2014 2:00:00 PM

Tuesday, May 27, 2014 2:00 PM
Sparks City Hall, Legislative Bldg, Council Chambers, 745 4th St., Sparks

General Business: 6.1

Title: Consideration and possible approval of Resolution No. 3259 authorizing the execution and delivery of a First Supplemental Indenture by and between the City of Sparks and U.S. Bank as Trustee, relating to the City of Sparks Local Improvement District No. 3 (Legends at Sparks Marina) 2008 Limited Obligation Improvement Bonds, thereby creating an amendment to the original indenture allowing for the prepayment of special assessments on parcels within the Local Improvement District No. 3.

Petitioner/Presenter: Jeff Cronk, CPA, Financial Services Director/Jeff Cronk, CPA, Financial Services Director

Recommendation: That the City Council approves the resolution authorizing the First Supplemental Indenture relating to the LID #3 2008 Limited Obligation Improvement Bonds.

Financial Impact: None

Business Impact (Per NRS 237):
A Business Impact Statement is not required because this is not a rule.

Agenda Item Brief: Consideration of a Resolution to create the First Supplemental Indenture relating to the City of Sparks Local Improvement District No. 3 (LID #3) 2008 Limited Obligation Improvement Bonds. The Resolution under consideration would amend the Original Indenture to allow the Trustee to release the Secured Parcel Letter of Credit that was obtained by the Legends developer, relating to the Olympia parcel, once the special assessments securing the Limited Obligation Bonds levied against the Olympia parcel have been fully paid. The ability to release the Letter of Credit relating to the Olympia parcel upon prepayment of the special assessments levied on that parcel is not mentioned in the original indenture, and the proposed resolution is intended to cure that omission.

Background: In 2008, the City of Sparks created the Local Improvement District No. 3, and issued Limited Obligation Improvement Bonds in the aggregate amount of $26,120,000 supported by special assessments on the parcels located in the area known as the Legends at Sparks Marina. The bonds were issued pursuant to the May 1, 2008 Indenture by and between the City and U.S. Bank as Trustee of the bonds. In order to provide security for the payment of the special assessments and improve the credit quality of the bonds with respect to the assessments levied on the Olympia parcel specifically, the City required that a Secured Parcel Letter of Credit on the Olympia parcel be obtained by the developer and delivered to the Trustee. Under the provisions of the Original Indenture, this letter of credit may be surrendered by the Trustee only if the Olympia parcel appraised value is no less than $22,169,862 in accordance with the Original Indenture and Letter of Credit Agreement.

Analysis: There is no mention in the Original Indenture that the letter of credit relating to the Olympia parcel can be released upon prepayment of the special assessment. Therefore, approval of the resolution presented to Council today would authorize the creation of a Supplemental Indenture that would amend the Original Indenture and allow for the Letter of Credit to be released by the Trustee (i.e., U.S. Bank) upon payment of the special assessments securing the 2008 Limited Obligation Bonds.

Alternatives: The City Council may choose not to adopt the proposed resolution thereby not allowing the release of the referenced letter of credit until such time as the Olympia parcel attains an appraised value of no less than $22,169,862.

Recommended Motion: “I move to approve Resolution No. 3259 authorizing the execution and delivery of a First Supplemental Indenture by and between the City of Sparks and U.S. Bank as Trustee relating to the City of Sparks Local Improvement District No. 3 2008 Limited Obligation Improvement Bonds.”

Attached Files:

Resolution First Supp Indenture LID 3 (Legends).pdf

First Supp Indenture Sparks LID.pdf

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