City of Fairfax, Virginia City Council Meeting

City of Fairfax, Virginia City Council Meeting Agenda Item # 9a City Council Meeting: 3/28/2017 TO: FROM: SUBJECT: ISSUE(S): Honorable Mayor and Members of City Council Robert Sisson, City Manager Consideration of a resolution approving a plan of lease refinancing with the City of Fairfax Economic Development Authority, providing for the early redemption of the City s public improvement refunding Certificates of Participation, Series 2011B, and Public Improvement Refunding Certificates of Participation, Series 2011C. Whether or not to adopt a resolution approving a plan of lease refinancing with the City of Fairfax Economic Development Authority, providing for the early redemption of the City s Certificates of Participation, Series 2011B, and Series 2011C. SUMMARY: Council approval of the attached resolution will allow the City to proceed with its plan to refund the 2011 Certificates of Participation (COPs) refunding obligations. As background, the 2011 COPs financing refunded the original lease financing which occurred in 2004, 2006 and 2007, funding the acquisition of Open Space, completion of School Construction Projects and the development of Ball Fields. The current financing (2011 COPs) and the original lease financings (2004, 2006 and 2007 Lease Financings) were secured by granting to a financing entity a leasehold interest in both portions of Stafford Park, Jester Properties, Ted Grefe Park parcels, Ashby Pond Conservatory, Blenheim Property, former Weight Watchers property and former Westmore Elementary School property. Under the planned refunding the Jester Properties, Ted Grefe Park parcels, Ashby Pond Conservatory, and former Westmore Elementary School property may no longer be needed as financing collateral. City Staff and Davenport & Company LLC, the City s financial advisor, recommend that the City Council authorize the refunding of these lease financing obligations at this time to take advantage of favorable interest rates currently available, the opportunity to unencumber City property (collateral), and to smooth out future debt service requirements. FISCAL IMPACT: Estimated gross savings of over $1.8 million from initial financings (2004, 2006 and 2007) through original term date (2027). RECOMMENDATIONS: ALTERNATIVE COURSE OF ACTION: RESP. STAFF/POC: COORDINATION: ATTACHMENTS: Approve the resolution. Do not approve the resolution. David Hodgkins, Director of Finance / Assistant City Manager City Manager, City Attorney, Bond Counsel, Financial Advisors Proposed Resolution, Draft Prime Lease, Draft Bond Purchase and Lease Agreement Sample Motion

RESOLUTION NO. _- - RESOLUTION APPROVING A PLAN OF LEASE REFINANCING WITH THE CITY OF FAIRFAX ECONOMIC DEVELOPMENT AUTHORITY, APPROVING THE FORM OF CERTAIN DOCUMENTS PREPARED IN CONNECTION THEREWITH, AUTHORIZING THE EXECUTION AND DELIVERY OF THE SAME AND PROVIDING FOR THE EARLY REDEMPTION OF THE CITY S PUBLIC IMPROVEMENT REFUNDING CERTIFICATES OF PARTICIPATION, SERIES 2011B, AND PUBLIC IMPROVEMENT REFUNDING CERTIFICATES OF PARTICIPATION, SERIES 2011C WHEREAS, the City of Fairfax, Virginia (the City ), previously issued its Public Improvement Refunding Certificates of Participation, Series 2011B, and Public Improvement Refunding Certificates of Participation, Series 2011C (collectively, the 2011 COPs ), and used the proceeds to refinance costs incurred by the City to acquire, construct, renovate, improve and equip certain properties for open space, parks, recreation and historic preservation purposes (collectively, the Open Space Projects ); WHEREAS, the City of Fairfax Economic Development Authority (the Authority ) was created under and is authorized to exercise all the powers set forth in the Industrial Development and Revenue Bond Act, Title 15.2, Chapter 49, Code of Virginia, as amended (the Act ), which include, among other things, the powers (a) to make loans to, among others, a city in furtherance of the Act, (b) to finance or refinance facilities and lease facilities for use by, among others, a city, (c) to issue its revenue bonds, notes and other obligations from time to time for such purposes and (d) to pledge all or any part of its revenues and receipts derived from payments received by the Authority in connection with its loans or from the leasing by the Authority of such facilities or from any source, as security for the payment of principal of and interest on any such obligations; WHEREAS, the City Council of the City (the Council ) hereby determines that it is in the best interests of the City and its residents to undertake another refinancing of the Open Space Projects for debt service savings purposes and to effect the early redemption of the 2011 COPs through a lease arrangement with the Authority, pursuant to which the City will lease certain real property and the improvements thereon (as more specifically described in the hereinafter defined Prime Lease, the Property ) to the Authority, which will lease the Property back to the City pursuant to the terms of the Lease Agreement (as hereinafter defined); WHEREAS, the City has requested that the Authority (a) issue a lease revenue refunding bond (the Bond ) pursuant to the terms of the Lease Agreement, (b) loan the proceeds of the Bond to the City pursuant to the terms of the Lease Agreement to effect the early redemption of the 2011 COPs and to pay the related costs of issuance and redemption, and (c) secure the repayment of the Bond by a lease of the Property to the City pursuant to the terms of the Prime Lease and the Lease Agreement;

WHEREAS, the City has requested Davenport & Company LLC, as the City s financial advisor (the Financial Advisor ), to solicit bids from banking and other financial institutions to make a loan to the Authority as evidenced by the purchase of the Bond; and WHEREAS, there have been presented to this meeting drafts of the following documents (collectively, the Documents ) that the City proposes to execute in support of the transactions described above, copies of which shall be filed with the records of the Council: (a) A Prime Lease (the Prime Lease ), between the Authority and the City, pursuant to which the City will lease the Property to the Authority; and (b) A Bond Purchase and Lease Agreement (the Lease Agreement ), between the Authority, the City and the Bondholder (as hereinafter defined), pursuant to which (i) the Authority will issue the Bond, (ii) the Bondholder will agree to make a loan to the Authority evidenced by its purchase of the Bond, (iii) the Authority will provide the proceeds of the Bond to the City to effect the early redemption of the 2011 COPs and (iv) the Authority will lease the Property to the City; NOW, THEREFORE, BE IT RESOLVED BY COUNCIL OF THE CITY OF FAIRFAX, VIRGINIA: 1. The following plan of lease refinancing is hereby approved: (a) the Authority shall issue the Bond in a principal amount not to exceed $9,900,000, (b) the City will lease the Property to the Authority pursuant to the terms of the Prime Lease, with an expiration not later than June 30, 2032, and (c) the Authority will lease the Property back to the City pursuant to the terms of the Lease Agreement, with an expiration not later than June 30, 2027. The City will undertake to make payments to the Authority of basic rent ( Basic Rent ) and additional rent ( Additional Rent ) under the terms of the Lease Agreement in amounts sufficient to pay when due the principal of, and premium (if any) and interest on the Bond and to pay the fees and expenses of the Authority. The obligation of the Authority to pay principal of and premium (if any) and interest on the Bond will be limited to the payments of Basic Rent and Additional Rent received from the City. The undertaking by the City to make payments of Basic Rent and Additional Rent will be subject to appropriations from time to time by the Council of sufficient amounts for such purposes. Upon an event of default or an event of non-appropriation by the Council under the Lease Agreement, the Authority shall have the right to exercise any remedies provided in the Lease Agreement, including the right to terminate the Lease Agreement and exclude the City from possession of the Property for the remainder of the term of the Prime Lease. The Bond will be secured in part by an assignment to the Bondholder of the Authority s rights to receive payments of Basic Rent. This plan of lease refinancing shall contain such additional requirements and provisions as the City Manager (which term for purposes of this Resolution includes the Assistant City Manager/Director of Finance) may approve and determine to be in the best interests of the City. 2. Subject to the pricing parameters of the Bond described below, the Council hereby authorizes the City Manager, in consultation with the Financial Advisor and the Chair or Vice Chair of the Authority, to review the bids received and to select the bid that the City Manager determines to be in the best interests of the City. The banking or other financial institution submitting such winning bid shall be selected as the bondholder (the Bondholder ). 2

3. The City Manager is hereby authorized and directed to execute the Documents, the forms of which submitted to this meeting are hereby approved, with such completions, omissions, insertions and changes not inconsistent with this Resolution as may be approved by the City Attorney and the City Manager, his execution to constitute conclusive evidence of their approval of any such completions, omissions, insertions and changes. In making completions to the Lease Agreement, the City Manager shall provide for payments of Basic Rent on terms equivalent to the Bond, which (a) shall mature in installments ending no later than June 30, 2027; (b) shall have an aggregate principal amount not exceeding $9,900,000; (c) shall have an initial interest rate not exceeding 2.48% per year (subject to adjustment pursuant to the terms of the Lease Agreement); (d) shall be subject to optional redemption on such terms that the City Manager, in collaboration with the Chair or Vice Chair of the Authority, determines to be in the best interests of the City; and (e) shall be sold to the Bondholder at a price not less than 100% of the aggregate principal amount thereof. Following the sale of the Bond, the City Manager shall file a certificate with the records of the Council setting forth the final terms of the Bond and the Lease Agreement. The actions of the City Manager in approving the terms of the Bond and the Lease Agreement shall be conclusive, and no further action shall be necessary on the part of the City. As set forth in the Lease Agreement, the City undertakes to pay from legally available funds such late charges and other charges as described therein. 4. The undertaking by the City to pay any amounts under the Lease Agreement shall be limited obligations payable solely from funds to be appropriated by the Council for such purpose. Nothing herein or in the Lease Agreement shall constitute a debt of the City within the meaning of any constitutional or statutory limitation or a pledge of the faith and credit or taxing power of the City. 5. The Council believes that funds sufficient to make payment of all amounts payable under the Lease Agreement can be obtained. While recognizing that it is not empowered to make any binding commitment to make such payments beyond the current fiscal year, the Council hereby states its intent to make annual appropriations for future fiscal years in amounts sufficient to make all such payments and hereby recommends that future Councils do likewise during the term of the Lease Agreement. The Council directs the City Manager or such other officer who may be charged with the responsibility for preparing the City s annual budget to include in the budget request for each fiscal year during the term of the Lease Agreement an amount sufficient to make the payment of all amounts payable under the Lease Agreement. So long as the Bond is outstanding, if at any time during any fiscal year of the City, the amount appropriated in the City s annual budget in such fiscal year is insufficient to pay when due the amounts payable under the Lease Agreement, the Council directs the City Manager or such other officer who may be charged with the responsibility for preparing the City s annual budget to submit to the Council a request for a supplemental appropriation sufficient to cover the deficit. 6. (a) The City hereby covenants that it will not take or omit to take any action the taking or omission of which will cause the Bond to be an arbitrage bond within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and regulations issued pursuant thereto (the Code ), or otherwise cause the interest due on the Bond to be includable in the gross income of the holder thereof under existing statutes. Without limiting the generality of the foregoing, the City shall comply with any provision of law that may require the City at any time to rebate to the United States any part of the earnings derived from the investment of the funds 3

received under the Lease Agreement, unless the City receives an opinion of nationally recognized bond counsel that such compliance is not required to prevent interest on the Bond from being includable in the gross income for federal income tax purposes of the holder thereof under existing law. (b) The City hereby covenants that during the term of the Lease Agreement it shall not permit the proceeds of the Bond or the facilities refinanced therewith to be used in any manner that would result in (i) 10% or more of such proceeds or facilities being used in a trade or business carried on by any person other than a governmental unit, as provided in Section 141(b) of the Code, provided that no more than 5% of such proceeds may be used in a trade or business unrelated to the City s use of such facilities, (ii) 5% or more of such proceeds or facilities being used with respect to any output facility (other than a facility for the furnishing of water), within the meaning of Section 141(b)(4) of the Code, or (iii) 5% or more of such proceeds being used directly or indirectly to make or finance loans to any persons other than a governmental unit, as provided in Section 141(c) of the Code; provided, however, that if the City receives an opinion of nationally recognized bond counsel that any such covenants need not be complied with to prevent the interest on the Bond from being includable in the gross income for federal income tax purposes of the holder thereof under existing law, the City need not comply with such covenants. 7. Such officers of the City as may be requested by bond counsel for the City are hereby authorized and directed to execute an appropriate certificate setting forth (a) the expected use and investment of the proceeds of the Lease Agreement in order to show that such expected use and investment will not violate the provisions of Section 148 of the Code and (b) any elections such officers deem desirable regarding rebate of earnings to the United States for purposes of complying with Section 148 of the Code. Such certificate shall be prepared in consultation with bond counsel for the City, and such elections shall be made after consultation with bond counsel. 8. The City Manager is hereby authorized and directed to take all proper steps to call for redemption the 2011 COPs and to prepare and deliver any such notices and correspondence necessary therefor. 9. All costs and expenses incurred in connection with the completion of the lease refinancing and the issuance of the Bond, including the Authority s fees and expenses and the fees and expenses of bond counsel, counsel for the Authority, the Bondholder and counsel to the Bondholder, shall be paid from the proceeds of the Bond or other legally available funds of the City. If for any reason the Bond is not issued, it is understood that all such expenses shall be paid by the City from its legally available funds and that the Authority shall have no responsibility therefor. 10. Any authorization herein to execute a document shall include authorization to deliver it to the other parties thereto and to record such document where appropriate. 11. All other actions of the officers of the City that are in conformity with the purposes and intent of this Resolution and in furtherance of the completion of the lease refinancing are hereby approved and ratified. The officers of the City are hereby authorized and directed to execute and deliver all certificates and instruments and to take all other actions necessary or 4

desirable in connection with the execution and delivery of the Documents and the completion of the lease refinancing. 12. All resolutions or parts of resolutions in conflict herewith are repealed. 13. This Resolution shall take effect immediately. Introduced: February 14, 2017 Adopted Attest: Mayor City Clerk The vote on the motion to approve was recorded as follows: VOTE: Councilmember DeMarco Councilmember Drummond Councilman Greenfield Councilmember Miller Councilmember Schmidt Councilmember Stehle 37832.000041 EMF_US 64281920v4 5

This document has been prepared by and, after recording, please return to: Brian J. Lubkeman BrigliaHundley PC 1921 Gallows Road Suite 750 Vienna, VA 22182 Tax Parcel ID Numbers: [ ] RECORDER S NOTE: THE CITY OF FAIRFAX ECONOMIC DEVELOPMENT AUTHORITY AND THE CITY OF FAIRFAX, VIRGINIA, ARE EXEMPT FROM RECORDATION TAXES PURSUANT TO SECTION 58.1-811(E) OF THE CODE OF VIRGINIA OF 1950, AS AMENDED, AND CLERK S FEES PURSUANT TO SECTION 17.1-266 OF THE CODE OF VIRGINIA OF 1950, AS AMENDED. PRIME LEASE THIS PRIME LEASE dated as of [, 2017] (the Effective Date ), by and between the CITY OF FAIRFAX, VIRGINIA, a municipal corporation within the Commonwealth of Virginia (the City ), as lessor and a grantor for indexing purposes, and the CITY OF FAIRFAX ECONOMIC DEVELOPMENT AUTHORITY, a political subdivision of the Commonwealth of Virginia (the Authority ), as lessee and a grantee for indexing purposes, provides: W I T N E S S E T H: WHEREAS, the Authority desires to acquire a leasehold interest in certain real property and the improvements thereon located in the City, as more fully described in Exhibit A (such real property and all improvements now or hereafter existing thereon, the Property ), and to provide funds for the City to refund the City s Public Improvement Refunding Certificates of Participation, Series 2011B, and Public Improvement Refunding Certificates of Participation, Series 2011C (collectively, the 2011 COPs ); WHEREAS, the Authority, the City and [ ], as purchaser (the Bondholder ), will enter into a Bond Purchase and Lease Agreement dated as of [, 2017] (the Lease Agreement ), to provide the terms for the issuance of the Bond (as defined in the Lease Agreement), the proceeds of which will be used to refund the 2011 COPs, and the lease of the Property by the Authority to the City; WHEREAS, the City desires to lease the Property to the Authority to effect the refinancing of the 2011 COPs and to sublease the Property from the Authority pursuant to the Lease Agreement, and the Authority desires to enter into this Prime Lease with the City in order to assist in the refinancing of the 2011 COPs; and NOW, THEREFORE, for and in consideration of the mutual covenants hereinafter contained and other valuable consideration, the parties hereto covenant and agree as follows: 1

Section 1. Lease of Property. The City hereby demises and leases to the Authority, and the Authority hereby leases from the City, the Property as described on Exhibit A. Section 2. Term. The term of this Prime Lease shall commence on the Effective Date and shall expire [January 31, 2037], unless such term is terminated earlier as hereinafter provided. Section 3. Rental. The Authority shall pay to the City, on the Effective Date, the sum of $10.00 from the proceeds of the Bond (receipt of which is hereby acknowledged by the City), such sum representing the full amount of rent to be paid for the term of this Prime Lease. Section 4. Purpose. The Authority shall use the Property solely for the purpose of leasing the Property to the City pursuant to the Lease Agreement, as well as for such purposes as may be incidental thereto; provided, however, that if any default by the City occurs under the Lease Agreement and such default is not cured within any applicable notice and cure period, then the Authority shall be entitled to use the Property for any lawful use, subject to the direction and consent of the Bondholder. Section 5. Title to Property. The City represents and warrants that it is the owner in fee simple of the Property as it exists on the date hereof. The Authority acknowledges and agrees that the City shall at all times retain fee simple title to the Property and at no time shall fee simple title reside in the Authority. Section 6. Assignment and Sublease. The Authority may assign its rights under this Prime Lease or sublet the Property without the consent of the City only (a) in connection with entering into, and assignment of its rights under, the Lease Agreement or (b) subject to the consent of the Bondholder, if the Lease Agreement is terminated because either an Event of Default or an Event of Non-Appropriation (as each term is defined in the Lease Agreement) has occurred and is continuing. Section 7. Fees and Expenses. The City shall pay from legally available funds all reasonable expenses of the Authority arising out of the transactions contemplated by the Lease Agreement and this Prime Lease. Section 8. Termination. (a) Upon the earlier of (i) the payment of all outstanding Basic Rent and Additional Rent (as each term is defined and as provided for in the Lease Agreement) and (ii) the expiration of the term hereof, the leasehold estate of the Authority hereunder shall terminate. The Authority agrees upon such termination to surrender the Property to the City and, upon the request of the City, to execute appropriate instruments evidencing such termination. (b) The City shall not have the right to exclude the Authority from the Property or take possession of the Property (other than pursuant to the Lease Agreement) or to terminate this Prime Lease prior to the expiration of its term upon any default by the Authority of its obligations hereunder. However, in the event of a default by the Authority hereunder, the City may maintain an action for specific performance. 2

Section 9. Quiet Enjoyment. Subject to the provisions of this Prime Lease, the Authority at all times during the term of this Prime Lease shall peaceably and quietly have, hold and enjoy the entire leasehold estate created hereunder. Section 10. Amendments to Release Property. In the event that the City elects to prepay Basic Rent from the Net Proceeds (as defined in the Lease Agreement) received from (a) any insurance recovery obtained pursuant to Section [22] of the Lease Agreement or (b) any condemnation, eminent domain or loss of title award obtained pursuant to Section [23] of the Lease Agreement, Exhibit A hereto may be amended, at the option of the City and with the consent of the Bondholder (such consent not to be unreasonably withheld), to release any portion of the Property from the terms of this Prime Lease so long as the removal of such portion of the Property leaves the Property with a market value, as determined by a licensed real estate appraiser mutually acceptable to the Authority, the Bondholder and the City, at least equal to the principal amount of the Bond then outstanding. Section 11. Regular Amendments. No modification, waiver, amendment, discharge or change of this Prime Lease shall be valid unless the same is in writing and consented to by the Authority, the City and the Bondholder. Section 12. Notices. All notices to be given under this Prime Lease shall be in writing and shall be deemed to have been given when delivered in person or when mailed by first class registered or certified mail, postage prepaid, addressed (a) if to the City, at 10455 Armstrong Street, Fairfax, Virginia 22030 (Attention: City Manager), (b) if to the Authority, at [ ] (Attention: Chair), or (c) if to the Bondholder, [ ] (Attention: [ ]). All notices to be given to the Authority under this Prime Lease shall also be given to the Bondholder. The City, the Authority and the Bondholder may, by notice given hereunder, designate any future or different addresses to which subsequent demands, notices, approvals, consents, requests, opinions or other communications shall be sent or persons to whose attention the same shall be directed. Section 13. Severability. If any provision of this Prime Lease shall be held invalid by any court of competent jurisdiction, such holding shall not invalidate any other provision hereof. Section 14. Limited Obligations; No Liability of Authority Members. Notwithstanding any provision of this Prime Lease to the contrary, the obligations of the Authority under this Prime Lease are not general obligations of the Authority, but are limited obligations payable solely from proceeds of the Bond. No director or officer of the Authority shall be personally liable on any of the Authority s obligations hereunder. Section 15. Successors and Assigns. This Prime Lease shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Section 16. Counterparts. This Prime Lease may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute but one and the same Prime Lease. Section 17. Governing Law. This Prime Lease shall be governed by the laws of the Commonwealth of Virginia. 3

Section 18. No Merger. The reversionary and leasehold estates in and to the Property created by this Prime Lease shall not merge and shall always remain separate and distinct, notwithstanding the union of such estates by purchase or otherwise in the Authority, the City, any lessee or any third party, unless the person holding both of such estates shall expressly elect in writing for them to merge. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES APPEAR ON THE FOLLOWING PAGES] 4

IN WITNESS WHEREOF, the parties have caused this Prime Lease to be duly executed and effective as of the date first written above by their duly authorized representatives. CITY OF FAIRFAX, VIRGINIA Approved as to form. By Robert L. Sisson, City Manager Brian J. Lubkeman, City Attorney COMMONWEALTH OF VIRGINIA ) ) ) The undersigned Notary Public, in and for the jurisdiction aforesaid, hereby certifies that the individual, whose name is signed to the foregoing as the City Manager of the City of Fairfax, Virginia, appeared before me and personally acknowledged the same in my jurisdiction aforesaid. Such person is personally known to me or has presented satisfactory evidence of identification. GIVEN under my hand and seal this day of, 2017. My commission expires: Notary Public # [Prime Lease City Signature Page]

CITY OF FAIRFAX ECONOMIC DEVELOPMENT AUTHORITY By [ ], Chair COMMONWEALTH OF VIRGINIA ) ) ) The undersigned Notary Public, in and for the jurisdiction aforesaid, hereby certifies that the individual, whose name is signed to the foregoing as the Chair of the City of Fairfax Economic Development Authority, appeared before me and personally acknowledged the same in my jurisdiction aforesaid. Such person is personally known to me or has presented satisfactory evidence of identification. GIVEN under my hand and seal this day of, 2017. My commission expires: Notary Public # [Prime Lease EDA Signature Page]

Exhibit A DESCRIPTION OF THE PROPERTY The Property refers to the following parcels of real property: STAFFORD DRIVE PARK (Tax Parcel #47-4-02-001-A) [Property Description or maps to be attached at closing] BLENHEIM PROPERTY (Tax Parcel #57-2-02-190) [Property Description or maps to be attached at closing] STAFFORD EAST PARK (Tax Parcel #47-4-02-002) [Property Description or maps to be attached at closing] A-1

TABLE OF CONTENTS Page Section 1. Definitions...2 Section 2. Representations and Findings by Authority....4 Section 3. Representations by City....5 Section 4. Representations by Bondholder....6 Section 5. Issuance and Sale of Bond; Information Provided to Bondholder....7 Section 6. Conditions Precedent To Delivery of Bond....8 Section 7. Loan by Authority; Agreement to Lease Property and Refinance 2011 COPs....8 Section 8. Disclaimer of Warranties....9 Section 9. Lease Term; Payment of Basic Rent and Additional Rent....9 Section 10. Subject to Appropriation....10 Section 11. Net Lease; Obligations of the City Unconditional....10 Section 12. Insurance....11 Section 13. Maintenance; Taxes; Utility Charges....12 Section 14. Proof of Payment of Taxes, etc....13 Section 15. No Encumbrances....13 Section 16. Installation of City s Own Furnishings and Equipment....13 Section 17. Early Redemption of Bond; Prepayment of Basic Rent; Option To Purchase....13 Section 18. Release and Transfer of Property....14 Section 19. Limitation on Subleasing....14 Section 20. Damage or Destruction....14 Section 21. Condemnation and Loss of Title....15 Section 22. Release of Property....16 Section 23. Events of Default....16 Section 24. Remedies....18 Section 25. Reinstatement after Event of Default....18 Section 26. No Remedy Exclusive...19 Section 27. No Additional Waiver Implied by One Waiver....19 Section 28. Attorney s Fees and Other Expenses....19 Section 29. Termination of Agreement....19 Section 30. Pledge and Assignment....20 Section 31. No Merger....20 Section 32. Use of Proceeds and Tax Exemption....21 Section 33. Annual Financial Statements....22 Section 34. Limitation of Authority s Liability....22 Section 35. Registration of Bond....23 Section 36. Notices....23 Section 37. Counterparts....24 Section 38. Miscellaneous....24 (i)

Exhibit A -- Description of Property Exhibit B -- Basic Rent Payment Schedule Exhibit C -- Form of Bond (ii)

THIS BOND PURCHASE AND LEASE AGREEMENT dated as of [, 2017], by and between the CITY OF FAIRFAX ECONOMIC DEVELOPMENT AUTHORITY, a political subdivision of the Commonwealth of Virginia, as lessor and a grantor for indexing purposes (the Authority ), the CITY OF FAIRFAX, VIRGINIA, a municipal corporation within the Commonwealth of Virginia, as lessee and a grantee for indexing purposes (the City ), and [ ], [a, having a business location in, ], as purchaser of the Bond (as hereinafter defined) (the Bondholder ), recites and provides as follows; W I T N E S S E T H: WHEREAS, the Authority is a political subdivision of the Commonwealth of Virginia duly created under the Industrial Development and Revenue Bond Act, Chapter 49, Title 15.2, Code of Virginia of 1950, as amended (the Act ); WHEREAS, the Authority is authorized to exercise all the powers set forth in the Act, which include, among other things, the power to make loans to, among others, a locality in furtherance of the purposes of the Act, to finance or refinance and lease facilities for use by, among others, a locality, to issue its revenue bonds, notes and other obligations from time to time for such purposes and to pledge all or any part of its revenues and receipts derived from payments received by the Authority, in connection with its loans or from the leasing by the Authority of such facilities or from any other source, as security for the payment of the principal of and interest on any such obligations; WHEREAS, the City owns certain real property and the improvements thereon located in the City, as more fully described in Exhibit A (such real property and all improvements now or hereafter existing thereon, the Property ); WHEREAS, the City desires to refinance the City s Public Improvement Refunding Certificates of Participation, Series 2011B, and Public Improvement Refunding Certificates of Participation, Series 2011C (collectively, the 2011 COPs ); WHEREAS, the City has granted a leasehold interest in the Property to the Authority pursuant to the terms of a Prime Lease dated as of the date hereof; WHEREAS, in furtherance of the purposes of the Act, at the request of the City, the Authority has determined to (a) issue a lease revenue refunding bond, (b) use the proceeds thereof to refinance the City s obligations under the 2011 COPs and pay the related costs of issuance and refinancing and (c) lease the Property back to the City; WHEREAS, the Authority, the City and the Bondholder desire to set forth in this Agreement the terms and conditions with respect to such financing and lease; and WHEREAS, all acts, conditions and things required by law to happen, exist and be performed precedent to and in connection with the execution of and entering into this Agreement have happened, exist and have been performed in regular and due time and in form and manner as required by law, and the parties hereto are now duly empowered to execute and enter into this Agreement;

NOW, THEREFORE, the parties hereto agree as follows: Section 1. Definitions. In addition to the capitalized terms used in the WHEREAS clauses above, the following capitalized terms shall have the following meanings for purposes of this Agreement unless the context otherwise requires: [ 2011 Escrow Fund shall mean the fund established in Section 7.] [include if necessary] Additional Rent shall mean (a) amounts payable to the Bondholder under Section 9(c), (b) reasonable costs and expenses of the Authority and (c) all other amounts that the City agrees to pay under the terms of this Agreement, but not including Basic Rent. Agreement shall mean this Bond Purchase and Lease Agreement, including any amendments or supplements hereto. Authorized Representative of the Authority shall mean any person (other than a representative of the City) designated to act on behalf of the Authority by certificate signed by its Chair or Vice-Chair and filed with the City and the Bondholder. Authorized Representative of the City shall mean any person designated to act on behalf of the City by certificate signed by the City Manager and filed with the Authority and the Bondholder. Basic Rent shall mean the payments due from the City under Section 9 in the amounts and on the dates set forth in Exhibit B attached hereto, subject to adjustment upon a Determination of Taxability and subject in all cases to the provisions of Section 10. Bond shall mean the Lease Revenue Refunding Bond (City Projects), Series 2017, in the form of Exhibit C attached hereto, issued by the Authority pursuant to this Agreement in the original principal amount of $[ ], and dated [, 2017]. Bond Counsel shall mean a firm of attorneys nationally recognized on the subject of municipal bonds, which may be counsel to the Authority or the City, and reasonably acceptable to the Authority and the Bondholder. Business Day shall mean any day, other than a Saturday or Sunday or a legal holiday, on which the Bondholder is open for the purpose of conducting a commercial banking business. Code shall mean the Internal Revenue Code of 1986, as amended, including applicable regulations and revenue rulings thereunder. Council shall mean the City Council of the City, as the governing body of the City. day or days shall refer to a calendar day(s) unless the context specifically refers to Business Day(s). 2

Determination of Taxability shall mean the occurrence, after the date hereof, of (a) a final ruling or judgment entered by a state or federal court of competent jurisdiction or (b) an official and final action taken or announced by the Internal Revenue Service or state official, in either event, determining that interest paid or payable on all or a portion of the Bond is or was includable in the gross income of the Bondholder for federal or state income tax purposes under the Code or Virginia law; provided, however, that no such ruling or judgment, or final action of the Internal Revenue Service or state official, will be considered final for this purpose unless the Authority has been given written notice and, if it is so desired and is legally allowed, has been afforded the opportunity to contest the same, either directly or in the name of the Bondholder, and until the conclusion of any appellate review, if sought. Event of Default shall mean any one or more of the events listed in Section 23. Event of Non-Appropriation shall mean the failure by the Council to appropriate, by June 30 of any year, moneys sufficient for the payment of Basic Rent and estimated Additional Rent for the immediately following Fiscal Year. Financing Instruments shall mean this Agreement, the Bond and the Prime Lease. Fiscal Year shall mean, with respect to the City, a twelve-month period commencing July 1 and ending the following June 30. Prime Lease shall mean the Prime Lease dated as of [, 2017], by and between the City and the Authority, including any amendments or supplements thereto. Initial Installment Computation Date shall mean [, 2022], the last day of the fifth bond year, as set forth in Section 32(b)(iii). Interest Rate shall mean a per annum rate equal to (a) prior to a Determination of Taxability, %, and (b) after a Determination of Taxability, the Taxable Rate. Lease Term shall mean the duration of the leasehold estate created in the Property, as provided in Section 9]. Net Proceeds shall mean the gross proceeds from any insurance recovery or action of condemnation or loss of title award in connection with the Property, less payments for attorneys fees and other expenses incurred in the collection of such gross proceeds. Non-Arbitrage Certificate shall mean the Non-Arbitrage and Tax Compliance Certificate dated [, 2017], executed by the Authority and the City. Payment of the Bond shall mean payment in full of the Bond and the making in full of all other payments due and payable pursuant to this Agreement at the time of such payment. Permitted Encumbrances shall mean, as of any particular time as to the Property, (a) liens for taxes and special assessments not then delinquent, (b) liens for taxes and assessments that are delinquent, but the validity of which is being contested in good faith and with respect to which the City shall have set aside adequate reserves, unless thereby any of the Property or the interest of the 3

City therein may be in danger of being lost or forfeited, (c) this Agreement and the Prime Lease and any security interests or other liens created hereby or thereby, (d) mechanics and materialmen s liens incident to construction or maintenance now or hereafter filed of record that are being contested in good faith and have not proceeded to judgment, provided that the City shall have set aside adequate reserves with respect thereto, (e) restrictions, mineral rights, easements, rights of way, exceptions or reservations for the purpose of utilities (including but not limited to water and gas pipelines, sanitary and storm sewers, telephone lines, telegraph lines, power lines, substations and other facilities and equipment used in connection with such utilities), roads, streets, alleys, highways, railroads, dikes, canals, laterals, ditches, and other like purposes, or for the joint or common use of real property, in each case which do not materially impair the use of the Property for the purposes for which it is or may reasonably be expected to be held, (f) such defects, irregularities, encumbrances, easements, rights of way and clouds on title as normally exist with respect to property owned or leased by the City for essential governmental purposes and similar in character to the Property and as will not, in the opinion of the City Attorney, impair the use of the Property for the purpose for which it is or may reasonably be expected to be held by the City and (g) present or future zoning laws and ordinances. [ Permitted Investments shall mean (a) any of the obligations or securities that are at the time legal investments for public funds under the Investment of Public Funds Act (Chapter 45, Title 2.2 of the Virginia Code of 1950, as amended) or any successor provisions of law applicable to such investments or (b) any pooled investment vehicle established pursuant to the Government Non-Arbitrage Investment Act (Chapter 47, Title 2.2 of the Code of Virginia of 1950, as amended) or any successor provision of law.] [delete if not used] Rebate Amount shall mean the amount due to the United States Treasury pursuant to Section 148(f) of the Code and regulations thereunder, as described in Section 32(b)(ii)(A). Rebate Amount Certificate shall mean a certificate setting forth the computation of the Rebate Amount. Registrar shall mean the Authority or any qualified bank or trust company appointed by the Authority as successor registrar. Taxable Period shall mean the period of time between (a) the date that interest on the Bond is deemed to be includable in the gross income of the Bondholder for federal or Virginia income tax purposes as a result of a Determination of Taxability and (b) the date of the Determination of Taxability. Taxable Rate shall mean %. Section 2. Representations and Findings by Authority. The Authority makes the following representations and findings as the basis for its undertakings hereunder: (a) The Authority is a political subdivision of the Commonwealth of Virginia, is duly organized under the Act and has the power to execute and deliver the Financing Instruments, to perform its obligations thereunder, to issue the Bond, to lease the Property to the City pursuant to 4

the provisions of this Agreement and to carry out its other obligations under the Financing Instruments. The Property constitutes an authority facility within the meaning of the Act. The lease of the Property to the City furthers the purposes for which the Authority was organized. By proper corporate action, the Authority has duly authorized the execution and delivery of the Financing Instruments, the performance of its obligations thereunder and the issuance of the Bond. Contemporaneously with the execution and delivery of this Agreement, the Authority has issued and sold the Bond to the Bondholder. (b) The Authority is not (i) in default in the payment of the principal of or interest on any of its indebtedness for borrowed money and is not in default under any instrument under or subject to which any indebtedness for borrowed money has been incurred (and no event has occurred and is continuing under the provisions of any such instrument that with the lapse of time or the giving of notice, or both, would constitute an event of default thereunder), (ii) in violation of the Act or any other existing Virginia law, rule or regulation applicable to it or (iii) in default under any indenture, mortgage, deed of trust, lien, lease, contract, note, order, judgment, decree or other agreement, instrument or restriction of any kind to which any of its assets are subject, and the execution and delivery by the Authority of this Agreement and the Bond and the performance of its obligations thereunder will not conflict with or result in a breach of or constitute a default under any of the above described documents or other restrictions. (c) No further approval, consent or withholding of objection on the part of any regulatory body, federal, state or local, is required in connection with (i) the issuance and delivery of the Bond by the Authority, (ii) the execution or delivery of or performance by the Authority of its obligations under the Financing Instruments or (iii) the assignment and pledge by the Authority pursuant to this Agreement of the Basic Rent payments, as security for payment of the principal of and premium, if any, and interest on the Bond. (d) There is no litigation at law or in equity or any proceeding before any governmental agency involving the Authority pending or, to its knowledge, threatened against the Authority that would affect (i) the organization and existence of the Authority, (ii) its authority to execute or deliver the Financing Instruments, (iii) the validity or enforceability of any of the Financing Instruments or the performance of its obligations thereunder, (iv) the title of any officer of the Authority executing the Financing Instruments or (v) any authority or proceedings related to the execution and delivery of the Financing Instruments on behalf of the Authority. No such authority or proceedings have been repealed, revoked, rescinded or amended, and all such authority and proceedings are in full force and effect. (e) Notwithstanding anything herein to the contrary, any obligation the Authority may incur hereunder in connection with the refinancing of the 2011 COPs or the leasing of the Property shall not be deemed to constitute a general obligation of the Authority but shall be payable solely from the payments received from the City as Basic Rent or Additional Rent and the security therefor. Section 3. Representations by City. The City makes the following representations as the basis for its undertakings hereunder: 5

(a) The City is a municipal corporation within the Commonwealth of Virginia and has the power to enter into the Financing Instruments to which it is a party and perform its obligations thereunder. By proper action, the City has duly authorized the execution and delivery of the Financing Instruments to which it is a party and the performance of its obligations thereunder. (b) There is no litigation at law or in equity or any proceeding before any governmental agency involving the City pending or, to its knowledge, threatened against the City that would affect (i) its authority to execute and deliver the Financing Instruments to which it is a party, (ii) the validity or enforceability of such instruments or the performance of its obligations thereunder, (iii) the title of any officer of the City executing such instruments, (iv) the power to lease the Property to or from the Authority and to undertake the refinancing of the 2011 COPs or (v) the financial condition of City or its ability to make payments of Basic Rent or Additional Rent in any material respect. (c) The City is not (i) in default in the payment of the principal of or interest on any of its indebtedness for borrowed money, (ii) to its knowledge, in violation of any existing Virginia law, rule or regulation applicable to it and (iii) in default under any instrument under and subject to which any indebtedness has been incurred, and no event has occurred and is continuing under the provisions of any such agreement that with the lapse of time or the giving of notice, or both, would constitute an event of default thereunder. (d) The execution and delivery of the Financing Instruments to which it is a party and the performance by the City of its obligations thereunder do not and will not conflict with, constitute a breach of or result in a violation of any agreement or other instrument to which the City is a party or by which it is bound or any constitutional or statutory provision or order, rule, regulation, decree or ordinance of any court, government or governmental authority having jurisdiction over the City or any of its property. (e) The City has obtained all consents, approvals, authorizations and orders of any governmental or regulatory authority that are required to be obtained by the City as a condition precedent to the execution or delivery of or performance by the City of its obligations under the Financing Instruments to which it is a party. (f) Until termination of this Agreement, the City will not use or occupy the Property or permit it to be used or occupied other than as an authority facility within the meaning of the Act. (g) The City intends to appropriate in its budget for the Fiscal Year ending June 30, 2018, funds sufficient to pay the Basic Rent due in such Fiscal Year. (h) There has been no material adverse change in the condition, financial or otherwise, of the City since June 30, 2016, from that set forth in the audited financial statements of the City for the Fiscal Year ended June 30, 2016. Section 4. Representations by Bondholder. The Bondholder makes the following representations as the basis for its undertakings hereunder: 6

(a) Virginia]. The Bondholder is a [ ], having a business location in [, (b) The Bondholder has full power and authority to enter into this Agreement, to make the loan evidenced by the Bond, to perform the transactions contemplated hereby and to carry out its obligations hereunder. (c) The Bondholder acknowledges that it has experience and expertise in the making of similar loans and that it is capable of evaluating the merits and risks of making such loan. (d) The Bondholder is entering into this Agreement for its own account and acknowledges that no offering statement, prospectus or other comprehensive disclosure document containing material information with respect to the Authority, the City, this Agreement or the Bond has been provided to it in connection with the making of such loan. However, the Bondholder has been provided with such information concerning the operations and financial condition of the Authority and the City as it has requested. The Bondholder has had an opportunity to make inquiries of such officers, employees, agents and attorneys of the Authority and the City as it considers appropriate in connection therewith. (e) The Bond is being acquired by the Bondholder as evidence of the loan being made for its own account and not with a present view toward resale or distribution; provided, however, that the Bondholder reserves the right to sell or transfer the Bond, but agrees that any such sale or transfer by the Bondholder shall be made in accordance with this Agreement, the Bond and applicable laws. The Bondholder acknowledges and agrees that neither the Authority nor the City shall have any obligation to prepare or provide any offering statement, prospectus or other comprehensive disclosure document containing material information with respect to the Authority, the City, this Agreement or the Bond in connection with such sale or transfer by the Bondholder. (f) The Bondholder understands and acknowledges that the scope of engagement of Hunton & Williams LLP, Richmond, Virginia, Bond Counsel with respect to this Agreement and the Bond, will be limited to matters set forth in their opinion based on their review of such proceedings and documents as they deem necessary to approve the validity of the Bond and this Agreement and the tax-exempt status of interest on the Bond, and that they have not been engaged and will not undertake to prepare or express an opinion as to the accuracy or completeness of any information that may have been furnished to the Bondholder or relied upon by it in making the loan. Section 5. Issuance and Sale of Bond; Information Provided to Bondholder. (a) The Authority shall issue and sell the Bond to the Bondholder and secure the Bond by assigning to the Bondholder the payments of Basic Rent to be made by the City hereunder, and the Bondholder shall purchase the Bond, all upon the terms and conditions set forth herein. All Financing Instruments shall be in form satisfactory to the Bondholder. (b) It is specifically understood and agreed that the Authority makes no representation, covenant or agreement as to the financial position or business condition of the City and does not represent or warrant as to any statements, materials, representations or certifications furnished by 7