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HomeMy WebLinkAbout05 ADOPT TPFA RESOLUTION NO. 13-01MEETING DATE: SEPTEMBER 17, 2013 TO: JEFFREY C. PARKER, CITY MANAGER FROM: PAMELA ARENDS -KING, FINANCE DIRECTOR /INTERIM CITY TREASURER SUBJECT: ADOPT TUSTIN PUBLIC FINANCING AUTHORITY (TPFA) RESOLUTION NO.13 -01 AUTHORIZING COMMENCEMENT OF PROCEEDINGS AND DESIGNATING CONSULTANTS IN CONNECTION WITH THE PROPOSED FINANCING OF IMPROVEMENTS TO THE CITY'S MUNICIPAL WATER SYSTEM BY THE ISSUANCE OF WATER REVENUE BONDS SUMMARY: The City is considering the issuance of water revenue bonds to finance improvements to the City's municipal water system. TPFA Resolution No.13 -01 authorizes City Staff to proceed with the preparation of the documents needed for the financing and designates consultants to assist with the proposed issuance of water revenue bonds ( "the bonds "). RECOMMENDATION: It is recommended that the City Council adopt TPFA Resolution No. 13 -01 authorizing the commencement of proceedings and designating consultants in connection with the proposed issuance of water revenue bonds. FISCAL IMPACT: Any obligation of the City to pay the designated consultants' fees will be contingent upon the sale and issuance of the water revenue bonds and all of such fees will 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 refunding bonds are not issued, the City will have no financial obligation to any of these consultants for their work related to the refunding bonds. The fee of the financial advisor, Fieldman, Rolapp & Associates, for financial services performed in connection with the issuance of the bonds is not to exceed $44,500. The average takedown fee of the underwriter, First Southwest, is expected to be approximately $5.00 per $1,000. Therefore, if the City issues up to $15.0 million of bonds, their fee is expected to be approximately $75,000. The fee of bond counsel, Quint & Thimmig LLP, for a $15.0 million bond issue is approximately $57,500. The firm's fee for disclosure counsel services is $25,000. ADOPT TPFA RESOLUTION NO. 13 -01 DESIGNATING CONSULTANTS IN CONNECTION WITH THE PROPOSED ISSUANCE OF WATER REVENUE BONDS SEPTEMBER 17, 2013 PAGE 2 CORRELATION TO THE STRATEGIC PLAN: The issuance of the water revenue bonds correlates to the City's strategic plan for public safety and protection of assets to ensure Tustin is an attractive, safe and well maintained community in which people feel pride and for organizational excellence and customer service. BACKGROUND: In June 2010, the City approved a five year water rate plan that included the issuance of two separate bonds to cover major capital improvements to the water infrastructure. Bonds were issued in May 2011 to pay for the rehabilitation of the Rawlings Reservoir. That project is completed so the proceeds from the second bond issuance will cover the cost of rehabilitating the Simon Ranch Reservoir Booster Pump Station and Pipeline Replacement Project and the Tustin Avenue Well Replacement Project. Staff has estimated these projects will cost approximately $14.0 million. The proposed bonds will mature in 2043 and are expected to have an initial principal amount not to exceed $15.0 million. The bonds will not require a reserve fund. The estimated interest rates for the various maturities of the bonds are estimated to range from 2.00% to 5.00 %. The estimated average annual debt service payment is approximately $1,020,000. 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 bonds relating to the financing of the water system improvements, with the primary legal documents subject to the approval of the City Council at a future City Council 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 First Southwest, as bond underwriter; and (c) authorizing the City Manager or the Finance Director to execute agreements with Fieldman, Rolapp & Associates and Quint & Thimmig LLP for their services related to the bonds in form acceptable to the City Manager, the Finance Director 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 bonds will be sold on or about October 24, 2013, with an anticipated closing date of November 14, 2013. The bond documents for City Council approval are expected to be on the agenda for the October 1, 2013 City Council meeting. Pamela Arends -King Finance Director /Interim City Treasurer Attachment(s): TPFA Resolution No. 13 -01 TPFA RESOLUTION NO. 13 -01 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 Tustin Public Financing Authority of the City of Tustin (the "Authority ") 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 "2013 Project ") to the City's municipal water enterprise (the "Enterprise "); 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 2013 Water Revenue Bonds (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 2013 Project 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 Authority's outstanding Tustin Public Financing Authority Water Revenue Bonds, 2011 Series A, and with an installment sale TPFA Resolution No. 13 -01 Page 2 agreement securing the Authority's outstanding Tustin Public Financing Authority 2012 Refunding Water Revenue Bonds; 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 in connection with the issuance and sale of the Bonds. The City Manager or the Finance Director is hereby authorized and directed to execute an agreement with such firm for its services with respect to the Bonds, in a form acceptable to the City Manager or the Finance Director and the City Attorney; provided that any and all compensation payable to such firm shall be contingent upon the sale and issuance of the Bonds. SECTION 3: Quint & Thimmig LLP is hereby designated as bond counsel and as disclosure counsel to the City in connection with the issuance and sale of the Bonds. The City Manager or the Finance Director is hereby authorized and directed to execute an agreement with such firm for its services with respect to the Bonds, in a form acceptable to the City Manager or the Finance Director and the City Attorney; provided that any and all compensation payable to such firm shall be contingent upon the sale and issuance of the Bonds. SECTION 4: First Southwest Company is hereby designated as underwriter to the City in connection with the issuance and sale of the Bonds. SECTION 5: 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 6: This Resolution shall take effect upon its adoption. TPFA Resolution No. 13 -01 Page 3 PASSED AND ADOPTED at a regular meeting of the Tustin Public Financing Authority held on the 17th day of September, 2013. Elwyn S. Murray Chairperson Jeffrey C. Parker Recording Secretary STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS CITY OF TUSTIN ) I, Jeffrey C. Parker, Recording Secretary of the Tustin Public Financing Authority of the City of Tustin, California, do hereby certify that the whole number of the members of the Directors of the Tustin Public Financing Authority is five; that the above and foregoing TPFA Resolution No. 13 -01 was duly passed and adopted at a regular meeting held on the 17th day of September, 2013 by the following vote: DIRECTORS AYES: DIRECTORS NOES: DIRECTORS ABSTAINED: DIRECTORS ABSENT: Jeffrey C. Parker Recording Secretary