3.B.
San Luis Facility Development Corporation
- Meeting Date:
- 10/29/2025
- Department Head:
- Kay Macuil
- Submitted By:
- Janet Taylor, Legal Secretary, Attorney's Office
ITEM:
Discussion and possible action on any and all matters regarding Resolution No. 2025-02. A resolution of the Board of the San Luis Facility Development Corporation in support of the San Luis Regional Detention and Support Center, ratifying the 2025 Amended and Restated Agreement with U.S. Bank Trust Company and LaSalle Corrections to extend the forbearance of the bonds until April 30, 2027; repealing conflicting provisions; and providing for severability. (Kay Marion Macuil, General Counsel)
SUMMARY:
The attached is the final executed forbearance agreement. There were no changes from the final term sheet reviewed by the Board in executive session. President Jenny Torres signed it because the temporary forbearance ended on July 31, 2025, and there was insufficient time to arrange a Board meeting. Therefore, this agenda item requests ratification of the executed forbearance agreement.
The staff requests that the San Luis Facility Development Corporation Board ratify the 2025 Amended and Restated Forbearance Agreement between the San Luis Facility Development Corporation (which issued the bonds), LaSalle Corrections (which is the operator), and U.S. Bank Trust Company (“Trustee”) for the San Luis Regional Detention and Support Center.
This agreement is effective as of May 1, 2025, if approved by the Court, and does the following:
There is no fiscal impact on the San Luis Facility Development Corporation or the City of San Luis. There may be funds available for the city if revenue from the project is sufficient after paying during the forbearance period:
1. Trustee and Trustee’s Attorneys' Fees,
2. Interest on the bonds up to $90,000 per month (starts August 1, 2025, through April 30, 2026), the payment will increase to $146, 467.29 after April 30, 2026.
3. LaSalle’s loses until paid or cut off on May 1, 2026,
4. Payment of $15,000 per month into the Operating Reserve/Repair/Contingency fund,
5. LaSalle’s reimbursement for operation and maintenance costs (break-even),
6. LaSalle’s 6% of its reimbursement for profit,
7. LaSalle’s $4,408,781 losses until paid in full,
Then the city will receive a one-time payment of $20,000.
Finally, at the end of the two-year forbearance period, if any fund balances remain, they shall go to pay on the interest and principal on the bonds. (Please see Amended and Restated Forbearance Agreement for the actual wording and details.)
Recommendation:
Staff recommends ratifying the 2025 Amended and Restated Forbearance Agreement.
The staff requests that the San Luis Facility Development Corporation Board ratify the 2025 Amended and Restated Forbearance Agreement between the San Luis Facility Development Corporation (which issued the bonds), LaSalle Corrections (which is the operator), and U.S. Bank Trust Company (“Trustee”) for the San Luis Regional Detention and Support Center.
This agreement is effective as of May 1, 2025, if approved by the Court, and does the following:
There is no fiscal impact on the San Luis Facility Development Corporation or the City of San Luis. There may be funds available for the city if revenue from the project is sufficient after paying during the forbearance period:
1. Trustee and Trustee’s Attorneys' Fees,
2. Interest on the bonds up to $90,000 per month (starts August 1, 2025, through April 30, 2026), the payment will increase to $146, 467.29 after April 30, 2026.
3. LaSalle’s loses until paid or cut off on May 1, 2026,
4. Payment of $15,000 per month into the Operating Reserve/Repair/Contingency fund,
5. LaSalle’s reimbursement for operation and maintenance costs (break-even),
6. LaSalle’s 6% of its reimbursement for profit,
7. LaSalle’s $4,408,781 losses until paid in full,
Then the city will receive a one-time payment of $20,000.
Finally, at the end of the two-year forbearance period, if any fund balances remain, they shall go to pay on the interest and principal on the bonds. (Please see Amended and Restated Forbearance Agreement for the actual wording and details.)
Recommendation:
Staff recommends ratifying the 2025 Amended and Restated Forbearance Agreement.
The staff requests that the San Luis Facility Development Corporation Board ratify the 2025 Amended and Restated Forbearance Agreement between the San Luis Facility Development Corporation (which issued the bonds), LaSalle Corrections (which is the operator), and U.S. Bank Trust Company (“Trustee”) for the San Luis Regional Detention and Support Center.
This agreement is effective as of May 1, 2025, if approved by the Court, and does the following:
- Preserves bondholder rights while avoiding disruption to facility operations.
- Extends the forbearance period through April 30, 2027, allowing LaSalle to continue managing the facility.
- Prioritizes monthly revenues to cover operating costs, repay past due amounts to the LaSalle, and make partial bond payments.
- Acknowledges more than $4.4 million in unpaid operating costs owed to the LaSalle from prior years.
- Authorizes the San Luis Facility Development Corporation to pursue a public election and auction for the potential sale of the facility, with proceeds to repay outstanding bonds. A.R.S. § 9-403(C) requires a municipality’s real property, the value of which is $15,000,000 or more, to submit to the voters of the city in an election for authority to sell. If approved by the votes, the facility must go to a public auction. Starting May 1, 2025, the Trustee will sweep all the fund balances in the separate funds into a Trustee Administration Fund. From that fund, the Trustee will reimburse the City for the costs of the election and auction, if any, up to a maximum of $100,000.
There is no fiscal impact on the San Luis Facility Development Corporation or the City of San Luis. There may be funds available for the city if revenue from the project is sufficient after paying during the forbearance period:
1. Trustee and Trustee’s Attorneys' Fees,
2. Interest on the bonds up to $90,000 per month (starts August 1, 2025, through April 30, 2026), the payment will increase to $146, 467.29 after April 30, 2026.
3. LaSalle’s loses until paid or cut off on May 1, 2026,
4. Payment of $15,000 per month into the Operating Reserve/Repair/Contingency fund,
5. LaSalle’s reimbursement for operation and maintenance costs (break-even),
6. LaSalle’s 6% of its reimbursement for profit,
7. LaSalle’s $4,408,781 losses until paid in full,
Then the city will receive a one-time payment of $20,000.
Finally, at the end of the two-year forbearance period, if any fund balances remain, they shall go to pay on the interest and principal on the bonds. (Please see Amended and Restated Forbearance Agreement for the actual wording and details.)
Recommendation:
Staff recommends ratifying the 2025 Amended and Restated Forbearance Agreement.
The staff requests that the San Luis Facility Development Corporation Board ratify the 2025 Amended and Restated Forbearance Agreement between the San Luis Facility Development Corporation (which issued the bonds), LaSalle Corrections (which is the operator), and U.S. Bank Trust Company (“Trustee”) for the San Luis Regional Detention and Support Center.
This agreement is effective as of May 1, 2025, if approved by the Court, and does the following:
- Preserves bondholder rights while avoiding disruption to facility operations.
- Extends the forbearance period through April 30, 2027, allowing LaSalle to continue managing the facility.
- Prioritizes monthly revenues to cover operating costs, repay past due amounts to the LaSalle, and make partial bond payments.
- Acknowledges more than $4.4 million in unpaid operating costs owed to the LaSalle from prior years.
- Authorizes the San Luis Facility Development Corporation to pursue a public election and auction for the potential sale of the facility, with proceeds to repay outstanding bonds. A.R.S. § 9-403(C) requires a municipality’s real property, the value of which is $15,000,000 or more, to submit to the voters of the city in an election for authority to sell. If approved by the votes, the facility must go to a public auction. Starting May 1, 2025, the Trustee will sweep all the fund balances in the separate funds into a Trustee Administration Fund. From that fund, the Trustee will reimburse the City for the costs of the election and auction, if any, up to a maximum of $100,000.
There is no fiscal impact on the San Luis Facility Development Corporation or the City of San Luis. There may be funds available for the city if revenue from the project is sufficient after paying during the forbearance period:
1. Trustee and Trustee’s Attorneys' Fees,
2. Interest on the bonds up to $90,000 per month (starts August 1, 2025, through April 30, 2026), the payment will increase to $146, 467.29 after April 30, 2026.
3. LaSalle’s loses until paid or cut off on May 1, 2026,
4. Payment of $15,000 per month into the Operating Reserve/Repair/Contingency fund,
5. LaSalle’s reimbursement for operation and maintenance costs (break-even),
6. LaSalle’s 6% of its reimbursement for profit,
7. LaSalle’s $4,408,781 losses until paid in full,
Then the city will receive a one-time payment of $20,000.
Finally, at the end of the two-year forbearance period, if any fund balances remain, they shall go to pay on the interest and principal on the bonds. (Please see Amended and Restated Forbearance Agreement for the actual wording and details.)
Recommendation:
Staff recommends ratifying the 2025 Amended and Restated Forbearance Agreement.
RECOMMENDATION / SUGGESTED MOTION:
I MOVE TO APPROVE RESOLUTION NO. 2025-02 RATIFING THE AMENDED AND RESTATED AGREEMENT REGARDING TEMPORARY FORBEARANCE, OPERATION OF PROJECT AND PROJECT REVENUES EXECUTED ON JULY 31, 2025.