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HomeMy WebLinkAbout2020-96 - Authorizing the Preparation, Sale and Delivery of Not to Exceed $10,000,000 Principal Amount of Certificates of Participation, Series 2020A (Fire Station No. 2 Project) and Approving Certain Documents and Authorizing Certain Actions in ConnectioRESOLUTION NO. 2020-96 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, AUTHORIZING THE PREPARATION, SALE AND DELIVERY OF NOT TO EXCEED $10,000,000 PRINCIPAL AMOUNT OF CERTIFICATES OF PARTICIPATION, SERIES 2020A (FIRE STATION NO. 2 PROJECT) AND APPROVING CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION THEREWITH WHEREAS, the City of Newport Beach ("City") and the Newport Beach Public Facilities Corporation ("Corporation") desire to enter into a Site Lease dated as of December 1, 2020 ("Site Lease"), and a Lease/Purchase Agreement, dated as of December 1, 2020 ("Lease"), whereby the City, as agent of the Corporation, shall cause the acquisition, improvement and equipping of a new Fire Station No. 2, as described therein ("Project"), and the City has agreed to lease the Leased Premises (defined below) from the Corporation, the forms of which have been presented to this City Council at the meeting of which the Resolution has been adopted; WHEREAS, in order to finance the Project, the City and the Corporation desire to authorize the sale of the City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2 Project) (the "Certificates") evidencing fractional interests in the Lease Payments made by the City under the Lease; WHEREAS, Section 5450 et seq. of the California Government Code ("Government Code") provides statutory authority for pledging collateral for the payment of principal or prepayment price of, and interest on, any agreement, including certificates of participation, and the Government Code creates a continuing perfected security interest which shall attach immediately to such collateral irrespective of whether the parties to the pledge document have notice of the pledge and without the need for any physical delivery, recordation, filing or further act, and, therefore, the City and the Corporation hereby warrant and represent that pursuant to the Lease, the Trust Agreement, to be dated as of December 1, 2020, by and among The Bank of New York Mellon Trust Company, N.A., as trustee ("Trustee"), the City and the Corporation ("Trust Agreement"), and the Government Code, the Trustee will have a first priority perfected security interest in the Lease Payments described in the Lease represented by the Certificates pursuant to the Government Code; Resolution 2020-96 Page 2 of 6 WHEREAS, the City Council desires to consent to the assignment of certain of the Corporation's rights, title and interest in and to the Site Lease and the Lease Agreement, including the right to receive such lease payments from the City, to the Trustee pursuant to an Assignment Agreement, between the Corporation and the Trustee, to be dated as of December 1, 2020 ("Assignment Agreement"), the form of which together with the form of the Trust Agreement, are attached to Resolution PFC2020-2, and have been presented to this City Council at the meeting at which this Resolution has been adopted; WHEREAS, the City Council desires to approve the form of a Purchase Agreement ("Purchase Agreement"), by and among the Corporation, the City and Stifel, Nicolaus & Company, Incorporated ("Purchaser"), pursuant to which the Purchaser will agree to buy the Certificates on the terms and conditions set forth therein, the form of which is attached to Resolution PFC2020-2, and has been presented to this City Council at the meeting at which this Resolution has been adopted; WHEREAS, the City Council desires to approve the form of a Preliminary Official Statement relating to the Certificates ("Preliminary Official Statement") to be distributed to potential investors, for the purposes of facilitating the sale of the Certificates at the lowest feasible interest rate, the form of which has been presented to this City Council at the meeting at which this Resolution has been adopted; WHEREAS, the City Council desires to approve the form of a Continuing Disclosure Agreement ("Disclosure Agreement") between the City and Digital Assurance Certification, LLC, the form of which has been presented to this City Council at the meeting at which the Resolution has been adopted; WHEREAS, the City Council desires to approve the form of an Agency Agreement between the City and the Corporation, the form of which has been presented to this City Council at the meeting at which the Resolution has been adopted; and WHEREAS, in compliance with Section 5852.1 of the Government Code, the City has obtained from KNN Public Finance, LLC, the City's municipal advisor, the required good faith estimates and such estimates are disclosed and set forth in Exhibit A attached hereto. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The City Council hereby finds and determines that the total rental to be paid under the Lease Agreement does not exceed the fair rental value of the leased property identified in Exhibit A to the Lease (collectively, the "Leased Premises"). Resolution 2020-96 Page 3 of 6 Section 2: This City Council hereby consents to the preparation, sale and delivery of the Certificates in an aggregate amount of not to exceed $10,000,000 in accordance with the terms and provisions of the Trust Agreement, to pay the costs of the Project and to pay all associated costs in connection therewith. The proceeds of the Certificates shall be expended to finance the costs of the Project and to provide for a reserve fund, if any, and the costs of the preparation, sale and delivery of the Certificates. Section 3: The Bank of New York Mellon Trust Company, N.A. is hereby appointed as Trustee on behalf of the owners of the Certificates, with the duties and powers of such Trustee as set forth in the Trust Agreement. Section 4: The forms of the Site Lease, the Lease Agreement, the Trust Agreement, the Disclosure Agreement, the Agency Agreement and the Assignment Agreement presented at this meeting are hereby approved. Each of the Mayor and the City Manager is hereby authorized for and in the name of the City to execute the Site Lease, the Lease Agreement, the Disclosure Agreement, the Agency Agreement and the Trust Agreement in substantially the forms on file with the City Clerk, 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"), or the City Attorney and the officer or officers executing the same. Approval of such changes shall be conclusively evidenced by the execution and delivery of the foregoing documents by one or more of the authorized officers. The Mayor and the City Manager each is 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 Disclosure Agreement, the Trust Agreement, the Agency Agreement and the Assignment Agreement. Section 5: The form of the Purchase Agreement presented at this meeting and the sale of the Certificates pursuant thereto are hereby approved, and each of the Mayor the City Manager is hereby authorized to evidence the City's acceptance of the terms and provisions of the Purchase Agreement by executing and delivering the Purchase Agreement in the form presented to the City at this meeting, with such additions thereto and changes therein as are recommended or approved by the City Attorney and the officers executing the same. Approval of such additions and changes shall be conclusively evidenced by the execution and delivery of the Purchase Agreement; provided, however, that the Purchase Agreement shall be signed only if: (a) the aggregate principal amount of the Certificates does not exceed $10,000,000; (b) the aggregate true interest cost of the Certificates does not exceed 2.0% per annum; (c) the interest rate with respect to the Certificates does not exceed 4.0% per annum; and Resolution 2020-96 Page 4 of 6 (d) an underwriting discount for the purchase of the Certificates does not exceed 0.5% of the principal amount of the Certificates. The City Manager, or its designee, is authorized to reject any terms presented by the Purchaser if determined not to be in the best interest of the City. Section 6: The form of the Certificates as set forth in the Trust Agreement (as the Trust Agreement may be modified pursuant to Section 4 hereof) are hereby approved. Section 7: In addition to the parameters relating to the Certificates set forth in Sections 1 and 6 of this Resolution, the Certificates shall mature no later than July 1, 2030, and may be subject to all or certain of the proposed prepayment provisions relating to the Certificates set forth in Exhibit B of this Resolution, as determined by the City Manager. Section 8: Based on current market conditions, KNN Public Finance, LLC, the City's Municipal Advisor, has projected maximum annual debt service with respect to the Certificates to be $964,000 and estimated the costs of delivery of the Certificates to be in the amount provided in Exhibit A under the subheading "Finance Charge of the Certificates." Section 9: The form of the Preliminary Official Statement presented at this meeting is hereby approved, and the Preliminary Official Statement may be distributed to prospective purchasers in the form so approved, together with such additions thereto and changes therein as are determined necessary by the City Manager, or its designee, to make such Preliminary Official Statement final as of its date for purposes of Rule 15c2- 12 of the Securities and Exchange Commission. Each of the Mayor and the City Manager is hereby authorized to execute a final Official Statement in the form of the Preliminary Official Statement, together with such changes as are determined necessary by the City Manager, or its designee, and the officer executing the same to make such Official Statement complete and accurate as of its date. The Purchaser is further authorized to distribute the final Official Statement for the Certificates to the purchasers thereof upon its execution by an officer of the City as described above. The City Manager and its written designee is hereby authorized and directed to take whatever steps are necessary to comply with the requirements of Rule 15c2-12 applicable to the Certificates following their execution and delivery. Resolution 2020-96 Page 5 of 6 Section 10: The Mayor and the City Manager are hereby authorized, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary and advisable in order to consummate the sale and delivery of the Certificates, as approved as to form by the City Attorney, and otherwise effectuate the purposes of this Resolution (including but not limited to the execution and delivery of any consents or agreements to remove encumbrances to title with respect to the Leased Premises and to substitute, remove or add property to the Leased Premises that is determined by the City Manager to be in the best interests of the City) and such actions previously taken by such officers are hereby ratified and confirmed. In the event the Mayor is unavailable or unable to execute and deliver any of the above -referenced documents, any other member of the City Council may validly execute and deliver such document. Section 11: In connection with the execution and delivery of the Certificates, the City has engaged Stradling Yocca Carlson & Rauth, a Professional Corporation, to act as Special Counsel and Disclosure Counsel to the City, Stifel, Nicolaus & Company, Incorporated to act as the underwriter and KNN Public Finance, LLC, to act as Municipal Advisor to the City. Section 12: The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Section 13: If any section, subsection, sentence, clause or phrase of this Resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this Resolution. The City Council hereby declares that it would have passed this Resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Section 14: The City Council finds the adoption of this resolution is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Resolution 2020-96 Page 6 of 6 Section 15: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. ADOPTED this 10th day of November, 2020. Will O'Neill Mayor ATTEST: APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE --'-- C - Aaron C. Harp City Attorney Attachments: Exhibit A - Good Faith Estimates Exhibit B - Prepayment Provisions EXHIBIT A GOOD FAITH ESTIMATES The good faith estimates set forth herein are provided with respect to the Certificates in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the City by KNN Public Finance, LLC, the City's Municipal Advisor (the "Municipal Advisor"). Principal Amount. The Municipal Advisor has informed the City that, based on the City's financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Certificates to be sold is $7,935,000 (the "Estimated Principal Amounts"). True Interest Cost of the Certificates. The Municipal Advisor has informed the City that, assuming that the respective Estimated Principal Amounts of the Certificates are sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Certificates, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Certificates, is 0.94%. Finance Charge of the Certificates. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amounts of the Certificates are sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Certificates, which means the sum of all fees and charges paid to third parties (or costs associated with the Certificates), is $182,165. Amount of Proceeds to be Received. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amounts of the Certificates are sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the City for sale of the Certificates, less the finance charge of the Certificates, as estimated above, and any capitalized interest on the Certificates paid or funded with proceeds of the Certificates, is $9,030,317. Total Payment Amount. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amounts of the Certificates are sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the City will make to pay debt service on the Certificates, plus the finance charge for the Certificates, as described above, not paid with the respective proceeds of the Certificates, calculated to the final maturity of the Certificates, is $9,617,967 and the annual cost to administer the Certificates, not paid with proceeds of the Certificates is $3,750. A-1 The foregoing estimates constitute good faith estimates only and are based on market conditions prevailing at the time of preparation of such estimates on October 26, 2020. The actual principal amount of the Certificates issued and sold, the true interest cost thereof, 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 Certificates being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Certificates sold being different from the respective Estimated Principal Amounts, (c) the actual amortization of the Certificates being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Certificates being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the City's financing plan, or a combination of such factors. The actual date of sale of the Certificates and the actual principal amount of Certificates sold will be determined by the City based on various factors. The actual interest rates borne by the Certificates will depend on market interest rates at the time of sale thereof. The actual amortization of the Certificates 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. EXHIBIT B PREPAYMENT PROVISIONS Pursuant to the City's Debt Management Policy, it should be noted that the below optional prepayment provision provides for a call at par less than ten years after the delivery of the Certificates. Extraordinary Prepayment from Net Proceeds. The 2020 Certificates are subject to prepayment prior to their respective maturity dates on any date, in whole or in part, from Net Proceeds which the Trustee deposits in the Prepayment Fund as provided in the Lease Agreement at least 45 days prior to the date fixed for prepayment and credited toward the prepayment made by the City pursuant to the Lease Agreement, at a prepayment price equal to the principal amount thereof together with the accrued interest to the date fixed for prepayment, without premium. For extraordinary prepayment of 2020 Certificates pursuant to the Trust Agreement, the Trustee will select 2020 Certificates for prepayment so that the Net Proceeds will be applied to prepay a proportionate amount of 2020 Certificates and Additional Certificates based on the Outstanding principal amount and by lot within any maturity or sinking account prepayment. The Trustee will promptly notify the City and the Corporation in writing of the 2020 Certificates so selected for prepayment by mailing to the City and the Corporation copies of the notice of prepayment provided for in the Trust Agreement. The City will provide the Trustee with a revised sinking fund schedule upon any prepayments. "Net Proceeds" means any proceeds of any insurance, performance bonds or taking by eminent domain or condemnation paid with respect to the Leased Premises remaining after payment therefrom of any expenses (including attorneys' fees) incurred in the collection thereof. Optional Prepayment. The 2020 Certificates are not expected to be subject to optional prepayment prior to maturity. la STATE OF CALIFORNIA } COUNTY OF ORANGE } ss. CITY OF NEWPORT BEACH } I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; the foregoing resolution, being Resolution No. 2020-96 was duly introduced before and adopted by the City Council of said City at a regular meeting of said Council held on the 10th day of November, 2020; and the same was so passed and adopted by the following vote, to wit: AYES: Mayor Will O'Neill, Mayor Pro Tem Brad Avery, Council Member Joy Brenner, Council Member Diane Dixon, Council Member Duffy Duffield NAYS: None RECUSED: Council Member Kevin Muldoon ABSENT: Council Member Jeff Herdman IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 12th day of November, 2020. UBILJAW'� Leilani I. Brown City Clerk Newport Beach, California %;L1E'ORN%