COMMISSIONERS' COURT AGENDA REQUEST
PLEASE FURNISH ONE ORIGINAL AND NINE COPIES OF THIS
REQUEST AND DOCUMENTS TO BE REVIEWED BY THE COURT.
MADE BY: Jonathan Letz
MEETING DATE: November 8, 2004
OFFICE: Commissioner, Pct. 3
TIME PREFERRED:
SUBJECT: Consider and discuss status of acquisition of Juvenile Detention Facility.
EXECUTIVE SESSION REQUESTED: (PLEASE STATE REASON)
NAME OF PERSON ADDRESSING THE COURT: Commissioner, Pct. 3
ESTIMATED LENGTH OF PRESENTATION:
IF PERSONNEL MATTER -NAME OF EMPLOYEE:
Time for submitting this request for Court to assure that the matter is posted in
accordance with Title 5, Chapter 551 and 552, Government Code, is as follows:
Meeting scheduled for Mondays
THIS REQUEST RECEIVED BY:
THIS REQUEST RECEIVED ON:
5:00 P.M. previous Tuesday.

All Agenda Requests will be screened by the County Judge's Office to determine if adequate
information has been prepared for the Court's formal consideration and action at time of Court
Meetings. Your cooperation will be appreciated and contribute towards you request being
addressed at the earliest opportunity. See Agenda Request Rules Adopted by Commissioners'
Court.
AGREEMENT
This Agreement (this "Aereement'~ is entered into this 28th day of October 2004, by
and between The Bank of New York Trust Company, N.A., f/k/a The Bank of New York Tnust
Company of Florida, N.A. (the "Trustee', Kerr County, Texas (the "Coon "}, Hill Country
Juvenile Facility Corporation (the "Issuer"), and the Kerr County Juvenile Board (the "Board',
to be effective as of October 1, 2004 (the "Effective Date").
RECITALS
A. The Issuer has previously isseied its Lease Revenue Bonds, Series 2002 (Kerr
County, Texas Juvenile Detention Facilities Projectxthe "Bonds' pursuant to that certain Tnust
Agreement, dated as of November 15, 2002 (the "Indenture"), between the Issuer and the
Trustee.
B. In connection with the issuance of the Bonds, the County, as lessee, and the
Issuer, as lessor, entered into that certain Lease Agreement, dated as of November 15, 2002 (the
"Lease', under which the Issuer leased the Project to the County. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms in tbe Lease.
C. The Board performs certain of the County's obligations under the Lease and
manages the Project on a day-today basis pursuant to that certain Operating Agreement, dated as
of November 15, 2002 (the "Oneratin¢ Agreement"), between the County and the Board.
D. The Bonds are secured by (i}the Lease Payments under the Lease, (ii) that certain
Deed of Trust and Assignment of Rents and Leases, dated as of November 15, 2002, from the
Issuer to the Mortgage Trustee for the benefit of the Trustee, and (iii) that certain Security
Agreement, dated as of November 15, 2002, between the Trustee and the Issuer.
E. On September 27, 2004, the County adopted its fiscal year 2004-2005 budget, and
in said budget failed to appropriate funds in an amount sufficient to pay Lease Payments under
the Lease, thereby causing an Event of Nonappropriation to occur under the Lease.
F. On September 28, 2004, the County notified the Trustee of such Event of
Nonappropriation, and of its intent to transfer possession and control of the Project to the Issuer
or the Trustee as of 12:00 A.M. on October 1, 2004, in accordance with Section 10.03(c) of the
Lease.
G. On September 30, 2004, in order to (i) ensure the health, safety and security of the
inmates of the Project and the citizens of the community, (ii) ensure an appropriate and orderly
transition of possession and control of the Project to the Issuer or the Trustee pursuant to Section
10.03(c) of the Lease, and (iii) maintain the Project as a going concern, the Trustee, the County
and the Issuer executed a letter agreement placing a moratorium on the transfer of possession and
control of the Project until November 1, 2004 (the "Letter Agreement"), with the Lease and
Operating Agreement to remain in effect during such moratorium.
H. On October 18, 2004, the Trustee gave notice- to the Issuer and the County of
several non-payment related defaults under the Lease, which if not cured within 30 days of such
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notice will constitute Events of Default under both the Lease and the Indenture (collectively, the
"Defaults").
L On October 2S, 2004, the Commissioners Court of the County approved
proceeding with a plan which is intended to lead to the issuance of a series of certificates of
obligation (the "Certificates") in an amount sufficient to purchase the Project and redeem the
Bonds on the date of delivery of the Certificates;
J. Based upon the action of the Commissioners Court as described in paragraph I
immediately above, the County and the Trustee desire to extend the moratorium contained in the
Letter Agreement upon the terms and conditions contained herein.
K. The parties desire to enter into this Agreement to {i) extend the moratorium
contained in the Letter Agreement, (ii) extend the terms of the Lease and the Operating
Agreement, and (iii) provide for the payment of the Project's operation and- maintenance
expenses until the earlier of December 31, 2004 (which date may be extended as provided in
Section 3.2 hereof), or the date this Agreement is terminated as provided herein.
L. Notwithstanding the execution of this Agreement, the Trustee expressly.reserves
all of its rights and remedies under the Financing Documents with respect to the Event of
Nonappmpriation and the Defaults.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
ARTICLE 1
Extension of Moratorium, Lease and Operatin{~Agreement
1.1 Moratorium. The Trustee, the Issuer, the County and the Board hereby agree that
the moratorium on the transfer of possession and control of the Project established in the Letter
Agreement shall be extended until the date this Agreement is terminated in accordance with
Article 3. The Letter Agreement is hereby superseded and replaced by this Agreement.
1.2 Extension of I.ease. The Issuer and the County hereby agree that the term of the
Lease shall be extended until the date this Agreement is terminated in accordance with Article 3,
and except as provided in Article 4, all of the teems and conditions of the Lease shall remain in
full force and effect.
1.3 Extension of Operating Agreement. The County and the Board hereby agree that
the term of the Operating Agreement shall be extended until the date this Agreement is
terminated in accordance with Article 3, and all of the terms and conditions of the Operating
Agreement shalE remain in full force and effect.
1.4 Obligation of County to Proceed with Financing Plan. The County represents that
it will proceed with due diligence to develop and implement a plan to issue-Certificates for the
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purpose of acquiring the Project and redeeming the Bonds; provided that the desire and ability of
the County to issue the Certificates, to purchase the Project, and to acquire and redeem the Bonds
is conditioned upon the following:
(i) the County is lawfully able to issue the Certificates in accordance with the
provisions of the Certificate of Obligation Act of 1971 (Subchapter D of Chapter 271,
Texas Local Government Code); _
(ii) the County receives the consent of all holders of the Bonds to waive the call _
protection on the Bonds (i.e., February 15, 2013) and permit the County to acquire and
redeem the Bonds on the date of delivery of the Certificates;
(iii) SBcP restores its credit rating on the County's general obligation
indebtedness to, and assigns a rating on the Certificates equal to, the rate in existence
prior to nonappropriation of the Lease Payments related to the Bonds;
(iv) the County receives a written certification from the Texas Commission on
Jail Standards that the newly constructed building at the Project can be modified at a
reasonable cost to the County to provide for up to 48 maximum security adult inmates;
and
(v) all documentation relating to the issuance of the issuance of the Certificates,
the purchase of the Project, and the redemption of the Bonds on the date of purchase of
the Project is approved by legal counsel representing the County.
The County anticipates that most activities related to the issuance of the Certificates, the
purchase of the Project, and the redemption of the Bonds will be coordinated and conducted by
the County. The County agrees to keep the Trustee informed of its progress relating to such
activities.
ARTICLE 2
Expenses
The County hereby agrees to pay all operation and maintenance expenses relating to the
Project, including expenses incurred prior to the Effective Date of this Agreement, until the date
this Agreement is terminated in accordance with Article 3. Notwithstanding the foregoing,
nothing is this Agreement shall obligate, or shall be deemed to obligate, the County or the Board
to pay any Lease Payments under the Lease or the Operating Agreement, respectively, nor shall
the execution of this Agreement by County and the Board be deemed to mean that the County or
the Board has taken any action to Appropriate for the payment of Lease Payments during the
current Fiscal Year (which began on October 1, 2004).
ARTICLE 3
Term
3.1 Term. This Agreement shall be of full force and effect from the Effective Date
until the earlier of December 31, 2004, or the date this Agreement is terminated in accordance
with Section 3.2 of this Agreement.
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3.2 Extension of Term at Option of the County. The term of this Agreement may be
extended for one or more additional monthly periods at the option of the County upon delivery
by the County to the Trustee at least 30 days in advance of the scheduled termination date of an
order approved by the Commissioners Court exercising its option to extend the term of this
Agreement for one or more additional months.
3.3 Termination.
(i) By the County. The County may terminate this Agreement without cause
upon 30 days written notice to the Trustee, the Issuer and the Board, provided that the
conditions set forth in Article 4 have been satisfied:
(ii) ~ the Trustee. In the event that an Event of Default has occurred under the
Lease or the Indenture, the Trustee may terminate this Agreement upon 15 days written
notice to the County, the Issuer and the Board; rovid however, the Trustee agrees
that, except as required under the provisions of the Financing Documents, it will not
terminate this Agreement upon the o~currerice of an Event of Default if the County is
able to demonstrate to the reasonable satisfaction of the Trustee that the County is
procceding with due diligence to issue the Certificates and that the County reasonably
believes that it will be able to complete the issuance of the Certificates and the purchase
of the Project within a reasonable period of time. Termination of this Agreement by the
Trustee pursuant to this Section 3.3(ii) shall not relieve the County, the Issuer and the
Board of their obligations under Article 4.
ARTICLE 4
Transfer of Project
The Issuer, the County and the Board agree that prior to the expiration or earlier
termination of this Agrcement that the Issuer, the County and/or the Board shall have closed the
Project in accordance with all applicable laws, regulations and best industry standards. The
Issuer, the County and the Board further acknowledge and agree that the Trustee lacks the
appropriate personnel, industry knowledge and regulatory approvals necessary to possess,
control, manage or operate a detention facility, and, therefore, under no circumstances shall the
Trustee be obligated to take possession and control of the Project until the County, the Issuer and
the Board shall have complied with the terms of this Article 4.
ARTICLE 5
Rights of the Trustee
Notwithstanding anything herein to the contrary, the Trustee expressly reserves all of its
rights and remedies under the Financing Documents, including, without Limitation, the Trustee's
rights and remedies relating to the Event of Nonappropriation and the Defaults.
ARTICLE 6
Miscellaneous
6.1 Entire Agreement: Amendment. THIS AGREEMENT AND TFIE FINANCING
DOCUMENT'S AS INCORPORATED HEREIN EMBODY THE FINAL, ENTIRE _ .
saoa~~ znoc 4
AGREEMENT BETWEEN THE PARTIES HERETO REGARDING THE SUBJECT
MATTER HEREOF, AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN , _
OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF, AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO.
THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions
of this Agreement may be amended or waived only by an instrument in writing signed by the _
Trustee, the Issuer, the County and the Baard. The Financing Documents remain in full force
and effect and continue to evidence the agreement of the parties with respect .to the subject
matter thereof.
6.2 Due Authorization. Each party to this Agreement represents and warrants that (i)
the execution, delivery and performance of this Agreement by such party does not require any
approval, consent of or filing with any person or entity that has not been obtained or made, and
(ii) the person executing this agreement on behalf of such party has been duly authorized to do
so.
6.3 Notices. All notices, requests, demands and other communications under this - ,
Agreement will be given in accordance with the provisions of the Financing Documents.
6.4 Successors and Assigns. This Agreement will be binding upon, and will inure to
the benefit of, the parties hereto and their respective heirs, legal representatives, successors and
assigns, provided that the County, the Issuer and the Board may not assign any rights or
obligations under this Agreement without the prior written consent of the Trustee.
6.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas and applicable laws of the United States of
America.
6.6 Interpretation. Wherever the context hereof so requires, the singular shall include
the plural, the masculine gender shall include the feminine gender and the neuter and vice versa
The headings, captions and arrangements used in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.
6.7 Severability. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never
been contained herein.
6.8 Counterparts. This Agreement may be executed and delivered in any number of
counterparts, each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute one and the same instrument.
Execution of this Agreement via facsimile shall be effective, and signatures received via
facsimile shall be binding upon the parties hereto and shall be etI'ective as originals.
[Remainder of page intentionally left blank.]
880477 2.DOC - = ~ , -%. ; ~ - ~
IN WITNESS WHEREOF, this Agreement has been entered into as of the date and year
first written above.
KERR COUNTY, TF
~.
--~
By:
Name: T~ ~1e~
Title: L•ax.~,r Sum
HILL COUNTRY JUVENILE FACILITY
CORPORATION
By. ~
Name•
Title: 1~t~es~ n+-
KERR COUNTY JUVENILE BOARD ~
By:
Name: ~t T~ s~1~
Title: GClo~.f .,~.
THE BANK OF NEW YORK TRUST
COMPANY, N.A., as Trustee
By:
Name:
Title:
ssoa7~ i.ooc 6
~~a coc,~~~-
W.R "RUSTY" HIERHOLZER, SHERIFF
my~A'~,s o`~~ KERR COUNTY
October 29, 2004
Patrick Tinley, County Judge
Kerr County Commissioner's Court
700 Main Street, County Court House
Kerrville, TX 78028
Reference: Kerr County Juvenile Facility
Dear Judge Tinley,
It is my unfortunate duty to advise you that after the meeting I had with the Texas
Commission on Jail Standards and Architect Wayne Gondick on October 28, 2004, I do
not feel that attempting to convert the new juvenile building into an adult facility is cost
effective or feasible.
The cost at a very minimum, would run approximately $350,000, which would have to
include the following:
1. Reinforce outside walls
2. Upgrade smoke evacuation system
3. Upgrade all locks and hardware
4. Install three (3) administrative separation cells
5. Add three (3) safety vestibules.
Another major concern is that in order to convert this facility from atwenty-four (24) bed
facility to aforty-eight (48) bed facility, all the individual cell doors would have to be
removed. Without the cell doors in place, a correction's officer has to enter a full cell
area and put up to fourteen (14) inmates between the officer and his/her nearest exit, in
order to check the last cell in the block. This would put the officer at a much higher risk
of assault or other danger than I feel is prudent.
The reason the doors would have to be removed is that the square footage inside the cell
is too small to place two inmates in the cell.
400 Clearwater Paseo • Kerrville, Texas 78028
830-896-1216 • Center Point 830-634-2334 • JFAX 830-896-7380 • Crime Stoppers 830-896-TIPS
~p~ CO(~
~ ~~~
s W.R "RUSTY" HIERHOLZER, SHERIFF
yFAi~~s o`~~ KERR COUNTY
Reference: Ken County Juvenile Facility
Page 2
To use the facility as atwenty-four (24) person minimum security facility, we would still
have to upgrade the smoke evacuation system. Although this would be the least
expensive way to use the facility,l do not feel that this would be of any relief to our
current facility for the following reasons:
1. according to the architect, we could add at least forty-eight (48) maximum
security beds to our current facility for less money.
2. Just about anyone charged with a felony would need to be classified as at least
a medium inmate and could not be housed in the facility.
3. With our current situation in the adult facility, adding anything less than forty-
eight (48) maximum security beds that would allow us to house any type of
inmates, especially female inmates, will do nothing to address the problem we
will soon face with over-crowding.
Sincerely,
W.R. "R Izer, S
Ken County Sheri s Department
WRH/edk
400 Clearwater Paseo • Kerrville, Texas 78028
830-896-1216 • Center Point 830-634-2334 • FAX 830-896-7380 • Crime Stoppers 830-896-TIPS