Mayor, and , known to me to be the City Clerk of the City of Tustin, one of the corporations that executed the within instrument, known to me to be the persons who executed the within instrument on behalf of such corporation, and acknowledged to me that such corporation executed the within instrument pursuant to a resolution of its board of directors. WITNESS my hand and official seal. (SEAL) Notary Public in and for the State of California STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On this day of , 1980, before me, the undersigned, a Notary Public in and for said State, personally appeared , known to me to be the President, and , known to me to be the Secretary of the City of Tustin Water Corporation, one of the corporations that executed the within instrument, known to me to be the persons who executed the within instrument on behalf of such corporation, and acknowledged to me that such corporation executed the within instrument pursuant to a reso-' lution of its board of directors. WITNESS my hand and official seal. (SEAL) ~Notary Public in and for the State of California -7-