SUBJECT/RECOMMENDATION:
Title
Approve the Clearwater Marine Aquarium’s (CMA) request to subordinate the City’s reverter interest in a portion of the CMA property to $25 million financing. (consent)
Body
SUMMARY:
The Clearwater Marine Aquarium (CMA) submitted a letter to the city manager dated June 22, 2016 requesting that Council conceptually agree to subordinate the City’s reverter interest in a portion of the CMA property to a future as yet undetermined lender.
The Council has previously agreed to subordinate the City’s reverter interest. Most recently in January 2011, the City agreed to subordinate to a $8.6 million loan between CMA and BB&T; and subsequently, in June 2013, the CMA requested and the City approved a subordination agreement in favor of BB&T in an amount not to exceed $14,839,179. Ultimately, this last subordination agreement and loan were not consummated.
CMA is negotiating financing for its garage and expansion and renovation project. They are requesting approval to increase the subordination amount to $25 million. The subordination agreement is not yet drafted and would be subject to negotiation. If Council approves the concept, the Subordination Agreement would be brought back to Council for approval.
The Subordination Agreement would provide, among other things that:
The City Council approves the subordination of its reverter rights applicable to Parcel 1 to the lender’s mortgage of $25,000,000.
In return for the City’s subordination, the lender will provide the City with the right of first refusal to acquire its first mortgage position and/or title, if applicable, to Parcels 1, 2 and 3, should the City elect to exercise its reverter rights by paying off the existing indebtedness in the event of the Aquarium’s default or demise.
The City will have no obligation to purchase the mortgage, nor is the City guaranteeing any debt. Should the Aquarium fail and/or default on the outstanding indebtedness, and the lender pursues its mortgage rights, the City would have the option to either obtain control of the entire CMA campus (all Parcels) in return for payment of the then existing debt balance, or waive this option, with the lender then able to proceed with foreclosure on the Parcels.
APPROPRIATION CODE AND AMOUNT:
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