 |
AGENDA ITEM REVIEW FORM |
6.A.
Regular City Council Meeting
- Meeting Date:
- 03/13/2019
- Department Head:
- Kay Macuil
- Submitted By:
- Kay Macuil, City Attorney, Attorney's Office
Action Requested:
Motion
ITEM:
Discussion and possible action on any and all matters regarding permitting a second lien on the leasehold the District granted on December 5, 2001 for the Walk-In Clinic at 1896 East Babbit Lane. (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 grants 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, 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:
I MOVE TO RESOLVE TO APPROVE A LIEN IN FAVOR OF WESTERN ALLIANCE BANK AS PART OF THE FINANCING FOR THE SAN LUIS MEDICAL MALL PROJECT OF THE REGIONAL CENTER FOR BORDER HEALTH, INC. (WHICH IS THE SUCCESSOR IN INTEREST TO THE WESTERN ARIZONA HEALTH EDUCATION CENTER, INC.) TO BE PLACED UPON THE LEASEHOLD INTEREST OF THE REGIONAL CENTER FOR BORDER HEALTH, INC. AND ITS SUBSIDIARY, SAN LUIS WALK-IN CLINIC, INC., FOR ITS LEASE OF PROPERTY LOCATED AT 1896 EAST BABBIT LANE, SAN LUIS, ARIZONA; AND TO CONDITION THE APPROVAL FOR THE LIEN ON THE LEASEHOLD UPON ANY SUCH LIEN TERMINATING BEFORE OR UPON TERMINATION OF THE LEASEHOLD INTEREST OF THE TENANT.
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 fiscal impact to this item. The District (City) will get the parcels back at the termination of the lease with or without the lien.