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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 au...
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