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Resolution 2006-54 RESOLUTION NO. 2006-54 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GILROY AUTHORIZING THE ISSUANCE AND SALE OF SPECIAL TAX BONDS, AND APPROVING AND AUTHORIZING RELATED DOCUMENTS AND ACTIONS City of Gilroy Community Facilities District No. 2000-1 (Highway 152) Special Tax Bonds, Series 2006 (Improvement Area No. I) WHEREAS, the City Council of the City of Gilroy (the "City") has conducted proceedings under and pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5 of Part I of Division 2 of Title 5 (commencing with Section 53311) of the California Government Code (the "Act"), to form Community Facilities District No. 2000-1 (Highway 152) (the "CFD"), to authorize the levy of special taxes upon the land within the CFD, and to issue bonds secured by the special taxes, the proceeds of which are to be used to finance certain public improvements, all as described in those proceedings; and WHEREAS, pursuant to a Fiscal Agent Agreement, dated as of December 18,2002 (the "Original 2002 Fiscal Agent Agreement"), between the City, for and on behalf of the CFD and Union Bank of California, N.A., as fiscal agent (the "Fiscal Agent"), the City previously issued the City of Gilroy Community Facilities District No. 2000-1 (Highway 152) Special Tax Bonds, Series 2002 (the" 2002 Bonds") in the initial principal amount of$7,185,000; and WHEREAS, the Rate and Method of Apportionment of Special Tax for the CFD, as amended (the "Rate and Method") authorizes the levy of a "Special Tax" in the CFD in any fiscal year to pay the "Highway 152 Special Tax Requirement" and lor the "Supplemental Bonds Special Tax Requirement"; and WHEREAS, the Highway 152 Special Tax Requirement generally is defined in the Rate and Method as the amount necessary to pay principal and interest on "Highway 152 Bonds", to create or replenish reserve funds for Highway 152 Bonds, to cure delinquencies in the payment of principal or interest on Highway 152 Bonds, and to pay administrative expenses not associated with "Supplemental Bonds"; and WHEREAS, Highway 152 Bonds are defined in the Rate and Method as bonds or other debt issued by the CFD to pay for the construction or acquisition of improvements to Highway 152; and WHEREAS, the Supplemental Bonds Special Tax Requirement generally is defined in the Rate and Method as the amount necessary to pay principal and interest on Supplemental Bonds, to create or replenish reserve funds for Supplemental Bonds, to cure delinquencies in the RESOLUTION NO, 2006-54 -1- payment of principal or interest on Supplemental Bonds, and to pay administrative expenses not associated with Highway 152 Bonds; and WHEREAS, Supplemental Bonds are defined in the Rate and Method as any bonds, the debt service on which are secured by the Supplemental Special Tax in an Improvement Area (as defined in the Rate and Method) within the CFD that have been issued to pay for public facilities other than improvements to Highway 152; and WHEREAS, the Rate and Method dictates that Supplemental Bonds sold to fund improvements within an Improvement Area shall be secured solely by special taxes collected within that Improvement Area and that no special tax shall be levied in any Improvement Area to pay debt service on Supplemental Bonds sold to fund improvements in another Improvement Area; and WHEREAS, pursuant to the Rate and Method, the Maximum Special Tax in Improvement Area No. 1 is $2,046 per Acre until such time as Supplemental Bonds are issued for public improvements within Improvement Area No.1, at which time the Maximum Special Tax increases to $15,262 per Acre; and WHEREAS, the Series 2002 Bonds are Highway 152 Bonds as defined in the Rate and Method and are secured by special taxes levied throughout the CFD, i.e., in Improvement Area Nos. I through 8, up to the Maximum Special Tax specified for Highway 152 Bonds in each Improvement Area; and WHEREAS, the City has been asked by the owner of property in Improvement Area No. I of the CFD to finance acquisition and construction of certain public facilities other than improvements to Highway 152, which facilities will be constructed by the property owner and acquired by the City as set forth in an Acquisition Agreement between the City and the property owner (the "Acquisition Agreement"); and WHEREAS, bonds in the total principal amount of $35,000,000 were authorized by the qualified electors of the CFD, which bonds may include Highway 152 Bonds and Supplemental Bonds; and WHEREAS, the 2002 Bonds, as Highway 152 Bonds under the Rate and Method, are secured by and payable from special taxes levied in each of the Improvement Areas to pay for the construction or acquisition of improvements to Highway 152, which amount is limited to $2,052 per Acre in Improvement Area No. I; and WHEREAS, prior to issuing the Supplemental Bonds for Improvement Area No. I, the City wishes to amend the Original 2002 Fiscal Agent Agreement pursuant to a First Amendment to Fiscal Agent Agreement (the "First Amendment," and together with the Original 2002 Fiscal Agent Agreement, the "2002 Fiscal Agent Agreement") to clarify that Supplemental Bonds are not "Parity Bonds" for purposes of the Original 2002 Fiscal Agent Agreement but must be issued in compliance with certain value-to-lien requirements specified in Section 3.06 thereof; and RESOLUTION NO. 2006-54 -2- WHEREAS, this City Council now wishes to provide for the issuance of the "City of Gilroy Community Facilities District No. 2000-1 (Highway 152) Special Tax Bonds, Series 2006 (Improvement Area No. I)" (the "2006 Bonds") secured by the special taxes levied in Improvement Area No. I for the purpose of paying the Supplemental Bonds Special Tax Requirement ("Special Taxes") and the funds and accounts established under a Fiscal Agent Agreement, dated as of August I, 2006, between the City, for and on behalf of the CFD, and the Fiscal Agent (the "2006 Fiscal Agent Agreement"), for the purpose of financing acquisition and construction of the non-Highway 152 improvements in Improvement Area No. 1 and related costs and expenses, and there has been placed on file with the City Clerk certain documents described below providing for the issuance of the 2006 Bonds for the CFD, including a form of Preliminary Official Statement; and WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the 2006 Bonds exist, have happened and have been performed in due time, form and manner as required by the laws of the State of California, including the Act; NOW, THEREFORE, BE IT RESOLVED, as follows: Section I. Bonds Authorized. Pursuant to the Act, this Resolution and the 2006 Fiscal Agent Agreement, the 2006 Bonds in an aggregate principal amount not to exceed $11,000,000 are hereby authorized to be issued. The 2006 Bonds shall be executed in the form, shall mature, be payable in the priorities and bear interest at the rates as provided in the Fiscal Agent Agreement. Section 2. Findings. In furtherance of the issuance of the 2006 Bonds and pursuant to Section 53345.8 of the Act and the applicable provisions of Section 3.06 of the Fiscal Agent Agreement, the City Council hereby finds and determines that the CFD Value (as defined below) is at least three times the principal amount of the 2002 Bonds, the principal amount of the 2006 Bonds to be sold and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act on property within the CFD or a special assessment levied on property within the CFD. "CFD Value" is defined as the fair market value, as of the date of the appraisal described below, of all parcels of real property in the CFD subject to the levy of Special Taxes and not delinquent in the payment of Special Taxes, including with respect to such nondelinquent parcels the value of the existing improvements and any facilities to be constructed or acquired with any amounts on deposit in the Improvement funds established under the 2002 fiscal Agent Agreement and the fiscal Agent Agreement or otherwise to be obtained through sale of the Parity Bonds, such value as determined by reference to a written appraisal prepared within 120 days of the issuance of the 2006 Bonds by an MAl appraiser selected by the City and using the methodology prescribed in written policies of the City adopted pursuant to Section 53312.7(a)(5) and 53345.8 of the Act (as described in the following paragraph). In connection with any such appraisal, the City has instructed the appraiser (a) to not assign value in respect of any cash, land or improvements donated to a public entity, and (b) to discount the value of any fully developed parcels, if the appraiser determines that due to the limitation of any maximum special tax that may be levied in the CFD on any such developed parcel, inclusion of such parcel in the appraisal at its full value will be misleading or inappropriate. RESOLUTION NO. 2006-54 -3- The City Council further finds that issuance of the 2006 Bonds is in compliance with the Act, the 2002 Fiscal Agent Agreement and the City's "Amended and Restated Policies and Procedures for Land Secured Financings" adopted by the City Council June 12, 2006 by Resolution No. 2006-39. Section 3. Authorities Granted. The Mayor, City Manager, Administrative Services Director, Economic Development Director, City Clerk, City Attorney or such other officer of the City as may be designated by such officer pursuant to Section 12 hereof (each, an "Authorized Officer") is hereby authorized and directed to execute and deliver the documents approved herein in substantially the form on file with the City Clerk, together with such additions or changes as are approved by such Authorized Officer upon consultation with the City's bond counsel, including such additions or changes as are necessary or advisable to permit the timely issuance, sale and delivery of the 2006 Bonds; provided, however, that no additions or changes shall (a) authorize an aggregate principal amount of Series 2006 Bonds in excess of $11,000,000 or (b) result in a maturity of the 2006 Bonds in excess of 25.5 years. The approval of such additions or changes shall be conclusively evidenced by the execution and delivery by an Authorized Officer of the documents herein specified. Section 4. Fiscal Agent Agreement. The City Council hereby approves the form of the Fiscal Agent Agreement, in substantially the form on file with the City Clerk. To the extent not set forth in the Master Fiscal Agent Agreement, the date, manner of payment, interest rate or rates, interest payment dates, denominations, form, registration privileges, manner of execution, place of payment, terms of redemption and other terms of the 2006 Bonds shall be as provided in the Fiscal Agent Agreement as finally executed and delivered. The terms and provisions of the Fiscal Agent Agreement, as executed, are incorporated herein by this reference as if fully set forth herein. An Authorized Officer is hereby authorized and directed to execute the Fiscal Agent Agreement on behalf of the City and the City Clerk (or a designee of the City Clerk) is hereby authorized and directed to attest thereto, subject to the terms of Section 3 hereof. Section 5. First Amendment. The City Council hereby approves the form of the First Amendment, in substantially the form on file with the City Clerk. The terms and provisions of the First Amendment, as executed, are incorporated herein by this reference as if fully set forth herein. An Authorized Officer is hereby authorized and directed to execute the First Amendment on behalf of the City and the City Clerk (or a designee of the City Clerk) is hereby authorized and directed to attest thereto. Section 6. Official Statement. The City Council hereby approves the Preliminary Official Statement prepared in connection with the 2006 Bonds in substantially the form on file with the City Clerk, together with any changes therein or additions thereto deemed advisable by an Authorized Officer. The City Council hereby approves and authorizes the distribution by the underwriter of the 2006 Bonds of the Preliminary Official Statement to prospective purchasers of the 2006 Bonds, and authorizes and directs an Authorized Officer on behalf of the City to deem the Preliminary Official Statement "final" pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") prior to its distribution to prospective purchasers of the 2006 Bonds. The execution of the final Official Statement, which shall include then current financial information regarding the City, 2006 Bond pricing information, such other changes and additions thereto deemed advisable by an Authorized Officer, and such information permitted to be RESOLUTION NO. 2006-54 -4- excluded from the Preliminary Official Statement pursuant to the Rule, shall be conclusive evidence of the approval of the Official Statement by the City. Section 7. Continuing Disclosure. The City Council hereby approves the form of the Continuing Disclosure Certificate with respect to the 2006 Bonds in substantially the form thereof attached to the Preliminary Official Statement on file with the City Clerk. An Authorized Officer is hereby authorized and directed to complete and execute the Continuing Disclosure Certificate on behalf of the City with such changes, additions or deletions as may be approved by the Authorized Officer in consultation with the City's bond counsel. Section 8. Sale of Bonds. The City Council hereby approves the sale of the 2006 Bonds by negotiation with Brandis Tallman, LLC as underwriter (the "Underwriter"). The 2006 Bonds shall be sold pursuant to a Bond Purchase Agreement (the "Bond Purchase Agreement") by and between the City and the Underwriter in the form on file with the City Clerk, together with any changes therein or additions thereto approved by an Authorized Officer, whose execution thereof shall be conclusive evidence of such approval of any such additions and changes. The Bond Purchase Agreement shall be executed in the name and on behalf of the City by an Authorized Officer upon submission of a proposal by the Underwriter to purchase the 2006 Bonds; provided, however, that such proposal is acceptable to the Authorized Officer and is consistent with the requirements of this Resolution. The amount of Underwriter's discount shall be not more than 1.25% of the par amount of the 2006 Bonds, exclusive of any original issue discount on the sale thereof, and the true effective rate of interest to be borne by the 2006 Bonds shall not exceed 6.0% per annum. The City Council hereby finds that sale of the 2006 Bonds to the Underwriter at a private sale pursuant to the Bond Purchase Agreement will result in a lower overall cost than would be achieved by selling the 2006 Bonds at a public sale utilizing competitive bidding. Section 9. Bond Delivery. Upon execution of the Bond Purchase Agreement, the 2006 Bonds shall be prepared, executed and delivered to the Fiscal Agent for authentication, all in accordance with the terms thereof. The Fiscal Agent, an Authorized Officer and other responsible officers of the City are hereby authorized and directed to take such actions as are required to cause the delivery of the 2006 Bonds upon receipt of the purchase price thereof. Section 10. Approval of Professional Service Agreements. The City Council hereby approves the form of the professional services agreements on file with the City Clerk with respect to the services of Jones Hall, A Professional Law Corporation as bond counsel, Nixon Peabody, as disclosure counsel, Northcross Hill & Ach, as financial advisor and Harris & Associates, as prevailing wage administrator, with respect to the 2006 Bonds. An Authorized Officer is hereby authorized and directed to execute the such agreements on behalf of the City with such changes, additions or deletions as may be approved by the Authorized Officer. Section 11. Actions Authorized. All actions heretofore taken by the officers and agents of the City with respect to the establishment of the CFD and the sale and issuance of the 2006 Bonds are hereby approved, confirmed and ratified, and the appropriate officers of the City are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, which they, or any of them, may deem RESOLUTION NO. 2006-54 -5- necessary or advisable in order to consummate the lawful issuance and delivery of the 2006 Bonds in accordance with this resolution, and any certificate, agreement, and other document described in the documents herein approved. All actions to be taken by an Authorized Officer, as defined herein, may be taken by such Authorized Officer or any designee, with the same force and effect as if taken by the Authorized Officer. Section 12. Acquisition Agreement. The City Council hereby approves the form of the Acquisition Agreement, in substantially the form on file with the City Clerk. The terms and provisions of the Acquisition Agreement, as executed, are incorporated herein by this reference as if fully set forth herein. An Authorized Officer is hereby authorized and directed to execute the Acquisition Agreement on behalf of the City. Section 13. Effectiveness. This resolution shall take effect from and after its adoption. AYES: COUNCILMEMBERS: ARELLANO, BRACCO, CORREA, GARTMAN, VALIQUETTE, VELASCO, and PINHEIRO NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: NONE ---- ATTE~: 2-- ~4A (k~~ Rhonda Pellin, City Clerk RESOLUTION NO. 2006-54 -6- I, RHONDA PELLIN, City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 2006-54 is an original resolution, or true and correct copy of a city resolution, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 17th day of July, 2006, at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 24th day of July, 2006. ~~, City Clerk of the City of Gilroy (Seal)