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HomeMy WebLinkAboutRESO 10307Resolution No. 10307 Resolution of the Council of the City of Palo Alto Authorizing the Borrowing of Funds Pursuant to Chapter 12.28 of the Palo Alto Municipal Code to Finance on an Interim Basis Improvements that Benefit the City’s Wastewater Treatment Enterprise and Wastewater Collection Enterprise, Authorizing the Execution and Delivery of a Revolving Credit Agreement, a Fee Letter and Related Notes, Authorizing and Ratifying Execution and Delivery of Related Documents, and Authorizing Related Actions RECITALS A. The City of Palo Alto (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 of the State of California and Article II of the Charter of the City, operates and maintains facilities for the collection, pumping, transport, treatment, storage and disposal of wastewater (the "Wastewater System") B. The City is empowered pursuant to Chapter 12.28 of the Palo Alto Municipal Code to issue bonds, notes and other obligations, to provide funds for the acquisition, construction, improvement or financing of the Wastewater System. C. Chapter 12.28 authorizes the City Council to exercise all of the powers set forth in the Revenue Bond Law of 1941, being Chapter 6, commencing with Section 54300, of Part 1 of Division 2 of Title 5 of the California Government Code, subject to the restrictions set forth therein, except as provided in Chapter 12.28. D. The City previously issued or incurred the following outstanding obligations for the purpose of financing and refinancing, as applicable, certain improvements to the Wastewater System (the “Outstanding Obligations”): (i) a Project Finance Agreement No. 07-814-550-0 between the City and the California State Water Resources Control Board (“State Water Board”), as amended, (ii) a Project Finance Agreement No. 09-814-550 between the City and the State Water Board, as amended, (iii) an Installment Sale Agreement No. D16-01034, dated as of March 20, 2017 by and between the City and the State Water Board, as amended, (iv) an Installment Sale Agreement No. SWRCB0000000000D2001009, executed as of July 12, 2021 by and between the City and the State Water Board, as amended, (v) an Installment Sale Agreement No. D2101050, executed as of May 9, 2022 by and between the City and the State Water Board, as amended, and (vi) an Installment Sale Agreement No. D2401001, executed as of March 27, 2025 by and between the City and the State Water Board. E. The Outstanding Obligations are secured by a first priority pledge of and payable from net revenues of the City’s Wastewater Treatment enterprise and its Wastewater Collection enterprise. F. The City has determined that it is a necessary and proper municipal affair to finance on an interim basis certain additions, betterments, extensions and improvements to the City’s Docusign Envelope ID: B63FBC27-8C9E-8460-8119-29E60F9C77F1 -2- Regional Water Quality Control Plant and other improvements that benefit the City’s Wastewater Treatment enterprise and its Wastewater Collection enterprise (the “Project”). G. The City wishes to secure such financing by a first priority pledge of net revenues of the City’s Wastewater Treatment enterprise and its Wastewater Collection enterprise. H. Pursuant to Government Code Section 5852.1, certain information relating to the revenue bonds is set forth in Appendix A attached to this Resolution, and such information is hereby disclosed and made public. I. United States Income Tax Regulations section 1.150-2 provides generally that proceeds of tax-exempt debt are not deemed to be expended when such proceeds are used for reimbursement of expenditures made prior to the date of issuance of such debt unless certain procedures are followed, one of which is a requirement that (with certain exceptions), prior to the payment of any such expenditure, the issuer declares an intention to reimburse such expenditure. NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES, as follows: SECTION 1. Findings and Determinations. The City Council hereby finds, determines and declares that the Recitals are true and correct. SECTION 2. Approval of Credit Agreement, Fee Letter and Notes; Terms of the Credit Agreement, Fee Letter and Notes; Security. The Council is adopting this resolution under the powers reserved to the City under Sections 3, 5 and 7 of Article XI of the Constitution and Article II of the Charter. Pursuant to Chapter 12.28, and for the purpose of financing the Projecton an interim basis, the City Council hereby approves the borrowing of funds by the City in the form of a revolving credit agreement (the “Credit Agreement”), a letter confirming certain terms related to the calculation of the interest rate payable by the City under the Credit Agreement and related fees (the “Fee Letter”) and one or more notes to evidence the City’s obligations under the Credit Agreement (the “Notes”). The maximum principal amount outstanding under each of the Credit Agreement and the Notes at any time shall not exceed $31,000,000. The interest rate under the Credit Agreement, the Fee Letter and the Notes shall not exceed the maximum rate of interest authorized by law. The interest rate under the Credit Agreement, the Fee Letter and the Notes may be fixed, variable, exempt from federal income taxation or subject to federal income taxation, in each case, as determined by the City Manager, Administrative Services Director or a designee appointed in writing by any such officer (each, an “Authorized Officer”) in consultation with Jones Hall LLP, the City’s bond counsel, and PFM Financial Advisors LLC, the City’s municipal advisor. The initial term of the Credit Agreement and the Notes shall not exceed five years, but the Credit Agreement and the Notes may have a succeeding term that shall not exceed three years. The City’s payment obligation under the Credit Agreement, the Fee Letter and the Notes shall be secured by a first priority pledge of and payable solely from the net revenues of the City’s Wastewater Treatment enterprise and its Wastewater Collection enterprise. The pledge shall be on a parity basis with the pledge securing the Outstanding Obligations, as determined Docusign Envelope ID: B63FBC27-8C9E-8460-8119-29E60F9C77F1 -3- by an Authorized Officer. To the extent the Credit Agreement is used to finance improvements that only partially benefit the City’s Wastewater Treatment enterprise and Wastewater Collection enterprise, the City will ensure that the financing costs are paid or reimbursed in a manner that complies with applicable law, including Articles XIII C and D of the California Constitution. The general fund of the City is not liable for the payment of the City’s obligations under the Credit Agreement, the Fee Letter or the Notes. The credit or taxing power of the City is not pledged for the payment of the City’s obligations under the Credit Agreement, the Fee Letter or the Notes. The Lenders (as defined in the Credit Agreement) may not compel the exercise of the taxing power of the City or the forfeiture of its property. The City Council hereby determines that the Credit Agreement, the Fee Letter and the Notes are conclusively deemed valid and executed, delivered and issued, as applicable, in conformity with Chapter 12.28. SECTION 3. Selection of U.S. Bank. The City Council hereby approves U.S. Bank National Association as Agent (as defined in the Credit Agreement) and the initial sole Lender, which staff has recommended following a competitive selection process. SECTION 4. Approval of Credit Agreement, Fee Letter and Notes. The City Council hereby approves the Credit Agreement, the Fee Letter and the Notes in substantially the forms on file with the City Clerk, with such changes approved by an Authorized Officer, acting alone, after consultation with City staff, bond counsel and the municipal advisor. The Mayor or the City Manager, acting alone, is authorized and directed for and in the name and on behalf of the City to execute and the City Clerk is hereby authorized and directed to attest the final form of the Credit Agreement, the Fee Letter and the Notes, and the execution of the Credit Agreement, the Fee Letter and the Notes by the Mayor or the City Manager shall be conclusive evidence of their approval by this City Council. SECTION 5. Authorization and Ratification of Amendments to the Outstanding Obligations. The City Council hereby authorizes and ratifies the execution and delivery of amendments to the Outstanding Obligations as may be required to facilitate the proposed interim financing. The execution of such amendments by an Mayor or the City Manager shall be conclusive evidence of such approval and ratification. SECTION 6. Official Actions. Each Authorized Officer, the Mayor, the City Attorney, the City Clerk and all other officers of the City are each authorized and directed in the name and on behalf of the City to make any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants, promissory notes and other documents, which they or any of them might deem necessary or appropriate in order to consummate any of the transactions contemplated by the agreements and documents approved under this Resolution. 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 is absent or unavailable. Any and all acts of each Authorized Officer, the City Attorney, the Mayor, the City Clerk and all other officers of the City in furtherance of the transactions contemplated by the foregoing resolutions that were taken prior to the adoption of these resolutions, are hereby ratified, confirmed, approved, and adopted. Docusign Envelope ID: B63FBC27-8C9E-8460-8119-29E60F9C77F1 -4- SECTION 7. Reimbursement Intent. The City hereby declares that it reasonably expects (i) to pay certain costs of the Project prior to the execution and delivery of the Credit Agreement and (ii) to use a portion of the proceeds of the Credit Agreement for reimbursement of expenditures for the Project that are paid before the execution and delivery of the Credit Agreement. SECTION 8. California Environmental Quality Act. The foregoing resolutions and the execution and delivery of the Credit Agreement, the Fee Letter and the Notes are not a project for purposes of the California Environmental Quality Act because the additions, betterments, extensions and improvements to the City’s Regional Water Quality Control Plant to be financed as described herein are categorically exempt under CEQA Guidelines Section 15301. SECTION 9. Effective Date. This Resolution shall take effect immediately upon its adoption. * * * * * * INTRODUCED AND PASSED: AUGUST 10, 2026 AYES: BURT, LAUING, LU, LYTHCOTT-HAIMS, RECKDAHL, STONE, VEENKER NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: City Clerk Mayor APPROVED AS TO FORM: APPROVED Jones Hall LLP By: Christopher K. Lynch, City Manager Jones Hall LLP Bond Counsel Director of Administrative Services City Attorney Docusign Envelope ID: B63FBC27-8C9E-8460-8119-29E60F9C77F1 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. The information assumes that the City will borrow funds in the form of a revolving line of credit in the principal amount not to exceed $31,000,000 at any time with a five-year maturity date. (A) True Interest Cost of the Financing: 3.416% (B) Finance Charge of the Financing (Sum of all fees/charges paid to third parties): $127,000 (C) Net Proceeds to be Received (net of finance charges, reserves and capitalized interest, if any): $30,873,000 (D) Total Payment Amount Through Maturity: $33,943,027 The foregoing estimates constitute good faith estimates only. The principal amount, the true interest cost, 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 financing being different than the date assumed for purposes of such estimates, (b) the actual principal amount being different from the estimated amount used for purposes of such estimates, (c) the actual amortization of the principal being different than the amortization assumed for purposes of such estimates, (d) the actual interest rate being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the City’s financing plan (including the mix of tax-exempt and taxable obligations), or a combination of such factors. The actual timing of the financing and the actual principal amount of the financing will be determined by the City based on the timing of the need for proceeds and other factors. The actual interest rates paid by the City will depend on market interest rates and the terms of the financing. The actual amortization of the principal will also depend, in part, on market interest rates. Market interest rates are affected by economic and other factors beyond the control of the City. Docusign Envelope ID: B63FBC27-8C9E-8460-8119-29E60F9C77F1 Certificate Of Completion Envelope Id: B63FBC27-8C9E-8460-8119-29E60F9C77F1 Status: Completed Subject: RESO 10307 - Authorizing the Borrowing of Funds Pursuant to Chapter 12.28 of the Palo Alto Municipal Source Envelope: Document Pages: 5 Signatures: 6 Envelope Originator: Certificate Pages: 2 Initials: 0 Nicole Bissell AutoNav: Enabled EnvelopeId Stamping: Enabled Time Zone: (UTC-08:00) Pacific Time (US & Canada) 250 Hamilton Ave Palo Alto , CA 94301 Nicole.Bissell@PaloAlto.gov IP Address: 170.85.54.121 Record Tracking Status: Original 8/13/2026 12:14:20 PM Holder: Nicole Bissell Nicole.Bissell@PaloAlto.gov Location: DocuSign Security Appliance Status: Connected Pool: StateLocal Signer Events Signature Timestamp Christopher Lynch clynch@joneshall.com Partner Security Level: Email, Account Authentication (None)Signature Adoption: Pre-selected Style Using IP Address: 72.219.101.203 Sent: 8/13/2026 12:19:02 PM Viewed: 8/13/2026 12:19:42 PM Signed: 8/13/2026 12:19:51 PM Electronic Record and Signature Disclosure: Not Offered via Docusign Caio Arellano Caio.Arellano@paloalto.gov Chief Assistant City Attorney City of Palo Alto Security Level: Email, Account Authentication (None) Signature Adoption: Uploaded Signature Image Using IP Address: 165.225.242.125 Sent: 8/13/2026 12:19:52 PM Viewed: 8/17/2026 11:48:28 AM Signed: 8/17/2026 11:48:38 AM Electronic Record and Signature Disclosure: Not Offered via Docusign Lauren Lai Lauren.Lai@paloalto.gov Director Administrative Services/CFO COPA Security Level: Email, Account Authentication (None) Signature Adoption: Drawn on Device Using IP Address: 170.85.54.117 Sent: 8/17/2026 11:48:40 AM Viewed: 8/17/2026 11:58:31 AM Signed: 8/17/2026 11:58:39 AM Electronic Record and Signature Disclosure: Not Offered via Docusign Ed Shikada Ed.Shikada@paloalto.gov City Manager City of Palo Alto Security Level: Email, Account Authentication (None) Signature Adoption: Pre-selected Style Using IP Address: 170.85.54.89 Sent: 8/17/2026 11:58:40 AM Viewed: 8/17/2026 12:06:03 PM Signed: 8/17/2026 12:06:10 PM Electronic Record and Signature Disclosure: Not Offered via Docusign Signer Events Signature Timestamp Veenker, Vicki vicki.veenker@paloalto.gov City of Palo Alto Security Level: Email, Account Authentication (None)Signature Adoption: Uploaded Signature Image Using IP Address: 2601:647:4080:be0:c574:11cf:2ccb:dd5d Sent: 8/17/2026 12:06:11 PM Viewed: 8/17/2026 2:02:20 PM Signed: 8/17/2026 2:03:05 PM Electronic Record and Signature Disclosure: Not Offered via Docusign Mahealani Ah Yun Mahealani.AhYun@paloalto.gov City Clerk Security Level: Email, Account Authentication (None)Signature Adoption: Pre-selected Style Using IP Address: 2600:387:15:4914::5 Signed using mobile Sent: 8/17/2026 2:03:07 PM Viewed: 8/17/2026 2:45:31 PM Signed: 8/17/2026 2:46:01 PM Electronic Record and Signature Disclosure: Not Offered via Docusign In Person Signer Events Signature Timestamp Editor Delivery Events Status Timestamp Agent Delivery Events Status Timestamp Intermediary Delivery Events Status Timestamp Certified Delivery Events Status Timestamp Carbon Copy Events Status Timestamp Witness Events Signature Timestamp Notary Events Signature Timestamp Envelope Summary Events Status Timestamps Envelope Sent Hashed/Encrypted 8/13/2026 12:19:02 PM Certified Delivered Security Checked 8/17/2026 2:45:31 PM Signing Complete Security Checked 8/17/2026 2:46:01 PM Completed Security Checked 8/17/2026 2:46:01 PM Payment Events Status Timestamps