COUNTY COUNCIL COUNTY OF ERIE, PENNSYLVANIA

Transcription

1 COUNTY COUNCIL COUNTY OF ERIE, PENNSYLVANIA ORDINANCE NO AN ORDINANCE OF THE COUNTY OF ERIE, PENNSYLVANIA (THE "COUNTY") AUTHORIZING AND DIRECTING THE EXECUTION AND DELIVERY OF A GUARANTY AGREEMENT FOR THE BENEFIT OF NORTHWEST PENNSYLVANIA TECHNICAL INSTITUTE (IINPTI") AND COMPLIANCE WITH THE PROVISIONS THEREOF AND INCURRING LEASE RENTAL DEBT THEREBY; APPROVING A NOTE IN THE AMOUNT OF $1,500,000 (THE "NOTE") FROM NPTI TO PNC BANK, NATIONAL ASSOCIA TION (THE "BANK"); DIRECTING THE PROPER OFFICERS OF THE COUNTY TO TAKE NECESSARY ACTIONS; AND REPEALING ALL INCONSISTENT ORDINANCES. WHEREAS, on May 9, 1991, the Board ofeducation ofthe Commonwealth of Pennsylvania approved the Plan dated April 8, 1991 submitted by the County of Erie (the "County") for Erie County Technical Institute, now known as NPTI, to become its local sponsor pursuant to applicable sections of the Public School Code of 1949; WHEREAS, NPTI is a community college organized and existing under the laws of the Commonwealth of Pennsylvania which provides two-year, post-secondary education on a public, non-sectarian basis; WHEREAS, NPTI desires to refund the remaining $1,500,000 principal balance of its $2,300,000 Revenue Anticipation Note, Series of 1999, issued October 18, 1999 (the "Prior Note") (the "Project"); and WHEREAS, NPTI has determined to finance the Project through the delivery of the Note in executed form to the Bank; and WHEREAS, to achieve lower interest rates and considerable savings thereby to NPTI and to the citizens of the County, the County Council has determined to enact this Ordinance and to thereby approve the guaranty of the Note as a general obligation ofthe County for which the County pledges its full faith, credit and general taxing power; and WHEREAS, this Ordinance is enacted in accordance with the provisions of the Act of December 19, 1996, No. 177, the Local Government Unit Debt Act (the "Act"); and WHEREAS, there has been presented to this meeting a form of the Guaranty Agreement (the "Guaranty Agreement") whereby the County will guarantee payment of the Note as a general obligation of the County for which the County pledges its full faith, credit and general taxing power. NOW, THEREFORE, the County Council of the County of Erie, Pennsylvania hereby ordains that:

2 1. The Project is hereby approved. The Project is a refunding of the Prior Note for the purpose of reducing the annual debt service in calendar year 2000 by extending the life of the obligation. The project for which the Prior Note was issued had a stated useful life of two (2) years and the maturity date of the Note, October 17, 2001, is therefore a maturity date which could have been established for the Prior Note. Accordingly, the Note complies with the requirements of Sections 8241 and 8243 of the Act. 2. The aggregate principal amount of indebtedness to be incurred by NPTI and guaranteed by the County pursuant to the provisions of the Guaranty Agreement is $1,500,000. The terms and conditions of the Note, including the amount, interest rate, maturity date, and provisions for payment and redemption ofthe Note, is hereby approved, The schedule of maximum lease rental payments attached hereto as Exhibit A is hereby approved. 3. The debt to be incurred hereby is lease rental debt. The source of any payment under the Guaranty will be the general revenues of the County, 4. The County Clerk is hereby authorized and directed to certify and file with the Department of Community and Economic Development a complete and accurate copy of the proceedings taken in connection with the increase of debt authorized hereunder. The County Executive, Chair or Vice-Chair of County Council and County Clerk are authorized and directed to execute and deliver the Guaranty Agreement and to take other necessary action for the purposes set forth herein. 5. The County Executive and County Clerk are hereby authorized and directed to prepare, verify, execute and file the Debt Statement required by the Act and to take all necessary action to comply with the provisions of the Act, including specifically the authority to prepare and file, as it shall become necessary or required, both originally and annually thereafter, such statements under the Act as are necessary to qualify all or any portion of the authorized to be incurred as excluded from any debt limit, either as self-liquidating debt or as subsidized debt or both. 6. The County does hereby guarantee payment ofthe Note, which obligation hereby created is a general obligation of the County and the County hereby authorizes the incurrence of lease rental debt thereby, The County covenants with the Bank, its successors or assigns, as bearer of the Note, that the County shall include the amount ofthe debt service evidenced by the Note and the amount payable in respect of its guaranty for each fiscal year in which such sums are payable in its budget for that year, shall appropriate such amounts to the payment of such debt service, and shall duly and punctually payor cause to be paid from general revenues the principal of the Note and the interest thereon at the date and place and in the manner stated in the Note, according to the true intent and meaning thereof, and for such budgeting, appropriation and payment, the County pledges its full faith, credit and taxing power. This covenant shall be specifically enforceable.

3 7. The existing net non-electoral and lease rental debt ofthe County as determined under the provisions ofthe Act, including the debt to be incurred hereby, does not in the aggregate exceed the limitations ofthe Constitution or of the Act. 8. The proper officers of the County are hereby authorized and directed to execute any and all papers and to do and cause to be done any and all acts and things necessary and proper for the purpose of carrying out the provisions of this Ordinance and the covenants of the County as contained in the Guaranty Agreement. 9. There is hereby directed to be established a Sinking Fund with PNC Bank, National Association for the deposit of the amounts necessary to be paid by the County pursuant to the Guaranty Agreement. repealed. 10. All ordinances and parts of ordinances inconsistent herewith are hereby 11. This Ordinance shall become valid and effective as provided in the Act. ATTEST: Date: ----~~~~~ APPROVED BY: Judith M. Lynch, County Executive Date: ( Carol J. Ldif,Chair..'.-)r';rUM.L. 6. :2:-1AL.L..{ 7 James B. Terrill, Vice Chair Mark A. DiVecchio ~d~ J seph F. Giles Voted No Fiore Leone... Davi.dIt Mitchell ~f~~ #

4 EXHIBIT A SCHEDULE OF MAXIMUM LEASE RENTAL PAYMENTS NORTHWEST PENNSYLVANIA TECHNICAL INSTITUTE NOTE, SERIES OF 2000 (COlJNTY OF ERIE GUARANTY) Date.. ~ayment Jnter~.st._... ~ri~cip~i._... Balance Loan 11/17/2000 1,500, /17/2000 6, , ,500, Totals 6, , /17/2001 6, , , /17/2001 6, , ,500, / , , ,500, /17/2001 6, , ,500, / ,500, /17/2001 6, , ,500, /17/2001 6, , ,500, /17/2001 6, , ,500, /17/2001 6, , ,500, /17/ , , , Totals 1,566, , ,500, Grand Totals 1,573, , , /I

5 Jlllllll M. LYNCII COUNTY OF ERIE Office of the County Executive Erie County Court House 140 West Sixth Street Erie, Pennsylvania (814) October 16, 2000 Members of County Council Erie County Courthouse 140 West 6 th Street Erie, PA Dear Members of Council: I am returning Ordinance No. 88, 2000, to you. I have not signed this Ordinance because I believe it to be invalid. As you know the Administrative Code requires members of Council who have a direct or indirect financial interest in a matter before Council to abstain from voting. I believe that Jim Terrill and Joe Giles have an indirect financial interest in the Northwest Pennsylvania Technical Institute, the subject ofordinance No. 88,2000. As Board members they are potentially liable for the decisions that have caused NPTI to be in such a distressed financial condition and for the significant and continuous State disallowances. Further, I call your attention to the fact that Ordinance No. 88, 2000, does not contain any protections for the County. Ordinance No. 88 refers to a "Guaranty Agreement" which was supposedly approved by County Council at the Council meeting on October 10, No sllch Agreement is attached to the Ordinance and as far as we know, no "Guaranty Agreement" exists. Clearly, in enacting Ordinance No. 88 Council placed the interests ofnpti above the County's need to be financially protected. For Members of Council, there is probably no more significant action than that of pledging the full faith and guarantee of the County and taxpayers rightfully should expect the interests ofthe County to be protected particularly when there is question about the financial stability ofnpti. What can be done? We have identified the following options: 1. Council can consider this Ordinance as final and move to obtain DCED approval of the borrowing. The question with this option is whether PNC will accept the unsigned Ordinance as final. Council needs to obtain the answer to this question before pursuing this option. 2. Council can convene an emergency meeting for the purpose ofconsidering an appropriate

6 ordinance guaranteeing the NPTI loan in which only the members of Councii without a conflict of interest vote. One of the members who voted against Ordinance No. 88 would have to introduce the motion and then vote with the majority. 3. Council, the Administration and NPTI officials can collectively request National City Bank to continue the current loan to the end of the year with the payment of $800,000 by NPTL In this scenario the interest rate would change to prime. The Administration recommends that Council agree to pursue Option 3. This gives the County and the State some time to work out a solution that will continue a strong and viable education and training facility for Erie County residents. Council in their deliberations may identify other options that it would prefer. Whatever course of action is chosen, we need to discuss it and agree on a plan to move forward. The Administration stands ready to work with you to resolve this issue. Most respectfully, />14</~ t'iudith M. Lynch County Executive