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TO: Mayor and City Council
FROM: The Law Department
DATE: September 17, 2020
SUBJECT:
Consenting to the refinancing of Joliet Avionics' (JA) mortgage on its facility at the Aurora Municipal Airport.
PURPOSE:
To allow the City Treasurer to consent, on behalf of the City, to JA's proposed refinancing of its mortgage with another lender.
BACKGROUND:
In 2007, the City entered into a lease with JA to allow it to occupy space at the airport and to operate as a fixed-base operator (FBO). The lease contemplated that JA may need to secure outside financing for the costs of the improvements it agreed to make at the airport and provided that the City's consent was required prior to JA's obtaining a mortgage. Though the City may not unreasonably withhold its consent, its consent should not be granted without careful review and consideration of the terms of the mortgage to ensure that the City's rights under the lease are not adversely affected. .
DISCUSSION:
On Friday, September 11, JA contacted the City to request its consent to obtain financing from Signature Bank, in lieu of an existing mortgage from First Midwest Bank. Upon review of the lease, the City's attorneys advised JA that the authority to consent to the refinancing rested with the City Council and that in the ordinary course of business, the Council could not grant its consent to the refinancing prior to its October 13, 2020 meeting. Counsel for JA subsequently represented that if JA cannot close on its mortgages by the end of September, the cost of the refinancing will increase by $250,000.
While JA's request came with relatively short notice, as a compromise and to avoid a situation where JA incurs unnecessary expenses, City staff agreed to present to the City Council a resolution delegating the authority to consent to the refinancing to the City Treasurer, upon a thorough review of the terms of the proposed mortgages and associated documents. The proposed resolution limits the Treasurer's authority this particular issue and his authority is conditioned upon his determination that the proposed mortgages are consistent with the terms of the lease, do not impair the rights of the City, and that any representations of the City made in any associated documents are true and complete to the best of the City's knowledge.
Consideration of the attached resolution as new business requires a 2/3 vote and the Council is not obligated to consider this request outside its normal process. Further, this resolution only confers the authority, and not the obligation, to consent to the mortgages - and that the Treasurer's authority to consent is strictly limited by the terms of the resolution.
As of this writing, representatives of JA and its legal counsel will attend Tuesday night's meeting and have been advised that the Council may have questions regarding the process.
IMPACT STATEMENT:
Approval of this resolution will expedite the City's review and possible approval of JA's request to obtain new financing. Disapproval or referral to the regular committee process will mean that the earliest the Council could provide its consent to JA's request is October 13, 2020 - which JA represents will significantly increase its cost of financing.
RECOMMENDATIONS:
That the Council carefully consider whether the circumstances justify a departure from its ordinary processes and whether strict adherence to those processes is necessary in this situation.
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution authorizing the City Treasurer to consent to the mortgage of the leasehold interest of Joliet Avionics, Inc. at the Aurora Municipal Airport .
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City of Aurora ("City") has leased certain real property at the Aurora Municipal Airport to Joliet Avionics, Inc. ("JA") for, among other things, the purpose of operating as a fixed base operator ("FBO"); and
WHEREAS, the lease between the City and JA ("Lease") dated November 27, 2007, and as subsequently amended, provides that JA may mortgage its leasehold at the City's reasonable discretion and subject to the provisions of the lease; and
WHEREAS, JA has requested the consent of the City to refinance its existing mortgage with First Midwest Bank and obtain financing through Signature Bank; and
WHEREAS, JA has represented that an urgency exists as to the time of closing on said refinancing in the form of two mortgages such that the City's normal approval process requires more time than is available to authorize the mortgages; and
WHEREAS, in an effort to accommodate JA's request while ensuring the City interests are adequately protected, the City Council finds it appropriate to vest the City Treasurer with the authority to act on its behalf with respect to this matter;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the City Treasurer shall be and hereby is authorized to act on behalf of the City with respect to the authority of the City under Paragraph 24 of the Lease; and further
BE IT RESOLVED, that such authority is expressly conditioned on the City Treasurer's determination that 1) all of the conditions set forth in Paragraph 24 of the lease have been fully satisfied, 2) that the mortgages and any attendant agreements do not impair any of the City's rights under the Lease or, in any respect, alter the terms of the Lease, and 3) that the representations made by the parties in the mortgage documents and any attendant agreements are true and correct to the best of his knowledge; and further
BE IT RESOLVED, that the City Treasurer shall be and hereby is authorized to sign on behalf of the City any consents, memoranda, or other documents attendant to the mortgages consistent with the limitations set forth herein; and further
BE IT RESOLVED, that the authority herein conferred upon the City Treasurer shall not extend beyond December 31, 2020.