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RESOLUTION BY THE CITY COUNCIL OF THE CITY OF JONESBORO, ARKANSAS AUTHORIZING CERTAIN AMENDMENTS TO THE CITY OF JONESBORO, ARKANSAS TAX INCREMENT FINANCING REVENUE REDEVELOPMENT BONDS (TURTLE CREEK REDEVELOPMENT DISTRICT PROJECT), SERIES 2006, AND THE TRUST INDENTURE PURSUANT TO WHICH SUCH BONDS WERE ISSUED; AUTHORIZING CERTAIN AMENDMENTS TO THE MEMORANDUM OF UNDERSTANDING AGREEMENTS RELATING TO THE BONDS; AUTHORIZING THE TERMINATION OF THE PILOT AGREEMENT, THE MAJOR ACHORS PILOT AGREEMENT AND THE UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE WITH RESPECT TO THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF CERTAIN ADDITIONAL DOCUMENTS RELATED TO THE AMENDMENTS TO THE BONDS; AND PRESCRIBING OTHER MATTERS RELATING THERETO
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WHEREAS, by Ordinance No. 3480 of the Ordinances of the City of Jonesboro, Arkansas (the "City"), passed and approved July 19, 2004, by Ordinance No. 3501 of the Ordinances of the City, passed and approved December 20, 2004, by Ordinance 3586 of the Ordinances of the City passed and approved November 1, 2005 and by Resolution No. 2005-130 adopted by the City on November 1, 2005, there was authorized the issuance of the City's Tax Increment Financing Revenue Redevelopment Bonds (Turtle Creek Redevelopment District Project), Series 2006, dated January 31, 2006 (the "Series 2006 TIF Bonds");
WHEREAS, the Series 2006 TIF Bonds were issued under and pursuant to the terms of a Trust Indenture dated as of January 31, 2006 (the "Trust Indenture"), between the City and Regions Bank, as trustee (the "Trustee");
WHEREAS, the proceeds of the Series 2006 TIF Bonds were used to finance the cost of a project consisting of the construction of certain public improvements and renovations within the Turtle Creek Redevelopment District (the "District"), in connection with the development of the Mall at Turtle Creek and Turtle Creek Crossing (collectively, the "Shopping Center") by Turtle Creek Partners, LLC (the "Developer");
WHEREAS, the Series 2006 TIF Bonds are limited obligations of the City payable from (1) certain incremental property tax revenue collected in connection with the real property located within the District, (2) payments made by the Developer under the terms of an Agreement to Make Payments in Lieu of Taxes dated January 31, 2006 (the "PILOT Agreement") between the Developer, the City, the Trustee and the Craighead County Tax Assessor (the "Assessor"), (3) payments under an Agreement dated January 31, 2006 (the "Major Anchors PILOT Agreement") between the City, J.C. Penney Properties, Inc., Target Corporation, Dillard's Dollars, Inc. and the Assessor, and (4) payments under an Unconditional Guaranty of Payment and Performance dated January 31, 2006 (the "Guaranty") granted in favor of the Trustee by Bruce Burrow, individually, MSB Family L.P., and Hocker MTC Partners, L.L.C.;
WHEREAS, subsequent to the issuance of the Series 2006 TIF Bonds the Arkansas Supreme Court issued a ruling in the City of Fayetteville v. Washington County, 369 Ark. 455 (2007) case, which resulted in a substantial portion of the incremental property tax revenue collected in connection with the real property located within the District no longer being available to pay debt service on the Series 2006 TIF Bonds and the Series 2006 TIF Bonds subsequently falling into default (which defaults have been waived by the owners of the Series 2006 TIF Bonds through August 1, 2012);
WHEREAS, the Developer and its wholly-owned subsidiary, Mall at Turtle Creek, LLC (collectively, the "Turtle Creek Entities"), have entered into a purchase agreement pursuant to which the Turtle Creek Entities will sell the Shopping Center to a purchaser (the "Mall Purchaser");
WHEREAS, as a condition precedent to the Mall Purchaser's purchase of the Shopping Center, the purchase agreement requires that the PILOT Agreement, the Major Anchors PILOT Agreement and the Guaranty be terminated;
WHEREAS, in order to facilitate the sale of the Shopping Center and the termination of the PILOT Agreement, the Major Anchors PILOT Agreement and the Guaranty, the Developer has requested that the City approve the restructuring of the Series 2006 TIF Bonds in order to reduce the outstanding principal amount to a level at which the debt service can be paid from the legally available property tax increment revenue;
WHEREAS, Section 9.02 of the Trust Indenture permits the Trust Indenture to be amended with the consent of the Developer, the Trustee and all of the owners of the outstanding Series 2006 TIF Bonds;
WHEREAS, the sale of the Shopping Center and the consummation of the amendments provided for in this Resolution shall occur simultaneously and shall result in the Developer, or related entities, being the sole owner(s) of all of the Series 2006 TIF Bonds;
WHEREAS, the owners of the Series 2006 TIF Bonds and the Trustee will consent to the termination of the PILOT Agreement, the Major Anchors PILOT Agreement and the Guaranty and the amendments to the Trust Indenture and the Series 2006 TIF Bonds; and
WHEREAS, the City Council deems it necessary and desirable and in the best interests of the City to approve the requested amendments to the Trust Indenture and the Series 2006 TIF Bonds and the requested termination of the Guaranty, the PILOT Agreement and the Major Anchors PILOT Agreement in order to cure the default with respect to the payment of debt service on the Series 2006 TIF Bonds;
NOW, THEREFORE, BE IT RESOLVED, BY THE CITY COUNCIL OF THE CITY OF JONESBORO, ARKANSAS:
Section 1. In order to provide for the various amendments to the Trust Indenture and the Series 2006 TIF Bonds described in the recitals hereto, the City Council hereby approves the form, terms and provisions of a first amendment to the Trust Indenture and the form of the Series 2006 TIF Bonds attached thereto (the "First Amendment"), in substantially the form presented at this meeting, and authorizes and directs the Mayor to execute and deliver the First Amendment, and the City Clerk to attest and affix the City's seal thereto, as may be necessary, with such changes to such document as the officers executing the same may approve, such approval to be conclusively evidenced by such officers' execution thereof. The outstanding principal amount of the Series 2006 TIF Bonds shall be reduced to $700,000, which is the principal amount at which scheduled debt service on the Series 2006 TIF Bonds will be covered by the legally available property tax increment revenue at a rate of at least 135%, calculated in relation to the amount of property tax increment revenue actually received by the Trustee in calendar year 2011 ($97,111.21). The Series 2006 TIF Bonds shall be subject to mandatory redemption from surplus revenues and shall have a new mandatory sinking fund redemption schedule so that the debt service requirement can be met.
Section 2. The City Council hereby approves the termination of the Guaranty, the PILOT Agreement and the Major Anchors PILOT Agreement, and hereby authorizes and directs the Mayor to execute and deliver such termination agreements as may be necessary to effectuate the termination of said agreements in such form as the Mayor may approve, such approval to be conclusively evidenced by the Mayor's execution thereof.
Section 3. The City Council hereby approves the amendments to the Memorandum of Understanding agreements originally executed with respect to the Series 2006 TIF Bonds, in order to incorporate certain changes to said agreements necessary to make said agreements consistent with the current state of the law and the amendments to the Trust Indenture and the Series 2006 TIF Bonds provided for in the First Amendment. The City Council hereby authorizes and directs the Mayor to execute and deliver such amendment agreements in such form as the Mayor may approve, such approval to be conclusively evidenced by the Mayor's execution thereof.
Section 4. The City Council is approving the various amendments and terminations described herein and in the First Amendment at the request of the Developer in order to cure defaults in the payment of debt service on the Series 2006 TIF Bonds, and as such, the approvals and authorizations provided herein are expressly conditioned upon the Developer providing the necessary consents from the Trustee and the owners of the Series 2006 TIF Bonds as to the restructuring of the Series 2006 TIF Bonds and the termination of the Guaranty, the PILOT Agreement and the Major Anchors PILOT Agreement simultaneously with (or prior to) the effective date of the amendments and terminations provided for in this Resolution.
Section 5. The Mayor and City Clerk are expressly authorized, empowered and directed from time to time and at any time to do and perform all acts and things and to execute, acknowledge and deliver in the name and under the corporate seal and on behalf of the City all certificates, financing statements, termination statements, instruments and other papers, whether or not herein mentioned, as the Mayor may determine to be necessary or desirable in order to carry out the terms and provisions of this Resolution, as well as the terms and provisions of the First Amendment, such determination to be conclusively evidenced by the performance of such acts and things and the execution of any such certificate, financing statement, instrument or other paper.
Section 6. The provisions of this Resolution are hereby declared to be severable and, if any such provision shall for any reason be held illegal or invalid, such holding shall not affect the validity of the remainder of this Resolution.
PASSED AND APPROVED this 4th day of December, 2012.