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HomeMy WebLinkAbout09 RESOLUTION NO. 11-32t A ends Item ,ti, ~~~ ~ AGENDA REPORT Reviewed: ~. ,,_. City Manager Finance Director ~ i MEETING DATE: APRIL 19, 2011 TO: WILLIAM A. HUSTON, INTERIM CITY MANAGER FROM: PAMELA ARENDS-KING, FINANCE DIRECTOR SUBJECT: ADOPT RESOLUTION N0.11-32 DESIGNATING CONSULTANTS IN CONNECTION WITH THE PROPOSED ISSUANCE OF WATER REVENUE BONDS RELATING TO WATER INFRASTRUCTURE IMPROVEMENTS SUMMARY: The City is considering the issuance of water revenue bonds to complete major water infrastructure projects for the Water Enterprise Fund. Resolution No. 11-32 designates consultants in connection with the proposed issuance of water revenue bonds. RECOMMENDATION: It is recommended that the City Council adopt Resolution No. 11-32 designating consultants in connection with the proposed issuance of water revenue bonds. FISCAL IMPACT: The consultants' fees are paid contingent upon the sale and issuance of the bonds, all of which are expected to be paid from the proceeds of the bonds or by means of a discount on the purchase of the bonds. If for any reason the bonds are not issued, the City will have no financial obligation to any of these consultants for their work related to the Bonds. Financial advisors, Fieldman, Rolapp & Associates' fee for financial services performed in connection with the issuance of the water revenue bonds is not to exceed $54,500. Underwriter, Citigroup Global Markets Ines' fee is $4.042 per $1,000 bond. Therefore if the City issues up to $19.5 million of bonds their fee will be approximately $78,819. Bond counsel, Quint & Thimmig LLP's fee fora $19.5 million bond issue is approximately $68,750. The firm's fee for disclosure counsel services is $30,000. BACKGROUND: The City will maximize bonding capacity for the Water Revenue Bonds. Bonding capacity is estimated to be approximately $22.5 million based on the current water rate structure. The bond proceeds will finance various water infrastructure capital projects. The two primary projects to be financed are the restoration of the Rawlings Reservoir estimated at $14.5 million and the Tustin Ave Well estimated at $4.5 million. The Rawlings Reservoir project consists of demolishing the existing reservoir and replacing ADOPT RESOLUTION NO. 11-32 DESIGNATING CONSULTANTS IN CONNECTION WITH THE PROPOSED ISSUANCE OF WATER REVENUE BONDS APRIL 19, 2011 PAGE 2 it with two 3 million gallon (MG) circular pre-stressed concrete reservoirs at the same site. The overall system storage capacity will be increased to 13.8 MG. This represents an increase of 2 MG of storage that will provide added system-wide operational, fire and emergency storage. The Tustin Avenue Well Site Project involves the demolition of an aging existing water well and facility and replacing it with a new higher capacity water well housed in a 2,000 square foot facility with modern appurtenances. The new Tustin Avenue Well will reduce the City's reliance on more expensive imported water and increases the systems reliability. Other infrastructure projects include improvement on storage, security, production, distribution and treatment. Staff recommends that the City Council adopt a resolution: (a) directing Staff to proceed with the preparation of documentation necessary to provide for the issuance of the water revenue bonds relating to the financing of water infrastructure projects, which documents shall in any event be subject to the approval of the City Council at a future City Council meeting and by the adoption of a resolution authorizing the issuance of the Bonds by the Board of Directors of the Tustin Public Financing Authority at a future Tustin Public Financing Authority meeting; (b) designating the professionals necessary to assist Staff with the issuance of the bonds, including Fieldman, Rolapp & Associates as financial advisor, Quint & Thimmig LLP as bond counsel and disclosure counsel and Citigroup Global Markets Inc. as bond underwriter; and (c) authorizing the City Manager or his designee to execute agreements with the professionals for their services related to the bonds in form acceptable to the City Manager and the City Attorney. All compensation payable to the financial advisor, bond counsel and disclosure counsel will be contingent upon the sale and issuance of the bonds, and it is expected that all of the consultants will be paid from bond proceeds (or, in the case of the underwriter, by means of a discount on the purchase of the bonds). It is anticipated that the water revenue bonds will be sold on May 12, 2011, and anticipated to close on May 25, 2011. The legal and financing bond documents for City Council approval will be on the agenda for the May 3, 2011 council meeting. ~ ~- Pamela Arends-King `'~-~ Finance Director Attachment(s): Resolution No. 11-32 RESOLUTION NO. 11-32 RESOLUTION AUTHORIZING THE COMMENCEMENT OF PROCEEDINGS TO FINANCE IMPROVEMENTS TO THE CITY'S MUNICIPAL WATER SYSTEM AND THE ISSUANCE OF WATER REVENUE BONDS BY THE TUSTIN PUBLIC FINANCING AUTHORITY FOR SUCH PURPOSES, DESIGNATING CONSULTANTS AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO The City Council of the City of Tustin does hereby resolve as follows: WHEREAS, the City and the Tustin Community Redevelopment Agency have heretofore entered into a joint exercise of powers agreement establishing the Tustin Public Financing Authority (the "Authority") for the purpose, among others, of issuing its bonds to be used to provide financial assistance to the City; WHEREAS, the City has determined that, due to prevailing financial market conditions, it is in the best interests of the City to finance the acquisition and construction of certain improvements and facilities (the "Improvements") which will constitute part of the City's municipal water enterprise (the "Water System"); WHEREAS, for the purpose of raising funds necessary to provide such financial assistance to the City, the Authority proposes to authorize the issuance of its revenue bonds under the provisions of Article 4 (commencing with section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the "Act"), designated as the Tustin Public Financing Authority Water Revenue Bonds, 2011 Series A (the "Bonds"), all pursuant to and secured by an indenture of trust (the "Indenture"), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"); WHEREAS, in order to provide for the repayment of the Bonds, the Authority will sell the Improvements to the City pursuant to an installment sale agreement (the "Installment Sale Agreement"), under which the City will agree to make installment payments to the Authority payable from the net revenues of the Water System which will be calculated to be sufficient, in time and amount, to enable the Authority to pay the principal of and interest and premium (if any) on the Bonds when due and payable; WHEREAS, the City's obligations under the Installment Sale Agreement will be on parity as to payment and security with the City's obligations with respect to its $14,355,000 City of Tustin 2003 Refunding Water Revenue Bonds, of which $11,165,000 is currently outstanding; Resolution No. 11-32 Page 2 WHEREAS, it is appropriate that the City formally authorize the commence of proceedings to issue the Bonds and to appoint a financial advisor, a bond counsel, a disclosure counsel and an underwriter in connection therewith; NOW, THEREFORE, it is hereby ORDERED and DETERMINED, as follows: SECTION 1: Officers and officials of the City are hereby authorized to proceed with the preparation of documents necessary to provide for the issuance and sale of the Bonds. All such documents to which the City and the Authority will be a party shall be subject to the final approval thereof by the City Council and the Authority at subsequent meetings of the City Council and the Authority. SECTION 2: Fieldman, Rolapp & Associates is hereby designated as financial advisor to the City and Quint & Thimmig LLP is hereby designated as bond counsel and as disclosure counsel to the City, each in connection with the issuance and sale of the Bonds. The City Manager, the Assistant City Manager or the Finance Director is hereby authorized and directed to execute agreements with such firms for their services with respect to the Bonds, in forms acceptable to the City Manager, the Assistant City Manager or the Finance Director and the City Attorney; provided that any and all compensation payable to such firms shall be contingent upon the sale and issuance of the Bonds. SECTION 3: Citigroup Global Markets Inc. is hereby designated as underwriter to the City in connection with the issuance and sale of the Bonds. SECTION 4: The Mayor, the City Manager, the Assistant City Manager, the Finance Director, the City Attorney, the City Clerk and all other appropriate officials of the City are hereby authorized and directed to execute such other agreements, documents and certificates as may be necessary to effect the purposes of this Resolution and the financing herein authorized. SECTION 5: This Resolution shall take effect upon its adoption. PASSED AND ADOPTED at a regular meeting of the Tustin City Council held on the 19t" day of April, 2011. Jerry Amante Mayor Resolution No. 11-32 Page 3 ATTEST: PAMELA STOKER City Clerk STATE OF CALIFORNIA ) COUNTY OF ORANGE ) CITY OF TUSTIN ) I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is five; that the above and foregoing Resolution No. 11-32 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 19t" day of April, 2011 by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: PAMELA STOKER City Clerk