Title
Approval Of Changes To Indenture Agreement And Lease For Los Alamos Retirement Community (LARC) To Allow For Refinancing Of Debt.
Recommended Action
I move that Council approve the consolidation of the LARC leases and the substitution of trustee for outstanding bonds, on the condition that LARC refinance its existing debt with HUD by the end of 2013.
Administrator's Recommendation
The County Administrator recommends that Council approve the amended lease and bond documents as requested.
Body
The facilities of the Los Alamos Retirement Center (Sombrillo and Aspen Ridge) are located on land owned by Los Alamos County. In addition to the land leases, the County issued Industrial Revenue Bonds for the construction of the facilities. LARC has an opportunity to retire the outstanding bonds by refinancing its debt through HUD. The refinancing transaction will enable the organization to reduce its debt payments and may allow for facilities upgrades. However, in order to consider financing the debt, HUD requires a 50 year lease. The existing leases expire in 2036 and 2042. The lease presented here combines both of the existing leases and would expire in 2063. LARC also proposes to substitute Los Alamos National Bank (LANB) as the trustee for the bonds before proceeding with retiring the bonds. LANB is the sole bond holder and naming it as trustee enables LARC to complete its transaction with fewer parties involved.
Staff is requesting conditional approval of the documents because if the bond market should negate the financial advantages to LARC, it may choose not to complete the refinancing. In that case, it will not be necessary to combine the leases, extend the term of the lease or to change the trustee on the outstanding bonds.
Alternatives
If Council does not approve the combined lease and extended term, LARC will not be able to take advantage of any financial benefits it might receive through refinancing its debt.
Fiscal and Staff Impact/U...
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