RESOLUTION PROVIDING FOR THE PURCHASE OF ENVIRONMENTAL SERVICES EQUIPMENT AND IMPROVEMENTS THROUGH LEASE PURCHASE FINANCING FOR FAUQUIER COUNTY, VIRGINIA, IN THE MAXIMUM AMOUNT OF $1,490,000, APPROVING THE FORM OF LEASE AGREEMENT PREPARED IN CONNECTION THEREWITH AND AUTHORIZING THE EXECUTION AND DELIVERY OF THE SAME
WHEREAS, the Board of Supervisors (the “Board”) of Fauquier County, Virginia (the “County”), desires to provide for a plan of lease purchase financing of environmental services equipment and improvements for the County for the Corral Farm Landfill/Recycling operations in the maximum amount of $1,490,000 (the “Equipment”); and
WHEREAS, the County’s administration has solicited proposals from commercial leasing entities to provide financing in connection with the Equipment; and
WHEREAS, the County’s administration recommends to the Board that it is in the County’s best interest to accept the proposal of CitiMortgage, Inc., dated October 11, 2006 (the “Proposal”), attached hereto as Exhibit A; and
WHEREAS, there have been presented to this meeting a draft of the Master State and Municipal Lease/Purchase Agreement between CitiMortgage, Inc. and the County (the “Lease Agreement”) for the lease purchase of the Equipment; and
WHEREAS, plans for the acquisition of the Equipment have advanced, and the County expects to advance its own funds to pay expenditures related to the Equipment (the “Expenditures”) prior to entering into the Lease Agreement and to receive reimbursement for such Expenditures from proceeds of the Lease Agreement; now, therefore, be it
RESOLVED BY THE BOARD OF SUPERVISORS OF FAUQUIER COUNTY, VIRGINIA, THIS 9TH DAY OF NOVEMBER 2006, THAT:
1. The Lease Agreement shall be in substantially the form presented to this meeting, which is approved, with such completions, omissions, insertions and changes not inconsistent with this Resolution as may be approved by the County Administrator, his execution or distribution to constitute conclusive evidence of his approval of any such completions, omissions, insertions and changes. The County Administrator is hereby authorized and directed to enter into the Lease Agreement on mutually agreeable terms and in accordance with the terms of this Resolution.
2. In completing the Lease Agreement, the County Administrator shall provide that the Rental Payments (as defined in the Lease Agreement) shall not exceed the maximum principal amount of $1,490,000, shall bear interest payable at an actual rate of interest not to exceed 3.85% per year, shall terminate no later than November 30, 2011, and shall be subject to prepayment, all as provided in the Lease Agreement.
3. The County Administrator is authorized and directed to execute the Lease Agreement. The officers of the County are authorized and directed to execute and deliver all certificates and instruments and to take all actions necessary or desirable in connection with the execution and delivery of the Lease Agreement.
4. The obligations of the County under the Lease Agreement shall be limited obligations payable solely from funds to be appropriated by the Board for such purpose and shall not constitute a debt of the County within the meaning of any constitutional or statutory limitation or a pledge of the faith and credit or the taxing power of the County beyond any fiscal year for which the County has appropriated funds for such purpose.
5. The County shall grant a security interest in the Equipment acquired with proceeds of the Lease Agreement as security for the prompt payment when due of amounts payable and the performance by the County of its other obligations under the Lease Agreement.
6. The Board determines that the continuing acquisition of equipment or improvements and the financing of the same through the Lease Agreement are essential to the proper and efficient operation of the County and will continue to be essential to the proper and efficient operation of the County through the fiscal year ending June 30, 2012.
7. The County believes that funds sufficient to make payment of all amounts payable under the Lease Agreement can be obtained. While recognizing that it is not empowered to make any binding commitment to make such payments beyond the current fiscal year, the Board hereby states its intent to make annual appropriations for future fiscal years in amounts sufficient to make all such payments and hereby recommends that future boards do likewise during the term of the Lease Agreement. The Board directs the County Administrator, or such other officer as may be charged with the responsibility for preparing the County’s annual budget, to include in the budget for each fiscal year during the term of the Lease Agreement an amount sufficient to make all Rental Payments payable under the Lease Agreement during such fiscal year. The County Administrator is authorized and directed to deliver to CitiMortgage, Inc. within ten days after the adoption of the budget for each fiscal year, but not later than ten days after the beginning of the fiscal year, a certificate stating whether an amount equal to the estimated amounts payable under the Lease Agreement during such fiscal year has been appropriated by the Board in any such budget.
8. The County covenants that it will not take or omit to take any action the taking or omission of which will cause the Lease Agreement to be an “arbitrage bond” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations issued pursuant thereto, or otherwise cause interest on the proceeds under the Lease Agreement to be includable in the gross income of the registered owner thereof under current statutes. Without limiting the generality of the foregoing, the County shall comply with any provision of law that may require the County at any time to rebate to the United States any part of the earnings derived from the investment of the gross proceeds under the Lease Agreement, unless the County receives an opinion of nationally recognized bond counsel that such compliance is not required to prevent interest on the proceeds under the Lease Agreement from being includable in the gross income for federal income tax purposes of the registered owner thereof under existing law.
9. The County covenants that during the term of the Lease Agreement it will not use or permit the use of any portion of the Equipment other than for the purpose of performing one or more governmental or proprietary functions of the County consistent with the scope of the County’s authority and will not use or permit the use of any portion of the Equipment in a trade or business of any person or entity other than the County.
10. The County covenants as follows:
(a) The County intends that the proceeds of the Lease Agreement be used to reimburse the County for Expenditures with respect to the Equipment made on or after the date that is no more than 60 days prior to the date of this Resolution. The County reasonably expects on the date hereof that it will reimburse the Expenditures with the proceeds of the Lease Agreement or other debt;
(b) Each Expenditure was or will be, unless otherwise approved by bond counsel, either (a) of a type properly chargeable to a capital account under general federal income tax principles (determined in each case as of the date of the Expenditure), (b) a cost of issuance with respect to the Lease Agreement, (c) a nonrecurring item that is not customarily payable from current revenues, or (d) a grant to a party that is not related to or an agent of the County so long as such grant does not impose any obligation or condition (directly or indirectly) to repay any amount to or for the benefit of the County;
(c) The County intends to make a reimbursement allocation, which is a written allocation by the County that evidences the County’s use of proceeds of the Lease Agreement to reimburse an Expenditure, no later than 18 months after the later of the date on which the Expenditure is paid or the Equipment is placed in service or abandoned, but in no event more than three years after the date on which the Expenditure is paid. The County recognizes that exceptions are available for certain “preliminary expenditures,” costs of issuance, certain de minimis amounts, expenditures by “small issuers” (based on the year of issuance and not the year of expenditure) and expenditures for construction of at least five years; and
(d) The County intends that the adoption of this Resolution confirms the “official intent” within the meaning of Treasury Regulations Section 1.150-2 promulgated under the Code.
11. All other actions of the County in conformity with the purposes and intent of this Resolution and in furtherance of entering into the Lease Agreement are approved and confirmed. The officers of the County are authorized and directed to execute and deliver all certificates and instruments and to take all such further action as may be considered necessary or desirable in connection with entering into the Lease Agreement.
12. All resolutions or parts of resolutions in conflict herewith are repealed.
13. This Resolution shall take effect immediately.
A Copy Teste
Paul S. McCulla
Clerk to the Board of Supervisors