Loading...
HomeMy WebLinkAboutCC 13 INDENTURE TRUST 6-18-90} C"SENT CALENDAR N0. 13 6/18/90 AGENDA - DATE: JUNE 111 1990 Inter - Com TO: WILLIAM A. HUSTON, CITY MANAGER FROM: RONALD A. NAULT, DIRECTOR OF FINANCE SUBJECT: RESOLUTION 90-65 EXECUTING THE THIRD SUPPLEMENTAL INDENTURE OF TRUST FOR ASSESSMENT DISTRICT 85-1 RECOMMENDATION: Adopt Resolution 90-65 authorizing the execution and delivery of the Third Supplemental Indenture of Trust and authorizing certain related matters. DISCUSSION: The City's Trustee, Citibank, N.A., for Assessment District 85-1 has initiated several discussion's regarding language in the Indenture of Trust as it relates to the allocation of interest earnings on monies held in several of the internal accounts as prescribed by the Indenture, and the distribution of any surplus funds that may remain in the construction fund upon the completion of all projects in the district. Legal counsel for all interested parties have reviewed the issues raised by the Trustee and have determined that there are ambiguities and have recommended that the attached Third Supplemental Indenture of Trust be adopted by the City. The sections of the Indenture to be amended are "Redemption of Bonds -Mandatory Redemption"; "Summary of Indenture -Redemption"; "Tender and Purchase -Selection of Bonds for Redemption -Purchase Fund"; "Summary of Indenture -Pledge of the Indenture"; "Funds and Accounts -Deposit of Monies -Variable Rate Reserve Account"; "Use of Money in the Construction Fund"; "Interest Reserve Fund"; and "Investments". These sections deal primarily with the allocation of investment earnings as credits to assessments for both the fixed rate and the variable rate bond holders. In accordance with existing State law, the current bond holders have been notified by mail of the proposed changes to the Indenture and it is anticipated that the trustee will have the consent of the majority at the time of the Council meeting. Ronald A. Nault Director of Finance RAN: 1s a:amendast.dst 1 2 3 4 5 6 7' 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 90-65 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN AUTHORIZING THE EXECUTION AND DELIVERY OF THE THIRD SUPPLEMENTAL INDENTURE OF TRUST AND AUTHORIZING CERTAIN RELATED MATTERS WHEREAS, the City Council of the City of Tustin has previously authorized the execution and delivery of an Indenture of Trust, dated as of August 1, 1986 by and between the City and Citibank, N.A., as Trustee (the "Indenture of Trust") with respect to the issuance of $50,650,000 aggregate principal amount of the City's Assessment District No. 85-1 Improvement Bonds (the "Bonds"); and WHEREAS, the City Council has previously authorized the execution and delivery of the First Supplemental Indenture of Trust, dated as of February 1, 1987 by and between the City and Citibank, N.A. , as Trustee, and the Second Supplemental Indenture of Trust, dated as of September 1, 1989 by and between the City and Citibank, N. A., as Trustee (as amended and supplemented, the "Original Indenture"); and WHEREAS, it is currently anticipated that upon the completion of the works of improvements relating to Assessment District No. 85-1, there will be moneys remaining in the Construction Fund of the Original Indenture; and WHEREAS, in order to provide, among other things, that the portion of any excess moneys held in the Construction Fund of the Original Indenture allocable to the Bonds bearing interest at other than a fixed interest rate may be applied (subject to prior application) as a credit against interest on Assessments bearing interest at other than a fixed interest rate and to provide that certain ambiguities with respect to the transfer and application of interest earnings on moneys held in the Remarketing Cost Account and the Interest Reserve Fund of the Original Indenture be clarified to be consistent with Section 5.08 of the Original Indenture, an amendment to the Original Indenture is desirable and in the best interests of the parties to the Original Indenture; and WHEREAS, the City and Citibank, N.A. desire to execute and deliver the Third Supplemental Indenture of Trust, dated as of June 1, 1990 by and between the City and Citibank, N.A. (the "Third Supplemental Indenture") the proposed form of which is attached as Exhibit A hereto, to amend the Original Indenture as described above; and 1 21 31 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 a: WHEREAS, Section 9.01 of the Original Indenture provides that the Original Indenture may be amended or supplemented at any time by an amendment or a supplement to the Original Indenture, which amendment or supplement shall become binding when the written consents of the owners of a majority in aggregate principal amount of the Bonds then outstanding and the written consent of the letter of credit bank (the "Bank") are filed with the Trustee; and WHEREAS, pursuant to said Section 9.01, notice of the proposed execution and delivery of this Third Supplemental Indenture has been given to the owners of the Bonds and to the Bank requesting consent from such owners and Bank to the Third Supplemental Indenture. BE IT RESOLVED, DETERMINED AND ORDERED BY THE CITY COUNCIL OF THE CITY OF TUSTIN AS FOLLOWS: SECTION 1. The City hereby approves the Third Supplemental Indenture, amending the Original Indenture, and the Mayor or Mayor Pro -Tem and City Clerk are hereby authorized on behalf of the City to execute the Third Supplemental Indenture with such additions, deletions and clarifications as approved by the Mayor or Mayor Pro -Tem, such execution being approval by the City of such additions, deletions or clarifications. SECTION 2. The Mayor or Mayor Pro -Tem, City Manager, Finance Director, Treasurer, City Clerk and other appropriate officers of the City are hereby further authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts necessary and proper to carry out the transactions contemplated by this Resolution. PASSED AND ADOPTED by the City Council of the City of Tustin at a regular meeting held on the 18th day of June, 1990. ATTEST: Mary Wynn, City Clerk lenture.851 Richard B. Edgar, Mayor Exhibit A THIRD SUPPLEMENTAL INDENTURE OF TRUST THIS THIRD SUPPLEMENTAL INDENTURE OF TRUST (the "Third Supplemental Indenture") dated as of June 1, 1990 by and between the City of Tustin, California (the "City") and Citibank, N.A. (the "Trustee"), a national banking association incorporated under the laws of the United States of America; WHEREAS, the City has heretofore entered into an Indenture of Trust dated as of August 1, 1986 by and between the City and the Trustee, as amended and supplemented by the First Supplemental Indenture of Trust dated as of February 1, 1987 by and between the City and the Trustee and the Second Supplemental Indenture of Trust dated as of September 1, 1989 by and between the City and the Trustee (as amended and supplemented, the "Original Indenture") to provide for, among other things, the securing of the City's $50,650,000 aggregate principal amount of Assessment District No. 85-1 Improvement Bonds (the "Bonds"); and WHEREAS, it is currently anticipated that upon the comple- tion of the works of improvements relating to Assessment District No. 85-1, there will be moneys remaining in the Construction Fund of the Original Indenture; and WHEREAS, the parties desire to have the portion of any excess moneys held in the Construction Fund of the Original Indenture allocable to the Bonds bearing interest at other than a fixed inter- est rate applied (subject to prior application) as a credit against interest on Assessments bearing interest at other than a fixed inter- est rate rather than used to redeem Bonds bearing interest at other than a fixed interest rate; and WHEREAS, the parties desire to amend the Original Indenture to provide that certain ambiguities with respect to the transfer and application of interest earnings on moneys held in the Remarketing Cost Account and the Interest Reserve Fund of the Original Indenture be clarified to be consistent with Section 5.08 of the Original Indenture; and 94691.5.2535.39:31 WHEREAS, the written consents of the Owners of a majority in aggregate principal amount of the Bonds Outstanding and the writ- ten consent of The Mitsubishi Trust and Banking Corporation, Los Angeles Agency (the "Bank") are to be obtained with respect to this Third Supplemental Indenture in accordance with Section 9.01 of the Original Indenture; and WHEREAS, in accordance with Section 9.01 of the Original Indenture, this Third Supplemental Indenture shall become binding when the written consents of the Owners of a majority in aggregate principal amount of the Bonds Outstanding and the written consent of the Bank have been filed with the Trustee; NOW, THEREFORE, KNOW ALL PEOPLE BY THESE PRESENTS, THIS THIRD SUPPLEMENTAL INDENTURE OF TRUST WITNESSETH: That, in consideration of the premises, it is agreed by and between the City and the Trustee as follows: ARTICLE I AUTHORITY AND DEFINITIONS SECTION 1.01. Supplemental Indenture. T h i s T h i r d Supplemental Indenture is supplemental to the Original Indenture. SECTION 1.02. Authority for this Third Supplemental Indenture. This Third Supplemental Indenture is authorized pursuant to the provisions of the Act and in accordance with Section 9.01 of the Original Indenture. SECTION 1.03. Definitions. All terms which are defined in Section 1.01 of the Original Indenture shall have the same meanings, respectively, in this Third Supplemental Indenture as such terms are given in said Section 1.01 of the Original Indenture. ARTICLE II AMENDMENTS TO CERTAIN PROVISIONS OF THE ORIGINAL INDENTURE SECTION 2.01. Amendments to Certain Provisions of the Original Indenture. The following amendments to the Original Indenture shall become effective at such time as this Third Supplemental Indenture is executed and delivered by the City and the Trustee, and the written consents of the Owners of a majority in aggregate principal amount of the Bonds Outstanding and the written -2- 94691.5.2535.39:31 consent of the Bank are filed with the Trustee, all as required by Section 9.01 of the Original Indenture. 1. Amendment to the f irst paragraph of Section 3.01(A) of the Original Indenture. The first part of Section 3.01(A) of the Original Indenture (to the first colon in such Section 3.01(A)) shall be amended to read as follows: "(A) Unit Pricing Bonds are subject to redemption on any Business Day upon notice as hereinafter provided, as a whole, or in part in Authorized Denominations in order of the Purchase Dates of such Bonds from moneys derived from foreclosure under Section 7.02 hereof or from prepaid Assessment Installments under the circumstances and upon the conditions and terms prescribed herein at a redemption price calculated as set forth below plus accrued and unpaid interest, if any:" 2. Amendment to last paragraph of Section 301(A) of the Original Indenture. The last paragraph of Section 3.01(A) of the Original Indenture shall be amended to read, in its entirety, as follows: "Demand Bonds are subject to redemption on any Interest Payment Date upon notice as hereinafter provided, as a whole, or in part in Authorized Denominations, from moneys derived from foreclosure under Section 7.02 hereof or from prepaid Assessment Installments under the circum- stances and upon the conditions and terms prescribed herein at a redemption price equal to the sum of the principal amount of the Bonds redeemed plus accrued interest thereon to the date fixed for redemption without redemption premium." 3. Amendment to last sentence of second paragraph of Section 3.01(C) of the Original Indenture. The last sentence of the second paragraph of Section 3.01(C) of the Original Indenture shall be amended to read as follows: "In determining such schedule, the Finance Director of the City shall credit amounts transferred from the Interest Reserve Fund pursuant to Section 5.07 and the moneys trans- ferred from the Variable Rate Reserve Account, as provided in the first sentence of Section 5.04(D)(v)." 4. Amencbment to Section 3.05 of the Original Indenture. Section 3.05 of the Original Indenture shall be amended to read, in its entirety, as follows: -3- 94691.5.2535.39:31 "SECTION 3.05. Selection of Bonds for Rede tion. If not otherwise provided in Sections 3.01, 3.02, 3.03 or 3.04, whenever less than all the Outstanding Bonds are to be redeemed on any one date, the Trustee shall select the Bonds to be redeemed in whole or in part from the Outstanding Bonds by lot in any manner that the Trustee deems fair; provided, however, that if Bonds are to be redeemed from prepaid Assessments or from moneys derived from foreclosures under Section 7.02 hereof, the Trustee shall select for redemption Bonds bearing interest in the same mode as such Assessment and, among Bonds of the same Mode, a Bond bearing a rate of interest equal to the rate of interest on such Assessment and if Bonds are to be redeemed from moneys transferred from the Construction Fund to the Redemption Account the Trustee shall use such moneys to redeem Fixed Rate Bonds (and pro rata among Fixed Rate Bonds with different Fixed Interest Rates), in accordance with Section 3.01 hereof. The Trustee shall promptly notify the Bank, the City, the Remarketing Agent and the Paying Agent in writing of the numbers of the Bonds so selected for redemption in whole or in part on such date; provided, however, that if on the date of selection, the Bank is the Owner of any of the Bonds, such Bonds shall be selected for redemption by the Trustee prior to selecting any Unit Pricing Bonds or Demand Bonds." 5. Amendment to fourth paragraph of Section 4.08(D) of Original Indenture. The fourth paragraph of Section 4.08(D) of Original Indenture shall be amended to read, in its entirety, follows: "Interest and earnings on amounts on deposit in the Remarketing Cost Account shall remain on deposit in such Account. If on the first Business Day of any month the amount on deposit in the Remarketing Cost Account exceeds the Remarketing Cost Account Requirement, such excess shall be transferred (a) to the Variable Rate Reserve Account to the extent of any deficiency therein, thereafter (b) to the Fixed Rate Reserve Account to the extent of any deficiency therein and .thereafter (c) to the Interest Account and applied as a credit against interest on all Assessments, with such credit being applied pro rata based on the prin- cipal amount of such Assessments." the the as 6 Amendment to Section 5.04 (D) (v) of the Original Indenture. Section 5.04 (D) (v) of the Original Indenture shall be amended to read, in its entirety, as follows: -4- 94691.5.2535.39:31 " (v) Upon any conversion of all or any portion of the Bonds to a Fixed Interest Rate, the Trustee shall transfer from the Variable Rate Reserve Account and to the extent permitted by Section 4.08(D)I from the Remarketing Cost Account, to the Fixed Rate Reserve Account an amount equal to the Fixed Rate Reserve Requirement for such Bonds. Upon the conversion of all of the Bonds to a Fixed Interest Rate or on the date on which no Bonds bearing interest at other than a Fixed Interest Rate are Outstanding and after any transfer by the Trustee to the Fixed Rate Reserve Account pursuant to the preceding sentence, amounts remaining in the Variable Rate Reserve Account shall be transferred to the Reserve Earnings Fund to pay any fees, expenses and indemnifications payable pursuant to Section 5.05 hereof if the Finance Director of the City determines that the amount on deposit in the Reserve Earnings Fund without such trans- fer would not be sufficient to pay all fees, expenses and indemnifications otherwise payable from the Reserve Earnings Fund, and thereafter any remaining amount not required to be transferred to the Reserve Earnings Fund shall be transferred to the Interest Account and applied as a credit against interest on all Assessments, with such credit being applied pro rata based on the principal amount of such Assessments; provided, however, if all Bonds bear- ing interest at other than a Fixed Interest Rate are to be refunded, then upon the direction of the Finance Director of the City and after any transfer to the Fixed Rate Reserve Account pursuant to the preceding sentence, all amounts remaining in the Variable Rate Reserve Account shall be applied to the redemption of Bonds bearing inter- est at other than a Fixed Interest Rate." 7. Amendment to Section 5.05 of the Original Indenture. Section 5.05 of the Original Indenture shall be amended to read, in its entirety, as follows: "SECTION 5.05. Reserve Egrninas Fund. There is hereby established and there shall be maintained by the Trustee a separate fund to be known as the "Reserve Earnings Fund." Such fund shall constitute a trust fund for the benefit of the Owners of the Bonds and the Bank. Money on deposit in the Reserve Earnings Fund shall be withdrawn solely for the payment of fees, expenses and indemnifications of the Bank or the Remarketing Agent upon receipt of bills from the Bank or Remarketing Agent, in accordance with the terms of the Reimbursement Agreement and the Remarketing Agreement as the case may be. Upon conversion of all Bonds to a Fixed Interest Rate or on the date on which no Bonds bearing interest at other than a -5- 94691.5.2535.39:31 Fixed Interest Rate are Outstanding and so long as all fees, expenses and indemnifications of the Bank and the Remarketing Agent are paid, amounts on deposit in the Reserve Earnings Fund shall be transferred to the Interest Account and applied as a credit against interest on all Assessments, with such credit being applied pro rata based on the principal amount of such Assessments." 8. Amendment to third paragraph of Section 5.06 of the Original Indenture. The third paragraph of Section 5.06 of the Original Indenture shall be amended to read, in its entirety, as follows: "When the construction of the works of improvement have been completed, or upon the decision of the City to terminate such construction the City shall deliver to the Trustee and the Bank a certificate of the City stating the fact and date of such completion or termination of such construction and stating that all the costs of such con- struction and equipment and expenses incidental thereto have been determined and paid (or that all such costs and expenses have been paid less specified claims which are subject to dispute and for which a retention in the Construction Fund is to be maintained in the full amount of such claims until such dispute is resolved or that such costs are fees, costs or indemnifications of the Trustee or Paying Agent). Upon the delivery of such certificate the City shall transfer any remaining balance of money in the Construction Fund (but less the amount of any such reten- tion or such fees, costs or indemnifications) to the Fixed Rate Reserve Account and the Variable Rate Reserve Account to the extent of any deficiencies therein and pro rata in the event of deficiencies in both such accounts, and there- after any remaining balance shall be applied pro rata, based on the principal amount of Assessments bearing inter- est at a fixed interest rate (the "Redemption Portion") and the principal amount of Assessments bearing interest at other than a fixed interest rate (the "Assessment Credit Portion"), in the manner set forth in the following two sentences. The Redemption Portion shall be transferred to the Redemption Account to be used to redeem Bonds bearing interest at a Fixed Interest Rate. The Assessment Credit Portion shall be transferred to the Interest Account and applied as a credit against interest on Assessments bearing interest at other than a fixed interest rate, with such credit being applied pro rata based on the principal amount of such Assessments." -6- 94691.5.2535.39:31 9. Amendment to third paragraph of Section 5.07 of the Original Indenture. The third paragraph of Section 5.07 of the Original Indenture shall be amended to read, in its entirety, as follows: "Any moneys held by the Trustee in the Interest Reserve Fund shall be held uninvested unless instructed to be invested by the City, in which case they shall be invested in direct obligations of the United States of America with maturity periods not exceeding thirty (30) days, and with a.maturity date on or before the dates in which the moneys are anticipated to be required. On the first Business Day of each month, all investment earnings on amounts on deposit in the Interest Reserve Fund shall be transferred to the Interest Account and applied as a credit against interest on all Assessments, with such credit being applied pro rata based on the principal amount of such Assessments." 10. Amendment to third paragraph of Section 5.08 of the Original Indenture. The third paragraph of Section 5.08 of the Original Indenture shall be amended to read, in its entirety, as follows: "Any interest or profits on deposits and investments in such funds received by the City or the Trustee (other than interest or profits on the Variable Rate Reserve Account or the Fixed Rate Reserve Account which shall be retained therein except as provided in Section 5.04(D) and Section 5.04(E) hereof, respectively) shall be deposited in the Interest Account and applied as a credit against inter- est on all Assessments, with such credit being applied pro rata based on the principal amount of such Assessments, except that prior to completion of the works of improvement and the filing of the certificate of the City as required by Section 5.06 hereof, all interest or profits on invest- ments of moneys held in the Construction Fund shall remain in said Fund." MM 94691.5.2535.39:31 ARTICLE III ORIGINAL INDENTURE TO REMAIN IN EFFECT; COUNTERPARTS SECTION 3.01. Original Indenture to Remain in Effect. Except as amended by this Third Supplemental Indenture, the Original Indenture shall remain in full force and effect. SECTION 3.02. Counterparts. This Third Supplemental Indenture may be executed in any number of counterparts, each of which, when so executed and delivered, shall be an original; but such counterparts shall.together constitute but one and the same instrument. -8- 94691.5.2535.39:31 IN WITNESS WHEREOF, the City has caused these presents to be signed in its name and on its behalf by its Mayor, and its corpo- rate seal to be hereunto affixed and attested by its City Clerk, thereunto duly authorized, and to evidence its acceptance hereof, the Trustee has caused these presents to be signed in its name and on its behalf by its duly authorized officers, and its official seal to be hereunto affixed. ATTEST: %.;iLy uierx or the city of Tustin ATTEST: Title: Written consent is hereby given pursuant to the Protocol -Agreement by: THE IRVINE COMPANY Title: -9- 94691.5.2535.39:31 CITY OF TUSTIN Mayor of the City of Tustin CITIBANK, N.A. Title: Written consent is hereby given pursuant to Section 9.01 of the Original Indenture by: THE MITSUBISHI TRUST AND BANKING CORPORATION, LOS ANGELES AGENCY Title: