Resolution 2019-21RESOLUTION NO.2019-21
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GILROY AUTHORIZING THE ISSUANCE OF ITS 2019
GENERAL OBLIGATION REFUNDING BONDS, AUTHORIZING
AND DIRECTING THE EXECUTION OF PAYING AGENT
AGREEMENTS, AND CERTAIN OTHER RELATED
DOCUMENTS, AND AUTHORIZING ACTIONS RELATED
THERETO
WHEREAS, more than two-thirds of the qualified voters in the City of Gilroy (the
"City"), voting at an election held on November 4, 2008 (the "Election"), voted to approve a
measure authorizing the issuance of up to $37,000,000 of general obligation bonds (the "Bond
Measure") for the purpose of raising money to finance the acquisition, construction of public
library facilities, as further described in the Bond Measure; and
WHEREAS, pursuant to the authorization received at such election, together with the
authorization contained in Chapter 4 of Division 4 of Title 4 of the Government Code of the
State of California (commencing with Section 43600) (the "Bond Law"), the City issued its
$10,500,000 2009 General Obligation Bonds (Gilroy Community Library Project) (the "2009
Bonds") and its $23,500,000 2010 General Obligation Bonds (Gilroy Community Library
Project) (the "2010 Bonds" and, together with the 2009 Bonds, the "Prior Bonds"); and
WHEREAS, the City Council has determined that prudent management of the fiscal
affairs of the City requires that refunding bonds (the "2009 Refunding Bonds") be issued
pursuant to Article 9 (commencing with Section 53550) and Article 11 (commencing with
Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code
(collectively, the "Refunding Law") for the purpose of defeasing and refunding all or a portion of
the 2009 Bonds (such 2009 Bonds to be defeased and refunded, the "2009 Refunded Bonds")
pursuant to this resolution, in one or more series; and
WHEREAS, the City Council has determined that prudent management of the fiscal
affairs of the City requires that refunding bonds (the "2010 Refunding Bonds" and, together with
the 2009 Refunding Bonds, the "Refunding Bonds") be issued pursuant to the Refunding Law
for the purpose of defeasing and refunding all or a portion of the 2010 Bonds (such 2010 Bonds
to be defeased and refunded, the "2010 Refunded Bonds" and, together with the 2009 Refunded
Bonds, the "Refunded Bonds") pursuant to this resolution, in one or more series, delivered on a
standard or forward delivery basis; and
WHEREAS, pursuant to the Refunding Law, (i) the 2009 Refunding Bonds may be
issued only if the total net interest cost to maturity on such 2009 Refunding Bonds plus the
principal amount thereof is not in excess of the total net interest cost to maturity on the 2009
Refunded Bonds plus the principal amount of the 2009 Refunded Bonds, and (ii) the 2010
Refunding Bonds may be issued only if the total net interest cost to maturity on such 2010
Refunding Bonds plus the principal amount thereof is not in excess of the total net interest cost
to maturity on the 2010 Refunded Bonds plus the principal amount of the 2010 Refunded Bonds;
and
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4850-2602-3571.3 RESOLUTION NO. 2019-21
WHEREAS, forms of the following documents have been presented to the City Council:
(i) a Bond Purchase Agreement (the "Bond Purchase Agreement") whereby Hilltop Securities
Inc., as underwriter (in such capacity, the "Underwriter") has offered to purchase one or more
series of Refunding Bonds from the City; (ii) a Forward Delivery Bond Purchase Agreement (the
"Forward Delivery Agreement") whereby the Underwriter has offered to purchase one or more
series of Refunding Bonds from the City on a forward delivery basis; (iii) a Preliminary Official
Statement (the "Preliminary Official Statement") relating to the Refunding Bonds; (iv) Paying
Agent Agreement (the "Paying Agent Agreements") to be executed and delivered by the City
and MUFG Union Bank, N.A., as paying agent (the "Paying Agent"); (v) an Escrow Deposit and
Trust Agreement with respect to the defeasance and refunding of all or a portion of the 2009
Refunded Bonds (the "2009 Escrow Agreement") to be executed and delivered by the City and
MUFG Union Bank, N.A., as escrow bank (the "Escrow Bank"); (vi) an Escrow Deposit and
Trust Agreement with respect to the defeasance and refunding of all or a portion of the 2010
Refunded Bonds (the "2010 Escrow Agreement" and, together with the 2009 Escrow Agreement,
the "Escrow Agreements") to be executed and delivered by the City and the Escrow Bank; and
(vii) one or more Continuing Disclosure Certificates (each, a "Continuing Disclosure
Certificate") in the form attached to the Preliminary Official Statement as Appendix D, to be
executed and delivered by the City; and
WHEREAS, this City Council recognizes that Senate Bill No. 222 (Chapter 78, Statutes
of 2015) ("S13222"), which provides for a statutory lien on the Pledged Moneys (as defined
herein) when collected by the County of Santa Clara (the "County") to secure repayment of
general obligation bonds, was passed by the Legislature of the State and approved by the
Governor and became effective January 1, 2016; and
WHEREAS, the pledge included in this Resolution to secure payment of the Refunding
Bonds is intended to be a consensual agreement with the Owners; and
WHEREAS, Section 5852.1 of the Government Code of the State of California
("Section 5852.1") provides that the City Council obtain from an underwriter, municipal advisor
or private lender and disclose, in a meeting open to the public, prior to authorization of the
Refunding Bonds, good faith estimates of. (a) the true interest cost of the Refunding Bonds, (b)
the finance charge of the Refunding Bonds, meaning the sum of all fees and charges paid to third
parties, (c) the amount of proceeds of the Refunding Bonds received less the finance charge
described above and any reserves or capitalized interest paid or funded with proceeds of the
Refunding Bonds and (d) the sum total of all debt service payments on the Refunding Bonds
calculated to the final maturity of the Refunding Bonds plus the fees and charges paid to third
parties not paid with the proceeds of the Refunding Bonds, all with respect to each series of
Refunding Bonds; and
WHEREAS, in accordance with Section 5852.1, the City Council has obtained such good
faith estimates from NHA Advisors, LLC, the City's municipal advisor, and such estimates are
disclosed in Exhibit A attached hereto; and
WHEREAS, the City Council of the City has duly considered such transactions and
desires at this time to approve said transactions and the documents related thereto;
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NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF GILROY DOES
HEREBY RESOLVE:
Secton 1. Findings as to Issuance of Bonds. The above recitals are true and correct,
and this City Council determines that the prudent management of its fiscal affairs requires that
the Refunding Bonds be issued for the purpose of defeasance and refunding all or a portion of
the Prior Bonds pursuant to the Refunding Law.
Secton 2. Authority for Resolution; Authorization. This Resolution is adopted
pursuant to the Election, the Constitution of the State and the provisions of the Refunding Law.
The Mayor, City Administrator and the Finance Director, or any delegate of any of them
(collectively, the "Authorized Officers") are, and each of them acting alone is, hereby authorized
and directed to issue and deliver the Refunding Bonds and to establish the initial aggregate
principal amount thereof, provided, however, that such initial aggregate principal amount shall
not exceed the maximum aggregate principal amount of $30,000,000. Such Refunding Bonds
shall be general obligations of the City, payable as to principal, premium, if any, and interest
from ad valorem taxes to be levied upon taxable property in the City (except certain property
which is taxable at limited rates). The Refunding Bonds shall be designated the "City of Gilroy
2019 General Obligation Refunding Bonds" with such insertions or series designations as shall
be appropriate to describe the authorizations for said Bonds, or any other changes as are agreed
to by an Authorized Officer, as evidenced by his or her execution thereof.
As provided in Section 53552 of the Refunding Law, (i) the 2009 Refunding Bonds shall
not be issued unless the total net interest cost to maturity on the 2009 Refunding Bonds plus the
principal amount of the 2009 Refunding Bonds is less than the total net interest cost to maturity
on the 2009 Refunded Bonds to be refunded plus the principal amount of the 2009 Refunded
Bonds to be refunded, and (ii) the 2010 Refunding Bonds shall not be issued unless the total net
interest cost to maturity on the 2010 Refunding Bonds plus the principal amount of the 2010
Refunding Bonds is less than the total net interest cost to maturity on the 2010 Refunded Bonds
to be refunded plus the principal amount of the 2010 Refunded Bonds to be refunded.
The Refunding Bonds may be issued in one or more series, and delivered on a standard or
forward delivery basis. The dated date; purchase, call or redemption provisions; authorized
denominations; interest rates and maturity dates; place or places of payment of principal and
interest; and costs of issuing the Refunding Bonds, shall all be as described in the applicable
form of Paying Agent Agreement upon its execution by an Authorized Officer. The Authorized
Officers are, and each of them acting alone is, hereby authorized and directed to determine the
specific maturities and amounts of the Prior Bonds or portions thereof to be refunded based upon
market conditions existing at the time of the pricing of the Refunding Bonds. The Authorized
Officers may apply for the issuance of a policy of municipal bond insurance respecting all or any
portion of the Refunding Bonds and may execute a commitment therefor and other documents
associated with such application.
Secton 3. Resolution to Constitute Contract. In consideration of the purchase and
acceptance of any and all of the Refunding Bonds authorized to be issued hereunder by those
who shall own the same from time to time, this Resolution shall be deemed to be and shall
constitute a contract among the City and the Owners from time to time of the Refunding Bonds;
4850-2602-3571.3 RESOLUTION NO. 2019-21
and the pledge made in this Resolution shall be for the equal benefit, protection and security of
the Owners of any and all of the Refunding Bonds, all of which, regardless of the time or times
of their issuance or maturity, shall be of equal rank without preference, priority or distinction of
any of the Refunding Bonds over any other thereof.
Secton 4. Approval of Paving Aaent Agreements. The proposed forms of Paying
Agent Agreements which are on file with the City Clerk are hereby approved, and the
Authorized Officers, each acting alone, are hereby authorized and directed, for and in the name
and on behalf of the City, to execute and deliver the Paying Agent Agreements in said form, with
said additions or changes thereto (including the insertion of the maturity dates, principal amounts
and interest rates of the Refunding Bonds) and changes therein as the Authorized Officers, each
acting alone, may approve, in his or her discretion, as being in the best interests of the City, such
approval to be conclusively evidenced by the execution and delivery thereof.
Pursuant to Section 53515 of the Government Code, the Refunding Bonds shall be
secured by a statutory lien on all revenues received pursuant to the levy and collection of ad
valorem property taxes for the payment thereof.
The Debt Service Accounts established in the Paying Agent Agreements, all of the tax
revenues, and all amounts (including proceeds of the Refunding Bonds and investment earnings)
held in any fund or account established hereunder, are hereby pledged and a continuing lien and
security interest is hereby granted by the City therein to secure, and constitute a trust fund for,
the payment of the principal of and interest on the respective series of Refunding Bonds. This
pledge (i) shall constitute a first lien on such Debt Service Account, the tax revenues, and
amounts in such funds or accounts, (ii) shall be valid and binding from and after the date hereof
without any physical delivery thereof or further act, and (iii) shall be irrevocable until all of the
respective series of Refunding Bonds are no longer Outstanding. It is the intention of the City
that (i) for purposes of 11 U.S.C. § 902(2)(E), the tax revenues constitute "taxes specifically
levied to finance one or more projects or systems" of the City and are not "general property,
sales or income taxes levied to finance the general purposes of the City, (ii) the pledge of the
tax revenues constitutes a pledge of "special revenues" for purposes of 11 U.S.C. §§ 901 et seq.,
and (iii) a petition filed by the City under 11 U.S.C. §§ 901 et seq. will not operate as a stay
under 11 U.S.C. §§ 362 and 922 of the application of such tax revenues to payment when due of
principal of and interest on the Refunding Bonds. The City will not take any action inconsistent
with its agreement and statement of intention hereunder and will not deny that the pledge of the
tax revenues constitutes a pledge of special revenues for purposes of 11 U.S. C. § § 901 et seq. In
addition, the pledges in this Resolution and in the Paying Agent Agreements are agreements
between the City and the Owners (and bondowners for which the Owners serve as nominees) in
addition to any statutory lien that may exist.
Secton 5. Approval of Form of Refunding_ Bonds. The form of Refunding Bonds set
forth in the forms of Paying Agent Agreements are hereby approved, and the members of the
City Council and the Authorized Officers of the City, each acting alone, and the City Clerk, are
hereby authorized and directed to execute the Refunding Bonds in the name and on behalf of the
City and to cause the delivery thereof as provided for below.
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4850-2602-3571.3 RESOLUTION NO. 2019-21
Secton 6. Sale and Issuance of Refunding Bonds; Annroval of Bond Purchase
Agreement and Forward Delivery Agreement. The City Council hereby approves the issuance
and sale of the Refunding Bonds, or any series of such Bonds, (i) by negotiation with the
Underwriter or (ii) by a private sale to a purchaser (the "Purchaser"), whereby the Purchaser
agrees to a loan to the City evidenced by the Refunding Bonds, and in connection with such sale
the City would be assisted by Hilltop Securities Inc., as placement agent (in such capacity, the
"Placement Agent"). The Authorized Officers, and each of them alone, is directed to determine
whether the Refunding Bonds, or any series of them, shall be sold by negotiated sale to the
Underwriter or by private placement to the Purchaser, and if such Authorized Officers determine
to sell the Refunding Bonds, or any series, of them, by private placement, to select the Purchaser
thereof. The Bond Purchase Agreement and the Forward Delivery Agreement, pursuant to
which the City agrees to sell the Refunding Bonds to the Underwriter, and the Underwriter
agrees to purchase the Refunding Bonds from the City, are each hereby approved, provided that
(a) the true interest cost of the Refunding Bonds shall not exceed 3.75%; (b) the principal
amount of the Refunding Bonds shall not exceed $30,000,000; (c) the discount at which the
Underwriter purchases all of the Refunding Bonds shall not be greater than an amount equal to
0.5% (exclusive of original issue discount) of the principal amount of the Refunding Bonds, (d)
the final maturity date of the Refunding Bonds shall not be later than the final maturity date of
the Refunded Bonds, and (e) the costs of issuing the Refunding Bonds are estimated to be
$400,000. One or more private placement agreements, Bond Purchase Agreements, and one or
more Forward Delivery Agreements may be utilized if necessary or advisable in connection with
the issuance of the Standard Delivery Refunding Bonds and the Forward Delivery Refunding
Bonds, as determined by an Authorized Officer. The Authorized Officers, each acting alone, are
hereby authorized and directed, for and in the name and on behalf of the City, to execute and
deliver the Bond Purchase Agreement and the Forward Delivery Agreement in the form on file
with the City Clerk, with said additions or changes thereto (including the insertion of the
maturity dates, principal amounts and interest rates of the Refunding Bonds) and changes therein
as the Authorized Officers, each acting alone, may approve, in his or her discretion, as being in
the best interests of the City, such approval to be conclusively evidenced by the execution and
delivery thereof. The City Council further approves the issuance and delivery of the Refunding
Bonds to the Underwriter pursuant to the Paying Agent Agreements.
A negotiated sale has been selected by the City Council because it offers greater
flexibility than a public sale process in setting and changing the time and terms of the sale of the
Refunding Bonds, in structuring the Refunding Bonds to meet the particular needs of potential
investors, in enhancing the sale of the Refunding Bonds to local investors, in evaluating the
benefits of bond insurance, and in providing greater assurance that the tax outcome will conform
to the expectations of voters.
Secton 7. Approval of Preliminary and Final Official Statement. The form of the
Preliminary Official Statement is hereby approved. This City Council also hereby authorizes the
use and distribution of (i) the Preliminary Official Statement, with such changes as an
Authorized Officer may approve, such approval to be conclusively evidenced by an Authorized
Officer's execution of a certificate described below; and (ii) an Official Statement in
substantially the form of the Preliminary Official Statement, with such changes as may be
necessary or advisable in connection with the sale of the Refunding Bonds, as determined by an
Authorized Officer, such determination to be conclusively evidenced by the execution and
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4850-2602-3571.3 RESOLUTION NO. 2019-21
delivery of the Official Statement; and (iii) any amendments or supplements to the Preliminary
Official Statement or the Official Statement which an Authorized Officer may deem necessary or
desirable. Upon approval of the Preliminary Official Statement by an Authorized Officer, said
Authorized Officer shall execute a certificate deeming the Preliminary Official Statement final as
of its date, and upon such execution, the Preliminary Official Statement shall be deemed final as
of its date, except for the omission of certain information as provided in and pursuant to Rule
15c2-12 promulgated under the Securities Exchange Act.
Secton 8. Approval of Escrow Agreements. The proposed forms of Escrow
Agreements to be executed and delivered by the City and the Escrow Bank relating to the
defeasance and redemption of the Refunded Bonds which are on file with the City Clerk are
hereby approved, and the Authorized Officers, each acting alone, are hereby authorized and
directed, for and in the name and on behalf of the City, to execute and deliver the Escrow
Agreements in said form, with said additions thereto and changes therein as the Authorized
Officers, each acting alone, may approve, such approval to be conclusively evidenced by the
execution and delivery thereof.
Secton 9. Continuing Disclosure Certificate. The proposed form of Continuing
Disclosure Certificate to be executed and delivered by the City, for the benefit of the owners of
the Refunding Bonds and in order to assist the Underwriter in complying with Rule 15c2-
12(b)(5) of the Securities and Exchange Commission, as amended, which is on file with the City
Clerk as Appendix D to the Preliminary Official Statement, is hereby approved, and the
Authorized Officers, each acting alone, are hereby authorized and directed, for and in the name
and on behalf of the City, to execute and deliver one or more Continuing Disclosure Certificate
in said form, with said additions thereto and changes therein as the Authorized Officers, each
acting along, may approve, such approval to be conclusively evidence by the execution and
delivery thereof.
Secton 10. Delegation of Authoritv to Authorized Officer. The Authorized Officers
are hereby authorized and directed to execute, sign and deliver any and all agreements,
approvals, certificates, statements, requests, requisitions and orders of the City in connection
with the sale and issuance of the Refunding Bonds, the refunding or defeasance of the Refunded
Bonds and the other transactions described herein. The Authorized Officers may authorize such
other officers of the City as they deem appropriate to undertake any of the actions which he is
authorized or directed to undertake pursuant hereto
Secton 11. Consultants. The City Council hereby approves (i) Hilltop Securities Inc.,
as Underwriter in connection with the issuance of the Refunding Bonds, and as Placement Agent
in connection with the placement of the Refunding Bonds with the Purchaser, (ii) Nixon Peabody
LLP, as bond counsel and disclosure counsel in connection with the issuance of the Refunding
Bonds, (iii) N1UFG Union Bank, N.A., as Paying Agent for the Refunding Bonds and Escrow
Bank for the Refunded Bonds, and (iv) NHA Advisors, LLC, as municipal advisor for the
issuance of the Refunding Bonds and the Authorized Officers, each acting alone, are hereby
authorize to enter into agreements with each of said firms in connection with their providing
services with respect to the Refunding Bonds.
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4850-2602-3571.3 RESOLUTION NO. 2019-21
Secton 12. General Authoritv. The officers of the City are hereby authorized and
directed, jointly and severally, to do any and all things and to execute and deliver any and all
documents which they may deem necessary or advisable in order to consummate the transactions
described herein or to otherwise effectuate the purposes of this resolution, including preparing,
or causing to be prepared, and executing all appropriate disclosure documents relating to the
Refunding Bonds. Any such actions previously taken by such officers are hereby ratified and
confirmed.
Secton 13. Severability. If any section, paragraph or provision of this resolution shall
be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall
not affect any remaining provisions hereof.
Secton 14. Effective Date. This resolution shall become effective immediately upon
its adoption.
PASSED AND ADOPTED this 20t' day of May, 2019, by the following vote:
AYES: COUNCILMEMBERS: BLANKL,EY, LERO-MUNOZ,
MARQUES, TOVAR, TUCKER, AND
VELASCO
NOES:
ABSENT:
A TTFCT
COUNCILMEMBERS: NONE.
COUNCILMEMBERS: BRACCO.
APPRO`JED:
cv / / -
Rola icy Masco, Mayor
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4850-2602-3571.3 RESOLUTION NO. 2019-21
GOOD FAITH ESTIMATES
Set forth below are good faith estimates of NHA Advisors, Inc., the City's municipal
advisor, as required under Section 5852.1 of the California Government Code (the "Code") for
the City's 2019 General Obligation Refunding Bonds (the "Bonds"). The following estimates
have no bearing on, and should not be misconstrued as, any not -to -exceed financial
parameters authorized by resolution.
(a) The true interest cost of the Refunding Bonds is estimated at 3.04%, calculated as
provided in Section 5 852. 1 (a)(1)(A) of the Code.
(b) The finance charge of the Refunding Bonds, including all fees and charges paid to
third parties, is estimated at $385,000.
(c) Net Proceeds to be Received for the sale of the Bonds (net of finance charges,
reserves and capitalized interest, if any) is $28,405,000.
(d) The total payment amount calculated as provided in Section 5852.1(a)(1)(1)) of
the, Code is estimated at $3 8,175,000.
The foregoing are good faith estimates only, and the final costs will depend on market
conditions and can be expected to vary from the estimated amounts set forth above. The principal
amount of the Bonds, the true interest cost of the Bonds, 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 sale of the Bonds being different than
the date assumed for purposes of such estimates, (b) the actual principal amount of Bonds sold
being different from the estimated amount used for purposes of such estimates, (c) the actual
amortization of the Bonds being different than the amortization assumed for purposes of such
estimates, (d) the actual market interest rates at the time of sale of the Bonds being different than
those estimated for purposes of such estimates, (e) other market conditions, (f) federal tax law
advice from the City's bond counsel or (g) alterations in the City's financing plan, or a
combination of such factors. The actual date of sale of the Bonds and the actual principal amount
of Bonds sold will be determined by the City based on the timing of the need for proceeds of the
Bonds and other factors. The actual interest rates borne by the Bonds will depend on market
interest rates at the time of sale thereof. The actual amortization of the Bonds will also depend, in
part, on market interest rates at the time of sale thereof. Market interest rates are affected by
economic and other factors beyond the control of the City.
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4850-2602-3571.3
I, SUZANNE GUZZETTA, Deputy City Clerk of the City of Gilroy, do hereby certify
that the attached Resolution No. 2019-21 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 20d' day of May, 2019, 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 22nd day of May, 2019.
Aanneetta
Deputy City Clerk of the City of Gilroy
(Seal)