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Ordinance 2000-06ORDINANCE NO. 2000-06 ORDINANCE OF THE CItY COUNCIL OF THE CITY OF GILROY ENACTING THE NONPROFiT CORPORATION PROJECT FINANCING LAW OF THE CITY OF GILROY, RELATING TO THE ISSUANCE AND SALE OF CONDUIT REVENUE BONDS FOR PROJECTS OF NONPROFIT CORPORATIONS THE CITY COUNCIL OF THE CITY OF GILROY DOES ORDAIN AS FOLLOWS: SECTION 1. The City Council of the City of Gilroy hereby finds and determines as follows: (a) The full employment of residents of the City of Gilroy, and the prevention of unemployment and underemployment of such residents, serves a vital and compelling public interest of the City of Gilroy and promotes the public health, safety and welfare of the City by reducing the incidence of crime, improving the mental and physical health and well-being of the City's residents, alleviating the financial drain upon limited public and private resources for welfare programs and unemployment assistance, and enhancing the financial resources of the City. (b) The encouragement of development of projects within the City by non-profit entities serves a vital and compelling public interest of the City and promotes the public health, safety and welfare of the City by increasing the employment of residents of the City, fostering the development of projects serving charitable purposes, and preventing physical deterioration and abandonment of properties within the City. In addition, the City's partidpation in the financing of such development serves the public interest by ensuring that such development will reflect the needs and objectives of the commtmity more so than if such development were undertaken without City participation. (c) Encouraging development of projects within the City by non- profit entities pursuant to this Ordinance (i) will promote the health, safety and welfare of the City, including those public interests enumerated above, and will improve the social, moral, economic and physical condition of the community thereby, and (ii) constitutes a municipal affair of the City of Gilroy, a valid exercise of the municipal affairs powers of the City of Gilroy, and a public purpose in which the City of Gilroy has a peculiar and unique interest. ORDINANCE NO. 2000-06 -1- SECTION 2. Chapter 8A of the Gilroy Municipal Code is hereby amended by adding Article III thereto, to read as follows: Chapter 8A REVENUE AND FINANCE Art. III NONPROFIT CORPORATION PROJECT FINANCING LAW Section 8A. 50. Title. This Article may be dted as the Nonprofit Corporation Project Financing Law of the City of Gilroy. Section8A.51. Definitions. Unless the context otherwise requires, the following definitions shall govern the construction of this Article: "Acquisition and Construction" and its variants means acquisition, construction, improvement, furnishing, equipping, remodeling, repair, reconstruction or rehabilitation. "Administrative Expenses" means all reasonable and necessary expenses incurred by the City in the administration of the provisions of this Article with respect to a particular Project and the financing thereof, including without limitation compensation to City agents, employees and staff, fees and expenses of paying agents, trustees, bond counsel, underwriter, rebate consultants and financing consultants, and costs of printing and advertising. "Article" means this Article, enacted pursuant to Ordinance No. __ passed and adopted by the City Council of the City on June __, 2000, as amended from time to time in accordance the terms of this Article. , Bonds" means any bonds, notes, certificates of participation or other obligations issued by the City pursuant to this Article, which are payable exclusively from Revenues and other funds permitted by this Article. "City' means the City of Gikoy, California, a charter city duly existing under and exercising powers pursuant to the City Charter and the constitution of the State. "City Charter" means the charter of the City, as amended from time to time. ORDINANCE NO. 2000-06 -2- "City Council" means the City Council of the City. "Costs" means, with reference to a Project, any or all of the following costs incurred for the Acquisition and Construction thereof: (a) obligations of the Nonprofit Corporation incurred for labor and materials in connection with the Acquisition and Construction of the Project; (b) the cost of Acquisition and Construction of any property, whether real or personal and improved or unimproved, including franchise rights and other intangible property, and any interests therein, required for the Acquisition and Construction of the Project; (c) the cost of demolishing, removing or relocating any building or structure, and the cost of making relocation assistance payments required by law; (d) the cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of the Acquisition and Construction of the Project; (e) all costs of engineering, legal and consultant services, including the costs of the Nonprofit Corporation for surveys, estimates, plans and specifications and preliminary investigation therefor, and for supervising construction, as well as for the performance of all other duties required by or consequent upon the proper Acquisition and Construction of the Project; (f) all amounts required to fund any reserve funds for Bonds and any interest on Bonds becoming due and payable during a period not exceeding the period of Acquisition and Construction of the Project and 12 months thereafter; (f) all Administrative Expenses; (g) all costs which the Nonprofit Corporation shall be required to pay, under the terms of any contract or contracts, for the Acquisition and Construction of the Project; (h) the refinancing of any existing indebtedness secured by an interest in any real property comprising any portion of the Project; and (i) any sums required to reimburse the Nonprofit Corporation for advances made for any of the above items or for any other costs incurred and for work done which are properly chargeable to the Project. ORDINANCE NO. 2000-06 -3- "Nonprofit Corporation" means any corporation requiring financing for the Acquisition and Construction of a Project pursuant to this Article, which corporation is an organization described in section 501(c)(3) of the Tax Code. "Project" means real property located within the City, including land and improvements, the Acquisition and Construction of which is financed or otherwise assisted pursuant to this Artide. "Revenues" means, with respect to a Project, all amounts received as repayment of principal, interest and all other charges received for, and all other income and revenue (including the proceeds of insurance) derived by, the City in connection with such Project or the financing thereof, and any receipts derived from the investment of such income or revenues, including moneys deposited in a sinking, redemption or reserve fund or other ftmd to secure the Bonds or to provide for the payment of the principal of or interest on the Bonds and such other moneys as the City Council may in its discretion make available therefor. "State" means the State of California "Tax Code" means the internal Revenue Code of 1986, as amended, or any similar provision of said Code then in effect. Section 8A.52. Powers. In connection with the financing of a Project pursuant to this Article, the City is authorized and empowered: (a) To issue Bonds for the purpose of financing or otherwise assisting the Acquisition and Construction of Projects authorized by this Article. (b) To fix fees, charges and interest rates for financing any Project, and to revise such fees, charges and interest rates from time to time, and to collect interest and principal on any loan made to a Nonprofit Corporation together with such fees and charges incurred in such financing, and to contract with any person, partnership, association, corporation or public agency with respect thereto. (c) To hold deeds of trust as security for financing any Project and to pledge the same as security for repayment of Bonds issued therefor. (d) To establish the terms and conditions for the financing of any Project undertaken pursuant to this Article. (e) To require that the full amount owed on any loan for the financing of a Project pursuant to this Article shall be due and payable upon sale or other transfer of ownership of such Project. ORDINANCE NO. 2000-06 -4- (f) To acquire, by deed, purchase, lease, contract, gift, devise, or otherwise, any real or personal property, structures, fights, rights-of-way, franchises, easements, mortgages and other interests in property located within the State necessary or convenient for the financing or Acquisition and Construction of a Project, upon such terms and conditions as it deems advisable, and to lease, sell or dispose of the same in such manner as may be necessary or desirable to carry out the objects and purposes of this Artide. Notwithstanding the foregoing, nothing in this Article is intended or shall be construed in any way to authorize any exercise of the power of eminent domain with respect to any Project. (g) To employ or contract for such engineering, architectural, accounting, collection, economic feasibility, or other services in connection with the servicing of loans made to Nonprofit Corporations, as may be necessary in the judgment of the City Council for the successful financing of a Project. The City may pay the reasonable costs of consulting engineers, architects, accountants, construction experts, and economic feasibility experts, if, in the judgment of the City Council, such services are necessary to the successful financing of a Project and if the City is not able to provide such services. The City may employ, contract for, and fix the compensation of financing consultants, bond counsel, and other advisers as may be necessary in its judgment to provide for the issuance and sale of Bonds. (h) In addition to all other powers specifically granted in this Article, to do all things necessary or convenient to carry out the ptmposes of this Article. Section 8A.53. Non-operation- The City shall not have the power to operate any Project as a business. The City shall take no more action with respect to any Project than is necessary to promote the public interests of the City. Section 8A.54. Authorization of Bonds. The City may issue its Bonds for the purpose of financing or otherwise assisting the Acquisition and Construction of Projects authorized by this Article. Every issue of Bonds shall be a special obligation of the City, payable solely from all or any part of the Revenues derived from the financing of Projects. Section 8A.55. Issuance of Bonds. The Bonds shall be authorized by resolution of the City Cotmcil and shall bear such date or dates, mature at such time or times, bear interest at such fixed or variable rate or rates, be payable at such time or times, be in such denominations, be in such form, carry such registration privileges, be executed in such mariner, be payable in lawful money of the United States of America, at such place or places, and be subject to such terms of redemption as the resolution or resolutions of the City Council may provide. The Bonds may be sold at either a public or private sale and for such prices as the City Council shall determine. ORDINANCE NO. 2000-06 -5- The prima~y purpose of this Article is to provide a method for the issuance of Bonds which constitute "qualified 501(c)(3) bonds" within the meaning of Section 145 of the Tax Code. Notwithstanding the foregoing, in the event and to the extent a portion of the Costs of a Project cannot be financed from Bonds which constitute "qualified 501(c)(3) bonds", the City may provide financing for such Costs by issuing Bonds under this Article the interest on which is includable in gross income of the owners thereof for federal income tax purposes. Section 8A. 56. Terms of Bonds. Any resolution or resolutions authorizing any Bonds or any issue of Bonds may contain provisions respecting any of the following terms and conditions, which shall be a part of the contract with the owners of the Bonds: (a) The pledge of all or any part of the Revenues, subject to such agreements with Bond owners as may then exist. (b) The interest and principal to be received and other charges to be charged and the amounts to be raised each year thereby, and the use and disposition of the Revenues. (c) The setting aside of reserves or sinking funds and the regulation and disposition thereof. (d) Limitations on the purposes to which the proceeds of a sale of any issue of Bonds, then or thereafter issued, may be applied, and pledging such proceeds to secure the payment of the Bonds or any issue of Bonds. (e) Limitations on the issuance of obligations on a parity with the Bonds, the terms upon which such obligations may be issued and secured, and the refunding of outstanding Bonds. (f) The procedure, if any, by which the terms of any contract with Bond owners may be amended or abrogated, the amount of Bonds the owners of which must consent thereto, and the manner in which such consent may be given. (g) Specification of the acts or omissions to act which shall constitute a default in the duties of the City to owners of its obligations, and providing the rights and remedies of such owners in the event of default. (h) The mortgaging of land, improvements, or other assets owned by a Nonprofit Corporation for the purpose of securing the Bond o~ers. (i) Such other terms and conditions pertaining to the issuance of the Bonds as are deemed advisable by the City Council. ORDINANCE NO. 2000-06 -6- Section 8A.57. Trust Agreement. In the discretion of the City Council, any Bonds issued under the provisions of this Article may be secured by a trust agreement or Indenture by and between the City and a corporate trustee or trustees, which may be any trust company or bank havIng the powers of a trust company within or without the State. Such trust agreement or the indenture may pledge or assign the Revenues to be received or proceeds of any contract or contracts pledged, and may convey or mortgage any property. Such trust agreement or Indenture may contain such provisions for protecting and enforcing the rights and remedies of the Bond owners as may be reasonable and proper and not In violation of law, including such provisions as is pernfitted to be included in any resolution or resolutions of the City Council authorizing the issuance of Bonds hereunder. Any bank or trust company doing business under the laws of the State which may act as depositary of the proceeds of Bonds or of Revenues or other moneys may furnish such Indemnity bonds or pledge such securities as may be required by the City. Any such trust agreement or Indenture may set forth the rights and remedies of the Bond owners and of the trustee or trustees, and may restrict the individual right of action by Bond owners. In addition to the foregoing, any such trust agreement or indenture may contain such other provisions as the City Council may deem reasonable and proper for the security of the Bond owners. Section 8A.58. Personal Liability. Neither the members of the City Council nor any employee, officer, attorney or other representative of the City, shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. Section 8A.59. Refunding Bonds. The City Council may provide for the issuance of Bonds any portion of which is to be used for the purpose of refrmding outstanding Bonds, including the payment of the principal thereof and interest and redemption premiums, if any, thereon. The proceeds of Bonds issued to refund any outstanding Bonds may, in the discretion of the City Council be applied to the retirement of such outstanding Bonds at maturity, or the redemption (on any redemption date) or purchase of such outstanding Bonds prior to maturity, upon such terms and subject to such conditions as the City Council shall deem advisable. Section 8A.60. Repayment of Bonds. Revenues shall be the sole source of funds pledged by the City for repayment of Bonds issued hereunder. Bonds issued hereunder shall not be deemed to constitute a debt or liabih'ty of the City or a pledge of the faith and credit of the City but shall be payable solely from Revenues. All Bonds shall contain on the face thereof a statement to the following effect: "Neither the faith and credit nor the taxIng power of the City of Gilroy is pledged to the payment of the principal of or Interest on this Bond." The issuance of Bonds shall not directly, indin~:tly or contingently obligate the City Council to levy or pledge any form of taxation or to make any appropriation for their payment. ORDINANCE NO. 2000-06 -7- Section 8A.61. Financing Agreements. The City may enter into agreements with any Nonprofit Corporation with respect to the financing of a Project, which agreements may provide that the architectural and engineering design of the Project shall be subject to such standards as may be established by the City and that the Acquisition and Construction of the Project shall be subject to such supervision as the City deems necessary. The terms and conditions of such agreements may be as mutually agreed upon, but shall not be inconsistent with the provisions of this Article. Any such agreement may provide the means or methods by which any mortgage taken by the City shall be discharged, and it may contain a covenant by the Nonprofit Corporation to complete the Project whether or not Bond proceeds are sufficient therefore, and such other terms and conditions as the City may require. The City is authorized to fix, revise, charge, and collect interest and principal and all other rates, fees, rents, installment purchase payments and charges with respect to the financing of a Project. Such rates, fees, rents, installment purchase payments, charges, and interest shall be fixed and adjusted so that the aggregate thereof will provide ftmds sufficient with other revenues and moneys which it is anticipated will be available therefor, if any, to do all of the following: (a) Pay the principal of and interest on outstanding Bonds issued to finance such Project, as the same shall become due and payable. (b) Create and maintain reserves required or provided for in any resolution authorizing such Bonds. A sufficient amount of the Revenues derived from the Project may be set aside at such regular intervals as may be provided by the resolution or trust agreement in a sinking or other similar fund, which shall be pledged to, and charged with, the payment of the principal of and interest on such Bonds as the same shall become due, and the redemption price or the purchase price of Bonds retired by call or purchase as therein provided. Such pledge shall be valid and binding from the time the pledge is made. The rates, fees, interest, and other charges, revenues, or moneys so pledged and thereafter received by the City shall immediately be sul~ect to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding as against all parties l'mving claims of any kind in tort, contract, or otherwise against the City, irrespective of whether such parties have notice thereof. Neither the resolution, the trust agreement nor any agreement by which a pledge is created need be flied or recorded except in the records of the City. The use and disposition of moneys to the credit of such sinking or other similar fund shall be subject to the provisions of the resolution or trust agreement authorizing the issuance of such Bonds. (c) Pay Administrative Expenses to the extent not paid from Bond proceeds. Section 8A.6Z Trust Funds. All moneys received pursuant to the provisions of this Article, whether proceeds from the sale of Bonds or Revenues, shall be deemed to be trust funds to be held and applied solely for the purposes of this Article. Any bank or ORDINANCE NO. 2000-06 -8- trust company in which such moneys are deposited shall act as trustee of such moneys and shall hold and apply the same for the purposes specified in this Article, subject to the terms of the resolution or trust agreement authorizing the Bonds. Section 8A.63. Liberal Construction. This Article, being necessary for the health, welfare and safety of the City and its residents, shall be liberally construed to effect its purposes. Furthermore, the City Council hereby declares that this Article is an exercise of the power granted to the City by the City Charter and the Constitution of the State and is an exercise by the City of its powers as to municipal affairs and its police powers, and this Article shall be liberally construed to uphold its validity under the laws of the State. Section 8/L64. Supplemental and Additional Powers. This Article shall be deemed to provide a complete, additional, and alternative method for doing the things authorized thereby, and shall be regarded as supplemental and additional to the powers conferred by other laws. The issuance of Bonds under the provisions of this Article need not comply with the requirements of any other law applicable to the issuance of bonds. Section 8A.65. Actions to Determine Validity of Bonds and Proceedings. An action may be brought pursuant to Chapter 9 (commencing with Section 860 of Title 10 of Part 2 of the Code of Civil Procedure) to determine the validity of Bonds and the legality and validity of all proceedings previously taken and proposed to be taken for the authorization, issuance, sale, and delivery of the Bonds and for the payment of the principal thereof and interest thereon. Section 8A.66. Amendment of Article. This Article shall not be amended so as to have a material, adverse affect upon the rights of the owners of any outstanding Bonds theretofore issued hereunder, without the written consent of such Bond owners; provided, however, that this Article may be amended at any time (a) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision herein contained, as the City may deem necessary or desirable; or (b) if such amendment does not materially impair or adversely affect the interests of any Bond owner or Nonprofit Corporation in the judgment of the City Council; or (c) if such amendments apply solely to Bonds not theretofore issued hereunder or Nonprofit Corporations with respect to whom Projects have not theretofore been financed hereunder. Section 8A.67. Partial Invalidity. if any Section, paragraph, sentence, clause or phrase of this Article shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Article. SECTION 3. The City Clerk shall cause the title and a summary of this Ordinance to be published at least once in the official newspaper of the City within fifteen (15) days after the adoption hereof, pursuant to Section 607 of the City Charter. ORDINANCE NO. 2000-06 -9- SECTION' 4. This Ordinance shall take effect from and after the 30· day following the date of its passage and adoption. PASSED AND ADOPTED this 10th day of July, 2000, by the following vote: AYES: COUNClLMEMBERS: G. ARELLANO, MORALES, SUDOL, VELASCO, SPRINGER NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: P. ARELLANO and PINHEIRO ATTESTs-, Rh6nda Pe _lljn, City Clerk APPROVED: Thomas W. Springer, May.~/ -- ORDINANCE NO. 2000-06 -10- I, RHONDA PELLIN, City Clerk of the City of Gilroy, do hereby certify that the attached Ordinance No. 2000-06 is an original ordinance, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 10th day of July, 2000, at which meeting a quorum was present. 1N WITNESS WHEREOF, [ have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 22nd day of August, 2000. City Clerk of the City of Gilroy (Sea)