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HomeMy WebLinkAboutResolutions - No. 2020-42RESOLUTION NO. 2020-42 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING DOCUMENTS AND OFFICIAL ACTIONS RELATING TO THE REFINANCING OF AN OUTSTANDING INSTALLMENT PAYMENT OBLIGATION FOR WATER SYSTEM IMPROVEMENTS AND THE ISSUANCE BY THE LODI PUBLIC FINANCING AUTHORITY OF REFUNDING WATER REVENUE BONDS WHEREAS, the City of Lodi (the "City") owns and operates facilities and property for the supply, treatment, and distribution of water within the service area of the City (the "Water System"); and WHEREAS, the Lodi Public Financing Authority (the Authority) is a joint exercise of powers authority that was established by the City and the Industrial Development Authority of the City of Lodi pursuant to a Joint Exercise of Powers Agreement, dated as of July 1, 2010; the Authority was formed for the purpose of assisting the City in the financing of public capital improvements; and WHEREAS, in order to provide funds to finance the acquisition and construction of improvements to the Water System (the 2010 Water Projects"), the City previously caused the Authority to issue the following bonds (collectively, the "2010 Bonds") pursuant to an Indenture of Trust, dated as of October 1, 2010 (the "2010 Indenture"), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the "2010 Trustee"): (i) $9,015,000 Lodi Public Financing Authority 2010 Water Revenue Bonds, Series A ("2010A Bonds"), and (ii) $29,650,000 Lodi Public Financing Authority 2010 Water Revenue Bonds, Series B (Federally Taxable - Build America Bonds — Direct Payment) ("2010B Bonds"); and WHEREAS, the 2010 Bonds are payable from installment payments (the "2010 Installment Payments") made by the City to the Authority under an Installment Sale Agreement dated as of October 1, 2010 (the "2010 Installment Sale Agreement"), under which the Authority acquired, constructed and improved the 2010 Water Projects and sold the completed 2010 Water Projects to the City in consideration of the agreement by the City to pay the 2010 Installment Payments; and WHEREAS, under current municipal bond market conditions, it is possible for the City to refinance on a tax-exempt basis the portion of the 2010 Installment Payments attributable to the 2010B Bonds (the "2010B Installment Payments") for the purpose of achieving savings for the benefit of the customers of the Water System, and to cause a redemption of the 2010B Bonds on June 1, 2020; and WHEREAS, the City does not expect to refinance the portion of the 2010 Installment Payments attributable to the 2010A Bonds (the "2010A Installment Payments") or to cause a redemption of the 2010A Bonds; and WHEREAS, in order to provide funds to refinance the 2010B Installment Payments and cause a redemption of the 2010B Bonds, the City wishes to ask the Authority to issue its 2020 Refunding Water Revenue Bonds, Series A (the "Refunding Bonds") under the provisions of Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code (the "Bond Law"); and WHEREAS, in order to provide revenues which are sufficient to pay debt service on the Refunding Bonds, the City proposes to enter into an installment sale agreement (the "Refunding Installment Sale Agreement") with the Authority and to pay installment payments (the "Refunding Installment Payments") in an amount sufficient to pay debt service on the Refunding Bonds; and WHEREAS, the Refunding Installment Payments will be secured by a pledge of and lien on the net revenues of the Water System, on a parity with the pledge of and lien on the net revenues securing the City's obligation under the 2010 Installment Sale Agreement to make the 2010A Installment Payments; and WHEREAS, there has also been submitted to the City Council a form of Preliminary Official Statement in connection with the marketing of the Refunding Bonds and the City Council, with the aid of its staff, has reviewed the Preliminary Official Statement; and WHEREAS, in accordance with Government Code Section 5852.1, the City Council has obtained and wishes to disclose the information set forth in Exhibit A hereto; and WHEREAS, the City Council wishes at this time to take action approving the proposed refinancing transactions and all related documents and actions. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lodi as follows: Section 1. Approval of Refinancing Plan; Authorization of Refunding Bonds. The City Council hereby approves the refinancing plan described in the recitals of this Resolution. To that end, the City Council hereby approves the issuance of the Refunding Bonds by the Authority under the Bond Law in the aggregate principal amount of not to exceed $31,000,000. Section 2. Approval of Refunding Installment Sale Agreement. The City Council hereby approves the Refunding Installment Sale Agreement between the Authority and the City. The Refunding Installment Sale Agreement is hereby approved in substantially the form on file with the City Clerk together with any changes therein or additions thereto deemed advisable by the Mayor, the City Manager, the Deputy City Manager or the City Attorney (each, an "Authorized Officer"). An Authorized Officer is hereby authorized and directed for and in the name and on behalf of the City to execute, and the City Clerk is hereby authorized and directed to attest, the final form of the Refunding Installment Sale Agreement, and such execution shall be conclusive evidence of the approval of the final form thereof. -2- Section 3. Sale of Refunding Bonds; Approval of Bond Purchase Agreement. The City Council hereby approves the negotiated sale of the Refunding Bonds by the Authority to Piper Sandler Companies (the "Underwriter"). The Refunding Bonds shall be sold upon the terms and conditions set forth in the Bond Purchase Agreement in substantially the form on file with the City Clerk together with any changes therein or additions thereto deemed advisable by an Authorized Officer. The Refunding Bonds shall be sold at such price and shall bear interest at such rates as shall produce a minimum net present value savings to the City of at least 3% of the principal component of the 2010B Installment Payments, as such savings shall be verified and conclusively determined by the City's municipal advisor (the "Minimum Savings Requirement"). The Underwriter's discount shall not exceed 0.3%. The final form of the Bond Purchase Agreement shall be executed in the name and on behalf of the City by an Authorized Officer. Section 4. Official Statement. The City Council hereby approves and deems nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, the Preliminary Official Statement describing the Refunding Bonds in the form on file with the City Clerk, together with such modifications thereof as may be approved by an Authorized Officer. An Authorized Officer is hereby authorized and directed to (a) execute and deliver to the Underwriter a certificate deeming the Preliminary Official Statement to be nearly final as of its date within the meaning of such Rule, (b) approve any changes in or additions to cause the Official Statement to be put in final form, and (c) execute the final Official Statement for and in the name and on behalf of the City. The City Council hereby authorizes the distribution of the Preliminary Official Statement and the Final Official Statement by the Underwriter. Section 5. Approval of Escrow Deposit and Trust Agreement. The City Council hereby approves an Escrow Deposit and Trust Agreement between the City and the 2010 Trustee, as escrow bank, providing for the deposit, investment and application of funds to refinance the 2010B Installment Payments and defease and redeem the 2010B Bonds. The Escrow Deposit and Trust Agreement is hereby approved in substantially the form on file with the City Clerk together with any changes therein or additions thereto deemed advisable by an Authorized Officer. An Authorized Officer is hereby authorized and directed for and in the name and on behalf of the City to execute, and the City Clerk is hereby authorized and directed to attest, the final form of the Escrow Deposit and Trust Agreement, and such execution shall be conclusive evidence of the approval of the final form thereof. Section 6. Continuing Disclosure Certificate. The City Council hereby approves execution by an Authorized Officer of a Continuing Disclosure Certificate in substantially the form attached as an appendix to the Preliminary Official Statement. Section 7. Approval of Professional Services. The City Council hereby appoints the firm of Jones Hall, A Professional Law Corporation, as bond counsel and disclosure counsel to the City in connection with the issuance of the Refunding Bonds, and an Authorized Officer is authorized to execute an agreement with said firm in substantially the form of the agreement on file with the City Clerk. The City Council hereby appoints the firm of Fieldman, Rolapp & Associates, Inc. as municipal advisor to the City in connection with the issuance of the Refunding Bonds, and an Authorized Officer is authorized to execute an agreement with said firm in substantially the form of the agreement on file with the City Clerk. -3- Section 8. Official Actions. The Authorized Officers and all other officers of the City are each authorized and directed in the name and on behalf of the City to make any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they or any of them might deem necessary or appropriate in order to consummate any of the transactions contemplated by the agreements and documents approved under this Resolution, including any documentation relating to municipal bond insurance if an Authorized Officer concludes, after consultation with the City's bond counsel, the City's municipal advisor and the Underwriter, that it would be cost-effective to purchase such insurance. Whenever in this Resolution any officer of the City is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in case such officer is absent or unavailable. Section 9. Effective Date. This Resolution shall take effect immediately upon its passage and adoption. Dated: March 4, 2020 I hereby certify that Resolution No. 2020-42 was passed and adopted by the City Council of the City of Lodi in a regular joint meeting of the Lodi City Council and the Lodi Public Financing Authority, held on March 4, 2020 by the following vote: AYES: COUNCIL MEMBERS — Chandler, Mounce, Nakanishi, and Mayor Kuehne NOES: COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — None ABSTAIN COUNCIL MEMBERS — None PAMELA M. FARRIS Assistant City Clerk 2020-42 -4- EXHIBIT A GOVERNMENT CODE SECTION 5852.1 DISCLOSURE The following information consists of estimates that have been provided by the City's municipal advisor, which has been represented by such party to have been provided in good faith: (A) True Interest Cost of the Refunding Bonds: 2.36%. (B) Finance Charge of the Refunding Bonds (Sum of all fees paid to third parties). $258,337. (C) Net Proceeds to be Received (net of finance charges, reserves and capitalized interest, if any): $28,291,138. (D) Total Payment Amount Through Maturity: $36,455,360. The foregoing estimates constitute good faith estimates only based on a refinancing of the 20108 Installment Payments and the 2010B Bonds. The principal amount of the Refunding Bonds, the true interest cost of the Refunding Bonds, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Refunding Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Refunding Bonds sold being different from the estimated amount used for purposes of such estimates, (c) the actual amortization of the Refunding Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Refunding Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the City's financing plan (including a refinancing of the 2010A Installment Payments and redemption of the 2010A Bonds), or a combination of such factors. The actual date of sale of the Refunding Bonds and the actual principal amount of Refunding Bonds sold will be determined by the City based on the timing of the need for proceeds of the Refunding Bonds and other factors. The actual interest rates borne by the Refunding Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Refunding Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the City. -5-