HomeMy WebLinkAbout1997-08-26; Public Improvement Corporation; 003; Water Revenue Certificate Of Participation Refund. . p
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CARLSBAD PUBLIC IMPROVEMENT CORPORATION -AGENDA BILL .
AB# 00 3 T’TLE: WATER REVENUE
MTG. 8/26/97 CERTIFICATES OF PARTICIPATION
DEPT. FIN REFUNDING ISSUE
RECOMMENDED ACTION:
Adopt Resolution No. 91-a authorizing the execution and delivery of not to exceed $8,500,000 refunding revenue certificates of participation, approving the execution and delivery of certain
documents and authorizing certain actions in connection therewith.
ITEM EXPLANATION:
On June 3, 1997, the CMWD Board adopted Resolution No. 975 directing staff to proceed with the
refunding (refinancing) of the existing Certificate of Participation (COP) issues. At that time, the
CMWD Board heard a report that explained that the decline in interest rates over the past few years
has provided the District with an opportunity to save hundreds of thousands of dollars by refinancing
some of its outstanding COPS. The Board 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 CMWD Board adopted Resolution No. 982 selecting Dean Witter Reynolds as
the underwriter to work on the refunding project, to return with an agreement, and directing staff to
continue with the refunding project. The fom7 of that agreement is on file with the Secretary to the
Board. 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 CMWD Board 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 were
unable to complete the refunding, that the CMWD Board transfer the assignment of completing the refunding to Stone and Youngberg. The Stone and Youngberg staff is prepared to assist the District,
if necessary.
Following the CMWD Board’s selection of the underwriter, staff consulted with the District Counsel on
the selection of Bond Counsel. The District Counsel (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
Water District refunding issues. Kurt Yeager has served the City of Carlsbad 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 and Water COP 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
Clerks office (Secretary to the CMWD Board, and the Corporation).
Page 2 of Agenda Bill # Rn 3
In general, the attached documents will authorize the issuing of new COPS. The proceeds of this new
issue will be used to pay off the outstanding COPS.
The actions the Corporation Board is being asked to take are as follows:
1. Consent to the refunding.
2. Approve the form of the lnstallment Purchase Agreement.
3. Approve the form of the Assignment Agreement.
4. Approve the form of the Trust Agreement with First Trust of California.
5. Approve the form of the Purchase Agreement with Dean Witter Reynolds.
6. Authorize various members of the board and staff to sign documents for the Corporation and to
make minor modifications as may be deemed necessary by the City Attorney (Corporate Counsel) and Bond Counsel.
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 Water District Certificates of Participation will
produce a net savings of about $374,000 over the next seven years. This assumes that the average coupon rate for the new COP issue will be about 4.12%, compared to 7.24% 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. 93-L authorizing the execution and delivery of not to exceed $8,500,000
refunding revenue certificates of participation, approving the execution and delivery of certain
documents and authorizing certain acts in connection therewith.
2. Documents on file with the Secretary to the Board:
l lnstallment Purchase Agreement
l Trust Agreement - First Trust of California **** Exhibits are attached to
l Assignment Agreement Water Board Agenda Bill
l Purchase Agreement - Dean Witter Reynolds i/385 dated B/26/97
RESOLUTION NO. 9 7-2
RESOLUTION OF THE BOARD OF DIRECTORS OF THE
CITY OF CARLSBAD PUBLIC IMPROVEMENT
CORPORATION AUTHORIZING THE EXECUTION AND
DELIVERY OF NOT TO EXCEED %%,SOO,OOO 1997 WATER
REVENUE CERTIFICATES OF PARTICIPATION (1988
REFUNDING PROJECT), APPROVING THE EXECUTION
AND DELIVERY OF CERTAIN DOCUMENTS AND
AUTHORIZING CERTAIN ACTIONS IN CONNECTION
THEREWITH
WHEREAS, the City of Carlsbad Public Improvement Corporation is a nonprofit public
benefit corporation organized and existing under the laws of the State of California (the “Corporation”)
with the authority to assist in the financing and refinancing of capital improvements on behalf of
Carlsbad Municipal Water District (the “District”); and
WHEREAS, the District and the Corporation desire to enter into that certain Installment
Purchase Agreement, dated as of September 1, 1997, by and between the District and the Corporation
(the “Installment Purchase Agreement”), the form of which is on file with the Corporation, pursuant to
which Carlsbad will agree to purchase the Project (as defined in the Instalhnent Purchase Agreement)
from the Corporation and pay certain Installment Payments (as defined in the Installment Purchase
Agreement) in connection therewith which will be pledged to the owners of the Certificates (defined
below) pursuant to a Trust Agreement, dated as of September 1,1997, by and among the Trustee
named therein as trustee (the “Trustee”), the District and the Corporation (the “Trust Agreement”), the
form of which is on fle with the Corporation; and
WHEREAS, the Corporation will assign to the Trustee payments under the Installment
Purchase Agreement, such assignment to be made pursuant to an Assignment Agreement, dated as of
September 1, 1997, by and between the Corporation and the Trustee (the “Assignment Agreement”),
the form of which is on file with the Corporation; and
WHEREAS, the Corporation and the District have determined that it would be in the best
interests of the Corporation, the District and citizens of the community to authorize the preparation and
delivery of 1997 Water Revenue Certificates of Participation (1988 Refunding Project) in an aggregate
principal amount not to exceed S&500,000 (the “Certificates”), which Certificates evidence
proportionate interests in certain installment payments to be made pursuant to the Installment Purchase
Agreement; and
WHEREAS, the Certificates will be sold to Dean Witter Reynolds Inc. (the “Underwriter”)
named in a Contract of Purchase, by and between the District and the Underwriter and acknowledged
by the Corporation (the “Contract of Purchase”);
WHEREAS, the District and the City of Carlsbad Public Improvement Corporation have
determined (i) that the District and all subordinate entities thereof do not anticipate that they will issue
506097.4l22062.0024
in the aggregate more than $10,000,000 of tax-exempt obligations during calendar year 1997 and (ii)
that it is desirable and in the best interest of the District to designate the Certificates as “qualified tax exempt
obligations” for purposes of paragraph (3) of Section 265(b) of the Internal Revenue Code of 1986, as
amended;
NOW, THEREFORE, the Board of Directors of the Corporation does hereby resolve as
follows:
Section 1. Certificates. This Board of Directors hereby author&es the preparation, sale
and delivery of the Certifkates in an aggregate principal amount not to exceed $8,500,000 in
accordance with the terms and provisions of the Trust Agreement. The purposes fur which the
proceeds of the sale of the Certificates shall be expended are to refinance acquisition and construction
of certain improvements to the District’s water system, to fund a reserve fund and to pay the costs of
the sale and delivery of the Certificates.
Section 2. Certificate Documents. The Installment Purchase Agreement, the
Assignment Agreement, the Trust Agreement and the Contract of Purchase presented at this meeting
are approved. The President or Vice-President and the Secretary are authorized and directed to
execute and deliver the Installment Purchase Agreement, the Assignment Agreement and the Trust
Agreenient and the President, Vice-President or Executive Director is author&d and directed to
acknowledge said Contract of Purchase. Such agreements and contract shall be executed or
acknowledged, as the case may be, in substantially the forms hereby approved, with such additions
thereto and changes therein as are approved by the officers executing such agreements and contract,
such approval to be conclusively evidenced by the execution and delivery or acknowledgment thereof
Section 3. Other Actions. The President, Vice-President, the Secretary, Executive
Director and such other officers of the Corporation are authorized and directed, acting singly, to do any
and all things and to execute and deliver any and all documents which such officers may deem
necessary or advisable in order to consummate the sale and delivery of the Certificates, and the delivery
of the Installment Purchase Agreement, Assignment Agreement and Trust Agreement and
acknowledgment of the Contract of Purchase and otherwise effectuate the purposes of this Resolution,
and such actions previously taken by such officers are hereby ratified and confirmed
Section 4. The Certificates are hereby designated as “qualified tax exempt obligations”
for purposes of paragraph (3) of Section 265(b) of the Internal Revenue Code of 1986, as amended.
Section 5. This Resolution shall take effect immediately. Effect.
506097.4U2062.0024 -2-
PASSED, APPROVED, AND ADOPTED, at a regular meeting of the Carlsbad
Public Improvement Corporation held on the 26th day of
August , 1997, by the following vote, to wit:
Ayes: Board Members Lewis, Finnila, Nygaard and Hall
Noes: None
Absent: Board Member Kulchin
ATTEST:
Secretary -
-
STATE OF CALJFORNIA )
) 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 Cklsbad Public Improbement
Corporation
50504i.4U2062.0023
.‘,I
DATE: August 27,1997
A -
FAX TRANSMITTAL
TO: E. Kurt Yeager
Stradling Yocca Carlson & Rauth
FROM: Lee Rautenkranz
City Clerk
City of Carlsbad
FAX No. (760) 434-1987
Office: (760) 434-2809
.
COMMENTS: This is the signed copy of the’ First
Amendment to Installment Sale Agreement for CMWD,
per your request. I know we have a lot of other documents
to process, and I’ll be looking at those today, but I’m
assummgwe’ll still need to have this original signed;
therefore, we may be calling with more questions later on.
STRADLIN~ YOCGA CARLSON & RAUTH A PROFEQSlONAL CORPORATION
ATTORNEYS AT LAW
E. KURTYEAGER
DlRECT DIAL ,714,72t%41**
E-HAIL
kyeoQer~SyCr.Com
se0 NEWPORT CENTER OFlIVE. S”lTE 1600 NEWPORT BEACH. CALlCORNlA ezeoo
TELEPHONE (714) 185.4ooo
FAX ,714,726-4100
ii
FIRST AMENDMENT TO JNSTALLMENT SALE AGREEMENT
THIS FIRST AMENDMENT TO INSTALLMENT SALE AGREEMENT entered into as of
this 1 st day of September 1997 is a supplemental agreement executed pursuant to the terms of Article
X of that certain Trust Agreement dated as of November 1, 1988 (the “1988 Trust Agreement”), by
and among Security Pacific National Bank, as Trustee, Independent Public Facilities Corporation (the
“Corporation”) and Costa Real Municipal Water District and, together with that certain Installment
Sale Agreement executed as of November 1, 1988, by and between the Corporation and the District
(the “1988 Installment Sale Agreement”), as hereby amended, governs the terms of the sale and
purchase of water facilities of the District in connection with the District’s execution and delivery of
Certificates of Participation (Reservoir and Water Facilities 1988 Refunding and Financing Project)
(the “1988 Certificates”).
RECITALS: .
WHEREAS, the darlsbad Municipal Water District (the “District”), a municipal water district
duly organized and existing under and pursuant to the Constitution and laws of the State of California,
formerly known as Costa Real Municipal Water District, has determined that it is in the best interest of
the District to refinance %8,690,000 outstanding principal amount of Installment Sale Agreement which
was originally executed and delivered in connection with the 1988 Certificates to finance and refinance
the expansion of the District’s reservoir and water system; and
WHEREAS, the District has determined the necessity to amend certain terms of the
Installment Sale Agreement to delete the requirement that the District deposit cash with the notice to
the Trustee of the District’s exercise of its option to prepay the Installment Payments under the
Installment Sale Agreement (collectively, the “Amendment”); and .
WHEREAS, Section 10.4 of the 1988 Installment Sale Agreement and Section 10.01 ofthe
1988 Trust Agreement executed in connection with the delivery of the 1988 Certificates provide that
the 1988 Installment Sale Agreement may be amended, without the consent and approval of the owners
of the 1988 Certificates but with the prior written consent of the District, Bond Investors Guaranty
Insurance Company (“BIG”) and the Independent Public Facilities Corporation, as seller (the
“Corporation”), in regard to questions arising thereunder, as the parties thereto deem necessary or
desirable, and which shall not adversely affect the interest of the Owners of the 1988 Certificates; and
WHEREAS, the District, BIG and First Trust of California, National Association, as assignee
of all rights and interests of the Corporation under the 1988 Installment Sale Agreement pursuant to
that certain Assignment Agreement executed in connection with the delivery of the 1988 Installment
Sale Agreement and the 1988 Certificates, have consented in writing to the terms of that First
Amendment to Installment Sale Agreement dated as of September 1, 1997 by and between the District
and First Trust of California, National Association, as assignee of the Corporation, the form of which is
on file with the District (the “Amendment”);
NOW, THEREFORE, the Board of Directors of the Carlsbad Municipal Water District
hereby finds, determines, declares, and resolves as follows:
SECTION 1. Section 4.4 (b) of the 1988 Installment Sale Agreement is hereby amended by
deleting subsection (b) in its entirely and replacing it with the following:
505’306.2Y22062.0024
Option to Prenay. Subject to the terms and conditions of this Section, the Seller hereby
grants an option to the District to prepay the Installment Payments, in whole or in part,
pursuant to which Prepayment Certificates will be redeemed in accordance with Section
4.0 1 (c) of the Trust Agreement. Said option may be exercised on any Interest Payment Date
occurring on or after May 1, 1997. Said option shall be exercised by the District by giving
written notice to the Trustee of the exercise of such option at least sixty (60) days prior to such
an Interest Payment Date. Such notice shall designate the annual installments, or portion
thereof, to which such Prepayment shall apply in the event that such Prepayment is not a
Prepayment in whole of such remaining installment payments, together with applicable
premiums, if any. Such option shall be further exercised by the District depositing with the
Trustee, on or before the date that the Trustee provides notice of such Prepayment to the
Owners of the Certificates to be prepaid, cash in the minimum principal amount of $50,000,
plus accrued interest on the principal amount to be prepaid to the date of redemption of the
Certificates being redeemed with such Prepayment, together with any Installment Payments
then due but unpaid. The District shall also deposit on such date an additional amount of cash,
as a prepayment premium equal to l/4 of 1% of the principal amount of the Installment
Payments to be prepaid for each year or portion of a year between the date of Prepayment and
the fixed maturity date of the Certificates to be prepaid therewith, but not in excess of 2% of
‘such principal amount.
SECTION 2. The Board of Directors hereby ratifies and directs District staff and the Trustee
to take any and all actions necessary and appropriate to accomplish the purposes described herein, and
hereby directs the Secretary to place a true and correct copy of this First Amendment to Installment
Sale Agreement on file in the Secretary’s office immediately following the execution hereof
CARLSBAD MUNICIPAL WATER DISTRICT, as
successor in interest tb the COSTA
AmST: ---,’ -
Secretary of the Carls
Water District
FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
%‘306.2\22062.0024