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HomeMy WebLinkAboutAgenda Report - March 2, 2022 C-17AGENDA ITEM Co17 CITY OF LODI COUNCIL COMMUNICATION TM AGENDA TITLE: Adopt Resolution Authorizing City Manager to Execute an Agreement for Legal Services with Jones Hall, a Professional Law Corporation, of San Francisco, for Bond Counsel Services in Connection with the Refinancing of Outstanding Lease Payment Obligation and Financing of Outstanding Lease Payment Obligation and Financing of Capital Improvements (Not to Exceed $101,500) MEETING DATE: PREPARED BY: March 2, 2022 City Attorney RECOMMENDED ACTION: Adopt a resolution authorizing the City Manager to execute an agreement for legal services with Jones Hall, a Professional Law Corporation, of San Francisco, for bond counsel services in connection with the refinancing of outstanding lease payment obligation and financing of outstanding lease payment obligation and financing of capital improvements (not to exceed $101,500). BACKGROUND INFORMATION: The Lodi Public Financing Authority ("Authority") previously issued its $19,080,000 Lodi Public Financing Authority 2012 Refunding Lease Bonds (the "2012 Bonds") for the purpose of refinancing outstanding certificates of participation that were executed and delivered to finance various municipal facilities of the City. The 2012 Bonds are payable from lease payments made by the City to the Authority. In order to take advantage of prevailing bond market conditions, City wishes to refinance the 2012 Bonds and its outstanding lease payment obligation. The City now wishes to leverage the savings achieved by refinancing the 2022 Bonds to finance the acquisition and construction of capital improvements, including, among other things, a new animal shelter and parks and playground improvements (collectively the "Project"). In order to raise funds for the proposed refinancing of the 2012 Bonds and the financing of the Project, the Authority proposes to issue and sell its Lodi Public Financing Authority 2022 Lease Revenue Bonds (2012 Refunding; Capital Projects Financing), which will be payable from a lease payment obligation to be undertaken by the City. In order to accomplish the proposed refinance of the 2012 Bonds and financing of the Project, the City requires the services of a nationally recognized bond counsel. Staff recommends authorizing the City Manager to execute an Agreement for Professional Services with Jones Hall, a Professional Law Corporation, of San Francisco, for bond counsel services in connection with the refinancing of certain outstanding obligations of the City as set forth above. FISCAL IMPACT: Not to exceed $101,500. FUNDING AVAILABLE: Refinanced debt service of the bonds will cover the cost of the legal services. nice . Magdich, City Attorney Attachment: Agreement for Legal Services APPROVED: Steve SchwabaUer Stephen Schwabauer, City Manager AGREEMENT FOR LEGAL SERVICES BETWEEN THE CITY OF LODI AND JONES HALL, A PROFESSIONAL LAW CORPORATION, FOR BOND COUNSEL SERVICES AND DISCLOSURE COUNSEL SERVICES IN CONNECTION WITH THE REFINANCING OF AN OUTSTANDING LEASE PAYMENT OBLIGATION AND FINANCING OF CAPITAL IMPROVEMENTS This AGREEMENT FOR LEGAL SERVICES is entered into this 3rd day of March, 2022, between the CITY OF LODI, A MUNICIPAL CORPORATION (the "Client") and JONES HALL, A PROFESSIONAL LAW CORPORATION, San Francisco, California ("Attorneys"). BACKGROUND: 1. The Lodi Public Financing Authority (the "Authority") previously issued its $19,080,000 Lodi Public Financing Authority 2012 Refunding Lease Revenue Bonds (the "2012 Bonds") for the purpose of refinancing outstanding certificates of participation that were executed and delivered to finance various municipal facilities of the Client. The Bonds are payable from lease payments made by the Client to the Authority. 2. In order to take advantage of prevailing bond market conditions, the Client wishes to refinance the 2012 Bonds and its outstanding lease payment obligation. 3. In addition, the Client wishes to leverage the savings achieved by refinancing the 2012 Bonds to finance the acquisition and construction of capital improvements, including, among other things, a new animal shelter (the "Project"). 4. In order to raise funds for the proposed refinancing of the 2012 Bonds and the financing of the Project, the Authority proposes to issue and sell its Lodi Public Financing Authority 2022 Lease Revenue Bonds (2012 Refunding; Capital Projects Financing) (the "Bonds"), which will be payable from a lease payment obligation to be undertaken by the Client. 5. In order to accomplish the proposed transaction, the Client requires the services of a nationally recognized bond counsel and disclosure counsel. AGREEMENT: In consideration of the foregoing and the mutual covenants contained in this Agreement, the Client and Attorneys agree as follows: Section 1. Attorney -Client Relationshp. Upon execution of this Agreement, the Client will be Attorneys' client and an attorney-client relationship will exist between Client and Attorneys. Attorneys assume that all other parties will retain such counsel, as they deem necessary and appropriate to represent their interests in this transaction. Attorneys further assume that all other parties understand that in this transaction Attorneys represent only the Client, Attorneys are not counsel to any other party, and Attorneys are not acting as an intermediary among the parties. Attorneys' services as bond counsel and disclosure counsel are limited to those contracted for in this Agreement; the Client's execution of this Agreement will constitute an acknowledgment of those limitations. Attorneys' representation of the Client will not affect, however, our responsibility to render an objective Bond Opinion. Section 2. Scope of Engagement. (a) Bond Counsel. Attorneys shall perform all of the following services as bond counsel in connection with the Bonds for the purpose of refinancing the 2012 Bonds and financing the Project: (i) Consultation and cooperation with Client and Client staff to assist in the formulation of a coordinated financial and legal issuance of the Bonds. (ii) Preparation of all legal proceedings for the authorization, issuance and delivery of the Bonds; including (a) preparation of a resolution of the governing board of the Client and a resolution of the governing board of the Authority authorizing the issuance and sale of the Bonds and approving related documents and actions, (b) preparation of all financing documents, including a lease agreement, a site lease, an assignment agreement, an escrow deposit and trust agreement and irrevocable refunding instructions, (c) preparation of all documents required for the closing of the issue, (d) supervising the closing, and (e) preparation of all other proceedings incidental to or in connection with the issuance and sale of the Bonds. (iii) Advising the Client, from the time Attorneys are hired as Bond Counsel until the Bonds are issued, as to compliance with federal tax law as required to ensure that interest on the Bonds is exempt from federal income taxation. (iv) Upon completion of proceedings to Attorneys' satisfaction, providing a legal opinion (the "Bond Opinion") approving the validity and enforceability of the proceedings for the authorization, issuance and delivery of the Bonds, and stating that interest on the Bonds is (a) excluded from gross income for purposes of federal income taxes and (b) exempt from California personal income taxation. The Bond Opinion will be addressed to the Client, and may also be addressed to the underwriter of the Bonds and other participants in the financing. (v) Review those sections of the official statements or other form of offering or disclosure documents to be disseminated in connection with the sale of the Bonds involving summary descriptions of the Bonds, the legal proceedings leading to the authorization and sale of the Bonds, the legal documents under which the Bonds will be issued, and federal tax law and securities law provisions applicable to the Bonds, as to completeness and accuracy. (vi) Assist the Client in presenting information to bond rating organizations and providers of credit enhancement relating to legal issues affecting the issuance of the Bonds. (vii)Such other and further services as are normally performed by bond counsel in connection with similar financings. -2- Attorneys' Bond Opinion will be delivered by Attorneys on the date the Bonds are exchanged for their purchase price (the "Closing"). The Bond Opinion will be based on facts and law existing as of its date, will cover certain matters not directly addressed by such authorities, and will represent Attorneys' judgment as to the proper treatment of the interest on the Bonds for federal income tax purposes. Attorneys' opinion is not binding on the Internal Revenue Service ("IRS") or the courts. Attorneys cannot and will not give any opinion or assurance about the effect of future changes in the Internal Revenue Code of 1986 (the "Code"), the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. Client acknowledges that future legislation, if enacted into law, or clarification of the Code may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent owners of the Bonds from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislation or clarification of the Code may also affect the market price for, or marketability of, the Bonds. Attorneys will express no opinion regarding any pending or proposed federal tax legislation. In rendering the Bond Opinion, Attorneys will rely upon the certified proceedings, opinions and other certifications of public officials and other persons furnished to Attorneys without undertaking to verify the same by independent investigation, and Attorneys will assume continuing compliance by the Client with applicable laws relating to the Bonds. (b) Disclosure Counsel. Attorneys shall perform all of the following services as disclosure counsel in connection with the Bonds for the purpose of refinancing the 2012 Bonds and financing the Project: (i) Prepare the Official Statement (both preliminary and final) or other disclosure documents in connection with the offering of the Bonds. (ii) Confer and consult with the officers and administrative staff of the Client as to matters relating to the Official Statement. (iii) Attend all meetings of the Client and any administrative meetings at which the Official Statement is to be discussed, deemed necessary by Attorneys for the proper exercise of their due diligence with respect to the Official Statement, or when specifically requested by the Client to attend. (iv) On behalf of the Client, prepare the bond purchase contract pursuant to which the Bonds will be sold to the underwriter and a continuing disclosure certificate of the Client .to assist the underwriter with complying with Securities and Exchange Commission Rule 15c2-12. (v) Subject to the completion of proceedings to the satisfaction of Attorneys, provide a letter of Attorneys addressed to the Client and the underwriter that, although Attorneys are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement and make no representation that Attorneys have independently verified the accuracy, completeness or fairness of any such statements, no facts have come to Attorneys' attention that cause Attorneys to believe that the Official Statement (except for any financial and statistical data and forecasts, numbers, estimates, -3- assumptions and expressions of opinion, and information concerning the Bond Insurance Policy and the Insurer, and information concerning the Depository Trust Company and the book -entry system for the Bonds, contained or incorporated by reference in the Official Statement and the appendices to the Official Statement, which Attorneys will expressly exclude from the scope of this sentence) as of the date of the Official Statement or the date hereof contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) Disclosure Counsel. This Agreement for Legal Services shall relate to the services described in this Section 2 and provided by Attorneys beginning in January 2022. Section 3. Excluded Services. Our duties in this engagement are limited to those expressly set forth above in Section 2, except as expressly set forth in a written amendment to this Agreement. Among other things, our duties do not include: a. Except as described above, assisting in the preparation or review of official statements or any other disclosure documents with respect to the Bonds, or performing an independent investigation to determine the accuracy, completeness or sufficiency of any such document or rendering advice that the official statement or other disclosure document does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. b. Preparing requests for tax rulings from the Internal Revenue Service, or "no -action" letters from the Securities and Exchange Commission. c. Preparing blue sky or investment surveys with respect to the Bonds. d. Except as described above, drafting state constitutional or legislative amendments. e. Pursuing test cases or other litigation, such as contested validation proceedings, except as set forth above. f. Making an investigation or expressing any view as to the creditworthiness of the Client or the Bonds. g. Except as described above, assisting in the preparation of, or opining on, a continuing disclosure undertaking pertaining to the Bonds or, after Closing, providing advice concerning any actions necessary to assure compliance with any continuing disclosure undertaking. h. After Closing, unless specifically requested to do so by Client, and agreed to by Attorneys, representing the Client in Internal Revenue Service examinations, audits or inquiries, or Securities and Exchange Commission investigations. -4- After Closing, unless specifically requested to do so by Client, and agreed to by Attorneys, providing continuing advice to the Client or any other party concerning any actions that need to be taken regarding the Bonds; e.g., actions necessary to assure that interest paid on the Bonds will continue to be excludable from gross income for federal income tax purposes (e.g., our engagement does not include rebate calculations for the Bonds). Reviewing or opining on the business terms of, validity, or federal tax consequences of any investment agreement that the Client may choose as an investment vehicle for the proceeds of the Bonds, unless the Client and Attorneys agree on the terms of such review and compensation for such review. k. Reviewing or opining on the business terms of, validity, or federal tax consequences of any derivative financial products, such as an interest rate swap agreement, that the Client may choose to enter into in connection with the issuance of the Bonds, unless the Client and Attorneys agree on the terms of such review and compensation for such review. I. Addressing any other matter not specifically set forth above that is not required to render our Bond Opinion. Section 4. Conflicts; Prospective Consent. Attorneys represent many political subdivisions, investment banking firms and financial advisory firms. It is possible that during the time that Attorneys are representing the Client, one or more of Attorneys present or future clients will have transactions with the Client. It is also possible that Attorneys may be asked to represent, in an unrelated matter, one or more of the entities involved in the issuance of the Bonds. Attorneys do not believe such representation, if it occurs, will adversely affect Attorneys' ability to represent you as provided in this Agreement, either because such matters will be sufficiently different from the issuance of the Bonds so as to make such representations not adverse to our representation of you, or because the potential for such adversity is remote or minor and outweighed by the consideration that it is unlikely that advice given to the other client will be relevant to any aspect of the issuance of the Bonds. Execution of this Agreement will signify the Client's consent to Attorneys' representation of others consistent with the circumstances described in this paragraph. Section 5. Compensation. For the bond counsel services of Attorneys related to the Bonds, the Client will pay Attorneys a fee of $65,000. For the Disclosure Counsel services performed by Attorneys under Section 3 above, the Client will pay Attorneys a flat fee of $35,000. In addition, the Client shall pay to Attorneys (a) all direct out-of-pocket expenses for travel outside the State of California (if any), messenger and delivery service, photocopying, closing costs, legal publication expenses and other costs and expenses incurred by Attorneys in connection with their services hereunder and (b) for transcript preparation, provided that such payment for expenses shall not exceed $1,500. Section 6. Responsibilities of the Client. -5- (a) General. The Client will cooperate with Attorneys and furnish Attorneys with certified copies of all proceedings taken by the Client, or otherwise deemed necessary by Attorneys to render an opinion upon the validity of the proceedings. During the course of this engagement, Attorneys will rely on Client to provide Attorneys with complete and timely information on all developments pertaining to any aspect of the Bonds and their security. Attorneys are not responsible for costs and expenses incurred incidental to the actual issuance and delivery of the Bonds, including the cost of preparing certified copies of proceedings required by Attorneys in connection with the issuance of the Bonds, and printing and publication costs. (b) Federal Tax Law -Related Responsibilities. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. As a condition of Attorneys issuing their opinion, you will be required to make certain representations and covenants to comply with certain restrictions designed to insure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. Attorneys' opinion will assume the accuracy of these representations and compliance with these covenants. Attorneys will not undertake to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. In this regard, Client agrees to familiarize itself with the relevant requirements and restrictions necessary for the Bonds to qualify for exemption from federal income taxation and to exercise due diligence both before and after issuance of the Bonds in complying with these requirements. Section 7. Independent Contractor. Attorneys will act as an independent contractor in performing the services required under this Agreement, and under no circumstances shall Attorneys be considered an agent, partner, or employee of the Client. Section 8. Assignment. Attorneys may not assign their rights or delegate their obligations under this Agreement, in whole or in part, except with the prior written consent of the Client. Section 9. Termination of Agreement. (a) Termination by Client. This Agreement may be terminated at any time by the Client with or without cause upon written notice to Attorneys. (b) Termination by Attorneys. This Agreement may be terminated by Attorneys upon 15 days' written notice to Client if Client fails to follow written legal advice given by Attorneys. (c) Termination Upon Issuance of the Bonds. This Agreement shall terminate upon the issuance of the Bonds. (d) Consequences of Termination. In the event of termination, all finished and unfinished documents shall at the option of the Client become its property and shall be delivered to the Client by Attorneys. IN WITNESS WHEREOF, the Client and Attorneys have executed this Agreement as of the date first above written. Approved as to form: C(Janic�jeD� Magdich City-Atrney, City of Lodi CITY OF LODI, a municipal corporation Steve Schwabauer City Manager JONES HALL, A PROFESSIONAL LAW CORPORATION -7- Christopher Lynch Vice President RESOLUTION NO. 2022-59 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT FOR LEGAL SERVICES WITH JONES HALL, A PROFESSIONAL LAW CORPORATION, OF SAN FRANCISCO, FOR BOND COUNSEL SERVICES IN CONNECTION WITH THE REFINANCING OF OUTSTANDING LEASE PAYMENT OBLIGATION AND FINANCING OF CAPITAL IMPROVEMENTS WHEREAS, the Lodi Public Financing Authority ("Authority") previously issued its $19,080,000 Lodi Public Financing Authority 2012 Refunding Lease Bonds (the "2012 Bonds") for the purpose of refinancing outstanding certificates of participation that were executed and delivered to finance various municipal facilities of the City; and WHEREAS, the 2012 Bonds are payable from lease payments made by the City to the Authority; and WHEREAS, in order to take advantage of prevailing bond market conditions, City wishes to refinance the 2012 Bonds and its outstanding lease payment obligation; and WHEREAS, City wishes to leverage the savings achieved by refinancing the 2022 Bonds to finance the acquisition and construction of capital improvements, including, among other things, a new animal shelter and parks and playground improvements (collectively the "Project"); and WHEREAS, in order to raise funds for the proposed refinancing of the 2012 Bonds and the financing of the Project, the Authority proposes to issue and sell its Lodi Public Financing Authority 2022 Lease Revenue Bonds (2012 Refunding; Capital Projects Financing) (the "Bonds"), which will be payable from a lease payment obligation to be undertaken by the City; and WHEREAS, in order to accomplish the proposed refinance of the 2012 Bonds and financing of the Project, the City requires the services of a nationally recognized bond counsel; and WHEREAS, staff recommends authorizing the City Manager to execute an Agreement for Professional Services with Jones Hall, a Professional Law Corporation, of San Francisco, for bond counsel services in connection with the refinancing of certain outstanding obligations of the City as set forth above. NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby authorize the City Manager to execute an Agreement for Professional Services with Jones Hall, of San Francisco, California, for bond counsel services in connection with the refinancing of an outstanding lease payment obligation and financing of capital improvements, as set forth above, in the amount of $100,000, and direct out-of-pocket expenses and costs not to exceed $1,500; and BE IT FURTHER RESOLVED, pursuant to Section 6.3q of the City Council Protocol Manual (Res. No. 2019-223), the City Attorney is hereby authorized to make minor revisions to the above -referenced document(s) that do not alter the compensation or term, and to make clerical corrections as necessary. Dated: March 2, 2022 I hereby certify that Resolution No. 2022-59 was passed and adopted by the City Council of the City of Lodi in a regular meeting held March 2, 2022, by the following vote: AYES: COUNCIL MEMBERS — Hothi, Khan, Kuehne, Nakanishi, and Mayor Chandler NOES COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — None ABSTAIN: COUNCIL MEMBERS — None PAMELA M. FARRIS Assistant City Clerk 2022-59