HomeMy WebLinkAboutItem III (C) Approval and Consent to Modification of Leasehold Mortgage of Forest Lake Golf Club, Ltd. Forest Lake to First Union 03/10/94 10:50 $407 648 1743 FOLEY & LARDNER AGENDA 3-15-94 ~n
Item III C
MEMORAND131
TO: The Honorable Mayor and City Commissioners of the City of Ocoee
FROM: Mark C. Exteinl_
THROUGH: Paul E. Rosenthal, City Attorney
DATE: March 10, 1994
RE: Forest Lake Golf Club, Ltd. ("Forest Lake")/Consent to Modification of
Leasehold rt a
. The Ground Lease Agreement with Forest Lake with respect to the golf course property
provides in Article 9 that Forest Lake may encumber its leasehold estate in the property and its
interest in the improvements constructed thereon with a mortgage, subject to the consent of the
City, which consent shall not be unreasonably withheld. In April, 1993, you consented to Forest
Lake's mortgage of its leasehold interest to First Union National Bank of Florida ("First Union")
in order to secure a loan of approximately $2.6 million for construction of the golf course and
the portion of the effluent disposal and re-use system which Forest Lake is required to construct
under the terms of the lease.
Forest Lake and First Union are contemplating entering into an interest rate swap
transaction which would have the effect of fixing Forest Lake's interest rate at approximately
91/4%. Forest Lake is currently paying interest at a floating rate of prime plus 11/2% and would
like to enter into this interest rate swap transaction in order to protect itself from the possibility
of increases in interest rates.
The party which will assume Forest Lake's floating rate obligation in exchange for a
fixed rate obligation will be First Union itself. Accordingly, Forest Lake and First Union will
enter into an interest rate swap agreement. In addition, the existing mortgage of Forest Lake's
leasehold estate and its interest in the related improvements and personal property will be
modified to expressly secure Forest Lake's obligations under the interest rate swap agreement.
Recommendation
It is respectfully recommended that the City Commission consent to the modification of
Forest Lake's mortgage to First Union as described herein, subject to review of the form of the
mortgage documents by legal counsel.
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