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HomeMy WebLinkAbout09 ADOPT RESOLUTION NO. 12-21:, f AGET~TDA REPORT Rev e eid m 9 ~ ~;,"'~ ~ City Manager Finance Director MEETING DATE: FEBRUARY 21, 2012 TO: JEFFREY C. PARKER, CITY MANAGER FROM: PAMELA ARENDS-KING, FINANCE DIRECTOR SUBJECT: ADOPT RESOLUTION N0.12-21 DESIGNATING CONSULTANTS IN CONNECTION WITH THE PROPOSED ISSUANCE OF WATER REFUNDING REVENUE BONDS SUMMARY: The City is considering the issuance of water refunding revenue bonds to refinance the 2003 water revenue bonds to take advantage of the favorable interest rates and lower the annual debt service obligations. Resolution No.12-21 designates consultants in connection with the proposed issuance of water revenue bonds. RECOMMENDATION: It is recommended that the City Council adopt Resolution No. 12-21 designating consultants in connection with the proposed issuance of water refunding 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 refunding revenue bonds are not to exceed $44,500. Underwriter, Stone & Youngberg's, A Division of Stifel Nicolaus, average takedown fee is $3.61 per $1,000 bond and their expenses are $11,000. Therefore if the City issues up to $8.690 million of bonds their fee will be approximately $40,206.25. Bond counsel, Quint & Thimmig LLP's fee for an $8.690 million bond issue is approximately $45,000. The firm's fee for disclosure counsel services is $25,000. BACKGROUND: The City issued $14.355 million Refunding Water Revenue Bonds in 2003 to defease the 1993 Series Water System Revenue Certificates of participation. The 2003 bonds mature in 2023. From now until the maturity date the interest rate on the bonds goes from 4.00% to 4.65% with a Price or Yield of 4.70%. The proposed 2012 Water ADOPT RESOLUTION NO. 12-21 DESIGNATING CONSULTANTS IN CONNECTION WITH THE PROPOSED ISSUANCE OF WATER REFUNDING REVENUE BONDS FEBRUARY 21.2012 PAGE 2 Refunding Bonds will mature in 2023 and with an estimated Par Amount of $8.390 million and premium of $1.452 million. The bonds would not require a reserve fund and the estimated interest rates range from 2.00% to 5.00% with a Yield of 0.38% to 2.35%. The average savings on annual debt service payments until the bonds mature is approximately $204,000. These are significant savings totaling over $2 million in ten years. The savings will be applied towards building reserves in the Water Enterprise fund and towards pay as you go Capital Improvements. 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 refunding revenue bonds relating defeasing the 2003 water refunding revenue bonds, 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 Stone and Youngberg, A Division of Stifel Nicolaus, 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 refunding revenue bonds will be sold on April 5, 2012, and anticipated to close on April 19, 2012. The legal and financing bond documents for City Council approval will be on the agenda for the March 20, 2012 council meeting. Pamela Arends-King Finance Director Attachment(s): Resolution No. 12-21 RESOLUTION NO. 12-21 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, AUTHORIZING THE COMMENCEMENT OF PROCEEDINGS TO REFINANCE IMPROVEMENTS TO THE CITY'S MUNICIPAL WATER SYSTEM AND THE ISSUANCE OF WATER REFUNDING 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 refinance the acquisition and construction of certain improvements and facilities to the City's municipal water enterprise (the "Enterprise") and, in particular, to provide for the refunding of the City of Tustin 2003 Refunding Water Revenue Bonds, of which $11,165,000 is currently outstanding (the "2003 Bonds"); 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 Refunding Revenue Bonds, 2012 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 Bands, the City will sell certain Enterprise improvements to the Authority and the Authority will sell such improvements back 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 Enterprise 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 an installment sale agreement securing the outstanding Tustin Public Financing Authority Water Revenue Bonds, 2011 Series A; WHEREAS, it is appropriate that the City formally authorize the commencement 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 a subsequent meeting of the City Council and the Authority. SECTION 2: Fieldman, Rolapp & Associates is hereby designated as financial advisor to the City and Quint & Thimmig I_t_P 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 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, 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: Stifel, Nicolaus & Company, Incorporated, DBA Stone & Youngberg, a Division of Stifel Nicolaus, 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 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 21 Sc day of February, 2012. John Nielsen Mayor 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. 12-21 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 21St day of February, 2012 by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: PAMELA STOKER City Clerk