EXHIBIT B
FORM OF NOTICE OF SALE
$50,000,000*
CITY OF EMERYVILLE
(Alameda County, California)
General Obligation Bonds,
Election of 2018, Series 2023
(Housing Projects)
(Federally Taxable) (Social Bonds)
NOTICE IS HEREBY GIVEN that electronic bids only for the purchase of $50,000,000* aggregate principal amount of City of Emeryville (Alameda County, California) General Obligation Bonds, Election of 2018, Series 2023 (Housing Projects) (Federally Taxable) (Social Bonds) (the “Bonds”), will be received by the City of Emeryville (the “City”) at the time and in the form below specified:
DATE AND TIME: Wednesday, April 26, 2023 (the “Bid Date”), at or before 8:30 A.M. (Pacific Daylight time).
SUBMISSION OF BIDS: Bids may be submitted (for receipt not later than the time set forth above) electronically only through the I-Deal LLC BiDCOMP/PARITY® system (“PARITY®”). See “FORM OF BID” herein.
Bidders should be aware that the par amount of the Bonds may be increased or reduced. See “ADJUSTMENT OF PRINCIPAL AMOUNTS AND OF MATURITIES” below.
Any questions on the bidding procedures and sale terms set forth in this Notice of Sale, or any modification or amendment thereof, or any postponement or cancelation of the sale of the Bonds, should be directed to KNN Public Finance, LLC (“Municipal Advisor”), Attention: Melissa Shick, telephone (5110) 208-8226, email: [email protected].
ISSUE; BOOK ENTRY: $50,000,000* Bonds consisting of fully registered bonds. The Bonds will be dated as of their date of delivery, expected to be May 10, 2023 (the “Closing Date”), and will be issued in minimum denominations of $5,000. The Bonds will be issued in a book entry only system with no physical distribution of the Bonds made to the public. The Depository Trust Company (“DTC”), will act as depository for the Bonds which will be immobilized in its custody. The Bonds will be registered in the name of Cede & Co., as nominee for DTC, on behalf of the participants in the DTC system and the subsequent beneficial owners of the Bonds.
MATURITIES: The Bonds will mature on the dates and in the principal amounts, as set forth in the following table.
Maturity Date
Principal
Maturity Date
Principal
(August 1)
Amount*
(August 1)
Amount*
2024
2037
2025
2038
2026
2039
2027
2040
2028
2041
2029
2042
2030
2043
2031
2044
2032
2045
2033
2046
2034
2047
2035
2048
2036
ADJUSTMENT OF PRINCIPAL AMOUNTS AND OF MATURITIES: The maturity amounts set forth above for the Bonds reflect certain estimates of the City with respect to the likely interest rates of the winning bid and underwriting discount contained in the winning bid. Potential bidders will be notified through PARITY® no later than 1:00 p.m. (Pacific Daylight time) on the business day prior to the date bids are to be received of any change to the principal payment schedule for the Bonds to be utilized for the bidding process. The final maturity schedule will be designed so that the financing objectives of the City will be met.
The City reserves the right to decrease the aggregate principal amount of the Bonds following the submission of the bids. Each principal payment is subject to increase or decrease in $5,000 increments without limitation. The winning bidder may not withdraw its bid or change its interest rates bid as a result of any changes made to the principal amounts. Subsequent to the adjustment of principal payments, the dollar amount of the purchase price will be changed so that the net compensation to the winning bidder expressed as a percentage of the aggregate principal amount of Bonds) does not increase or decrease from what it would have been if no adjustment had been made to the principal amounts, taking into consideration the reoffering yields for the different maturities.
Serial Bonds and/or Term Bonds: Bidders may provide that all the Bonds be issued as serial bonds or may provide that any one or more consecutive annual principal amounts be combined into one or more term bonds.
INTEREST: Bidders must specify the rate of interest that the Bonds will bear, subject to the following limitations. Interest on the Bonds will accrue from the Closing Date and will be calculated on a 360 day basis, consisting of twelve 30-day months. Interest on the Bonds will be payable semi-annually on each February 1 and August 1, commencing February 1, 2024. Bidders may specify any number of separate rates and the same rate or rates may be repeated as often as desired, but:
No Bond may bear an interest rate greater than 8% per annum The true interest cost shall not exceed 8%
No Bond shall bear a zero rate of interest
No Bond shall bear more than one rate of interest
Each interest rate specified in any bid must be in a multiple of 1/1000 of one percent (e.g., 0.001%) per annum Each Bond shall bear interest from its date of delivery to its stated maturity date or earlier redemption at the interest rate specified in the applicable bid Bids that do not conform to the terms of this section may be rejected.
PURCHASE PRICE: Bidders may not bid a gross purchase price of less than 100% of the aggregate principal amount of the Bonds (provided that the net purchase price for the Bonds, after subtracting the underwriter’s discount from the gross purchase price, may not be less than 100% of the aggregate principal amount of the Bonds).
PAYMENT: Principal of the Bonds will be payable upon surrender at The Bank of New York Mellon Trust Company, N.A., Los Angeles, California (the “Paying Agent”). Interest on the Bonds will be payable by check or draft mailed by first class mail to the owner at the address listed on the registration books maintained by the Paying Agent for such purpose.
OPTIONAL REDEMPTION: The Bonds maturing on or prior to August 1, 2033, are non-callable. The Bonds maturing on and after August 1, 2034, are callable for redemption prior to their stated maturity date at the option of the City, as a whole, or in part on any date on or after August 1, 2033 (in such maturities as are designated by the City, or, if the City fails to designate such maturities, in inverse order of maturity), and may be redeemed prior to the maturity thereof by payment of all principal, plus accrued interest to date of redemption, without premium.
PURPOSE: The Bonds are being issued to (a) finance facilities to provide affordable housing and prevent displacement of vulnerable populations, including low and middle-income households, veterans, local artists, seniors, and the disabled and provide supportive housing for people experiencing homelessness; and help low and middle-income households purchase homes which were authorized by a vote of more than two-thirds of the qualified voters of the City voting at a special municipal election held on June 5, 2018, and (b) pay for costs of issuance of the Bonds.
SECURITY: The Bonds are general obligations of the City. The City has the power and is obligated to levy ad valorem taxes for the payment of the Bonds and the interest thereon without limitation as to rate or amount upon all property within the City subject to taxation (except for certain classes of personal property).
RATING: S&P Global Ratings Services, a Standard & Poor’s Financial Services LLC business, has assigned the rating of “___” to the Bonds. The cost of obtaining such rating will be borne entirely by the City and not by the winning bidder.
TERMS OF SALE
FORM OF BID: Each bid must be unconditional and conform to all of the sale terms provided herein. By submitting a bid, the bidder agrees to all of the terms and conditions of this Notice of Sale. In submitting a bid, each bidder acknowledges that the bid is an offer to purchase all of the Bonds, and if accepted, will become a contract to purchase such Bonds on the terms contained herein.
To the extent any instructions or directions set forth in BiDCOMP/PARITY® conflict with this Official Notice of Sale, the terms of this Official Notice of Sale shall control. For further information about BiDCOMP/PARITY®, bidders may contact the Municipal Advisor or BiDCOMP/PARITY® at (212) 404-8102.
THE CITY RETAINS ABSOLUTE DISCRETION TO DETERMINE WHETHER ANY BID IS TIMELY AND COMPLETE. NONE OF THE CITY, THE MUNICIPAL ADVISOR, OR QUINT & THIMMIG LLP (“BOND COUNSEL”) TAKES ANY RESPONSIBILITY FOR INFORMING ANY BIDDER PRIOR TO THE TIME FOR RECEIVING BIDS THAT ITS BID IS INCOMPLETE OR NOT RECEIVED.
EACH BIDDER SUBMITTING AN ELECTRONIC BID UNDERSTANDS AND AGREES BY DOING SO THAT IT IS SOLELY RESPONSIBLE FOR ALL ARRANGEMENTS WITH BiDCOMP/PARITY® AND THAT BiDCOMP/PARITY® IS NOT ACTING AS AN AGENT OF THE CITY. INSTRUCTIONS AND FORMS FOR SUBMITTING ELECTRONIC BIDS MUST BE OBTAINED FROM BiDCOMP/PARITY® AND THE CITY ASSUMES NO RESPONSIBILITY FOR ENSURING OR VERIFYING BIDDER COMPLIANCE WITH THE PROCEDURES OF BiDCOMP/PARITY®. THE CITY SHALL ASSUME THAT ANY BID RECEIVED THROUGH BiDCOMP/PARITY® HAS BEEN MADE BY A DULY AUTHORIZED AGENT OF THE BIDDER.
THE CITY WILL MAKE ITS BEST EFFORTS TO ACCOMMODATE ELECTRONIC BIDS; HOWEVER THE CITY, THE MUNICIPAL ADVISOR AND BOND COUNSEL ASSUME NO RESPONSIBILITY FOR ANY ERROR CONTAINED IN ANY BID SUBMITTED ELECTRONICALLY, OR FOR FAILURE OF ANY BID TO BE TRANSMITTED, RECEIVED OR ACCEPTED AT THE OFFICIAL TIME FOR RECEIPT OF BIDS. THE OFFICIAL TIME FOR RECEIPT OF BIDS WILL BE DETERMINED BY THE CITY AND THE CITY SHALL NOT BE REQUIRED TO ACCEPT THE TIME KEPT BY BiDCOMP/PARITY® AS THE OFFICIAL TIME.
BEST BID: The Bonds will be awarded to the bidder or bidders offering to purchase the Bonds at the lowest true interest cost (“TIC”) to the City; provided, however, that certain refunding savings are achieved. The true interest cost of each bid will be determined on the basis of the present value of the aggregate future semiannual payments resulting from the interest rates specified by the bidder. The present value will be calculated to the Closing Date and will be based on the proposed bid amount (par value plus any premium). For the purpose of making such determination, it shall be assumed that any bond designated as Term Bonds by the bidder shall be deemed to be payable on the dates and in the amounts as shown under the section entitled “MATURITIES” herein. If such bid fails to achieve certain refunding savings, the City may reject all bids and not award the Bonds. The determination of the best bid by the Municipal Advisor shall be binding and conclusive on all bidders. In the event that two or more bidders offer bids for the Bonds at the same lowest TIC, the City will determine by lottery which bidder will be awarded the Bonds.
MULTIPLE BIDS FROM A SINGLE BIDDER: In the event multiple bids for the Bonds are received from a single bidder, the City shall be entitled to accept the bid with the lowest true interest cost for the Bonds, calculated in accordance with this Official Notice of Sale, from among all such bids, and each bidder agrees by submitting any bid to be bound by such lowest bid unless such bid is withdrawn prior to the deadline for receiving bids.
RIGHT OF CANCELLATION OF SALE BY CITY: The City reserves the right, in its sole discretion, at any time to cancel the public sale of the Bonds. In such event, the City shall cause notice of cancellation of this invitation for bids and the public sale of the Bonds to be communicated through PARITY® not later than 1:00 P.M., Pacific Daylight time on Tuesday, April 25, 2023, which is one day prior to the Bid Date. However, no failure to publish such notice or any defect or omission therein shall affect the cancellation of the public sale of the Bonds.
RIGHT TO MODIFY OR AMEND: The City reserves the right, in its sole discretion, to modify or amend this Official Notice of Sale including, but not limited to, the right to adjust and change the principal amount and principal amortization schedule of the Bonds being offered, at any time prior to the date and time for the receipt of bids, communicated through PARITY® not later than 1:00 P.M. Pacific Daylight time on Tuesday, April 25, 2023, which is one day prior to the Bid Date. Failure of any bidder to receive notice of any such modification or amendment shall not affect the legality of the sale.
RIGHT OF POSTPONEMENT BY CITY: The City reserves the right, in its sole discretion, to postpone, from time to time, the date established for the receipt of bids. Any such postponement will be communicated through PARITY® prior to the date and time for the receipt of bids. If the Bid Date is postponed, any alternative sale date will be announced through PARITY® not later than 1:00 P.M. Pacific Daylight time on Tuesday, April 25, 2023, which is one day prior to the Bid Date. On any such alternative sale date, any bidder may submit a bid for the purchase of the Bonds in conformity in all respects with the provisions of this Official Notice of Sale, except for the date and time of sale, which will be announced through PARITY®.
RIGHT OF REJECTION: The City reserves the right, in its sole discretion, to reject any and all bids and to waive, without limitation, any irregularity or informality in any bid except the time of receipt of electronic bids.
PROMPT AWARD: Pursuant to authority granted by the City Council of the City (the “Council”), the City manager, or the City Manager’s designee, will take action awarding the Bonds or rejecting all bids not later than twenty-six (26) hours after the expiration of the time for the receipt of bids; provided, that the award may be made after the expiration of the specified time if the bidder shall not have given to the Council notice in writing of the withdrawal of such bid. Bid evaluations or rankings by PARITY® are not binding on the City or the Council.
DELIVERY AND PAYMENT: It is expected that the Bonds will be delivered to DTC for the account of the winning bidder within thirty (30) days from the date of sale thereof. The winning bidder shall have the right, at his option, to cancel its obligation to purchase the Bonds if the Bonds are not tendered for delivery within thirty (30) days from the date of the sale thereof, and in such event the winning bidder shall be entitled to the return of the Deposit (see below), without payment of interest, accompanying its bid. Payment for the Bonds must be made on the Closing Date, in the form of a wire transfer of immediately available funds to the order of the Paying Agent. Any expense of providing immediately available funds, whether by transfer of Federal Reserve Bank funds or otherwise, shall be borne by the winning bidder.
Good Faith Deposit: A good faith deposit (“Deposit”) by wire transfer in immediately available funds, in the amount of $300,000 payable to the order of the Paying Agent must be remitted by the winning bidder within 48 hours after the acceptance of its bid. The Deposit shall be held by the Paying Agent on behalf of the City and shall then be applied toward the purchase price of the Bonds. If after the award of the Bonds the winning bidder or bidders fail to complete their purchase on the terms stated in their bid, the Deposit will be retained by the City. The retention of the Deposit shall constitute a full release and discharge of all claims and rights of the City against the bidder on account of such failure and a waiver of any right the City may have to any additional damages for such failure. By submitting a bid, the bidder waives any right to claim that actual damages resulting from such failure are less than the amount of such Deposit, and agrees that the amount of such Deposit is a reasonable estimate of damages that the City may suffer in the event of such failure.
CHANGE IN TAX EXEMPT STATUS: At any time before the Bonds are tendered for delivery, the winning bidder may disaffirm and withdraw its bid if the interest from bonds of the same type and character shall be declared to be taxable income under present federal income tax laws, either by a ruling of the Internal Revenue Service or by a decision of any federal court, or shall be declared taxable, or be required to be taken into account in computing federal income taxes (except alternative minimum taxes and environmental taxes payable by corporations) by any federal income tax law enacted subsequent to the date of this notice.
CLOSING PAPERS; BOND PRINTING: Each bid will be understood to be conditioned upon the City furnishing to the purchaser, without charge, concurrently with payment for and delivery of the Bonds, the following closing papers, each dated the Closing Date:
(a) The opinion of Quint & Thimmig LLP, Larkspur, California, Bond Counsel, approving the validity of the Bonds and stating that interest on the Bonds is exempt from California personal income taxes. Interest on the Bonds is not excludable from gross income of the owners thereof for federal income tax purposes. Other tax consequences to holders of the Bonds, if any, are not addressed in the opinion. (b) The opinion of Quint & Thimmig LLP, Larkspur, California, Disclosure Counsel, to the effect that that subject to certain qualifications no information has come to the attention of such counsel to cause such counsel to believe that the Official Statement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. (b) A certificate of the City certifying that on the basis of the facts, estimates and circumstances in existence on the date of issue, it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be arbitrage bonds; (c) A certificate of the City, signed by officers and representatives of the City, certifying that the officers and representatives have signed the Bonds whether by facsimile or manual signature, and that they were respectively duly authorized to execute the same; (d) The receipt of the City evidencing the receipt of the purchase price of the Bonds; (e) A certificate of the City, certifying that there is no known litigation threatened or pending affecting the validity of the Bonds; and (f) A certificate of the City, signed by an officer of the City, acting in his official capacity, to the effect that at the time of the sale of the Bonds, and at all times subsequent thereto up to and including the time of the delivery of the Bonds, the Official Statement relating to the Bonds did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
CUSIP NUMBERS: It is anticipated that CUSIP numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and payment for the Bonds in accordance with the terms of the purchase contract. The Municipal Advisor shall provide the CUSIP numbers to the winning bidder following the award of the Bonds. All expenses of printing CUSIP numbers on the Bonds and the CUSIP Service Bureau charge for the assignment of said numbers shall be paid by the winning bidder.
ESTABLISHMENT OF ISSUE PRICE: The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at closing an “issue price” or similar certificate setting forth the reasonably expected initial offering price to the public of the Bonds, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit A attached, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the City and Bond Counsel.
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION: The winning bidder will be required, pursuant to State law, to pay any fees to the California Debt and Investment Advisory Commission when due.
DTC FEES: All fees due to DTC with respect to the Bonds shall be paid by the winning bidder or bidders.
OFFICIAL STATEMENT: The City has caused to be prepared a Preliminary Official Statement describing the Bonds in a form deemed final by the City within the meaning of Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, except for certain information which is permitted under said Rule 15c2-12 to be omitted from the Preliminary Official Statement. A copy of the Preliminary Official Statement will be furnished upon request to KNN Public Finance, LLC, 2054 University Avenue, Suite 300, Berkeley, CA 94704, telephone (510) 208-8226. The City will furnish, upon request only, to the winning bidder within seven business days following the date of award, at no charge, not in excess of 5 copies of the Official Statement for use in connection with any resale of the Bonds. Otherwise, distribution of the Official Statement will be provided electronically only, in pdf format.
OFFICIAL STATEMENT DISCLOSURE: The City will deliver to the purchaser of the Bonds a certificate of an official of the City, dated the date of Bond delivery, stating that as of the date thereof, to the best of the knowledge and belief of said official, the Official Statement does not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, and further certifying that the signatory knows of no material adverse change in the condition of the City which would make it unreasonable for the purchaser of the Bonds to rely upon the Official Statement in connection with the resale of the Bonds.
CONTINUING DISCLOSURE: In order to assist the purchaser of the Bonds in complying with S.E.C. Rule 15c2-12(b)(5) (“Rule 15c2-12”), the City will undertake, pursuant to the resolution authorizing issuance of the Bonds and a continuing disclosure certificate, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the final Official Statement. In February 2019, Rule 15c2-12 was amended to include new material events. The City is aware of these changes and has updated existing policies or procedures to ensure compliance with its continuing disclosure obligations for these new material events.
Exhibit B
* Preliminary, subject to change.