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Legislation #: 110981 Introduction Date: 12/15/2011
Type: Ordinance Effective Date: 1/15/2012
Sponsor: None
Title: Approving a Termination Agreement between the Industrial Development Authority of the City of Kansas City, Missouri and Lehman Brothers Special Financing, Inc. to settle a claim against such Issuer.

Legislation History
DateMinutesDescription
12/14/2011 Filed by the Clerk's office
12/15/2011 Referred to Finance, Governance & Ethics Committee
1/4/2012 Advance and Do Pass, Debate
1/5/2012 Passed

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Lehman Fiscal Note.xlsx Fiscal Note 29K Lehman Fiscal Note
Lehman Fact Sheet 10-20-11 (2).xlsx Fact Sheet 63K Fact Sheet

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ORDINANCE NO. 110981

 

Approving a Termination Agreement between the Industrial Development Authority of the City of Kansas City, Missouri and Lehman Brothers Special Financing, Inc. to settle a claim against such Issuer.

WHEREAS, the Industrial Development Authority of the City of Kansas City, Missouri (the Issuer) is a public corporation duly organized and existing under Chapter 349, Revised Statutes of Missouri, as amended; and

WHEREAS, at the request of the City of Kansas City, Missouri (the City), pursuant to the Indenture of Trust, dated as of March 1, 2005 (the Original Indenture) between the Issuer and UMB Bank, N.A., as Trustee, as amended and supplemented by a First Supplemental Indenture of Trust, dated as of July 1, 2006 (the First Supplemental Indenture), the Issuer has previously issued its $115,015,000.00 Variable Rate Demand Tax‑Exempt Revenue Bonds (Kansas City Downtown Redevelopment District), Series 2005A (the Series 2005A Bonds), its $64,985,000.00 Variable Rate Demand Tax‑Exempt Revenue Bonds (Kansas City Downtown Redevelopment District) Series 2005B (the Series 2005B Bonds and with the Series 2005A Bonds, the Series 2005 Bonds), its $69,500,000.00 Variable Rate Demand Tax‑Exempt Revenue Bonds (Kansas City Downtown Redevelopment District), Series 2006A (the Series 2006A Bonds) and its $45,500,000.00 Variable Rate Demand Tax‑Exempt Revenue Bonds (Kansas City Downtown Redevelopment District) Series 2006B (the Series 2006B Bonds and with the Series 2006A Bonds, the Series 2006 Bonds) (collectively, the Bonds) to finance certain costs associated with the Kansas City Downtown Redevelopment Project (the Project); and

WHEREAS, at the request of the City, the Issuer entered into an ISDA Master Agreement, including a Schedule, a Credit Support Annex and a Confirmation relating to the Transaction described therein, with Lehman Brothers Special Finance, Inc. (“Lehman”) (collectively, the “Lehman Swap Agreement”) relating to a portion of the Series 2005B Bonds and Series 2006A Bonds (collectively, the “Hedged Bonds”), swapping the floating interest rate thereon to a fixed rate (subject to the conditions set forth in the Lehman Swap Agreement), for which a guarantee was provided by Lehman Brothers Holdings Inc. (“Holdings”); and

WHEREAS, Holdings and Lehman each filed for bankruptcy, each of which constituted an Event of Default under the Lehman Swap Agreement for which termination by the Issuer was an available remedy; and

WHEREAS, on October 16, 2008, the City Council passed Ordinance No. 081030, approving the termination of the Lehman Swap Agreement, and authorizing the execution and delivery of one or more replacement or substitute swap agreements relating to the Hedged Bonds; and

WHEREAS, the Lehman Swap Agreement was terminated in accordance with its terms, and upon the direction of the City, the Issuer entered a replacement swap agreement with Barclays Bank PLC; and

WHEREAS, the City and the Issuer entered into a Financing Agreement in connection with the Bonds (as amended, the “Financing Agreement”) wherein, among other things, the City agreed to make Additional Payments (as defined therein) in connection with the Bonds sufficient to cover any early termination costs under the Lehman Swap Agreement; NOW, THEREFORE,

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

Section 1. That the payment of the sum of $100,000.00 in settlement of the claim of Lehman against the Issuer as recommended by the City Attorney and the Director of Finance is hereby approved.

Section 2. That the Director of Finance is hereby authorized to pay the sum of $100,000.00 in settlement of this claim from funds previously appropriated in Account No. AL-3310-129677-B, KC Live Project Fund.

Section 3. That the City requests, directs and instructs the Issuer to enter into a Termination Agreement with Lehman in settlement of the claim, in such form as is approved by the Director of Finance.

___________________________________________________

I hereby certify that there is a balance, otherwise unencumbered, to the credit of the appropriation to which the foregoing expenditure is to be charged, and a cash balance, otherwise unencumbered, in the treasury, to the credit of the fund from which payment is to be made, each sufficient to meet the obligation hereby incurred.

 

___________________________________

Randall J. Landes

Director of Finance

 

Approved as to form and legality:

 

 

___________________________________

Sarah Baxter

Assistant City Attorney