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AGENDA ITEM REVIEW FORM |
3.A.
Work Session
- Meeting Date:
- 03/06/2019
- Department Head:
- Kay Macuil
- Submitted By:
- Kay Macuil, City Attorney, Attorney's Office
Action Requested:
Discussion Item - No Action to be Taken
ITEM:
Discussion and possible directions to staff on any and all matters regarding a possible lien on the lease for the Regional Center for Border Health's facility at 1896 East Babbit Lane and in favor of Western Alliance Bank as part of the Medical Mall project of Regional Center for Border Health. (Glenn Gimbut, Assistant City Attorney)
SUMMARY:
The Regional Center for Border Health (Border Health) is in the process of building a Medical Mall to be located just off Avenue E near 24th Street. Western Alliance Bank is providing construction financing. The U.S. Department of Agriculture (USDA) is providing permanent financing. One of the conditions of the construction loan is that Border Health grant Western Alliance Bank a lien on all property interests of Border Health. One of those property interests is a 2001 lease for land parcels the San Luis Public Health Community Facilities District (District) entered into with Border Health. It is a thirty-year lease which ends in December 2031 (12 years and about 9 months left on it). A copy of the lease is attached. At the end of the lease, the District (City) will get back all parcels being leased plus an additional parcel, plus all improvements. This is a development for the Walk[In Clinic that cost Border Health over 3 million at the outset.
Under the terms of the lease, there is a first lien in favor of USDA as the lender for the Walk-In Clinic. This is a lien on the leasehold. In other words, if foreclosed, all they would get is the right to lease the land from the District under the terms of the lease. A second lien on the leasehold means if foreclosed, they must satisfy the first lien and still lease from the District under the terms of the lease. Since there really is no equity here, why any lien at all? The answer is that this is a federal requirement of loan for the Medical Mall, that the lender gets a lien on everything, whether it makes sense or not. The terms of the lease require that the Board must approve any lien that is to be placed on the property.
As a result, for the Council Meeting on March 13, 2019, a request is made for Board approval. Staff is recommending approval conditioned upon the lien terminating upon any termination of the lease. By this condition, it will not interfere in any property interest of the District.
RECOMMENDATION / SUGGESTED MOTION:
Discussion and possible directions to staff only, no action.
Fiscal Impact
- IS THERE FISCAL IMPACT ASSOCIATED WITH THIS ITEM:
- N/A
- CITY/STATE/FEDERAL FUNDS:
- N/A
- TOTAL:
- N/A
- BUDGETED AMOUNT:
- N/A
- AVAILABLE AMOUNT TO TRANSFER:
- N/A
- ACCT NAME & GL#/REMAINING BALANCE BEFORE PURCHASE:
- N/A
FISCAL IMPACT STATEMENT (IF THIS IS A BUDGET TRANSFER, YOU MUST ATTACH THE BUDGET ADJUSTMENT FORM):
There is no cost to this item. The District (City) will get the leased land back at the end of the lease with or without the lien.