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Resolution 1994-07 , . . RESOLUTION NO. 94 - 7 RESOLUTION AUTHORIZING ISSUANCE OF BONDS NORTH FOREST STREET ASSESSMENT DISTRICT CITY OF GILROY The City Council of the City of Gilroy resolves: Section 1. RECITALS. On December 21, 1992, the City Council of the City of Gilroy adopted its resolution of intention, as later amended, to order improvements in North Forest Street Assessment District, City of Gilroy, County of Santa Clara, State of California, under the provisions of the Municipal Improvement Act of 1913 (the "Act"), as amended. Proceedings taken under the Act led to the levy of a special assessment by the Council against parcels of land within the assessment district in the total amount of $2,311,492.00. These assessments were recorded in the office of the County Recorder of the County of Santa Clara, and thereupon became a lien on each parcel assessed. The period within which parcel owners might pay their assessments in cash without interest expired on or about January 14, 1994. Section 2. ISSUANCE OF BONDS. The Council hereby authorizes the issuance of improvement bonds under the provisions of the Improvement Bond Act of 1915 to represent unpaid assessments in the amount of $2,311,492.00. Each bond shall be designated, "limited Obligation Improvement Bond, City of Gilroy, North Forest Street Assessment District, Series No. 1994-A." Bonds shall be dated approximately the date of delivery and issued in denominations of $5000 or integral multiples thereof, except for Bond No.1, which may be an odd amount, and may be issued as serial bonds, term bonds, or any combination thereof. Bonds shall mature in the principal amounts set forth in the table attached as Exhibit A (or, for term bonds, shall be subject to mandatory sinking fund redemption at par in accordance with the table). The bond date and interest rates on the bonds shall be as set forth in the bond purchase agreement. Section 3. APPOINTMENT OF PAYING AGENT, REGISTRAR AND TRANSFER AGENT. The Council hereby appoints the Bank of America National Trust and Savings Association (the "Bank") as paying agent, registrar and transfer agent for the bonds in accordance with an agreement between the City of Gilroy and the Bank. RESOLUTION NO. 94 - 7 ORIGINAL . . Section 4. FORM AND EXECUTION. Bonds shall be issued as fully registered bonds substantially in the form set forth as Exhibit B to this resolution. The bonds shall be signed by the City Treasurer and the City Clerk and the seal of the City shall be affixed. Both signatures and seal may be reproduced on the bonds by facsimile, but upon its registration or reregistration each bond shall be authenticated by the manual signature of the Bank. The Bank shall assign to each bond authenticated and registered by it a distinctive letter, or number, or letter and number, and shall maintain a record thereof which shall be available to the City for inspection. Section 5. ESTABLISHMENT OF SPECIAL FUNDS. For administering the proceeds of the sale of bonds and payment of interest and principal on the bonds, there are hereby established five funds to be known as the improvement fund, the redemption fund, the special reserve fund, the investment earnings fund and the arbitrage rebate fund, respectively, for North Forest Street Assessment District. Section 5.1. IMPROVEMENT FUND. Except as provided in Section 5.3, proceeds of sale of the bonds, together with all amounts paid on the assessments before bond issuance, shall be deposited in the improvement fund to be maintained by the City Treasurer. Disbursements from the improvement fund shall be made by the City Treasurer in accordance with the budget of estimated costs and expenses set forth in the amended engineer's report heretofore approved by the Council, which report and budget are subject to modification by the Council from time to time as prescribed by the Act. Section 5.2. REDEMPTION FUND. The redemption fund shall be maintained by the City Treasurer. All payments of principal and interest installments on the assessments, together with penalties, if any, and any capitalized interest included as a cost incident to the issuance of the bonds, shall be deposited in the redemption fund, which shall be a trust fund for the benefit of the bondholders. Payment of the bonds at maturity, or at redemption before maturity, and all interest on the bonds shall be made from the redemption fund. The City shall deposit into the redemption fund, from the proceeds of the sale of the bonds, the amount of $92,057.80, which shall be applied to payment of the first payable interest on the bonds until fully expended. RESOLUTION NO. 94 - 7 2 ~ 't. . . Section 5.3. SPECIAL RESERVE FUND. There shall be deposited into the special reserve fund the amount of $161,804.44 from the proceeds of the sale of bonds. That amount, less any amounts transferred to the redemption fund pursuant to Section 8884 of the Streets and Highways Code, shall constitute the "Reserve Requirement" for the bonds. The special reserve fund shall be maintained by the City Treasurer. A. During the term of the bonds, the amount in the special reserve fund shall be available for transfer into the redemption fund in accordance with Section 8883 and 8808 of the Streets and Highways Code. The amount so advanced shall be reimbursed to the special reserve fund from the proceeds of redemption or sale of the parcel for which payment of delinquent assessment installments was made from the special reserve fund. B. If any assessment is prepaid before final maturity of the bonds, the amount of principal which the assessee is required to prepay shall be reduced by an amount which is in the same ratio to the original amount of the special reserve fund as the original amount of the prepaid assessment bears to the total amount of unpaid assessments originally securing the Bonds. This reduction in the amount of principal prepaid shall be balanced by a transfer from the special reserve fund to the redemption fund in the same amount. C. The amount maintained in the special reserve fund will never exceed the Reserve Requirement. Proceeds of investment of the special reserve fund shall be deposited in the investment earnings fund. D. When the amount in the special reserve fund equals or exceeds the amount required to retire the remaining unmatured bonds (whether by advance retirement or otherwise), the amount of the special reserve fund shall be transferred to the redemption fund, and the remaining installments of principal and interest not yet due from assessed property owners shall be cancelled without payment. Section 5.4. INVESTMENT EARNINGS FUND. Proceeds of the investment of amounts in the improvement fund and the special reserve fund will be deposited in the investment earnings fund. As of September 2 of each year during the term of the bonds, the City Treasurer shall determine whether any portion of investment earnings must be rebated to the United States pursuant to Section 148 of the United States Internal Revenue Code and regulations adopted thereunder. Any amounts required to RESOLUTION NO. 94 - 7 3 . . be rebated will be transferred to the arbitrage rebate fund, and the balance will be transferred as follows: (a) To the extent that the balance in the special reserve fund is less than the Reserve Requirement, a transfer will be made from the investment earnings fund to the special reserve fund. (b) The remaining balance in the investment earnings fund, if any, will be transferred to the improvement fund until the improvement is completed and the improvement fund is closed; thereafter the balance in the investment earnings fund will be transferred to the redemption fund to be used, in the discretion of the City Treasurer, as a credit upon the annual installments of assessment or for the advance retirement of bonds. The City Treasurer is authorized to retain independent attorneys, accountants and other consultants to assist in complying with Federal requirements. Section 5.5. ARBITRAGE REBATE FUND. Amounts in the arbitrage rebate fund shall be invested in the same manner as amounts in the other funds and shall be held in trust for rebate to the United States at the times required by Section 148 of the United States Internal Revenue Code and regulations adopted thereunder. Section 5.6 RETURN OF UNCLAIMED FUNDS. Other provisions of this resolution to the contrary notwithstanding, the Bank shall return to the City any funds held by it hereunder not later than twelve (12) months before those funds would escheat to the State of California under any law now or hereafter enacted. Section 6. PAYMENT ON BONDS. The principal and interest on the bonds shall be payable at the office of the Bank of America National Trust and Savings Association, Glendale, California. Principal and interest shall be paid by check, mailed to the registered owner of each bond at the owner's address appearing on the register maintained by the Bank on the 15th day of the month preceding the date of payment. Upon the payment and cancellation of any bond, the bond shall be destroyed and the Bank shall furnish the City a certificate of destruction. Section 7. ADVANCE RETIREMENT OF BONDS. Any Bond or any portion thereof in the amount of $5,000 or any integral multiple thereof, may be redeemed and paid in advance of maturity upon the second day of March or September in any year by giving at least 30 days' notice by registered or certified mail or by personal service to RESOLUTION NO. 94 - 7 4 . . the registered owner thereof at such owner's address as it appears on the registration books of the Bank and by paying principal and accrued interest together with a premium equal to a percentage of the principal amount of the redeemed bond, as follows: Redemption Date Redemption Premium March 2, 1995 through September 2, 2002 March 2, 2003 and September 2, 2003 March 2, 2004 and September 2, 2004 March 2, 2005 and thereafter 3% 2% 1% 0% Section 8. REREGISTRATION. Any bond may be registered to a new owner by completing the assignment certificate on the reverse of the bond and delivering the bond to the Bank. Upon reregistration, any bond may be replaced by one or more bonds of the same maturity and aggregate amount in denominations of $ 5000 or any integral multiple thereof. Section 9. COVENANTS. In the event of a default in the payment of any bond or any installment of interest thereon, bondholders shall have the remedies set forth in the Improvement Bond Act of 1915. In addition, the Council makes the following covenants, which shall constitute a contract with the bondholders: Section 9.1. FORECLOSURE OF LIENS. Not later than October 1 in any year, the City shall file an action in the Superior Court to foreclose the lien of each delinquent assessment if the sum of uncured assessment delinquencies for the preceding fiscal year exceeds five percent (5%) of the assessment installments posted to the tax roll for that fiscal year, and if the amount of the special reserve fund is less than the Reserve Requirement. Section 9.2. ARBITRAGE. During the term of the bonds, the City will make no use of bond proceeds which, if such use had been reasonably expected at the date the bonds are issued, could have caused the bonds to be "arbitrage bonds" within the meaning of Section 148 of the United States Internal Revenue Code of 1986, and regulations of the Internal Revenue Service adopted thereunder, and further shall rebate to the United States any amounts required to be rebated on account of arbitrage in accordance with the provisions of that Code and those regulations. Section 9.3. MAINTENANCE OF TAX EXEMPTION. The City will take all reasonable actions required to maintain the status of interest on the bonds as RESOLUTION NO. 94 - 7 5 . . excludable from gross income for federal income tax purposes and as exempt from the State of California personal income taxes. * * * I HEREBY CERTIFY TIIAT the foregoing resolution was duly and regularly adopted and passed by the City Council of the City of Gilroy, California, at a regular meeting thereof held on the 18th day of January, 1994, by the following vote of the members thereof: AYES, and in favor, thereof, Councilmembers: GILROY, KLOECKER, MORALES, ROGERS, ROWLISON, VALDEZ and GAGE. NOES, Councilmembers: None ABSENT, Councilmembers: None 4~?~ -.J , City Clerk of the City of Gilroy ~d- APll::JJ j, [}r Mayor RESOLUTION NO. 94 - 7 6 . . MATURITY SCHEDULE OF BONDS GILROY North Forest Street Assessment District Bonds mature on September 2 in the years and amounts, and bear interest at the annual rates, set forth below. YEAR FACE AMOUNT RATE(%) 1995 41,492.00 4.250 1996 45,000.00 4.750 1997 45,000.00 5.000 1998 50,000.00 5.250 1999 50,000.00 5.500 2000 55,000.00 5.650 2001 55,000.00 5.800 2002 60,000.00 6.000 2003 65,000.00 6.100 2004 70,000.00 6.250 2005 70,000.00 6.400 2006 75,000.00 6.500 2007 80,000.00 6.800 2008 85,000.00 6.800 2009 95,000.00 6.800 2010 100,000.00 6.800 2011 105,000.00 6.800 2012 115,000.00 6.800 2013 120,000.00 6.800 2014 130,000.00 6.800 2015 140,000.00 6.800 2016 150,000.00 6.800 2017 160,000.00 6.800 2018 170,000.00 6.800 2019 180,000.00 6.800 ------------- ------------- TOTAL: 2,311,492.00 TERM BOND (maturity) EXHIBIT A . . United States of America State of California County of Santa Clara REGISTERED Number REGISTERED $ LIMITED OBLIGATION IMPROVEMENT BOND CIlY OF GILROY NORTH FOREST STREET ASSESSMENT DISTRICT SERIES NO. 1994-A INTEREST RATE MATURIlY DATE BOND DATE CUSIP NUMBER REGISTERED OWNER: PRINCIPAL SUM: DOLLARS Under and by virtue of the Improvement Bond Act of 1915, Division 10 (commencing with Section 8500), of the Streets and Highways Code (the "Act"), the City of Gilroy, County of Santa Clara, State of California (the "City"), will, out of the redemption fund for the payment of the bonds issued upon the unpaid portion of assessments made for the acquisition, work and improvements more fully described in proceedings taken pursuant to Resolution of Intention No. 92-91, adopted by the City Council of the City of Gilroy on the 21st day of December, 1992, as later amended, pay to the registered owner stated above or registered assigns, on the maturity date stated above, the principal sum stated above, in lawful money of the United States of America and in like manner will pay interest from the interest payment date next preceding the date on which this Bond is authenticated, unless this Bond is authenticated and registered as of an interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated and registered prior to September 2, 1994, in which event it shall bear interest from its date, until payment of such principal sum shall have been discharged, at the rate per annum stated above, payable semiannually on March 2 and September 2 in each year commencing on September 2, 1994, based on a 30-day month, 360-day year. Both the principal hereof and redemption premium hereon are payable at the principal corporate trust office of Bank of America National Trust and Savings Association, or its successor, as Paying Agent, Registrar and Transfer Agent, in Glendale, California (the "Bank"), and the interest hereon is payable by check by first-class mail, postage prepaid mailed on each interest payment date to the owner hereof at the owner's address as it appears on the records of the Bank, or at an address that has been filed with the Bank for that purpose, as of the fifteenth day of the calendar month immediately preceding each interest payment date (the "record date"). REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE SIDE HEREOF WHICH SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH HEREIN. This Bond will continue to bear interest after maturity at the rate above stated, provided, it is presented at maturity and payment thereof is refused upon the sole ground that there are not sufficient moneys in said redemption fund with which to pay same. If it is not presented at maturity, interest thereon will run until maturity. This Bond shall not be entitled to any benefit under the Act or the Resolution Authorizing Issuance of Bonds (the "Resolution of Issuance"), or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Bank. ff:'/'t.~ Ii (~, ~T '? ::.....1.. ~ t """ J ~ I.) . . IN WITNESS WHEREOF, the City has caused this Bond to be signed in facsimile by the Treasurer of said City and by its Clerk, and has caused its corporate seal to be reproduced in facsimile hereon all as of the 21st day of January, 1994. CI1Y OF GILROY Clerk Treasurer (SEAL) CERTIFICATE OF AUTHENTICATION AND REGISTRATION This is one of the Bonds described in the within mentioned Resolution of Issuance, which has been authenticated and registered on BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION as paying agent, registrar and transfer agent By Authorized Officer 2 . . (REVERSE OF BOND) liMITED OBliGATION IMPROVEMENT BOND CI1Y OF GILROY NORTH FOREST STREET ASSESSMENT DISTRICT Series No. 1994-A ADDITIONAL PROVISIONS OF THE BOND Except for the term bond maturing in the year 2019, each bond of this Series No. 1994-A is one of several annual series of bonds of like date, tenor and effect, but differing in amounts, maturities and interest rates. The Series No. 1994-A bonds have been issued by the City under the Act and the Resolution of Issuance, for the purpose of providing means for paying for the improvements described in said proceedings, and are secured by the moneys in the redemption fund and by the unpaid portion of assessments made for the payment of those improvements, and, including principal and interest, are payable exclusively out of the redemption fund. This Bond is transferable by the registered owner hereof, in person or by the owner's attorney duly authorized in writing, at the office of the Bank, subject to the terms and conditions provided in the Resolution of Issuance, including the payment of certain charges, if any, upon surrender and cancellation of this Bond. Upon transfer, a new registered bond or bonds, of any authorized denomination or denominations, of the same maturity, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. Bonds shall be registered only in the name of an individual (including joint owners), a corporation, a partnership or a trust. Neither the City nor the Bank shall be required to make exchange or to register the transfer of bonds during the period commencing with the fifteenth day of the month immediately preceding any interest payment date and ending on said interest payment date (the "record date"). The City will not obligate itself to advance available funds from the City treasury to cure any deficiency which may occur in the bond redemption fund. A determination not to obligate itself shall not prevent the City from, in its sole discretion, so advancing funds. The City and the Bank may treat the registered owner hereof as the absolute owner for all purposes, and the City and the Bank shall not be affected by any notice to the contrary. This Bond or any portion of it in the amount of Five Thousand Dollars ($5,000) or any integral multiple thereof, may be redeemed and paid in advance of maturity upon the second day of March or September in any year by giving at least 30 days' notice by registered or certified mail or by personal service to the registered owner hereof at the owner's address as it appears on the registration books of the Bank and by paying principal and accrued interest together with a premium equal to a percentage of the principal amount of the redeemed bond, as follows: Redemption Date Redemption Premium March 2, 1995 through September 2, 2002 March 2, 2003 and September 2, 2003 March 2, 2004 and September 2, 2004 March 2, 2005 and thereafter 3% 2% 1% 0% Th~ term bond maturing in the year 2019 is subject to mandatory advance redemption, by lot, without premium, on September 2 in accordance with the schedule set forth in the Resolution of Issuance, on or after September 2, 2007. 3 - . . . . . I hereby certify that the following is a correct copy of the signed legal opinion of STURGIS, NESS, BRUNSELL & ASSAF a professional corporation, Emeryville, California, on file in my office. City Clerk 4