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HomeMy WebLinkAboutRESO 9753DocuSign Envelope ID: C8642DBD-E2CE-417C-86BF-EOA03AB18864 Resolution No. 9753 A RESOLUTION OF THE CITY OF PALO ALTO APPROVING, AUTHORIZING AND DIRECTING EXECUTION OF CERTAIN LEASE FINANCING DOCUMENTS, APPROVING A PRELIMINARY OFFICIAL STATEMENT, AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO RECITALS WHEREAS, the Palo Alto Public Improvement Corporation, a nonprofit public benefit corporation duly formed, organized operating and acting pursuant to the laws of the State of California (the "Corporation") has heretofore leased the Palo Alto Civic Center to the City pursuant to that certain lease agreement, dated as of January 1, 2002, by and between the Corporation, as lessor, and the City, as lessee (the "2002 Lease") for the purposes of refinancing that certain lease agreement, dated as of March 1, 1992, by and between the Corporation, as lessor, and the City, as lessee (the "1992 Lease"), refinancing certificates of participation executed and delivered in the original amount of $7,670,000 (the "1992 Certificates"), and financing the costs of certain Parking Structure Improvements, as defined in the 2002 Lease; WHEREAS, in order to provide funding for the foregoing objectives, the City contemporaneously caused execution and delivery of (1) City of Palo Alto Certificates of Participation (Civic Center Refinancing and Downtown Parking Improvements Project), Series 2002A (Tax-Exempt) in the original amount of $3,500,000 (the "2002A Certificates") and (2) City of Palo Alto Certificates of Participation (Civic Center Refinancing and Downtown Parking Improvements Project), Series 20028 (Taxable) in the original amount of $3,555,000 (the "20028 Certificates") pursuant to that certain Trust Agreement, dated as of January 1, 2002 (the "2002 Trust Agreement"), by and among U.S. Bank National Association, as trustee (the "2002 Trustee"), the Corporation and the City; WHEREAS, in order to take advantage of prevailing market conditions and realize savings for the benefit of the City, the City now wishes to refinance its lease payment obligation under the 2002 Lease and to cause the prepayment of the outstanding 20028 Certificates (the 2002A Certificates are no longer outstanding); WHEREAS, the City further desires to finance the costs of making certain improvements to the Palo Alto Municipal Golf Course (the "Golf Course"), located at 1875 Embarcadero Road (the "Golf Course Improvements"); WHEREAS, in order to refinance the 2002 Lease and the 2002B Certificates, and to finance the Golf Course Improvements, the City has determined to provide for the execution and delivery of City of Palo Alto 2018 Certificates of Participation (Golf Course Improvement Project; 20028 Refinancing) (Federally Taxable) (the "Certificates"); WHEREAS, staff has recommended that the City cause the Certificates to be executed and delivered in a single series the interest on which would be taxable under federal tax law in order to preserve the maximum ongoing flexibility for Golf Course management; however, in 180403 th 0140188 DocuSign Envelope ID: C8642DBD-E2CE-417C-86BF-EOA03AB 18864 order to ensure that the financing is ultimately structured in the most cost-effective manner, the City Council wishes to delegate to the City Manager or a designee appointed by the City Manager (e.g. Administrative Services Director) the final determination of whether it is desirable and in the City's best interest to have the City cause to be executed and delivered a second series of certificates of participation the interest on which would be exempt from federal tax law to finance all or a portion of the Golf Course Improvements; WHEREAS, the City further proposes to lease its Fire Station 1, located at 301 Alma Street (or another property identified by staff) (the "Leased Property"), to the Corporation under a Property Lease by and between the City, as lessor, and the Corporation, as lessee (the "Property Lease"), and to cause the Corporation to lease the Leased Property back to the City under a Lease Agreement, by and between the City, as lessee, and the Corporation, as lessor (the "Lease Agreement"), in consideration of the payment by the City of semi-annual lease payments; WHEREAS, the City further proposes to cause the Corporation to assign its right to receive such lease payments to U.S. Bank National Association, as trustee (the "Trustee"), under an Assignment Agreement (the "Assignment Agreement"), by and between the Corporation and the Trustee, and in consideration of such assignment the Trustee has agreed to execute and deliver the Certificates, each evidencing a direct, undivided fractional interest in such lease payments, in accordance with a Trust Agreement to be executed by and among the Trustee, the City and the Corporation (the "Trust Agreement"); WHEREAS, in connection therewith, it is in the public interest and for the public benefit that the City authorize and direct execution of the Lease Agreement and certain other financing documents in connection therewith; WHEREAS, pursuant to Government Code Section 5852.1, which became effective on January 1, 2018 by the enactment of Senate Bill 450, certain information relating to the Certificates is set forth in Appendix A attached to this Resolution, and such information is hereby disclosed and made public; WHEREAS, pursuant to the City's authorization, Quint & Thimmig LLP, as disclosure counsel to the City, has prepared and presented to the City a form of preliminary official statement containing information material to the offering and sale of the Certificates (the "Preliminary Official Statement"); and WHEREAS, the documents below specified have been filed with the City, and the members of the City Council, with the aid of its staff, have reviewed said documents. NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows: SECTION 1. The below-enumerated documents be and are hereby approved, and the Mayor, the City Manager, the Administrative Services Director or a designee appointed by any such officer (in each case, an "Authorized Officer") are hereby separately authorized and directed to execute said documents, with such changes, insertions and omissions as may be 180403 th 0140188 DocuSign Envelope ID: C8642DBD-E2CE-417C-86BF-EOA03AB18864 approved by such official, and the City Clerk is hereby authorized and directed to attest to such Authorized Officer's signature: (a) The Property Lease, relating to the lease of the Leased Property by the City to the Corporation, by and between the City, as lessor, and the Corporation, as lessee; (b) The Lease Agreement, relating to the lease of the Leased Property by the Corporation back to the City, between the Corporation, as lessor, and the City, as lessee; (c) The Trust Agreement, by and among the Corporation, the City and the Trustee, relating to the execution and delivery of the Certificates, evidencing the fractional interests of the owners thereof in lease payments to be made by the City under the Lease Agreement; (d) A Termination Agreement, relating to the termination of the 2002 Lease, between the Corporation and the City and acknowledged by the 2002 Trustee; (e) A Purchase Agreement among the City, the Corporation and Raymond James & Associates, Inc., as underwriter of the Certificates (the "Underwriter"), specifying the terms and conditions upon which the Certificates are to be sold to the Underwriter; and (f) A continuing disclosure certificate under which the City will agree to provide certain information on a continuing basis. SECTION 2. The Council hereby authorizes the execution and delivery of the Certificates, and the sale of the Certificates to the Underwriter in the aggregate principal amount of not to exceed $9,800,000. The true interest cost of the Certificates may not exceed 5.0% and the Underwriter's discount may not exceed 0.80% of the principal amount of the Certificates. SECTION 3. The City Manager or a designee appointed by the City Manager (e.g. Administrative Services Director) is hereby authorized and directed to determine whether it is desirable and in the City's best interest for the City to cause to be executed and delivered a second series of certificates of participation the interest on which would be exempt from federal tax law to finance all or a portion of the Golf Course Improvements, either in lieu of or in addition to the taxable series. If the City Manager or a designee appointed by the City Manager determines that a second series should be executed and delivered, all references to the Certificates in this resolution shall refer to both series. SECTION 4. The City Manager or a designee appointed by the City Manager is additionally authorized to add a "Green Bonds" designation to the name of the Certificates if he determines, after consultation with the City's municipal advisor, that doing so would be in the best interests of the City. SECTION 5. Each Authorized Officer, the City Clerk and all other officials of the City are hereby authorized and directed to execute such other agreements, documents and certificates as may be necessary to effect the purposes of this resolution and the lease financing and 180403 th 0140188 DocuSign Envelope ID: C8642DBD-E2CE-417C-86BF-EOA03AB18864 refinancing herein authorized, and to identify an alternative parcel of property as the Leased Property in place of Fire Station 1. 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 the case such officer shall be absent or unavailable. SECTION 6. The City hereby approves the Preliminary Official Statement describing the Certificates, in the form on file with the Director of Administrative Services. The Underwriter is hereby authorized to distribute the Preliminary Official Statement in connection with the sale of the Certificates. 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 final as of its date within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, (b) approve any changes in or additions to cause such Preliminary Official Statement to be put in final form, and (c) execute said final official statement (the "Final Official Statement") for and in the name and on behalf of the City. SECTION 7. The Authorized Officers are separately authorized to approve corrections and additions to the Preliminary Official Statement by supplement or amendment thereto, or otherwise as appropriate, provided that any such corrections or additions shall be necessary to cause the information contained therein to conform with facts material to the Certificates, or to the proceedings of the City or such corrections or additions are in form rather than in substance. SECTION 8. The Mayor, the City Manager and the Administrative Services Director are separately authorized and directed to cause the Preliminary Official Statement to be brought into the form of a final official statement and to execute said Final Official Statement, dated as of the date of the sale of the Certificates, and the City Manager and Administrative Services Director are separately authorized and directed to execute a statement that the facts contained in the Final Official Statement, and any supplement or amendment thereto (which shall be deemed an original part thereof for the purpose of such statement) were, at the time of sale of the Certificates, true and correct in all material respects and that the Final Official Statement did not, on the date of sale of the Certificates, and does not, as of the date of delivery of the Certificates, contain any untrue statement of a material fact with respect to the City or omit to state material facts with respect to the City required to be stated where necessary to make any statement made therein not misleading in the light of the circumstances under which it was made. The Mayor, the City Manager or the Administrative Services Director shall take such further actions prior to the signing of the Final Official Statement as are deemed necessary or appropriate to verify the accuracy thereof. SECTION 9. The Final Official Statement, when prepared, is approved for distribution by the Underwriter in connection with the offering and sale of the Certificates. SECTION 10. This resolution shall take effect immediately upon its adoption. 180403 th 0140188 DocuSign Envelope ID: C8642DBD-E2CE-417C-86BF-EOA03AB18864 APPENDIX 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 Certificates: 4.15% (B) Finance Charge of the Certificates (Sum of all fees/charges paid to third parties): $258,975.68 (C) Net Proceeds to be Received (net of finance charges, reserves and capitalized interest, if any): $8,988,349.32 (D) Total Payment Amount Through Maturity: $15,525,240.35 The foregoing estimates constitute good faith estimates only. The principal amount of the Certificates, the true interest cost of the Certificates, 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 estimated amount used for purposes of such estimates, (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 the timing of the need for proceeds of the Certificates and other 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. 180403 th 0140188