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2024-01 Financing of Revenue Bonds NE Corner of Highway 101 and La Costa AvenueRESOLUTION NO. FA-2024-01 RESOLUTION OF THE BOARD OF DIRECTORS OF THE ENCINITAS PUBLIC FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF ITS REVENUE BONDS IN THE ORIGINAL PRINCIPAL AMOUNT OF NOT TO EXCEED $6,000,000 IN CONNECTION WITH THE FINANCING OF THE ACQUISITION OF THE CERTAIN REAL PROPERTY AUTHORIZING AND DIRECTING EXECUTION OF AN INDENTURE OF TRUST, A LEASE AGREEMENT, AN AGENCY AGREEMENT, A BOND PURCHASE AGREEMENT AND AUTHORIZING AN OFFICIAL STATEMENT AND OTHER OFFICIAL ACTIONS AND EXECUTION OF RELATED DOCUMENTS WHEREAS, the Encinitas Public Financing Authority (the “Authority”) has been formed pursuant to a Joint Exercise of Powers Agreement by and among the City of Encinitas (the “City”), Cardiff Sanitation District, Encinitas Fire Protection District, Encinitas Sanitation District and the San Dieguito Water District and is authorized under said Agreement and under the laws of the State of California to finance the acquisition and construction of public capital improvements for the City; and WHEREAS, the City has requested the Authority to issue its bonds for the purpose of providing funds to enable the City to finance certain improvements of benefit to the City, specifically the costs of acquisition of certain real property within the City, known as Assessor’s Parcel Numbers 216-042-01-00 and 216-042-05-00 (the “Project”); and WHEREAS, to provide such financing for the Project, the Authority proposes to issue its lease revenue bonds in an aggregate principal amount of not to exceed $6,000,000 under the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Act”), such Bonds may be issued in one or more series in such amounts as may be determined by the Authority as stated herein, and which are proposed to be payable from the revenues to be derived by the Authority from lease payments to be made by the City for the lease of certain facilities pursuant to that certain Lease Agreement relating to the financing of the Project (the “Lease Agreement”), and the lease and sublease of the Leased Premises (as defined below); and WHEREAS, the City Council has determined that the Project property should be the leased assets under the Lease Agreement (the “Leased Premises”); and WHEREAS, a portion of the proceeds of the Bonds will be deposited in the Acquisition and Construction Fund to be established pursuant to the Indenture of Trust which is hereinafter approved, and will be applied by the Authority and the City to the acquisition, construction and installation of the Project pursuant to an Agency Agreement between the Authority and the City; and 26353.00023\42039402.4 DocuSign Envelope ID: B0C00564-651C-483E-B135-C5BA62595C58 2 WHEREAS, Hilltop Securities Inc. (the “Underwriter”) has proposed to purchase and underwrite the Bonds and has presented to the Authority a form of Bond Purchase Agreement for the Bonds, to be entered into by and among the Authority, the City, and the Underwriter (the “Bond Purchase Agreement”) and there is also presented the Authority with a proposed form of Official Statement describing the Bonds, to be used in connection with the marketing thereof by the Underwriter; and WHEREAS, Section 5852.1 of the California Government Code (“Section 5852.1”) provides that the Authority shall obtain from an underwriter, financial advisor, or private lender and disclose, in a meeting open to the public prior to authorization of the issuance of the Bonds, good faith estimates of (a) the true interest cost of the Bonds, (b) the finance charge of the Bonds, meaning the sum of all fees and charges paid to third parties, (c) the amount of proceeds of the Bonds received less the finance charge described above and any reserves or capitalized interest paid or funded with proceeds of the Bonds, and (d) the sum total of all debt service payments on the Bonds calculated to the final maturity of the Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Bonds; and WHEREAS, in accordance with Section 5852.1, the Authority has obtained such good faith estimates from Urban Futures, Inc., the Authority’s and City’s municipal advisor (the “Municipal Advisor”), and such estimates are disclosed in Exhibit A attached hereto; and WHEREAS, the Board of Directors of the Authority (the “Board”) has duly considered such transactions and has determined that it approves said transactions in the public interests of the City and the Authority. NOW THEREFORE, BE IT RESOLVED by the Board of the Encinitas Public Financing Authority as follows: Section 1. Findings and Determinations. A. Pursuant to the Act, the Board hereby finds and determines that the issuance of the Bonds will provide a more efficient delivery of governmental services within the City and will result in significant public benefits within the contemplation of Section 6586 of the Act. B. The Board finds and determines that the above recitals are true and correct and that the fair rental value of Leased Premises exceeds the present value of Lease Payments to be made under the Lease Agreement. C. The Board finds that a negotiated sale with the Underwriter will result in time savings and sale effectiveness for the Bonds. Section 2. Issuance of Bonds. The Board hereby authorizes the issuance of the Bonds for the purpose of funding the Project under and pursuant to the Act, in the maximum original principal amount not to exceed $6,000,000. The Bonds may be issued in one or more series. Section 3. Approval of Financing Documents. The Board hereby approves each of the following documents in substantially the respective forms on file with the Secretary, together with DocuSign Envelope ID: B0C00564-651C-483E-B135-C5BA62595C58 3 such additions thereto and changes therein as Bond Counsel shall deem necessary, desirable, or appropriate, the execution of which by the Chairperson, the Vice Chairperson, the Executive Director, or the Treasurer (each an “Authorized Officer”) shall be conclusive evidence of the approval of any such additions and changes: A. that certain Indenture of Trust, by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), establishing the terms and conditions pertaining to the issuance, sale, and administration of the Bonds (the “Indenture of Trust”); B. the Lease Agreement, by and between the Authority and the City relating to the lease and sublease of the Leased Premises; C. the preliminary official statement describing the City, the Authority, and the Bonds (the “Preliminary Official Statement”); D. the Agency Agreement, by and between the Authority and the City; E. The Continuing Disclosure Certificate relating to the Bonds; F. The Assignment Agreement, by and between the Authority and the Trustee; and G. the Bond Purchase Agreement, by and among the Authority, the Community Facilities District and the Underwriter (the “Bond Purchase Agreement”), relating to the purchase of the 2024 Authority Bonds by the Underwriter and the purchase of the Special Tax Refunding Bonds by the Authority. The Authorized Officers are each, acting alone, hereby authorized and directed to execute, and the Secretary is hereby authorized and directed to attest and affix the seal of the Authority to, the final form of each of the foregoing documents and agreements for and in the name and on behalf of the Authority, with such addition and changes thereto as deemed necessary, desirable or appropriate by Bond Counsel. The Board hereby authorizes the delivery and performance of each of the foregoing documents and agreements. Section 4. Sale of Bonds. The Board hereby approves the sale of the Bonds by the Authority by negotiated sale with the Underwriter, pursuant to the Bond Purchase Agreement in substantially the form on file with the Secretary, together with such additions thereto and changes therein as Bond Counsel shall deem necessary, desirable, or appropriate, the execution of which by an Authorized Officer shall be conclusive evidence of the approval of any such additions and changes. The Authorized Officers are hereby each, acting alone, authorized and directed to execute the final form of the Bond Purchase Agreement for and in the name and on behalf of the Authority upon the submission of an offer by the Underwriter to purchase the Bonds, which offer is consistent with the requirements of this Resolution. The amount of Underwriter’s discount for the Bonds shall be not more than 0.80% of the aggregate principal amount thereof, and the true interest cost of the Bonds shall not exceed four and seventy-five hundredths percent (4.75%). Section 5. Official Statement; Continuing Disclosure. The Board hereby approves the preparation of, and hereby authorizes the Executive Director or the Treasurer to deem final within DocuSign Envelope ID: B0C00564-651C-483E-B135-C5BA62595C58 4 the meaning of Rule 15c2-12 of the Securities and Exchange Commission except for permitted omissions, a preliminary form of Official Statement of the Bonds. The Executive Director and the Treasurer are each, acting alone, hereby authorized to execute the final Official Statement in the name and on behalf of the Authority, including any modifications resulting from additions thereto and changes therein as Bond Counsel shall deem necessary, desirable, or appropriate, with the execution of the final Official Statement by an Authorized Officer to be conclusive evidence of the approval of any such additions and changes. The Executive Director or the Treasurer are each, acting alone, further authorized to sign on behalf of the Authority the Continuing Disclosure Certificate with respect to the financing, in such form as may be approved by Bond Counsel. Section 6. Bond Purchase Agreement. The Authorized Officer are each, acting alone, hereby authorized and directed to negotiate and evidence the Authority’s acceptance of the offer made by a Bond Purchase Agreement by executing and delivering such Bond Purchase Agreement in substantially the form on file with the Secretary, together with such additions or changes thereto as deemed necessary, beneficial, or desirable by Bond Counsel, such approval to be conclusively evidenced by the execution and delivery thereof. Section 7. Appointment of Professionals. (a) Underwriter. Hilltop Securities Inc. is hereby selected as the Underwriter for the Bonds. (b) Municipal Advisor. Urban Futures, Inc. is hereby appointed to serve as the municipal advisor to the Authority in connection with the issuance of the Bonds. (c) Bond and Disclosure Counsel. Best Best & Krieger LLP is hereby appointed to serve as Bond and Disclosure Counsel to the Authority in connection with the issuance of the Bonds. (d) Trustee. U.S. Bank Trust Company, National Association is hereby selected as the Trustee under the Indenture of Trust. Section 8. Official Actions. The Authorized Officers, the Secretary, and any and all other officers of the Authority are hereby authorized and directed, for and in the name and on behalf of the Authority, to do any and all things and take any and all actions, including obtaining title insurance for the Leased Premises, obtaining a rating on the Bonds, and including execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they, or any of them, may deem necessary or advisable in connection with the issuance and sale of the Bonds. Section 9. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. NOW THEREFORE, BE IT FURTHER RESOLVED that this action is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Section 15378(b)(5) of the CEQA Guidelines, as an organizational or administrative activity of government that will not result in a direct or indirect physical change in the environment. DocuSign Envelope ID: B0C00564-651C-483E-B135-C5BA62595C58 5 PASSED, APPROVED AND ADOPTED this 17th day of April, 2024 by the Board of Directors of the Encinitas Public Financing Authority, City of Encinitas, State of California. Tony Kranz, Chair ATTEST: Kathy Hollywood, Board Secretary APPROVED AS TO FORM: Tarquin Preziosi, Board Attorney CERTIFICATION: I, Kathy Hollywood, Board Secretary of the Encinitas Public Financing Authority, do hereby certify under penalty of perjury that the foregoing Resolution was duly adopted at a regular meeting of the Board of Directors of the Encinitas Public Financing Authority on the 17th day of April, 2024, by the following vote: AYES: Blackwell, Ehlers, Hinze, Kranz, Lyndes NOES: None ABSENT: None ABSTAIN: None Kathy Hollywood, Board Secretary DocuSign Envelope ID: B0C00564-651C-483E-B135-C5BA62595C58 A-1 EXHIBIT A 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 Authority by the Municipal Advisor in consultation with the Underwriter. Principal Amount. The Municipal Advisor has informed the Authority that, based on the financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Bonds to be sold is $5,715,000 (the “Estimated Principal Amount”). True Interest Cost of the Bonds. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of the Bonds is 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 4.43%. Finance Charge of the Bonds. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of Bonds is 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 costs associated with the Bonds), is $195,720. Amount of Proceeds to be Received. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the Authority for the sale of the Bonds, less the finance charge of the Bonds, as estimated above, and any reserve fund paid or funded with proceeds of the Bonds $5,726,029. Total Payment Amount. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of the Bonds is 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 Authority will make to pay debt service on the Bonds, plus the finance charge for the Bonds, as described above, not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $10,754,497. The foregoing estimates constitute good faith estimates only. 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 Estimated Principal Amount, (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, or alterations in the financing plan or finance charges, DocuSign Envelope ID: B0C00564-651C-483E-B135-C5BA62595C58 A-2 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 Authority 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 Authority. DocuSign Envelope ID: B0C00564-651C-483E-B135-C5BA62595C58