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AGENDA ITEM REVIEW FORM |
3.A.
Special City Council Meeting
- Meeting Date:
- 05/14/2020
- 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 authorization to the City Manager to provide a Guarantor letter and related documents confirming the City of San Luis will act as Guarantor, on a pro-rata share basis, along with the City of Yuma and Yuma County, for the Greater Yuma Port Authority refinance loan. (Kay Marion Macuil, City Attorney)
SUMMARY:
Background
The Greater Yuma Port Authority (GYPA) membership consists of the City of San Luis, the City of Yuma, the County of Yuma, and the Cocopah Indian Tribe (a sovereign nation). Each government has two (2) board members, one (1) of which is an elected official. For San Luis, Council Member Matias Rosales is the elected official on the board.
The governments came together to create the GYPA for the sole purpose of promoting and developing the commercial port of entry area for the economic betterment of the region. GYPA, through a loan, acquired and is developing land known as the Gary Magrino Industrial Park located along the U.S-Mexico Border near the commercial Port of Entry #2. The outstanding loan balance is about $1,158,000.
Reason for Request to Approve Guarantor Letter
On August 14, 2019, the City Council approved a guarantee letter to refinance the loan, since then the terms of the guarantor letter have changed. A new authorization through City Council is requested through this motion.
The terms on the loan are not competitive under current market conditions. 1st Bank Yuma offers better terms to refinance the loan. GYPA pays monthly interest only on the debt. 1st Bank Yuma offers interest plus principal monthly payments at the low interest rate of 2% above prime, which is a total of 4% interest. The favorable refinancing terms are only available to credit-worthy, non-profit, backed by governmental members with a guarantor letter from at least three (3) of the governmental members. The collateral for the refinancing is the unsold approximately 100 acres. Some of the acreage is already subdivided with infrastructure and utility services. The value of the collateral should exceed the 60% loan to value ratio 1st Bank Yuma requires.
The Greater Yuma Port Authority (GYPA) membership consists of the City of San Luis, the City of Yuma, the County of Yuma, and the Cocopah Indian Tribe (a sovereign nation). Each government has two (2) board members, one (1) of which is an elected official. For San Luis, Council Member Matias Rosales is the elected official on the board.
The governments came together to create the GYPA for the sole purpose of promoting and developing the commercial port of entry area for the economic betterment of the region. GYPA, through a loan, acquired and is developing land known as the Gary Magrino Industrial Park located along the U.S-Mexico Border near the commercial Port of Entry #2. The outstanding loan balance is about $1,158,000.
Reason for Request to Approve Guarantor Letter
On August 14, 2019, the City Council approved a guarantee letter to refinance the loan, since then the terms of the guarantor letter have changed. A new authorization through City Council is requested through this motion.
The terms on the loan are not competitive under current market conditions. 1st Bank Yuma offers better terms to refinance the loan. GYPA pays monthly interest only on the debt. 1st Bank Yuma offers interest plus principal monthly payments at the low interest rate of 2% above prime, which is a total of 4% interest. The favorable refinancing terms are only available to credit-worthy, non-profit, backed by governmental members with a guarantor letter from at least three (3) of the governmental members. The collateral for the refinancing is the unsold approximately 100 acres. Some of the acreage is already subdivided with infrastructure and utility services. The value of the collateral should exceed the 60% loan to value ratio 1st Bank Yuma requires.
The GYPA (on March 26, 2020) approved the new Guarantor term. Yuma City Council (on May 6, 2020) and the Yuma County Supervisors (on April 20, 2020) have approved pro-rata share (33%) guarantor letters.
Approving this motion authorizes and directs the City Manager to provide to 1st Bank Yuma a pro-rata share (33%) guarantor letter (attached) and other related documents confirming the City of San Luis will act as a 1/3 Guarantor for GYPA on the refinancing.
Approving this motion authorizes and directs the City Manager to provide to 1st Bank Yuma a pro-rata share (33%) guarantor letter (attached) and other related documents confirming the City of San Luis will act as a 1/3 Guarantor for GYPA on the refinancing.
RECOMMENDATION / SUGGESTED MOTION:
I MOVE TO APPROVE THE GUARANTOR LETTER AS PRESENTED.
Fiscal Impact
- IS THERE FISCAL IMPACT ASSOCIATED WITH THIS ITEM:
- Not at this Time
- 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):
It is not anticipated that GYPA will default. The 4 government members pay dues to cover the loan amount. Any fiscal impact would be pure speculation.
Attachments
- Draft Guarantor Letter
- San Luis Prior Guarantor Letter
- Yuma County Prior Guarntor Letter
- Yuma City Prior Guarantor Letter