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HomeMy WebLinkAboutHFDC 1994-12-19 Minutes NORTH RICHLAND HILLS HEALTH FACILITIES DEVELOPMENT CORPORATION MONDAY, DECEMBER 19, 1994 MINUTES Corporation Members Present: Charles Brinkley Richard K. Work Bob Hamm David Myers Charles Owen Robert Harrison Clint Blackmon Others Present: Gary Staats, The Covenant Group John Boehm, Fulbright & Jaworksi Jay Jones, Boatmen's First National Bank of Oklahoma Chris Janning, First Southwest Co. David Medanich, First Southwest Co. Dan Branch, Langley & Branch City Staff Present: Larry Cunningham, Assistant City Manager Marty Wieder, Director of Economic Development Scott Welmaker, Marketing & Research Coordinator Bret Starr, Account Phyl Baloga, Secretary CALL TO ORDER Charles Brinkley opened the meeting at 10: lOa. m. APPROVAL OF MINUTES Charles Brinkley requested a motion to concerning the minutes from the December 7th meeting. David Myers moved for approval, Charlie Owen seconded, and the motion carried unanimously. BUSINESS David Medanich opened the business meeting with reference to a December 19th letter from First Southwest Company addressed to the President and Board of Directors of the North Richland 1 .~- .~._~~-'»-~--~~--'-_."~~_....,_.,<-~---_.._~._---<_.._---.- Hills Health Facilities Development Corporation (the"HFDC"). In summarizing this memo, David Medanich pointed out that this was a 30 year bond issue with 7.3% the current rate of the bonds. The proposed bonds are not general obligations of the HFDC nor are they obligations of the City of North Richland Hills. Fulbright & Jaworski, Counsel to the HFDC, has stated that in no event will the City of North Richland Hills or the HFDC be liable for obligations of the borrower. Bank One of Fort Worth will be the third party trustee. There is no reserve fund, but the guarantee from Oklahoma Christian University of Science & Art (the "University") is sufficient. John Boehm stated that the guarantee works directly from the University to Boatmen's Bank. These two parties have had a 30 year relationship and the University is willing to guarantee to Boatmen's Bank the limit of the guarantee. It is not the same amount of the bonds but less. Due to the relationship of the University and Boatmen's Bank, there would be a direct obligation. Jay Jones talked about the built-in flexibility for the borrower by not having a guarantee. They currently have a loan with Tealridge out of Oklahoma in the amount of$3,000,000. They would join the current $3 million with a $2.4 million, covering the necessary written $5.4 million total. Charles Brinkley asked for an explanation ifthere was a default. Jay Jones stated that if Boatmen's Bank did not wish to repurchase the bonds then the bonds would go into default. The trust collateral is the project itself Boatmen's Bank would be able to foreclose on the property in addition to the University's guarantee. Chris Janning said the bond trustee would handle the foreclosure. Charles Brinkley asked who would do the foreclosing. Jay Jones said it would be Bank One and not Boatmen's Bank. Charles Brinkley then asked where in the documents was it written that the City would not be liable. John Boehm referred to Exhibit A page 2 where it states: "Neither the State of Texas nor any political subdivision or agency of the State of Texas, including the City of North Richland Hills, Texas, shall be obligated to pay the bonds or the interest thereon. Neither the faith and credit not the taxing power of the State of Texas, the City of North Richland Hills, Texas, or any other political subdivision or agency thereof is pledged to the payment of principal of (and premium, if any) or interest on the bonds." Continuing on that line of thought, Mr. Boehm moved to page 3 still part of Exhibit A, where it discusses:" The Bonds are limited obligations of the Issuer payable solely from the Bond Fund of the Issuer established in trust with the Trustee under the Indenture and from net recoveries from the security provided for payment of the Bonds, including recoveries, if any, or collateral pledged to secure the Bonds. Tealridge Manor Corporation, an Oklahoma non-profit corporation (the "Corporation"), which term includes any successor under the terms of the Loan Agreement (hereinafter defined), has agreed to pay to the Trustee for the account of the Issuer, for deposit to the Bond Fund, money in sufficient amounts and by the times required to pay the principal of (and premium, ifany) or interest on the Bonds 2 when due, pursuant to a Loan and Security Agreement dated as of December 1, 1994 (the "Loan Agreement") between the Issuer and the Corporation. After the first year, First Southwest will review the issue to make sure adequate deposits are provided into a Rebate Fund held in reserve to make any necessary arbitrage rebate payments. John Boehm has been handling the documents regarding notices and consents. Jay Jones stated that Boatmen's council has reviewed the documents and no more consents were needed. Charles Brinkley asked for a motion to approve number three on the agenda pertaining to resolution. Bob Hamm made a motion and Charlie Owen seconded. The motion passed with all but Robert Harrison voting in favor. Jay Jones spoke next notifying the board that the new loan amount was $5.7 million. Chris Janning stated that the note was padded and First Southwest was aware that it was overstated. John Boehm reviewed the upcoming list of events. On Wednesday December 21, 1994 at 9:00 a.m. the Tefra Hearing will take place in the pre-council chambers at City Hall. First Southwest will be present to handle the hearing. If the Mayor signs and approves the documents then the documents will be sent to the Attorney General. The closing is scheduled for December 29th, 1994. On or about the 28th or 29th, two officers will need to be available for signatures. Charles Brinkley asked whether there was a need for further discussion. John Boehm introduced Dan Branch of Langley & Branch. He stated that Langley & Branch had been engaged by Tealridge after the initial process when the preliminary agreement was issued. They feel that the preliminary agreement needs to be reworded. They have prepared what they consider to be reasonable language and would like it reworded before the closing on the 29th. Charles Brinkley asked John Boehm ifhe was familiar with the changes that Dan Branch wished to make. John Boehm answered no but that he would review. The Board could authorize the changes and give their written advise. Bob Hamm asked how the changes would affect the city. Dan Branch said the agreement was too lengthy and all expenses would be incurred by Tealridge. Likewise, the City would have no limitations as far as time or scope of the bond issue. Charles Brinkley stated that he would like the entire board to review the changes with council to make sure that the City would not incur future costs. John Boehm explained that he would review the changes after closing. Robert Harrison asked if the information needed had to be finalized before it went to Austin. John Boehm explained to the Board that once the Bond deal 3 closed it was possible to make amendment changes just as long as it didn't need to be reviewed by the Attorney General. David Medanich spoke to the Board, stating that if the changes Langley & Branch suggested would increase liability to the City then it would not be acceptable. Bob Hamm was in favor of changes as long as it didn't increase costs to the City and if the legal council approved. Charles Brinkley asked if this situation couldn't be handled by phone with council advising the Board of any and all changes. Bob Hamm stated that if the Board Members didn't feel comfortable with the information that council supplied, then could the Board have another meeting to discuss. Charles Brinkley called for a motion to approve council handling the changes and informing the Board. David Myers made a motion of approval and Bob Hamm seconded. The motion passed unanimously. Charles Brinkley called for a motion to adjourn the meeting. David Myers made a motion of approval and Charlie Owen seconded. ADJOURNMENT ~~;~ President 4