Resolution No. 2022-06 | Authorizing Issuance of Bonds | Adopted 01/24/2022
Resolution No. 2022-06 Page 1 of 4 January 24, 2022
RESOLUTION NO. 2022-06
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GILROY AUTHORIZING THE ISSUANCE OF BONDS TO
REFUND CERTAIN PENSION OBLIGATIONS OF THE
CITY, APPROVING THE FORM AND AUTHORIZING THE
EXECUTION OF A TRUST AGREEMENT, AUTHORIZING
JUDICIAL VALIDATION PROCEEDINGS RELATING TO
THE ISSUANCE OF SUCH BONDS AND APPROVING
ADDITIONAL ACTIONS RELATED THERETO
WHEREAS, the City of Gilroy (the “City”) has previously adopted a retirement plan
pursuant to the Public Employees’ Retirement Law, commencing with Section 20000 of the
Government Code of the State of California, as amended (the “Retirement Law”) and elected to
become a contracting member of the California Public Employees’ Retirement System (“PERS”);
WHEREAS, the Retirement Law and the contract (the “PERS Contract”) between the
Board of Administration of PERS and the City Council of the City (the “City Council”) obligate
the City to (i) make contributions to PERS to fund pension benefits for certain City employees,
(ii) amortize the unfunded accrued actuarial liability with respect to such pension benefits, and
(iii) appropriate funds for the foregoing purposes;
WHEREAS, the City desires to authorize the issuance of its Taxable Pension Obligation
Bonds (the “Bonds”) pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of
Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said
Code (the “Bond Law”), in a maximum principal amount not to exceed that required for the
purpose of refunding all or a portion of the City’s current obligation to PERS for fiscal year 2022-
23, pursuant to the PERS Contract, to pay all or a portion of the unfunded accrued actuarial liability
of the City (the “Unfunded Liability”) with respect to pension benefits under the Public
Employees’ Retirement Law and the PERS Contract, to pay capitalized interest on the Bonds and
to pay the costs of issuance of such Bonds, including the underwriter’s discount and an y original
issue discount on such Bonds;
WHEREAS, the City expects that the need may arise in the future to issue additional
refunding bonds (the “Additional Bonds”) pursuant to the Bond Law to amortize the accrued and
Unfunded Liability of the City to PERS as required by the Retirement Law and the PERS Contract
and to fund all or a portion of the normal contributions required by the PERS Contract;
WHEREAS, the Bonds will be issued under and secured by a Trust Agreement (such Trust
Agreement, in the form presented to this meeting, with such changes, insertions and omissions as
are made pursuant to this Resolution, being referred to herein as the “Trust Agreement”); and
WHEREAS, the City has determined the advisability of filing an action to determine the
validity of the Bonds, the Additional Bonds and the Trust Agreement, and the actions proposed to
be taken in connection therewith;
WHEREAS, in compliance with SB 450, the City has obtained from its Municipal Advisor
the required good faith estimates and such estimates are disclosed and set forth in Exhibit A
attached hereto; and
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Resolution No. 2022-06 Page 2 of 4 January 24, 2022
WHEREAS, all acts, conditions and things required by the laws of the State of California
to exist, to have happened and to have been performed precedent to and in connection with the
consummation of the financing authorized hereby do exist, have happened and have been
performed in regular and due time, form and manner as required by law, and the City is now duly
authorized and empowered, pursuant to each and every requirement of law, to consummate such
financing for the purpose, in the manner and upon the terms herein provided;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Gilroy as
follows:
The City Council does hereby find and declare that the above recitals are
true and correct.
The issuance of the Bonds on the terms and conditions set forth in, and
subject to the limitations specified in, the Trust Agreement, is hereby authorized and approved.
The Bonds shall be dated, shall bear interest at the rates, shall mature on the dates, shall be issued
in the form and shall have terms as provided in the Trust Agreement, as the same shall be
completed in accordance with this Resolution. The title of the Bonds may be changed to reflect
the year in which the Bonds are issued, and to reflect the appropriate series designation, as directed
by the City Administrator of the City.
The Trust Agreement, in substantially the form submitted to this meeting
and made a part hereof as though set forth in full herein, is hereby approved. The Mayor of the
City, or such member of the City Council as the Mayor may designate, the City Administrator of
the City, the Finance Director of the City, and their authorized designees (the “Authorized
Officers”) are, and each of them is, hereby authorized and directed, for and in the name of the City,
to execute and deliver the Trust Agreement in the form presented to this meeting, with such
changes, insertions and omissions as the Authorized Officer executing the same may require or
approve, such requirement or approval to be conclusively evidenced by the execution of the Trust
Agreement by such Authorized Officer. The City Clerk of the City is hereby authorized and
directed to attest the Trust Agreement for and in the name and on behalf of the City.
The City hereby authorizes and approves the issuance of Additional Bonds
pursuant to the Bond Law, as authorized by the Trust Agreement, from time to time, to refund all
or a portion of the Unfunded Liability and the City’s obligation to PERS pursuant to the PERS
Contract for the then-current fiscal year, provided that the City Administrator, or his designee, first
certifies to the Council in writing that such actions will result in cost savings to the City. The City
authorizes any one of the Authorized Officers, or their designees, to execute and deliver one or
more other trust agreements and/or one or more supplemental agreements supplementing or
amending the Trust Agreement and providing for the issuance of Additional Bonds (each an
“Additional Trust Agreement”); provided, however, that (i) each series of Additional Bonds shall
be in a principal amount not to exceed the sum of the Unfunded Liability of the City to PERS
under the PERS Contract and the Retirement Law remaining unpaid on the date of issuance of
such Additional Bonds, the obligation to PERS for the current fiscal year pursuant to the PERS
Contract and the costs of issuing the Additional Bonds, (ii) the stated interest rate on the Additional
Bonds shall not exceed the discount rate assumed by PERS with respect to the amortization of the
Unfunded Liability at the time such Additional Bonds are issued, and (iii) the Additional Bonds
issued pursuant to such Additional Trust Agreement shall mature not later than 30 years from the
date of their issuance.
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Resolution No. 2022-06 Page 3 of 4 January 24, 2022
Each Unfunded Liability refunded by the Bonds and each series of Additional Bonds
pursuant to the Trust Agreement and each Additional Trust Agreement constitutes an obligation
imposed by law, pursuant to the Constitution and laws of the State of California and an obligation
of the City not limited as to payment from any special source of funds. The Unfunded Liability
refunded by the Bonds pursuant to the Trust Agreement and each series of Additional Bonds
pursuant to an Additional Trust Agreement shall not, however, constitute an obligation of the City
for which the City is obligated or permitted to levy or pledge any form of taxation or for which the
City has levied or pledged or will levy or pledge any form of taxation.
The City Administrator of the City, the Finance Director of the City, and
their designees are each authorized, on behalf of the City, to establish and determine (i) the final
principal amount of the Bonds, provided the aggregate initial principal amount of the Bonds shall
not be greater than the sum of the City’s obligation to PERS for fiscal year 2022-23, as evidenced
by the PERS Contract, and the Unfunded Liability as calculated by PERS or other actuary selected
by the Authorized Officer, together with the costs of issuing the Bonds as approved by such
Authorized Officer, and (ii) the final interest rates on various maturities of the Bonds, provided
that the maturity date of the Bonds shall not exceed 30 years.
The City Administrator of the City, the Finance Director of the City, and
their respective designees are hereby authorized to negotiate and execute an insurance policy and
debt service reserve fund insurance policy for the Bonds (and such other agreements that may be
required by the insurer in connection therewith) if it is determined that the policies will result in
interest rate savings for the City, and to pay the insurance premium of such policies from the
proceeds of the issuance and sale of the Bonds.
The Authorized Officers are each authorized to execute contracts with
Nixon Peabody LLP, to act as Bond and Disclosure Counsel, and with NHA Advisors, LLC, to
act as Municipal Advisor.
In order to determine the validity of the Bonds, the Additional Bonds, the
Trust Agreement and the Additional Trust Agreements, and the actions authorized hereby to be
taken in connection therewith, the City Council hereby authorizes the City Attorney, in concert
with Nixon Peabody LLP, Bond Counsel, to prepare and cause to be filed and prosecuted to
completion all proceedings required for the judicial validation of the Bonds, the Additional Bonds,
the Trust Agreement and the Additional Trust Agreements in the Superior Court of Santa Clara
County, under and pursuant to the provisions of Sections 860 et seq. of the California Code of
Civil Procedure. The City Council further authorizes the Authorized Officers and all other
officers, employees and agents of the City to take any and all actions, including the execution and
delivery or appropriate documentation, as may be required to conclude such jud icial validation
proceedings.
The Authorized Officers are, and each of them hereby is, authorized and
directed to execute and deliver any and all documents and instruments and to do and cause to be
done any and all acts and things necessary or proper for carrying out the transactions contemplated
hereby, including, but not limited to, the preparation of an Official Statement (and a Preliminary
Official Statement) for use in connection with the offering and sale of the Bonds, the execution
and delivery of a continuing disclosure undertaking and the execution and delivery of any
documents required by PERS in order to complete the issuance of the Bonds.
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Resolution No. 2022-06 Page 4 of 4 January 24, 2022
All actions heretofore taken by the Authorized Officers and by any other
officers, employees or agents of the City with respect to the issuance of the Bonds, or in connection
with or related to any of the agreements or documents referenced herein, are hereby approved,
confirmed and ratified.
This Resolution shall take effect from and after the date of approval and
adoption hereof.
The City Clerk of the City of Gilroy shall certify as to the adoption of this Resolution.
PASSED AND ADOPTED by the City Council of the City of Gilroy this 24th day of
January 2022, by the following vote:
AYES: COUNCIL MEMBERS: ARMENDARIZ, BRACCO, LEROE-
MUÑOZ, MARQUES, TOVAR,
BLANKLEY
NOES: COUNCIL MEMBERS: NONE
ABSTAIN: COUNCIL MEMBERS: NONE
ABSENT: COUNCIL MEMBERS: HILTON
APPROVED:
Marie Blankley, Mayor
ATTEST: APPROVED AS TO FORM:
Thai Nam Pham, City Clerk Andy Faber, City Attorney
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EXHIBIT A
SB 450 GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Bonds in
accordance with California Government Code Section 5852.1. Such good faith estimates have
been provided to the City by NHA Advisors, LLC, the City’s Municipal Advisor (the “Municipal
Advisor”).
Principal Amount. The Municipal Advisor has informed the City that, based on the City’s
financing plan and current market conditions, its good faith estimate of the aggregate principal
amount of the Bonds to be sold is $75,880,000.00 (the “Estimated Principal Amounts”).
True Interest Cost of the Bonds. The Municipal Advisor has informed the City that,
assuming that the respective Estimated Principal Amounts of the Bonds are sold, and based on
market interest rates prevailing at the time of preparation of such estimate, its good faith estimate
of the true interest cost of the Bonds, which means the rate necessary to discount the amounts
payable on the respective principal and interest payment dates to the purchase price received for
the Bonds, is 3.1922128%.
Finance Charge of the Bonds. The Municipal Advisor has informed the City that,
assuming that the Estimated Principal Amounts of the Bonds are sold, and based on market interest
rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance
charge for the Bonds, which means the sum of all fees and charges paid to third parties (or cost s
associated with the Bonds), is $578,520.00.
Amount of Proceeds to be Received. The Municipal Advisor has informed the City that,
assuming that the Estimated Principal Amounts of the Bonds are sold, and based on market interest
rates prevailing at the ti me of preparation of such estimate, its good faith estimate of the amount
of proceeds expected to be received by the City for sale of the Bonds, less the finance charge of
the Bonds, as estimated above, and any capitalized interest on the Bonds paid or funded with
proceeds of the Bonds, is $75,301,480.00.
Total Payment Amount. The Municipal Advisor has informed the City that, assuming that
the Estimated Principal Amounts of the Bonds are sold, and based on market interest rates
prevailing at the time of preparation of such estimate, its good faith estimate of the total payment
amount, which means the sum total of all payments the City will make to pay debt service on the
Bonds, plus the finance charge for the Bonds, as described above, not paid with the respective
proceeds of the Bonds, calculated to the final maturity of the Bonds, is $100,531,494.88.
The foregoing estimates constitute good faith estimates only and are based on market
conditions prevailing at the time of preparation of such estimates on January 13, 2022. The actual
principal amount of the Bonds issued and sold, the true interest cost thereof, 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 respective Estimated Principal Amounts, (c) the actual
amortization of the Bonds being different than the amortization assumed for purposes of such
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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, or (f) 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 various
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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CERTIFICATE OF THE CLERK
I, THAI NAM PHAM, City Clerk of the City of Gilroy, do hereby certify that the attached
Resolution No. 2022-06 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 held on Council
held Monday, January 24, 2022, 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 Monday, January 24, 2022.
____________________________________
Thai Nam Pham, CMC, CPMC
City Clerk of the City of Gilroy
(Seal)
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