HomeMy WebLinkAboutRESO 5836--------------------------------------------------... ~, ' .
• • • , .... f
• ,.
RESOLUTION NO. 5836 _ __;_.;;..,;;....;;..__ ORIGINAL
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
CONCERNING THE ISSUANCf,; OF REVENUE BONDS TO FIKANCE
THE EXPANSION AND RENOVATION PitOGRAM OF
LYTTON GARD~~S, INC.
WHEIU.,AS, the City of Palo Alto (the "City") is a
municipal corporation and chcirter city duly organized and
existing under a freeholders' chart~r pursuant to which the
City has the right and power to make and enforce all laws and
regulations in respect to municipal af ~airs and certain other
matters in accordance with and as ffiore particularly provided
in Sections 3, 5 and 7 of Article XI of th~ Constitution of
the State of California and Article II of the charter of the
City (the "Charter");
WHEREAS, the City Council of the City acting under
and pursuant to the powers reserved to the City under
Sections 3, 5 and 7 of Article XI of the Constitution ~f the
State of California and Article II of the Charter, finds that
the public interest and necessity require the establishment
of a program for ~he authorizatlon, sale and issuance of
health facility revenue bonds by the City for the purpose of
making loans such as that described herein;
WHERF.AS, in connection with its expansion and
renovation program at its skilled nursing facility located
within the City (the "Project"), Lytton Gardens, Inc., (the
"Nursing Facility") has requested the financial assistance of
the City and has presented to the City a description of the
Proj~ct (including a statement of estimated cost);
WHEREAS, the City desires to assist the Nursing
Facility in the financing of the Project; and
WHEREAS, the City deems it necessary and essential
and a proper public purpose that tbe Project be financed at
the earliest practicable date: the Nursing Facility requires
satisfactory assurance from the City that the proceeds of the
sale of bonds of the City will be made available to assist in
the financing of the Project; and the City requires satis-
factory· assurance from the Nursing Facility that certain
costs of issuing such bonds will be paid by the Nursing
Facility and that the Nursing Facility as part of the
consideration for such financial assistance, will provide
certain health services for and within the City during the
term of such bonds;
NOW THEREFORE, BE IT RESOLVED by the City Council
of the City of Palo Alto, as follows:
Section 1. The City shall proceed to prepare, or
~~use to be prepared, the documentation necessary for the
City to iaaue, at one time or from time tc time, an aggregate
of not to exceed $10,000,000 principal amount of health
facility revenue bonds of the City {the "Bonda~) to finance
the Project; provided that, prior to commending such
preparation, the City and the Nursing Facility shall have
entered into a letter agreement in substantially the form
attached hereto, with such additions or deletions as are
considered necessary or appropriate by officers of the City
and the Nurain9 Facility, and the Mayor or City Manager of
the City ia hereby authorized to execute said letter
agreement for anf..t in the narne and on behalf of the City~
Section 2. 'the Bonds •hall be payable solely from
the revenue• to be received by the City purauant to a loan or
other agreement(&) to be entered in~o by the City and the
Nursing Facility in connection with the financing of the
~roject, and shell not be deemed to constitute a debt or
liability of the City under any constitutional, charter or
atatutory debt limitation. Neither the faith and credit nor
the taxing power of the City shall be pledged to be payment
of the principal of or intere•t on the Bonda.
(
• I . ,. .. .. . .
• ~ Section 3. Issuance of the Bonds shall be subject
lo the fol lowing con<li lions: (a) thl"!' Ci. ty and the Nursing
Facility shall have first agreed to mutually acceptable terms
for the Bonus and the sale and delivery thereof and mutually
acceptable terms and conditions for the loan or other
agreement(s) for the financing of t.he Project, and (b) all
requisite governmental approvals shall have first been
obtained. Further, City retains full discretion in the
exercise of its governmental authority to suspend further
proceedings for bond issuance.
Section 4. OrricK, Herrington, Rowley & Sutcliffe
is hereby designated bond counsel to the City in accordance
with the terms of their proposal dated September 8, 1980.
Sectiun 5. Blyth Eastman Paine Webber Healthcare
Funding, Inc., is hereby designated underwriter of the Bonds
for the City in accordance with the terms of its proposal
dated July 21, 1980.
Section 6. Thla resolution shall take effect
irnmediately upon its passage.
INTRODUCE.D AND PASSE:D: September 15 ~ 1980
AYES: Brenner, Eyerly, Fletcher, Henderson, Levy, Sher, Witherspoon
NOES: None
ABSTENTIONS: Renzel
ABSENT: Fazzino
AT~JL_
citycte(j
APPROVED:
APPROVED AS TO FORM:
Q:i~ Q. ati."-'l!JJ
-2-
Cuy of J'alo )llto.
CA.1..l~O~NIA
ii'4:!')i
~ ~ • ' . 'I ... -~ ~· ' ~. ·-. w -... , .......
September 26, 1980
Lytton Gardens, Inc.
656 Lytton Avenue
Palo Alto, CA 94301 AGREEMENT 4128
Re: Lytton Gardens, Inc. Expansion and
Renovation Program
Ladies and Gentlemen:
The purpose of this letter is to set forth certain
terms and conditions under which the City of Palo Alto (the
"City"} will assist in th'?! financing of your expansion and
renovation program (the 0 Project").
The City intends to enter into agreements with the
law firm of Orrick, Herrington, Rowley & Sutcliffe as bond
counsel, and Blyth Eastman Paine Webber Healthcare Funding,
Inc., as underwriter, to advise and assist the City in the
sale of bonds (the "Bonds11 ) for the financing of the Project.
Copies of the agreements between the City and Orrick,
Herrington, Rowley & Sutcliffe and Blyth Eastman Paine
Webber Healthcare Funding, Inc. are attached hereto.
By signing and returning the enclosed copy of this
letter you hereby agree to the following on behalf of Lytton
Garde:t\S, Inc. (the nNursing Facility") :
1. The Nursing Facility agrees to pay all costs
involved in the issuance of the Bonds, including by way of
example and not limitation, bond counsel's fee and disburse-
ments, fees and disbursements of any other experts engaged
by the ~!ursing Facility or by the City in connection with
\ •
the issuance of the Bonds, bond printing and other printing
costs, publication costs and costs incurred in order to
obtain rating.s for the Bonds. Such costs may be paid from
proceeds of the Bonds. In the event that Bonds are not
issued for any reason, the Nursin& Facility agrees to assume
the City's obligations, if any, for payment of such costs.
2. The Nursing Facill,ty agrees to pay the cost
of preparation of any studi~s, reports or other documents
necessary to be prepared by or for the City to comply with
the California Environmental Quality Act.
3. The Nursing Facility agrees to pay any and
all costs incurred by tht City in connec~1on with any legal
action challenging the issuance or validity of the Bonds or
use of the proceeds thereof.
4. The Nursing Facility shall have the right to
approve any contract not attached hereto which the City
proposes to execute and for payments under with the Nursing
Facility will be responsible pursuant to this letter agreement.
S. The Nursing Facility agrees that while City
has approved the concept of bond issuance and has commenced
steps for issuance it retains discretion in the exercise of
its governmental authority to suspend further proceedings
and actual bond issuance • •
The City agrees to proceed, and to direct the
aforementioned bond counsel and underwriter to proceed, with
the planning and preparation of the necessary proceedings
for the offering of the Bonds for sale to finance the
Project. The Nursing Facility understands that this letter
agreement does not exempt it from any requirements of the
City, or any department or agency thereof or other governmental
body. that would apply in the absence of the proposed Bond
financing, and compliance with such requirements is an
express precondition to the issuance of the Bonds by the
City.
9/26/80
-z-
• •
If the foregoin& is satisfactory, kindly execute
the enclosed copy of this letter and return it to the City
of Palo Alto, City Hall, 250 Hamilton Avenue, Palo Alto,
California 94301, Attention: City Manager.
Very truly yours,
CITY OF PALO ALTO
\ I
By: l .l 1L •. _,_
CONFIRMED AND ACCEPT.ED:
L Y!TON GARDENS , I NC • ,
By: CJJd.k,& 9}JQ1ZA. ~('.cc.,:...,..._
Dated: /CJ -8'-fcl
i
9/26/80
-3-
7 (.:;.---
--~·-·~----------------------------------------
.. . • \ • ORRICK, H£AAINOTON, ROWLEY 6. SUTCLlf",-E.
City of Palo Alto
2SO Haailton Ave.
Palo Alto, CA 94301
C0UN911.l.01'9 AHO ATTOAtolET9 AT l.A#
£1.EV(lllTH 'l.OOR
eC>0 ot0NTGOM£11tY STRlltl
September 8, 1980
Lytton Gardens, Inc~
656 Lytton Avenue
Palo Alto, CA 94301
ATTACHMEBT VI
Re: City of PalQ Alto Health Facility Revenue
Bonds (Lxtton Gardens, Inc.}, Series A
Lsdie• and Gentlemen:
We have been advised that the City of Palo Al.to is
considering the issuance of health facility revenue bonds in
connection with a contemplated expansion program at Lytton
Gardens, Inc., a skilled nursing facility, and we have been
asked if we would ae:ve as bond counsel f9r a1.1cb a financing.
We understand that· t.be bonds would be iss_ued pursuant to the
City's povera aa a charter city, and that tbe principal aaount
of tbe isaue would be approximately $9,000,000. We would be
ple•aed to act as bond·counsel in these proceedings.
In connection with such a financing, our services
would include tbe following:
(l) consultation vitb the City, the llluraing
Facility, their counsel and their financial consult~nt or
underwriter concerning tbe financing, it• tiai~ tar .. and atructur•1
(2) preparation of 199al proceeding• for the
autbof iaation, isauance and sale of bealt.h facility revenue
bonds, including preparation of the neceasary procedural
ordinance, resolutions, indenture and otbe1 docw.enta neces-
aary for tbe iaauance of the bond.•1 preparation of an agree-
.. nt or agree .. nta betw .. n the City and tbe Mucaing Facility
specifying ter .. of the financing, the security for cbe bond•
and otber conditiona to the fiDAncing_, preparatioa of tbe
~oceecUnv• foE tJte aal• of the bonda, wbich we undei:atand
will be negotlatedi and preparation of other proceedi'ft9•
incidental to oc in connection wi~b the iaeuance and e4le of
tb• bond•1 -
(3) the rendering of • final legal opinion on tb•
·v•lidity and tax atatua of tbe bonda1 and
I e
OA"ICK, HEFIFUNOTON, RoWLEY & SUTC"-lP',.E
(4) such other legal services as aay be incidental
to the foregoing.
Our fee for the foregoing would be determined by
the extent of the services rendered by us on an hourly basis
at our usual, full hourly rates then in effect, to a 11axiaum
of $35,000. If for any reason the City does not issue and
••11 the bonds, we would be paid a fee determined on the same
biaais. Out fee does not include our out.-of•pocket expenses,
such as' travel expenses, long-distance telephone call charges,
reproduction of docw.ents, word proeeasin9 and aecret&rial
overtime necessary or requested becauae of tbe tiae aeaands
o~ the transaction~ and we will bill separately for such
out-of-pocket expenses. This fee does not include represen-
tation of the City or tbe Nursing Facility in any legal
action challenging the validity of the transactions contem-
plated by this letter.
In the event that we are requested by the City or
the Nursing Facility to perform any additional or extraordi-
nary setvices not hecein contemplated,_ we shall be entitled
to apply to the City or tbe Nursing Facility for additional
coapensation for such additional services, but no auch
additional compensation shal! be paid unless apecif ically
authorized by the City and the Nursing Facility in their
discretion.
The City and the Nureing Facility will be expected
to furnish us vith cert·ified copies of all proceedings taken
by the governing body of each such entity, respectively, that
we dee• necessary to render an ovinion upon the validity of
auch proceedings. All 1"9al docuaenta prepared by ua vill be
submitted to the City and tbe Nursing Facility, •• nearly as
practicabl•, in care of their respective counsel, and shall
be subject to the approval of such counsel. Upon approval of
such proceedings, aucb counsel will be expected to aubait
aucb document• to tile City or tb• Nursing Facility, aa the
caae .. y be, for approval.
In addition, we will not be responsible for the
prep.ration or content ~~ tbe Official Stat ... nt or Offering
Circular prep.reel by tbe City, the Nursing Facility and·tbeir
financial consultant or underwriter for tbia tcanaaction1
provided,. however, tbat ve will review that portion qf the
Official Stat ... nt or Offering Circular tbat deacribe• tb•
ter.. of the bond indenture and the detail• of the bonds
the .. elvea. Our ... loyment i• liait~ to a review of tbe
l•g•l proceedinga required for th• aut.bori••tion of t.fte bond•
and to rendering an opinion •• to tb: validity of tb• bond.a
and the exemption of interest on the bond• f rwa taxation.
OU.r opinion v1ll not consider or extend to any doc:U1M1nta1
2
• ORRICK, H~R'RINOTON. RoWLCY & SUTCL.IP"P'E
a9reeaenta, representations, offering circulars or other
aaterials of any kind concerning the bOnds, including the
Offici•l Statement or Offering Circular, not described above.
The City or the Nursing Facility will be expected
to P•Y all costs and expenses incurred by the• incident to
the actual isauance and delivery of the bonds, including the
coat and expense of prepacin9 certified copies of proc:eedin9s
required by us in connection with the issuance of bonds, the
cost of preparing the bonds for execution and delivery, all
printing costs and publication costs, and any other expenses
incurred by the• in connection with the issuance of the bonds,
including fees and expenses of financial or feasibility con-
sultants, accountants or other experts employed by the City
or the Nursing Facility.
If the foregoing is satisfactory, please execute
the enclosed copy of this le~ter and return it to me.
Very truly yours,
'
' I John R. Myers
CONPIRMBD AND ACCEPTED:
CITY OP PALO ALTO LYTTON GARDBNS, INC.
Bys ________________ __,,_.. Bya ____________ ~-------
Datedi ____________ ~---Dated: ------------------
Bly\tr Eastman Paine \\~bber Hea. ~re Funding. Inc.
$5$ Calil'orai1 Str .. t. Sta FHuitco. Ce 9Wf4 (41.J) 362·8000
Mayor
City of Palo Alto
Paio Alto, California 91f302
Attention: Mr. Afan Henderson
Mayor
Lytton Gardens, Inc.
6 .56 Lytton A venue .
Palo Alto, California '4301
Attention: Mr. Horace Nealey
Exeeutive Director .
Gentlemen:
JuJ y 21, 1980
• ATTACHM£HT VU
This Authorization Letter will serve to outline the. services to be provi.de<1 by Blyth
Eastman Paine Webber Health Care Funding, Inc., (Blyth) when representing the City
of Palo Al to (the City) and Lytton Gardens, Inc. ( lG I), and the compensation to be
received by Blyth from LGI for rendering such services.
Blyth understands that the Hospital proposes to undertake a ·major construction
program and desires to finMCe such program by a comhination of hospital funds and
donations and th~ public sale of tax-exempt revenue bonds issued through the City on
behalf of LGI. Blyth anticipates that Bonds issued by the City on behalf of LGI, and
secured by an insured mortgage on LG I would be rated A-ll AA+ by the major rating
agencies. ·
'J'.he City and LGI hereby grant to Blyth the ri"ht to underwrite the Bonds for public
sale. The period of authorization shall commence upon execution of this Agreem~nt
and continue for a period of 12 months. It may be extended from time to time as
requested by the City and LGI ..
Blyth will provide, at a minimum, the following services to the City and to LG I:
• Structure-the financin91 on a preliminary basis as to amount, term,
amo11ization, and secur!ty ..
• Develop a comprehensive financing plan.
• Consult with the City, Lea, bond counse-1, and <.-onsultants appointed by
the Hospitm in connection with the structure and issuance of the Bonds.
• Auist the CJty, I.GI and bond C)\lnsel in preparing and/or reviewing the
necessary bond resolutions, indentures, and other legal documents.
. i· . ~ .. .• ~
•
•
• Assume r~~nsibility for the preparation of the Official Statement to
be used for the placement of the Bonds and coordinate the efforts of all
parties involved.
• Make an effective _presentation to the bond rating agencies in order to
obtain the highest possible rating for the Bonds.
• Assist in the prepAration of reports, fi!MOCiaJ data and other informa-
tion necessaiy to the successful marketing of the Bonds.
• Advis• and coordinate with I.GI and the City. concerning the timing of
the financing, the terms of the financing, includinK such items u the
maturity schedule,· interest and redemption .rates, and call .features.
81yth will seek the City and Lt l*s approval for the preliminary inter~t
rate with which to enter the market. 'We will also p-ovide market
compar~sons and other information LG I may requ~re so it can determine
the reasonableness·· of our preliminary price. During the marketing
per lod, Blyth wilJ keep the City and LG I, as needed or requested,
informed of our progress. No changes in interest rate will be made
without consent of LGI. ·
• Provide the City and LG I with our final recommendations as to price
and terms. •
• Underwrite the Bonds.
• CJose the financing as expeditiously u possible.
• Advise LG I manag4!ment with respect to the investment '>f loan
proceMis by the Trustee pursuant to a Trust Indenture~
As full and complete compensation for underwrit)ng the proposed Bonds, LG I agrees to
pay Blyth a fee equal to between 2"-2''6 ·of the amount of the Bonds. e&yth's fee for
underwriting the Bonds shall be deemed earned upon acceptance by the C•tY and LGl
of bond purchue contract and shall be payable from Bond proeeedS at dosing. 8lyih
will be responsible for out~f-pocket expensa. LGI will be responsible for all expemes
of the transaction including any out-c-f..pocket expenses incurred by the City.
In tM event the City and LGI are not satisfied with the performance of Blyth in the
proposed financing, this Agreement may be cancelled at any time.
U the terms and conditions of this authof'lzation are acceptable w satisfactory to
you, kindly indicate your acc~ptuce by signing and returning th la letter to us.
• \
• •
AGREED TO ANO ACCEPTED BY:. RESPECTFULLY SUBMITTED BY:
LYTTON GARDEN~ INC. BLYTH EASTMAN PAINE \V.EBBER
HEAL TH CARE FUNDING
Position Position ~--~~--~~~~~~
CITY OF PALO AL TO
Position ----
,, ,,