DATE: November 09, 2021
SUBJECT:
Title
RESOLUTION AUTHORIZING AMENDMENT TO AMENDED AND RESTATED SUBORDINATED, FULLY-NEGOTIABLE PROMISSORY NOTE WITH THE SAN DIEGO COUNTY REGIONAL AIRPORT AUTHORITY TO MODIFY THE INTEREST RATE, WITH CONDITIONS
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EXECUTIVE SUMMARY:
On June 1, 2004, the District executed and delivered an Amended and Restated Subordinated, Fully-Negotiable Promissory Note (Note) to the San Diego County Regional Airport Authority (Airport Authority) in the original principal amount of $50,000,000 (Attachment A) in connection with a Settlement Agreement between the District and the Airport Authority (Settlement Agreement, District Clerk No. 47492). Under the Note, from June 1, 2004 to December 31, 2005, the interest rate on the outstanding balance was a variable interest rate equal to 1% over the prevailing daily reported prime rate. The interest rate converted to a fixed interest rate of 5.5% on January 1, 2006 and remains the same until the maturity date on December 31, 2030. The current balance on the Note is approximately $26.5M.
Similar to other public agencies, the District has been economically impacted by the COVID-19 pandemic. In an effort to reduce costs to the District, and take advantage of historically low interest rates in the market, staff reached out to various lenders to solicit proposals to refinance the Note. However, when staff notified the Airport Authority, staff for the Airport Authority agreed to match the interest rate offered by one of the lenders proposing to refinance the Note.
Under the Amendment to Amended and Restated Subordinated, Fully-Negotiable Promissory Note between the District and the Airport Authority (Amendment) (Attachment B), the annual interest rate for the remaining term of the Note will be reduced from 5.5% to 3.63% and the amortization table attached to the Note will be conformed accordingly. The proposed effective date of the Amendment is November 1, 2021.
Staff recommends that the Boar...
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