HomeMy WebLinkAbout1996-12-03; City Council; 13934; APPROVAL OF DOCUMENTS AND CERTAIN ACTIONS ASSOIATED WITH THE REFUNDING OF THE ENCINA FINANCING JOINT POWERS AUTHORITY WASTEWATER REVENUE BONDS, 1989 SERIES A.c ( ;x a 8! OF CARLSBAD - AGENDA BILL
EFUNDING OF
AUTHORITY WASTEWATER REVENUE BONDS,
RECOMMENDED ACTION:
Adopt Resolution No. 96- 413 approving the form of an amended and re
installment purchase agreement for the refunding of certain obligations relating
Encina Water Pollution Control Facility and approving the form of certain docu
and actions in connection therewith.
ITEM EXPLANATION
In 1989, the City and three other agencies formed the Encina Financing Joint F
Authority (EFJPA) to finance the cost of constructing Phase 5 of the Encina
Pollution Control Facility. The other agencies involved are the City of Vis1
Buena Sanitation District and the Leucadia County Water District. The EFJPA
$33.5 million in debt that was secured by installment purchase agreements fror
of the agencies.
At the EFJPA board meeting in 1993, the Board directed staff to move ahead M
selection of a financing team to refund the outstanding EFJPA bonds. In Fe
1996, the Board approved the selection of the underwriter and bond counsc
approval of the underwriter was postponed for some time as the interest ra
municipal bonds had risen making the refunding uneconomical at that time.
to the EFJPA, so staff began work on preparing the documents again.
Since the security for the bonds is based on the underlying credit worthiness
participating agencies, it is necessary for each agency involved to appro
documents relating to the refunding. Staff is requesting that the Council appr
form, all documents necessary to consummate the refunding of the outstandin1
bonds and to authorize the Mayor, the City Manager, the City Clerk and certaii
officers upon advise of the City Attorney to make changes as they deem nec
and advisable. The timing of the refunding will be dictated to a large part
municipal bond market as staff is recommending that the refunding occur onl]
City will receive net present value savings of at least 3.5%.
The calculation of a net present value savings is an accepted method used
industry to determine the amount of savings expected from a bond refundin(
all associated costs) and then discounts this stream of payments to take into i
the time value of money. This value is termed the “present value of the saving:
calculate the percentage, the present value savings is divided by the amouni
outstanding bonds to be refunded.
beginning of 1996, the rates dropped back down to a level that could provide s
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method computes the annual savings to be achieved by the refunding (after ad 5
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As of August 30, 1996, there was $30,330,000 outstanding on the bonds with an a
interest rate of 6.7%, as shown below.
City of Carlsbad $1 1,489,000
beucadia Water District 7,2 I 3,000
City of Vista 5,638,000
Buena Sanitation District 5,990,000
Total: $30,330,000
If the refunding goes forward, the City of Vista and the Buena Sanitation Distric
indicated that they will pay off their share of the bonds. Thus, only Leucadia Water
and the City of Carlsbad will continue to have bonds outstanding.
Therefore, the total bonds to be refunded will be approximately $18,702,000. The new
to be issued will have the same term as that of the currently outstanding bonds (final pi
in 2014). Also only the amount of bonds necessary to refund the outstanding bonds
issued. No "new" money will be generated. The City has approximately $900,000 ren
in the EFJPA construction fund which can only be used to call bonds when possible.
funds will be included in the refunding to help reduce the total new bonds that neec
issued.
In order to achieve a 3.5% present value savings on the refunding of the bonds, tf
bonds would need to be issued at an average interest rate of 5.5%. At this minimal le!
gross savings to be achieved over time by the refunding will total about $1,080,00(
Carlsbad alone, we would be refunding $1 1,489,000 of bonds to achieve a total gross I
over time of $660,000, which equates to an annual reduction in debt service payment o
$37,000 per year.
Of course, interest rates continue to fluctuate and it is possible that we could achieve
savings than stated here. On the other hand, if rates spiral upward, the refunding will
on hold until they drop back down to where we can at least achieve our target presen
savings of 3.5%.
The attached documents do not change the relationships or the obligations of the C
respect to the EFJPA and the Encina Wastewater Agency other than to adjust the ob1
and payments necessary under the various agreements nor do the documents effl
City's share of the Encina Water Pollution Control Facility.
COUNCIL ACTIONS REQUIRED:
The attached resolution authorizes sale of the bonds provided that the City will I
present value savings of at least 3.5%. It also approves the following documents in fo
gives certain officers authority to make changes to complete the refunding in accordan
this approval. This resolution is required in order for the EFJPA to proceed w
refinancing:
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' Page 3 of Agenda Bill # 1 i q 3 Y
Documents-
I. Assignment Agreement and Installment Purchase Agreement - Sets forth the
obligations to make payments on the outstanding bond issue.
2. Escrow Agreement - Provides for the defeasance of the 1989 bond issue and se
the City's remaining obligations for this bond issue.
3. Bond Purchase Contract - Contract between the EFJPA and the underwriter
purchase of the bonds.
4. Preliminary Official Statement - Used by the bond underwriter as information
buyers of the bonds.
5. Trust Indenture - Sets forth the rules of the financing between the EFJPA a
trustee which is State Street Bank and Trust Company.
6. Continuing Disclosure Agreement - New document required by Rule 15c
certain annual disclosures about the City and its sanitation fund. It also requi
City to provide additional disclosures upon the occurrence of certain events SU(
draw on the reserve fund or default in a debt payment.
Drafts of all of these documents are on file in the City Clerk's office.
Securities Exchange Commission. It sets forth the requirements of the City to I
FISCAL IMPACT:
As stated earlier, the refunding should provide annual debt service savings to thc
Sanitation fund of approximately $37,000 annually. The attached resolution on11
authorization to consummate the refunding if the City can achieve at least a 3.5% I
value savings.
The EFJPA board previously approved Stone 8 Youngberg as the underwriter and St\
Yocca, Carlson & Rauth as the bond counsel. Stone & Youngberg was selected as thc
of a Request for Proposal process due to their experience, reputation and competitive 1
Stradling was chosen due to their experience on the 1989 EFJPA bond issue. The f
both of these parties are contingent upon a successful bond offering and will be paic
the proceeds of the refunding bonds.
EXHIBITS:
1. Resolution No. 96-YI3 of the City Council of the City of Carlsbad appro\
amended and restated installment purchase agreement for the refunding of
obligations relating to the Encina Water Pollution Control Facility and ap
certain documents and actions in connection therewith.
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CITY OF ENCINITAS
505 SOUTH VULCAN AVENUE
ENCINITAS, CA 92024
619/633-2627 (Fax)
TRANSMITTAL
6191633-260 1
TO: City Clerk
City of Carlsbad
DATE: December 13,1996
FROM: DEBORAH CERVONE, CITY CLERK'S OFFICE
ENCLOSED PLEASE FIND:
Encinitas City Council Resolution 96-90, pertaining to the Refinancing of Certain Debt of
the Encina Financing Joint Powers Authority
VIA: MAILX- MESSENGER
- For Your Information - Please Return Enclosures
-- - X For Your Files - Please Telephone Me
In Accordance with your request - Please read and advise
CITY OF ENCINITAS
CITY CLERK
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RESOLUTION NO. 96-90
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ENCINITAS PERTAINING TO THE-REFINANCING OF
CERTAIN DEBT OF THE ENCINA FINANCING JOINT
POWERS AUTHORITY
WHEREAS, the Encina Water Pollution Control Facility ("EWPCF") is owned by the city of Carlsbad, the City of Vista, the Buena Sanitation District, the Leucadia County Water
District, the Vallecitos Water District (formerly San Marcos County Water District) and the City
of Encinitas, as successor to Encinitas Sanitary District (the "Member Agencies"), pursuant to a
revised establishment document for the Encina Wastewater Authority, as amended (the "Master
JPA"); and
WHEREAS, the Member Agencies have previously agreed to an expansion of the
EWPCF to increase its wastewater treatment capacity and to make other needed improvements,
pursuant to the 39th Supplement to the Master JPA (the "39th Supplement") and the 43rd
Supplement to the Master JPA (the "43rd Supplement") (collectively, the "Expansion Project");
and
WHEREAS, the Cities of Carlsbad and Vista. the Buena Sanitation District and the
Leucadia County Water District (the "Participants") have previously formed the Encina Financing
Joint Powers Authority (the "Authority") for the purpose of financing the Participants' share of
the Expansion Project cost! current expansion of capacity and other improvements to the
EWPCF; and
WHEREAS, the financing structure of the Expansion Project involved a conveyance and
assignment of the Participants' capacity in the Expansion Project, pursuant to an Assignment
Agreement dated as of June 1, 1989, by and among the Participants and the Authority, with a
concurrent repurchase of the capacity by the Participants pursuant to the Installment Purchase
Agreement described below; and
WHEREAS, the Authority entered into Installment Purchase Agreements dated as of
June 1, 1996, by and among the Authority, as seller, and each of the Participants, as purchasers
(the "Installment Purchase Agreements"), which provided for the purchase on an installment
purchase basis by the Participants of their respective shares in the Expansion Project; and
WHEREAS, the Authority assigned the payments obtained from the Installation Purchase
Agreements to a trust estate, pursuant to an Indenture of Trust dated as of June 1, 1989 by and
and
among the Participants and State Street Bank and Trust Company of California (the "Indenture");
WHEREAS, the Authority issued its Wastewater Revenue Bonds (Phase IV Expansion
Project) 1989 Series A (the "1989 Bonds") secured by the payments to be made by the
Participants under the Installment Purchase Agreements to raise money to pay for the acquisition
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and construction of the Participants' respective shares of the Expansion Project and other related
expenses; and
WHEREAS, the City of Carlsbad and the Leucadia County Water District have
determined it is in their best interest to refinance their obligations related to the 1989 Bonds, anc
substantially similar terms to those applicable to the 1989 Bonds; and
for the Authority to issue refundinp bands (thc "1996 Bonds") for such Part;c;pants on
WHEREAS, the bonds will be issued and secured as provided in the Indenture; and
WHEREAS, each of the Member Agencies have been presented with copies of the basic
form of agreements and documents discussed above.
. NOW, THEREFORE, BE IT RESOLVED. as follows:
1. The reassignment of Carlsbad's and Leucadia's financed share of capacity in the
Expansion Project pursuant to the basic terms of the forms of Amended and Restated Installmeni
Purchase Agreement and Amended and Restated Assignment Agreement and the actions
contemplated thereby be, and in all respects the same hereby are, consented to and approved, bu
only to the extent required by the Master JPA and any collateral agreements or requirements.
2. Nothing in this resolution shall constitute an endorsement of the financing
structure or scheme contemplated by the participants.
3.
to the Authority.
The City Clerk is hereby authorized to furnish a certified copy of this resolution
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PASSED AND ADOPTED on 12/ 11 , 1996, by the following vote:
Approved:
(Sea
Attest:
;c, 1. L/L< { 9. hC .z; ./-iiJyqA7
City Clerk of the Ciry of Encinim \
3 PUBL:44381-1 I017122898.0001
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CITY CLERK’S CERTIFICATE
I, Deborah Cervone, City Clerk of the City of Encinitas, California, hereby certify as
follows:
The foregoing is a full, true and correct copy of a resolution duly adopted at a regular
meeting of the City Council of said City duly and regularly and legally held at the regular
meeting place thereof on 12 / 11 , 1996, of which meeting all of the members of said City
Council had due notice and at which a majority thereof were present.
At said meeting said resolution was adopted by the following vote:
Ayes: Aspell, Bond, Cameron, Davis, DuVivier
Noes: None
Absent: . None
None Abstain:
I have carefully compared the same with the original minutes of said meeting on file and
of record in my office, and the foregoing is a full, true and correct copy of the original resolutio
adopted at said meeting and entered in said minutes.
Said resolution has not been amended, modified or rescinded since the date of its
adoption, and same is now in full force and effect.
Dated: 12/12 , 1996
r, j!,c \ : L ‘c *LJ- w I;, ( -
City Clerk of the City of Encinitas
(Seal)
PuB~:44381-1 I017122898.0001
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RESOLUTION NO. 9 6 - 4 13
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD APPROVING AN AMENDED AND RESTATED
INSTALLMENT PURCHASE AGREEMENT FOR THE
REFUNDING OF CERTAIN OBLIGATIONS RELATING TO
THE ENCINA WATER POLLUTION CONTROL FACILITY
AND APPROVING CERTAIN DOCUMENTS AND ACTIONS
IN CONNECTION THEREWITH
WHEREAS, the City of Carlsbad, a municipal corporation organized and existii
and by virtue of the Constitution and the laws of the State of California (the "City"), h;
previously acquired capacity in certain components of the Encina Water Pollution Conti
Expansion, (the "Project") as described in the Installment Purchase Agreement Relating
Water Pollution Control Facility Expansion by and between the City and the Encina Fii
Joint Powers Authority (the "Authority"), dated as of June 1, 1989 (the "1989 Installn
Purchase Agreement"); and
WHEREAS, the Authority is a joint exercise of powers authority organized an
pursuant to Articles 1 and 2 of Chapter 5, Division 7, Title 1 of the Government Code
State of California, and has the authority to assist in the financing and refinancing of 1
on behalf of the City; and a I
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WHEREAS, the Authority has previously issued its $33,500,000 Encina Finan
Powers Authority Wastewater Revenue Bonds (Phase IV Expansion Project) 1989 Ser
It 1989 Bonds") for the purpose of financing the purchase of capacity in the Project by
the Buena Sanitation District, the City of Vista and the kucadia County Water Distric
1989 Bonds are secured in part by installment payments made by the City pursuant to
Installment Purchase Agreements; and
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WHEREAS, the 1989 financing structure contemplated a conveyance and assignm
the City's capacity in the Project pursuant to an Assignment Agreement dated as of June
by and among the City and the Authority, with a concurrent repurchase of the capacity b:
City pursuant to the 1989 Installment Purchase Agreement; and
WHEREAS, the Authority desires to refund the 1989 Bonds and the City desires
refund its obligations pursuant to the 1989 Installment Purchase Agreement, and City is i
that the Leucadia County Water District wishes to refund its 1989 obligations in a simila
fashion, while the City of Vista and the Buena Sanitation District have elected to prepay
respective obligations under the 1989 Installment Purchase Agreements through a deposit
from other sources pursuant to an Escrow Agreement dated as of October 1, 1996 by an
the Authority, the Trustee, the City, the Leucadia County Water District, the City of Vi!
the Buena Sanitation District (the "Escrow Agreement"); and
WHEREAS, the City has requested that the Authority cause the sale, issuance ar
delivery of bonds pursuant to the Marks-Roos Bond Pooling Act of 1985 to be secured i
the Installment Payments to be made by the City pursuant to an Amended and Restated
Installment Purchase Agreement dated as of October 1, 1996, by and between the Distri
Authority (the "Installment Purchase Agreement"); and
I WHEREAS, the City desires to enter into an Amended and Restated Assignmea
Agreement with the Authority, dated as of October 1, 1996 (the "Assignment Agreemer
WHEREAS, the Authority will enter into an Indenture of Trust, dated as of Oct
1996, by and between the Authority and State Street Bank and Trust Company of Califc
N.A. (the "Trustee") (the "Indenture") for the issuance of Encina Financing Joint Powe
Authority Wastewater Revenue Refunding Bonds, 1996 Series A (the "Bonds"); and
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WHEREAS, substantially all right, title and interest of the Authority under the
Installment Purchase Agreement will be assigned to the Trustee pursuant to the Indenture; anc
WHEREAS, Stone & Youngberg LLC (the TJnderwriter”) desires to purchase the
Bonds and, in connection therewith, will enter into a Bond Purchase Contract with the
Authority (the “Bond Purchase Contract”); and
WHEREAS, the City will agree to provide continuing disclosure relative to its
obligations under the Installment Purchase Agreement pursuant to a Continuing Disclosure
Agreement, dated as of October 1,1996, by and between the City and the Trustee (the
“Continuing Disclosure Agreement”) for the purpose of compliance with S.E.C. Rule 15c2-
12@)(5); and
WHEREAS, there has been presented to this City Council the Installmknt Purchase
Agreement, the Assignment Agreement, the Escrow Agreement, the Continuing Disclosure
Agreement, the Indenture and Preliminary Official Statement; and
WHEREAS, it is the desire of this City Council to adopt this Resolution approving th
aforementioned document;
NOW, THEREFORE, the City Council of the City of Carlsbad does hereby find,
determine, resolve, and order as follows:
SECTION 1.
SECTION 2.
The foregoing recitals, and each of them, are true and correct.
The form of the Assignment Agreement and the Installment Purchas
Agreement providing for the purchase by the City from the Authority of capacity in certain
components of the Project, with Installment Payments to be made by the City in the amounts
and at the times necessary to amortize that portion of the Bonds attributable to the financing
the City’s capacity in certain components of the Project, are hereby approved. The form of
Escrow Agreement providing for the defeasance of the 1989 Bonds and the City’s obligation:
under the 1989 Installment Purchase Agreement and the Continuing Disclosure Agreement 2
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hereby approved. The Mayor and the City Clerk of the City are hereby authorized and directec
for and in the name of the City, to execute and deliver the Continuing Disclosure Agreement,
the Escrow Agreement, the Assignment Agreement and the Installment Purchase Agreement
with such changes if any, upon advise of the City Attorney, as said officers may approve,
including the addition to the Installment Purchase Agreement of the schedule of Installment
Payments based on the amortization schedule of the principal and interest on the Bonds, as
determined following the sale of the Bonds, such approval to be conclusively evidenced by the
execution and delivery thereof.
SECTION 3. The firm of Stone & Youngberg LLC is approved as the Undenvriter.
This City Council acknowledges that the Chairman of the Board of Directors of the Authority
or an authorized officer thereof is authorized to execute and deliver to the Undenvriter a Bonc
Purchase Contract with such changes as said officers may approve, such approval to be
conclusively evidenced by the execution and delivery thereof. Stradling, Yocca, Carlson &
Rauth, a Professional Corporation, is hereby confirmed to act as bond counsel to the Authorit
SECTION 4. The initial draft of the Preliminary Official Statement as it relates to
information regardmg the City is hereby approved. The Mayor or the City Manager is hereby
authorized to approve the Preliminary Official Statement with such changes if any, upon advic
of the City Attorney, relating to the City as may be approved by the Mayor, the City Manager t
Financial Management Director. The Undenvriter is hereby authorized to distribute copies of
the Preliminary Official Statement to persons who may be interested in the initial purchase of
the Bonds and is directed to deliver copies of the final Official Statement to all actual initial
purchasers of the Bonds.
SECTION 5. The Bonds, in an aggregate principal amount not to exceed
$22,000,000, are authorized to be executed, sold, and delivered in accordance with the terms
and provisions of the Indenture and the Bond Purchase Contract, provided the City Manager
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determines the City will receive net present value savings with respect to its installment
payments under the Installment Purchase Agreement of at least three and one-half percent and
the undewrking fee payable to the Underwriter with respect to the bonds does not exceed
1.5%.
SECTION 6. The proceeds from the sale of the Bonds shall be deposited as
provided in the Indenture and the Installment Purchase Agreement to provide for the
refinancing of the 1989 Bonds and the City’s obligations under the 1989 Installment Purchase
Agreement, to fund capitalized interest, if any, as defined in the Indenture, to provide a resew
fund or pay the premium on a surety bond or similar credit facility, if purchased, and to pay
other costs of issuance, as described in the Indenture.
SECTION 7. The Mayor, the Mayor Pro Tern, The City Manager, the City Clerk, an
any other proper officer of the City are hereby authorized and directed, jointly and severally, tc
do any and all things necessary and appropriate to execute and deliver any and all documents
necessary or proper for carrying out the transactions contemplated by the Installment Purchas
Agreement, the Assignment Agreement, the Escrow Agreement, the Indenture, the Bond
Purchase Contract, the Continuing Disclosure Agreement and this Resolution.
SECTION 8. Any document the execution of which by the Mayor is authorized by
this Resolution shall, in the absence or inability to act of the Mayor, be executed by the Mayor
Pro Tern.
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SECTION 9. This Resolution shall take effect from and after its date of adoption
ADOPTED, SIGNED AND APPROVED this 3rd day of December
ATTEST:
City Clerk
(SEAL)
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