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REQUEST FOR
COUNCIL/SANTA ANA
i'
FINANCING AUTHORITY ACTION
CITY COUNCIL MEETING DATE:
DECEMBER 3, 2007
TITLE:
RESOLUTIONS APPROVING AGREEMENTS
AND FINANCING DOCUMENTS
FOR LOCAL STREET FINANCING
CLERK OF COUNCIL USE ONLY:
APPROVED
? As Recommended
? As Amended
? Ordinance on 15t Reading
? Ordinance on 2"d Reading
? Implementing Resolution
? Set Public Hearing For
CONTINUED TO
FILE NUMBER
RECOMMENDED ACTION
Adopt a resolution authorizing and directing the preparation and
execution of certain financing documents including a certificate purchase
agreement, and authorizing the distribution of an Official Statement.
Santa Ana Financing Authority
Adopt a resolution authorizing and directing the preparation and
execution of certain financing documents including a certificate purchase
agreement, and authorizing the distribution of an Official Statement.
DISCUSSION
The Public Works Agency has completed an inventory of all the City's
streets that includes their general lifespan condition. Based on staff's
assessment, an immediate infusion of funds to rebuild the City's
neighborhood streets will enhance the City's ability to address all
neighborhood streets and implement a long-term preventive maintenance
program. Based on this strategy, it is recommended that over the next
five years, $100 million be invested toward rebuilding and repairing City
streets. To achieve this initiative, bonds in the amount of $60 million
dollars are needed to complete the $100 million investment. Neighborhood
street improvements will include grind and overlay, reconstruction, and
critical concrete repair of sidewalk, curb and gutter.
2
Street Rehabilitation Financing
December 3, 2007
Page 2
In order to explore bonding alternatives and capacity, a financing team
consisting of a financial advisor (Fieldman, Rolapp & Associates), an
underwriter (De La Rosa & Co.), bond counsel (Orrick, Herrington &
Sutliff e), and disclosure counsel (Quint & Thimmig) was retained. Upon
evaluation the team is recommending the use of an installment-sale
Certificates of Participation (COP) financing structure that utilizes Gas
Tax Revenue as the pledge to repay the certificates.
The use of this innovative financing structure has several advantages.
First, it utilizes an existing, stable revenue source already designated
for the design, construction, maintenance, and operation of public
streets and highways. Second, it does not require the pledge of any
General Fund monies as collateral for debt payments. The COP installment
sale also allows bonding capacity to exceed the 25% debt service limit
allowed through a straight revenue bond structure as authorized under the
California Streets and Highways Code. Lastly, the financing structure is
exempt from the State's constitutional debt limit thereby preserving the
City's ability to capitalize on existing bond capacity should it be
necessary in the future.
On August 20, 2007 the City Council approved the execution of the
Installment Sales Agreement between the City of Santa Ana and the Santa
Ana Financing Authority. The agreement permits the purchase of the street
improvements from the Santa Ana Financing Authority who then assigns the
improvements back to the City for completion. In addition, Council
approved a Trust Agreement between the Santa Ana Financing Authority and
the Bank of New York. The Trust Agreement reassigns all debt payments to
the Bank of New York as the trustee. Finally, the Council authorized the
City to initiate the validation process that assigns the use of Gas Tax
revenues as a special fund and pledge. On November 16, 2007, a judgment
was entered by the Orange County Superior Court validating the use of the
gas tax pledge. A 30-day appeal period will expire on December 16, 2007.
In conjunction, City staff along with Fieldman, Rolapp and Associates
(financial advisor) and De La Rosa & Co (underwriter) prepared a credit
presentation for Standard & Poor's consideration. Recently, the City
received a solid A credit rating and is now preparing for the bond
insurance solicitation process. Upon Council approval of the recommended
action and conclusion of the 30-day appeal period, bond certificate
pricing and issuance will commence. It is anticipated that bond closing
would occur during the latter part of December.
In an adjoining action the Public Works Agency is requesting the addition
of two Assistant Engineer II positions and one Construction Inspector II
position. The positions will provide much needed assistance in the design
and inspection of the $100 million dollar Neighborhood Street initiative.
Street Rehabilitation Financing
December 3, 2007
Page 3
FISCAL IMPACT
Approval of the resolutions and related agreements authorizes staff to
prepare certain financing documents relating to local street improvements
totaling $60 million dollars. A total cap including issuance costs is not
to exceed $70 million and 6% per annum.
James G. oss
Executive Director
Public Works Agency
APPROVED AS TO FUNDS AND ACCOUNTS:
Francisco Gutierrez
Executive Director
Finance & Management Services Agency
JWF 11/19/2007
RESOLUTION NO. SAFA- 2007-
A RESOLUTION OF THE GOVERNING BOARD OF THE
SANTA ANA FINANCING AUTHORITY AUTHORIZING THE
EXECUTION AND DELIVERY OF A CERTIFICATE
PURCHASE AGREEMENT, AND OTHER MATTERS
RELATING THERETO, AND AUTHORIZING THE EXECUTION
OF NECESSARY DOCUMENTS AND CERTIFICATES AND
RELATED ACTIONS, AND RATIFYING ACTION PREVIOUSLY
TAKEN OR APPROVED TO BE TAKEN, INCLUDING THE
EXECUTION AND DELIVERY OF AN INSTALLMENT SALE
AGREEMENT AND THE EXECUTION AND DELIVERY OF
CITY OF SANTA ANA, CALIFORNIA, GAS TAX REVENUE
CERTIFICATES OF PARTICIPATION (2007 LOCAL STREET
IMPROVEMENT PROJECT) PURSUANT TO A TRUST
AGREEMENT.
BE IT RESOLVED BY THE GOVERNING BOARD OF THE SANTA ANA
FINANCING AUTHORITY AS FOLLOWS:
Section 1. The Governing Board of the Santa Ana Financing Authority hereby
finds, determines and declares as follows:
A. The Santa Ana Financing Authority (the "Authority") is empowered to
assist the City of Santa Ana (the "City") in financing certain public capital
improvements pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of
the Government Code of the State of California and pursuant to that
certain Joint Exercise of Powers Agreement by and between the City of
Santa Ana and the Community Redevelopment Agency of the City of
Santa Ana, dated August 1, 1993;
B. The City and the Authority, pursuant to Resolution No. SAFA-2007-002,
adopted by the Authority on August 20, 2007 (the "Initial Authority
Resolution"), have previously determined to enter into a 2007 Installment
Sale Agreement with the Authority (the "Installment Sale Agreement") in
order to apply certain motor vehicle fuel tax revenues received by the City
to acquire certain public capital improvements consisting of street
resurfacing and related improvements (as more fully described in the
Installment Sale Agreement, the "Improvements") for the benefit of the
City in accordance with Article XIX, Section 1 of the California Constitution
(collectively, the "Street Improvement Project");
C. In order to provide for the delivery of the City of Santa Ana, California, Gas
Tax Revenue Certificates of Participation (2007 Local Street Improvement
Project) (the "Certificates") and to establish and declare the terms and
conditions upon which the Certificates are to be executed and delivered
Resolution No. 2007-XXX
Page 1 of 4
and secured, the Authority has previously determined to enter into a Trust
Agreement with The Bank of New York Trust Company, N.A. (the "Trust
Agreement");
D. E.J. De La Rosa & Co., Inc., as underwriter (the "Underwriter"), has
submitted to the City and the Authority a proposed form of an agreement
to purchase the Certificates in the form of a Certificate Purchase
Agreement (the "Certificate Purchase Agreement");
E. The Governing Board has been presented with the form of each document
referred to herein relating to the financing contemplated hereby, and the
Board has examined and approved each document and desires to
authorize and direct the execution of such documents and the
consummation of such financing; and
F. 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 such 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
Authority 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.
Section 2. The form of Certificate Purchase Agreement, on file with the
Secretary of the Authority, is hereby approved, and the Executive Director, the
Treasurer, the Authority Counsel, the Secretary and the Controller of the Authority (the
"Authorized Officers") are each hereby authorized and directed, for and in the name and
on behalf of the City, to execute and deliver the Certificate Purchase Agreement in
substantially said form, with such changes therein as the Authorized Officer executing
the same may require or approve, such approval to be conclusively evidenced by the
execution and delivery thereof; provided, however, that the aggregate amount of the
Certificates shall not exceed $70,000,000, the final maturity date of the Certificates shall
be no later than January 1, 2040, the true interest cost applicable to the Certificates
shall not exceed 6.00% per annum and the underwriter's discount for the sale of the
Certificates shall not exceed 1.0% of the aggregate principal amount of such
Certificates.
Section 3. The execution and delivery of not to exceed $70,000,000 aggregate
principal amount of the Certificates, in the principal amounts, bearing interest at the
rates and maturing on the dates as specified in the Trust Agreement as finally executed,
is hereby authorized and approved.
Section 4. The officers and agents of the Authority are hereby authorized and
directed, jointly and severally, to do any and all things which they may deem necessary
or advisable in order to consummate the transactions herein authorized and otherwise
to carry out, give effect to and comply with the terms and intent of this Resolution,
Resolution No. 2007-XXX
Page 2 of 4
including, without limitation, negotiating the terms of an insurance policy and/or a
reserve surety bond to the extent such insurance and surety bond is determined to be
economically advantageous.
Section 5. All of the findings, terms and provisions of the Initial Authority
Resolution are hereby ratified, confirmed and approved.
Section 6. All actions heretofore taken by the officers and agents of the
Authority with respect to the transactions set forth above are hereby approved,
confirmed and ratified.
Section 7. This Resolution shall take effect immediately upon its adoption by
the Governing Board of the Authority, and the Secretary of the Authority shall attest to
and certify the vote adopting this Resolution.
ADOPTED this 3rd day of December, 2007.
Miguel A. Pulido
Chairman
APPROVED AS TO FORM:
By:
Joseph W. Fletcher, Authority Counsel
AYES:
Authority members.
NOES: Authority members
ABSTAIN: Authority members
NOT PRESENT: Authority members
Resolution No. 2007-XXX
Page 3 of 4
CERTIFICATE OF A TTESTA TION AND ORIGINALITY
I, PATRICIA E. HEALY, Secretary of the Authority, do hereby attest to and certify the
attached Resolution No. SAFA 2007- be the original resolution adopted by the
Governing Board of the Santa Ana Financing Authority on December_, 2007.
Date:
Secretary
Santa Ana Financing Authority
Resolution No. 2007-XXX
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