1998 AGN NOV 10 I01 - Laserfiche WebLink

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taxes penalties and interest but there were no bidders. WHC III requested that the City assist them in restructuring the bond issue to reduce their debt service burden which we agreed we would do while discussing the termination of the lawsuit. WHC III made a proposal to Franklin Fund, the sole owner of the bonds, which was rejected. Franklin Fund put the bonds up for sale and apparently WHC III purchased the bonds to minimize the risk of having to negotiate with a potentially unfriendly bondholder. DISCUSSION/ANALYSIS: WHC III is current in all property taxes and Special Taxes at this point. As a part of the initial discussion of restructuring the bond issue, WHC III Investors paid for a property appraisal for the Lebanoff-McKnight parcel as well as their own which showed a reduction in the value below the appraisal prepared in 1990 for the bond issue. The City has retained the bond law firm of Jones Hall to act as bond and disclosure counsel. In addition we have retained Piper Jaffray to act as either a placement agent for a private placement or underwriter in the event the refunding bonds are sold to the public. The financing team has developed a restructuring strategy that will result in meeting the City's goals and objectives as described below. In addition, all costs of these transactions will be paid by WHC III.from proceeds of the bonds. 1. Termination of litigation WHC III Investors will sign an agreement stipulating to changing the rate and method of apportionment of the Special tax, which will settle the issue of the litigation. The change in the Rate and Method of Apportionment of the Special Tax will occur at a future Council meeting in the form of a resolution following a public hearing. WHC III will agree that they will be 100% responsible for the Special Tax and that the Lebanoff-McKnight property will not be responsible for any future tax and that the new bondholders will not have any right in sales proceeds of the sale of the that property. WHC III will put up $40,000 to pay for any remaining attorney fees that were incurred by the City as a result of the litigation with WHC III. In the Limited Offering Memorandum or Preliminary Off'icial Statement, there will be disclosure that the Lebanoff- McKnight parcel is now in default, was offered for sale, that there were no bidders and that there may not be suf�icient value in the future to pay the delinquent ad valorum, Special Taxes, penalties and interest due. In addition there will be disclosure of the City's intention and the property owners stipulation that Rate and Method of Apportionment for Special Tax will be changed and that the Lebanoff- McKnight property will have no future Special Tax obligation. 2. Assist the �roperty owner The City is cooperating in a restructuring, that will reduce the debt service on the property. In addition we are "cleaning up" legal issues so that any potential buyer of the project will have a clear understanding of their financial obligation with regard to debt service on the bonds.