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HomeMy WebLinkAboutResolution 2327~a~~~ Rio r ~~~ ~- .~ No. A RESOLUTION Authorizing the City Manager to Enter Into a Loan Guarantee Agreement with the Texas Department of Transportation WHEREAS, Amtrak in January 1997 notified Governor Bush that it would discontinue the operation of the Texas Eagle which provides service from Chicago to San Antonio via Fort Worth on May 19 1997 if additional financial resources were not provided to Amtrak; and WHEREAS, the cities along the Texas Eagle line including the City of Fort Worth lobbied the Texas Legislature to consider providing a loan to Amtrak to keep the line operating through the next federal budget year or through September 30 1997 and • WHEREAS, through the leadership of Representative Diane Delisi and Senator Bill Ratliff legislation was passed that authorized a $5 6 million loan to Amtrak, allowing Amtrak to continue operation of the Texas Eagle through September 30 1997 and WHEREAS, as a condition of passage of the authorizing legislation, the Legislature required that the cities served by the Texas Eagle guarantee the repayment of one-half of any unpaid balance on the loan including interest, in the event of a default by Amtrak; and WHEREAS, a default by Amtrak is considered highly unlikely as it is a corporation that is subsidized by the Federal Government through the budget appropriations process and state law requires that the loan be fully collateralized; and WHEREAS, the loan agreement between the Texas Department of Transportation contains a security agreement recorded with the U S SurFace Transportation Board, that grants the State of Texas a security interest in forty- seven (47) passenger rail cars having a total estimated value of $6 345 000 as collateral and C~ .] WHEREAS, THE City of Fort Worth s exposure though unlikely would be limited to 13 9262% of one-half of any remaining balance of the loan should Amtrak default on the loan and only after the collateral is sold and the proceeds of the sale fail to cover the outstanding loan balance and WHEREAS, it is in compliance with the provisions of Senate Bill 1706 which state that the department [Texas Department of Transportation], on behalf of the commission and with the approval of the comptroller shall secure an agreement or agreements with the municipalities served by an eligible corporation [Amtrak] that receives assistance under this subchapter to further guarantee the repayment of half of any unpaid balance on a loan including interest, made under this subchapter that the Texas Department of Transportation comes to the City asking that the City enter into a loan guarantee agreement with the department. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS 1 That the City Council authorizes the City Manager to enter into a loan . guarantee agreement with the Texas Department of Transportation for the purpose of guaranteeing the repayment of 13 9262% of half of any unpaid balance of a loan that was executed by the Texas Department of Transportation to the National Railroad Passenger Corporation (Amtrak) in the amount of $5 6 million including interest, in the event of a default after July 31 1999 in accordance with the provisions of Senate Bill 1706 as passed during the 75th Legislature Regular Session. 2. That at this time the City Council has not appropriated any funds to make payments under the loan guarantee agreement. 3 That a provision shall be included in the loan guarantee agreement expressly stating that the City's liability under the agreement is subject to and conditioned upon the City Council taking further action to appropriate funds other than ad valorem taxes for any payments by the City to the Texas Department of Transportation under such agreement. Adopted this f~day of , y S , 1997 APPR®N~~ Ct~'Y COU~C~L ~~ ,y ®r ~~ r ~3tg ~°~ ~ ~rro~, ~~~ Mayor Kenneth Barr LOAN GUARANTEE AGREEMENT This loan guarantee agreement is made between the Texas Department of Transportation an agency of the State of Texas with offices at 125 E. 11 Street, Austin Texas (hereinafter `TxDOT") and the City of Fort Worth, Texas a municipal corporation acting through its duly authorized officers (hereinafter `the City") WHEREAS the National Railroad Passenger Corporation (hereinafter Amtrak") operates the 'Texas Eagle an intercity passenger rail train, between Chicago Illinois, and San Antonio Texas, via Missouri and Arkansas; and WHEREAS Amtrak by letter dated January 24 1997 notified the Governor of the State of Texas that Amtrak would discontinue the operation of the Texas Eagle effective May 10 1997 if necessary financial resources were not provided to Amtrak to continue the service and WHEREAS on June 3 1997 TxDOT acting pursuant to Senate Bill 1706 and Senate Bill 886 75th Legislature Regular Session executed a $5 6 million loan to Amtrak, allowing Amtrak to continue operation of the Texas Eagle through September 30 1997 and • WHEREAS the loan agreement requires Amtrak to re a the $5 6 million PY plus interest, with interest to be accrued at the rate of interest earned by the State of Texas on funds invested pursuant to Section 404 024(b) Texas Government Code and requires the loan to be paid in full ~ey July 31 1999• and WHEREAS as collateral against the loan Amtrak has granted to TxDOT through a security agreement recorded with the U S Surface Transportation Board pursuant to 49 U S C 11301 a security interest in forty-seven (47) passenger rail cars having a total estimated value of $6 345 000• and WHEREAS although the loan is fully collateralized, Senate Bill 1706 requires TxDOT to secure an agreement with each of the municipalities served by the Texas Eagle to further guarantee the repayment of one half of any unpaid balance on the loan, including interest, in the event of a default by Amtrak; and WHEREAS on April 18 1997 the City of Fort Worth, as a city served by the Texas Eagle agreed to guarantee the loan along with TxDOT and the other municipalities served by the Texas Eagle to assure the $5 6 million loan is repaid to the State of Texas and • 1 J WHEREAS pursuant to Senate Bill 1706 it is necessary for TxDOT and the City to formalize the City's commitment through execution of this loan guarantee agreement; and WHEREAS as evidence of the City's authority to guarantee the loan and enter into this agreement, on , 1997 the Fort Worth City Council passed Resolution No , NOW THEREFORE, in the event that Amtrak defaults and fails to repay all of part of the State of Texas loan, TxDOT and the City hereby agree to the following• 1 As provided in the loan agreement, TxDOT shall initiate action to ensure that the rolling stock collateralizing the Amtrak loan is removed from service and moved to a secure location. 2 TxDOT shall initiate action to ensure that title to the rolling stock collateralizing the Amtrak loan is transferred to the State of Texas 3 TxDOT shall liquidate the collateral and apply 100°!0 of the sale proceeds toward the outstanding loan balance If the sale proceeds satisfy the debt in full TxDOT shall notify the City in writing that the debt has been retired If after applying the sale proceeds an outstanding balance remains TxDOT shall calculate the amount to be paid by the City and shall notify the City in writing of the amount due and payable to the State of Texas 4 The amount to be paid by the City shall represent the City's percentage share (based on population) of one half of the deficiency required to be paid collective{y by the cities served by the Texas Eagle TxDOT shall use the 1994 update of the federal census data to determine the City's percentage share of the deficit. TxDOT shall be responsible for the remaining one half of the deficiency 5 Within 90 days of receiving written notice from TxDOT or by July 31 1999 whichever is later the City shall remit to the State of Texas payment in full of all funds due from the City under the terms of the agreement; provided however that the City shall not be required to remit payment to the State of Texas because of any notice that the City receives from TxDOT after July 31 2001 • 2 6 Subsequent to the retirement of the debt by TxDOT and the served municipalities TxDOT shall exercise its rights under the Amtrak loan agreement to seek from Amtrak compensation in an amount equal to the amount paid collectively by TxDOT and the served municipalities toward retirement of the Amtrak debt. Legal and administrative expenses (including expenses associated with liquidation of the collateral) incurred by TxDOT while seeking compensation from Amtrak, shall be subtracted from any funds recovered and shall be retained by TxDOT Fifty percent (50%) of the balance of funds recovered shall be returned to the served municipalities which guaranteed the debt. The percentage share to be returned to each city shall be equal to each city's percentage share paid toward retirement of the Amtrak debt. 7 TxDOT acknowledges that the City Council of the City has not appropriated the funds to satisfy the City's financial obligations under this agreement. Because the City is a governmental entity and is subject to statutory constitutional and city charter provisions TxDOT acknowledges and agrees that the City's performance of the City's obligations under this agreement is subject to and conditioned upon the City Council taking separate action at a later time to appropriate the funds necessary to satisfy such obligations 8 Any changes in the time frame character provisions of this agreement, or obligations of the parties hereto shall be enacted by written amendment executed by both the City and TxDOT 9 In the event of any dispute concerning the terms of the agreement, the rights and responsibilities of the parties hereunder or an alleged breach by either party of the agreement, venue shall be in Travis County Texas 10 All notices from either party to the other required under this agreement shall be delivered personally or sent by certified U S mail postage prepaid, addressed to such party at the following respective addresses 3 TxDOT Thomas A. Griebel Assistant Executive Director Multimodal Transportation Texas Department of Transportation 125E 11 m Street Austin, Texas 78701 City City Manager City of Fort Worth 1000 Throckmorton Fort Worth Texas 76102 IN WITNESS WHEREOF authorized representatives of the parties hereto have executed this agreement in two (2) original counterparts This agreement is effective upon execution by both parties CITY OF FORT WO By. Title Assista(n~t City Manager Date 1 "1 TEXAS DEPARTMENT OF TRANSPORTATION By Title Asst. Executive Director for Multimodal Transportation Date • 4