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HomeMy WebLinkAboutCC Reso 2021-28 RESOLUTION NO. 2021-28 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY AUTHORIZING THE ISSUANCE AND DELIVERY OF PENSION OBLIGATION BONDS TO REFUND CERTAIN OUTSTANDING PENSION OBLIGATIONS OF THE CITY TO THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM, APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF A TRUST AGREEMENT, AUTHORIZING A VALIDATION ACTION, AUTHORIZING CERTAIN PROFESSIONALS, AND OTHER MATTERS RELATING THERETO WHEREAS, the City of Cathedral City, California (the "City") is a charter city duly organized and existing under and pursuant to the Constitution and laws of the State of California. WHEREAS, the City is obligated by the Public Employees' Retirement Law, commencing with Section 20000 of the Government Code of the State of California, as amended (the "Retirement Law"), to make payments to the California Public Employees' Retirement System (the "System") relating to pension benefits accruing to the System's members. WHEREAS, the City is obligated specifically to make certain payments tothe System in respect of current and retired employees under the pension programs of the System that amortize such obligations over a fixed period of time (the "Pension Obligation"). WHEREAS, the Pension Obligation is evidenced by contracts with the System with respect to employees of the City, as heretofore and hereafter amended from time to time (collectively, the "CalPERS Contract"). WHEREAS, the City is authorized pursuant to Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of Division 2 of Title 5 of the Government Code of the State of California (the "Act") to issue bonds for the purpose of refunding any evidence of indebtedness of the City. WHEREAS, the City desires to approve the issuance of one or more series of bonds (the "Pension Obligation Bonds") for the purpose of refunding obligations under the CaIPERS Contract, subject to favorable market conditions and subsequent City Council approval of a preliminary official statement, a bond purchase agreement and a continuing disclosure undertaking should the City determine to deliver Pension Obligation Bonds following the validation process authorized hereby. WHEREAS, there is on file with the City Council the proposed form of Trust Agreement (the "Trust Agreement") to be entered into between the City and a trustee to be named therein (the "Trustee"), relating to the Pension Obligation Bonds and Additional Bonds, including the form of bonds attached thereto as an exhibit thereto. NOW THEREFORE, the Board resolves, determines and orders as follows: 102965784.2 - I - Section 1. Findings. This City Council hereby finds and declares that the issuance of the Pension Obligation Bonds to refund Pension Obligations of various plans under the CaIPERS Contract, and the other actions contemplated by this Resolution are in the best interests of the City. Section 2. Pension Obligation Bonds and Parameters. The Pension Obligation Bonds will be in substantially the form attached to the Trust Agreement, with such changes therein, deletions therefrom and additions thereto as the City Manager may approve in a form approved by the City Attorney, such approval to be conclusively evidenced by the execution and delivery of the Pension Obligation Bonds. The Pension Obligation Bonds will be issued as current interest fixed rate bonds and bear such series and subseries designations as necessary or convenient. The aggregate initial principal amount of the Pension Obligation Bonds may not exceed (i) the lesser of $50,000,000 or (ii) the amount of the Pension Obligation (as confirmed by the System) remaining unpaid on the Safety Plan and Miscellaneous Plan described above on the date of issuance of the Pension Obligation Bonds, plus an additional amount to pay costs of issuance of the Pension Obligation Bonds, original issue discount, if any, and underwriter's discount on the Pension Obligation Bonds. The Underwriter's discount, excluding original issue discount, may not exceed 0.65% of the aggregate principal amount of the initial series of Pension Obligation Bonds. The maximum all-in true interest cost may not exceed 3.80% per annum for the initial series of Pension Obligation Bonds. No series of Pension Obligation Bonds will mature later than in 2044. Section 3. Payment Obligation under the Pension Obligation Bonds. The Pension Obligation Bonds constitute an obligation imposed by law, pursuant to the California Constitution and the laws of the State of California, including the Retirement Law. Payment of the principal of and interest on the Pension Obligation Bonds is not limited to any special source of funds and is payable from any legally available moneys or funds of the City. Section 4. Trust Agreement. The proposed form of Trust Agreement, between the City and the Trustee, on file with the City Clerk, is approved. The City Manager, Administrative Services Director and the City Clerk (the "Authorized Representatives") are each hereby authorized and directed, severally, or any such officer's designee, for and on behalf of the City, to execute and deliver the Trust Agreement, substantially in the form on file with the City Clerk, with such changes therein, deletions therefrom and additions thereto (including, without limitation, changes, deletions and additions as such Authorized Representative approves, such approval to be conclusively evidenced by the execution and delivery of the Trust Agreement. Section 5. Validation Proceeding. The Authorized Representatives of the City are, and each of them is, authorized and directed to do any and all things, including bringing a validation action under Section 860 et seq. of the California Code of Civil Procedure and to take any and all actions (including any required publications of summons or other notice) and execute and deliver any and all documents which they or any of them deem necessary or advisable to consummate the transactions contemplated by this Resolution and the Trust Agreement and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution and the Trust Agreement. Section 6. Good Faith Estimates. Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California Legislature) ("SB 450") requires that the governing body of a public body obtain from an underwriter, financial advisor or private lender and disclose, before authorizing the issuance of bonds with a term of greater than 13 months, certain good faith cost estimates. Set 102965784.2 - 2 - forth in attached Exhibit A, which is incorporated by reference, are good faith estimates of: (a) the true interest cost of the Pension Obligation Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Pension Obligation Bonds, (c) the amount of proceeds of the Pension Obligation Bonds expected to be received net of the fees and charges paid to third parties, and (d) the sum total of all debt service payments on the Pension Obligation Bonds calculated to the final maturity of the Pension Obligation Bonds, plus the fees and charges paid to third parties not paid with the proceeds of the Pension Obligation Bonds. Section 7. Approval of Certain Financing Team Members. The City Council hereby approves the appointment of (a) Norton Rose Fulbright US LLP, to provide Bond Counsel and Disclosure Counsel services in connection with the Pension Obligation Bonds, (b) Fieldman, Rolapp & Associates, to provide services as Municipal Advisor in connection with the Pension Obligation Bonds, (c) Raymond James & Associates, Inc. as Underwriter for the Pension Obligation Bonds, and (d) Willdan Financial Services, as Dissemination Agent. The City Manager and the Administrative Services Director of the City are each individually hereby authorized and directed to execute services agreements with these financing team members, as applicable. Section 8. General Authorization; Ratification. Each Authorized Representative and all other officers of the City are authorized and directed, for and in the name and on behalf of the City to do any and all things and take any and all other actions, including the publication of any notices necessary or desirable in connection with the sale of the Pension Obligation Bonds and execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments and other documents, which they, or any of them, deem necessary or advisable to consummate the issuance and sale of the Pension Obligation Bonds and the consummation of the transactions as described herein. All actions heretofore taken by any Authorized Representative or any officer, employee or agent of the City with respect to the issuance, delivery and sale of the Pension Obligation Bonds or in connection with or related to any of the agreements referred to herein, are hereby approved, confirmed and ratified. Section 9. Electronic Signatures. This Resolution and the Trust Agreement and all other documents and certificates relating to the Pension Obligation Bonds may be executed with electronic signatures in accordance with Government Code of the State of California §16.5. Such electronic signatures will be treated in all respects as having the same effect as an original signature. Section 10. Effective Date. This Resolution becomes effective immediately upon adoption. 102965784.2 - 3 - PASSED AND ADOPTED at a meeting of the City Council of the City of Cathedral City on this 15th day of September 2021, by the following vote: AYES: Councilmembers Ross, Lamb and Carnevale; Mayor Pro Tem Gutierrez and Mayor Gregory NOES: None ABSENT: None ABSTAINED: None L1 L'J1kt it kit Ra I"'•nd Gre. , ayor City n Cathedra I Attest: A racey R. . :rtinez, City Clerk 102965784.2 - 4 - STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) SS CITY OF CATHEDRAL CITY) I, Tracey R. Martinez, CMC Clerk of the City Council of the City of Cathedral, California, do hereby certify that the foregoing Resolution No. 2021-28 was duly and regularly adopted at a meeting of the City Council of the City of Cathedral City, held on the 15th day of September 2021 by the following vote: AYES: Councilmembers Ross, Lamb and Carnevale; Mayor Pro Tem Gutierrez and Mayor Gregory NOES: None ABSENT: None ABSTAINED: None '_17)7 ,c) -- Tracey RUfiartinez, City Cler 102965784.2 EXHIBIT A GOOD FAITH ESTIMATES The following information was obtained from Raymond James & Associates, Inc. with respect to the Pension Obligation Bonds approved in the attached Resolution, and is provided in compliance with Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California Legislature) with respect to the Pension Obligation Bonds: 1. True Interest Cost of the Pension Obligation Bonds. Assuming an aggregate principal amount of Pension Obligation Bonds of $45,570,000 are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the true interest cost of the Pension Obligation Bonds, 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 Pension Obligation Bonds, is 2.28%. 2. Finance Charge of the Pension Obligation Bonds. Assuming an aggregate principal amount of Pension Obligation Bonds of $45,570,000 are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the finance charge of the Pension Obligation Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Pension Obligation Bonds), is $548,205 as follows: Cost of Issuance Estimated Amounts Bond Counsel $ 75,000 Disclosure Counsel 43,000 Validation* 20,000 Financial Advisor 57,000 Trustee & Trustee's Counsel 7,000 Printer 3,000 Rating Agency 37,000 Miscellaneous 10,000 Underwriter 296,205 Total $ 548,205 • Capped at$30,000. 3. Amount of Proceeds to be Received. Assuming an aggregate principal amount of Pension Obligation Bonds of$45,570,000 are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the amount of proceeds expected to be received by the Authority for sale of the Pension Obligation Bonds less the finance charge of the Pension Obligation Bonds described in 2 above and any reserves or capitalized interest paid or funded with proceeds of the Pension Obligation Bonds, is $44,962,990. 4. Total Payment Amount. Assuming an aggregate principal amount of Pension Obligation Bonds of $45,570,000 are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the total payment amount, which means the sum total of all payments the Authority will make to pay debt service on the Pension Obligation Bonds plus the finance charge of the Pension Obligation Bonds described in paragraph 2 above not paid with the proceeds of the Pension Obligation Bonds, calculated to the final maturity of the Pension Obligation Bonds, is $54,239,287. 102965784.2 Attention is directed to the fact that the foregoing information constitutes good faith estimates only. The actual interest cost, finance charges, amount of proceeds and total payment amount may vary from the estimates above due to variations from these estimates in the timing of Pension Obligation Bond sales, the amount of Pension Obligation Bonds sold, the amortization of the Pension Obligation Bonds sold and market interest rates at the time of each sale. The date of sale and the amount of Pension Obligation Bonds sold will be determined by the Authority based on need for project funds and other factors. The actual interest rates at which the Pension Obligation Bonds will be sold will depend on the bond market at the time of each sale. The actual amortization of the Pension Obligation Bonds will also depend, in part, on market interest rates at the time of sale. Market interest rates are affected by economic and other factors beyond the City's and the Authority's control. The City and the Authority have approved the execution and delivery of the Pension Obligation Bonds with a maximum all-in true interest cost not to exceed 2.39% per annum. 102965784.2