HomeMy WebLinkAboutCC 6 ASSESS DIST 85-1 09-18-89TO:
FROM:
SUBJECT:
WILLIAM A. HUSTON, CITY MANAGER
RONALD A. NAULT, DIRECTOR OF FINANCE
RESOLUTION 89-142 AMENDING THE INDENTURE OF TRUST FOR
ASSESSMENT DISTRICT 85-1
RECOMMENDATION:
Adopt Resolution 89-142 approving the Second Supplemental
Indenture amending the Original Indenture and authorizing the
Mayor or Mayor Pro Tem to execute the Amended Indenture.
DISCUSSION:
Assessment District 85-1 Bonds were issued in August of 1986
prior to the IRS Code changes regarding arbitrage earnings which
became effective in January of 1987. Construction proceeds from
these Bonds were not limited by interest earnings for a three
year "temporary" construction period. Due to the long internal
processing time required by Cal Trans to finalize plans and specs
for the Tustin Ranch Road Interchange Project, we find ourselves
exceeding the three year period by approximately eighteen months.
At the time, the list of permitted investments included in the
original documents, were in compliance with IRS~Regs. Since 1986
IRS Regs have been revised, we are restricted to earnings that do
not exceed the average interest expense during the construction
phase. For the three years since issuance we have averaged 5.47
percent interest expense in the combined variable rate and fixed
rate issues. At the present time the only authorized investment
that meets the yield restriction is our Bank of America Passbook
Savings Account. .
Resolution 89-142 will authorize the Mayor to execute certain
documents ammending the Original Indenture of Trust to allow for
the investment of the ConstruCtion Funds in tax exempt Municipal
Bonds rated as Aa/P1 or higher, or tax exempt Money Market
Portfolios with assets in excess of $1 billion. This amendment
will be consistant with the language regarding permitted
investments in tax exempt securities as listed in the Indenture
for AD 86-2 which was adopted subsequent to the final arbitrage
regulations being implemented.
Page 2
September 13, 1989
Before an amendment can be executed we must have the approval of:
the Trustee; the Letter of Credit Bank; and the majority of the
current Bond holders. Ail these parties have consented to this
amendment.
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RESOLUTION NO. 89-142
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN,
CALIFORNIA, AUTHORIZING THE EXECUTION AND DELIVERY OF THE
SECOND 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 (together with the Indenture of Trust, the "Original Indenture");
and
WHEREAS, in order to assure that the City may comply with
federal "arbitrage" tax restrictions an amendment to the Original Indenture
is desirable and in the best interests of the City; and
WHEREAS, the City intends to execute and deliver the Second
Supplemental Indenture of Trust, dated as of September .1, 1989 by and
between the City and Citibank, N.A., (the "Second Supplemental Indenture")
the proposed form of which is attached as Exhibit A hereto, to amend the
Original Indenture as described above; and
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 Second Supplemental Indenture has been given
to owners of Bonds and to the Bank requesting consent from such owners and
Bank to the Second Supplemental Indenture.
NOW, THEREFORE, BE IT RESOLVED, DETERMINED and ordered by the
City Council of the City of Tustin as'follows:
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SECTION 1. The City hereby approves the Second 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
Second Supplemental Indenture with such additions, deletions and
'clarification8 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 at a regular meeting of the City Council'of
the City of Tustin, California, held on the day of ,
1989. .
ATTEST:
URSULA E. KENNEDY
MAYOR
MARY E. WYNN
CITY CLERK
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EXHIBIT "A"
SECOND SUPPT.RN]~TAL INDENTURE OF TI~3~
THIS SECOND SUPPLEMENTAL INDENTURE OF TRUST (the "Second
Supplemental Indenture") dated as of September 1, 1989 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;
WITNESSETH:
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 (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, the City desires to amend the Original Indenture
to provide that unspent moneys on deposit in the Construction Fund of
the Original Indenture .may be invested in certain tax-exempt obliga-
tions in order to assure that the City will comply with federal
"arbitrage" tax restrictions; and
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
Second 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 Second 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;
94691.9999.2535.01:9
NOW, THEREFORE, KNOW ALL PEOPLE BY THESE PRESENTS, THIS
SECOND SUPPLEMENTAL INDENTURE OF TRUST WITNESSETH:
That, in consideration of the premises, it is agreed by and
between the City and the Trustee as follows:
ARTIC~ I
AUTHORITY AND DEFINITIONS
SECTION 1.01. Supplemental Indenture. T h i s S e c o n d
Supplemental Indenture is supplemental to the Original Indenture.
SECTION 1.02. Authority for this Second Supplemental
Indenture. This Second 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. Ail terms which are defined in
Section 1.01 of the Original Indenture shall have the same meanings,
respectively, in this Second Supplemental Indenture as such terms are
given 'in said Section 1.01 of the Original Indenture, except as pro-
vided in Section 2.01(1) hereof.
._
ARTICLE II
AMENDMENT TO CERTAIN PROVISIONS OF THE
ORIGINAL IN~~
SECTION 2.01. Amendment to Certain Provisions of the
Original Indenture. The following amendment to the Original
Indenture shall become effective at such time as this Second
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
consent of the Bank are filed with the Trustee, all as required by
Section 9.01 of the Original Indenture.
1. Amendment to Section 1.01 of the Original Indenture.
The definition of "Permitted Investments" contained in Section 1.01
of the Original Indenture shall be amended to add the following sub-
paragraphs (7) and (8):
"(7) With respect to moneys in the Construction
Fund, tax-exempt obligations of any state of the
United States or any political subdivision thereof,
which at the time of investment are rated "Aa/Pi" or
94691.9999.2535.01:9
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higher by Moody's and "AA" or higher by S&P, or if
short-term obligations, are rated in the highest pos-
sible category by Moody's and "Al+" by S&P; and
(8) With respect to moneys in the Construction
Fund, interests in tax-exempt money market portfolios
having assets in excess of one billion dollars
($1,000,000,000) ."
ARTICLE III
ORIGINAL INDENTUR~ TO REMAIN IN.. EFFECT;
COUNTERPARTS
SECTION 3.01. Original Indenture to Remain in Effect.
Except as amended by this Second Supplemental Indenture, the Original
Indenture shall remain in full force and effect.
SECTION 3.02. Counterparts. This Second 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.
94691.9999.2535.01:9
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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.
CITY OF TUSTIN
ATTEST:
Mayor of the City of Tustin
City Clerk of the City
of Tustin
CITIBANK, N.A.
'ATTEST-.
Title:
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:
94691.9999.2535.01:9
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