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HomeMy WebLinkAbout1997-08-26; Public Improvement Corporation; 002; Hosp Grove Certificate Of Participation Refund,- - 0 I CARLSBAD PUBLIC IMPROVEMENT CORPORATION - AGENDA BILL AB# oo+ TITLE: HOSP GROVE MTG. 8/26/97 CERTIFICATES OF PARTICIPATION DEPT. FIN REFUNDING ISSUE RECOMMENDED ACTION: Adopt Resolution No 9?* f authorizing the preparation, sale and delivery of not to exceed $7,000,000 principal amount of refunding certificates of participation (Hosp Grove Project) Series 1997 and approving certain documents and authorizing certain actions in connection therewith. ITEM EXPLANATION: On June 3, 1997, the City Council adopted Resolution No. 97-468 directing staff to proceed with the refunding (refinancing) of several existing Certificate of Participation (COP) issues. At that time, the Council heard a report that explained that the decline in interest rates over the past few years has provided the City with an opportunity to save hundreds of thousands of dollars by refinancing its outstanding COPS. Council directed staff to proceed with the selection of an underwriter and to move forward with the refunding plan. Since the refunding of these COPS will require the participation of the Carlsbad Public Improvement Corporation, the Corporation Board is being asked to review the proposed financing plan, and take the actions outlined below. On July 8, 1997, the City Council adopted Resolution No. 97-529 selecting Dean Witter Reynolds as the underwriter to work on the refunding project, to return with a contract, and directing staff to continue with the refunding project. The form of that agreement is on file with the Secretary to the Corporation. The attached resolution limits the amount to be paid to the underwriter to not more than 1.5% of the aggregate principal amount of the Certificates. The final amount will be negotiated at the time the bonds are priced based on the market then in effect. To insure that a fair price is achieved and to assist the staff with the review of documents, staff has also solicited proposals from financial consultants. Staff has entered into an agreement with Peter J. Ross, an independent financial consultant, who previously worked with the City on the refunding of a multi-family mortgage revenue bond as an underwriter with Dean Witter. The Council also asked staff to propose a second course of action should Dean Witter Reynolds not be able to complete the refundings for any reason. After considering the five firms that were interviewed, staff is recommending that, in the unlikely event that Dean Witter Reynolds was unable to complete the refunding, that the Council transfer the assignment of completing the refunding to Stone and Youngberg. The Stone and Youngberg staff is prepared to assist the City, if necessary. Following the Council’s selection of the underwriter, staff consulted with the City Attorney (also Counsel to the Corporation) on the selection of Bond Counsel. The City Attorney requested that we select the firm of Stradling Yocca Carlson and Rauth, and more specifically Kurt Yeager of that firm, to work on the Hosp Grove and Water District refunding issues. Kurt Yeager has served the City as Bond Counsel on several past issues, including the expansion of the Encina Wastewater Plant. Staff and the consultants listed above have been working to complete the refunding of both the Hosp Grove issues by late September in order to avoid having to wait six months for the next principal payment date. The documents necessary to accomplish this are on file in the City Clerk’s office. In general, the attached documents will authorize the issuing of new COPS at a lower interest rate than the existing issue. The proceeds of this new issue will be used to pay off the outstanding Cops. Page 2 of Agenda Bill # 00% The actions the Corporation Board is being asked to take are as follows: 1. Consent to the refunding. 2. Appoint First Trust of California to act as the trustee for the City and Carlsbad Public Improvement Corporation (Corporation) on this issue. First trust is the current trustee on the existing COP issue. 3. Approve the form of the Escrow Agreement, Site Lease, Lease Agreement, Trust Agreement, and Assignment Agreement. These documents frame the agreement between the various participants that make the refunding possible. 4. Authorize the Chairman, Executive Director, and Secretary to sign for the Carlsbad Public Improvement Corporation, and to make minor modifications as may be deemed necessary by the Corporate Officers and Bond Counsel, as special counsel to the Corporation. 5. Approve the purchase agreement with Dean Witter Reynolds. 6. Approve the form of the Certificates of Participation. 7. Approve the form of the Preliminary Official Statement. Bond Counsel, the Dean Witter staff, and City staff will be available at the Board meeting to answer any questions the Board may have on the documents listed above. FISCAL IMPACT: Based on current market conditions, the refunding of the Hosp Grove Certificates of Participation will produce a net savings of about $520,000 for the General Fund of the City of Carlsbad over the next ten years (a present value savings of 7%). This assumes that the average coupon rate for the new COP issue will be about 4.4%, compared to 7.97% for the existing issue. All costs related to this issue will be paid from the proceeds of the issue. A summary of all costs will be available upon closing, now set for September 24, 1997. EXHIBITS: 1. Resolution No. q?- 1 authorizing the preparation, sale and delivery of not to exceed $7,000,000 principal amount of refunding certificates of participation (Hosp Grove Project) Series A of 1997 and approving certain documents and authorizing certain actions in connection therewith. 2. Documents on file with the City Clerk: (Secretary to the Corporation) 0 Site Lease l Lease Agreement ***Exhibits are attached to City l Assignment Agreement Council Agenda Bill i/14,317 dated 8126197. l Escrow Agreement l Trust Agreement - First Trust of California 0 Preliminary Official Statement l Purchase Agreement - Dean Witter Reynolds RESOLUTION NO. 97-l - RESOLUTION OF THE CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION AUTHORIZING THE PREPARATION, SALE AND DELIVERY OF NOT TO EXCEED %7,000,000 PRINCIPAL AMOUNT OF REFUNDING CERTIFICATES OF PARTICIPATION (HOSP GROVE PROJECT) SERIES 1997 AND APPROVING CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION THEREWITH WHEREAS, the City Council (the “City Council”) of the City of Carlsbad (the “City”) has previously adopted its Resolution No. 88-187 authorizing the execution and delivery of those certain $8,690,000 Certificates of Participation (1988 Hosp Grove Project) of the City (the “Prior Certificates”); and WHEREAS, the Board of Directors (the “Board”) of the City of Carlsbad Public Improvement Corporation (the “Corporation”) has previously adopted its Resolution No. 88-06 approving the Corporation’s participation in the acquisition of the certain real property known as Hosp Grove and related public improvements for general municipal purposes (the “Project”) through the execution and delivery of the Prior Certificates; and WHEREAS, a refunding of the Prior Certificates will result in a reduction of the lease payments required to be paid by the City in connection with the Project, thereby creating a public benefit; and WHEREAS, in order to reduce its costs associated with the Project, the City now desires to refund the outstanding portion of the Prior Certificates through the execution and delivery of those certain Refunding Certificates of Participation (Hosp Grove Project) Series 1997 (the “Certificates”); and WHEREAS, in order to accomplish the refunding of the Prior Certificates, the City and the Corporation further desire to enter into that certain Site Lease, by and between the City and the Corporation (the “Site Lease”), and that certain Lease Agreement, by and between the City and the Corporation (the “Lease Agreement”), each to be dated as of the first day of the month in which the Certificates are executed and delivered, the forms of which have been presented to the Corporation for approval; and WHEREAS, pursuant to the Site Lease, the Corporation will agree to lease certain real property, improvements, furnishings and equipment described therein (the “Leased Property”) from the City and pursuant to the Lease Agreement the City will agree to lease back the Leased Property from the Corporation and to pay certain lease payments in connection therewith; and WHEREAS, the Corporation desires to assign certain rights under the Site Lease and the Lease Agreement, including its right to receive such lease payments from the City, to the Trustee pursuant to 505047.4\22062.0023 - an Assignment Agreement to be dated as of the first day of the month in which such Assignment Agreement is executed by the parties thereto, between the Corporation and the Trustee (the “Assignment Agreement”), the form of which has been presented to the Corporation for approval; and WHEREAS, there has been presented to the Corporation for approval the form of a Purchase Agreement (the “Purchase Agreement”) to be entered into by the City and Dean Witter Reynolds Inc. (the “Purchaser”) pursuant to which the Purchaser will agree to buy the Certificates on the terms and conditions set forth therein; and WHEREAS, there has been presented to the Corporation for approval the form of a Preliminary Official Statement to be delivered to prospective purchasers of the Certificates; NOW, THEREFORE, the City of Carlsbad Public Improvement Corporation does hereby resolve, determine and order as follows: SECTION 1. Each of the foregoing recitals is true and correct. SECTION 2. The Corporation hereby authorizes the preparation, sale and delivery of the Certificates in an aggregate principal amount not to exceed $7,000,000 in accordance with the terms and provisions of the Trust Agreement. The proceeds of the Certificates shall be expended to refund the Prior Certificates and to provide for a reserve fund, if required, and for payment of the costs of the sale and delivery of the Certificates. SECTION 3. The Corporation hereby approves the appointment by the City of First Trust of California, National Association, to act as Trustee on behalf of the owners of the Certificates, with the duties and powers of the Trustee as set forth in the Trust Agreement. SECTION 4. The forms of the Escrow Agreement, the Site Lease, the Lease Agreement, the Trust Agreement and the Assignment Agreement presented at this meeting are hereby approved. Each of the Chairman, the Executive Director and Secretary of the Corporation are hereby authorized to execute, acknowledge and deliver any and all documents required to consummate the transactions contemplated by the Site Lease, the Lease Agreement, the Trust Agreement and the Assignment Agreement and this Resolution. Each of the Chairman, the Executive Director and the Secretary of the Corporation are hereby authorized for and in the name of the Corporation to execute and deliver the Site Lease, the Lease Agreement, the Trust Agreement and the Assignment Agreement in substantially the forms hereby approved, with such additions thereto and changes therein as are recommended or approved by Stradling, Yocca, Carlson & Rauth, a Professional Corporation, as Special Counsel to the City (“Special Counsel”), and approved by the officer or officers executing the same, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 5. The form of the Certificates as set forth in the Trust Agreement (as the Trust Agreement may be modified pursuant to the preceding section hereof) is hereby approved. SECTION 6. The form of the Purchase Agreement presented at this meeting is hereby approved and the sale of the Certificates pursuant thereto is hereby consented to by the Corporation; provided that the aggregate principal amount of the Certificates does not exceed $7,000,000, the present value of the debt service payments due with respect to the Certificates is at least 3.5 percent less than the present value of the debt service payments due with respect to the Prior Certificates (as 505047.4\22062.0023 2 set forth in writing by the City and/or the Purchaser) and the discount paid to the Purchaser (exclusive of original issue discount and any bond insurance premium) with respect to the Certificates does not exceed 1.5% of the aggregate principal amount of the Certificates. SECTION 7. The Corporation consents to the preparation and distribution by the City of a Preliminary Official Statement to prospective purchasers of the Certificates in the form deemed final by the City for purposes of Rule 15~2-12 of the Securities and Exchange Commission and to the preparation of a final Official Statement in substantially the form of the Preliminary Official Statement, with such additions thereto and changes therein as are recommended or approved by the City Attorney, and approved by the officer or officers executing the same on behalf of the City. SECTION 8. The President, Vice President, Executive Director, Secretary and other officers of the Corporation are hereby authorized, jointly and severally, to do any and all things and to execute and deliver any and all documents which they deem necessary and advisable in order to consummate the sale and delivery of the Certificates and otherwise effectuate the purposes of the Resolution and such actions previously taken by such officers are hereby ratified. SECTION 9. In the event the President is unavailable or unable to execute and deliver any of the above-referenced documents, any other member of the Board of the Corporation may validly execute and deliver such documents, and any documents required to be signed by the Secretary may be signed by any deputy secretary. SECTION 10. This Resolution shall take effect Tom and after its date of adoption. ADOPTED, SIGNED AND APPROVED THIS 26” day of August, 1997. President of the City of Carlsbad Public Improvement Corporation ATTEST: Secretary of the City of Carlsbad Public Improvement Corporation STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) Aletha L. Rautenkranz I, I , Secretary of the City of Carlsbad Public Improvement Corporation, do hereby certify that the above and foregoing Resolution was duly and regularly adopted by the Board of Directors of said Corporation at a regular meeting held on the 26th day of August , 1997, and that it was so adopted by the following vote: AYES: Board Members Lewis, Finnila, Nygaard and Hall NOES: None ABSENT: Board Member Kulchin ABSTAIN: None Secretary of the City of Carlsbad Public Trnprovehent Corporation 505047.4'22062.0023