Humane Society Animal Shelter Funding Structure

GO Bonds

• No bonds will be issued until Society deposits at least $2.5M of cash with Trustee bank

• All future donations related to capital campaign for facility, up to a total of $5.0M, plus any additional donations specifically restricted to use for construction of building, must be deposited with Trustee bank

• Upon deposit of funds, but no earlier than 120 days from deposit, City will issue two series of GO bonds, each to produce $2.5M of net proceeds for a total of $5.0M of net proceeds

• Bond proceeds will be deposited with Trustee bank, and all construction draws will require approval of both Society and City

• GO financing to fund Loan:

• All debt service expected to be paid from Lease payments made by Society and/or donations received by Society

• Financing may be negotiated through a request for proposal with priority to local banks.

• The initial Term will be a three to four year temporary note with balloon payment at the end of term.

• At note maturity, bonds issued with terms determined, in part, based on success of capital campaign.

• Special mandatory prepayment provisions requiring early prepayment upon Society’s receipt of donations

• GO Bonds to fund Grant:

• Structured as interest only until 2021.

• Term of up to 20 years

• Competitive bid to market with winner being net lowest overall financing cost.

Lease Purchase Agreement

• Term:  Equivalent to term of City Bonds (up to 20 years)

• Rental Payments: 

• In early years, rent will be equal to the greater of (a) total debt service payments on $2.5M of City GO Bonds used to fund the Loan or (b) total amount of donations received by Humane Society to fund loan portion of the City GO.

• After GO Bonds to fund Loan are paid in full, then rental payments will be a nominal amount (i.e., $100/year) until GO bonds to fund grant portion are paid off.

• Default Provisions:

• An event of default under the Lease will exist if the Society fails to make any rental payment, or if the Society is unable to provide animal control services to the City.

• Upon an event of default, the Lease will terminate and the City will have the right to possession of the building for the then remaining term of the Base Lease

• Purchase Option:  at the end of the Lease term, the Society will have the right to purchase the building and collapse the entire transaction (including termination of the Base Lease) for a nominal amount (i.e., $100).

Base Lease

• Term:  Equivalent to term of City Bonds (up to 20 years)