City of Gonzales
PUBLIC WORKS / CITY ENGINEER DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: August 7, 2023
FROM: Patrick Dobbins, Public Works Director/City Engineer THROUGH: Carmen Gil, City Manager
SUBJECT: Agreement for Bond Counsel Services for the Community Center Complex Project
RECOMMENDATION
It is recommended that the City Council Approve an Agreement Between the City of Gonzales and Kutak Rock, LLP for Bond Counsel Services for the Community Center Complex Project, and Authorize the City Manager to sign it.
BACKGROUND
As the Council is aware, design and construction of the Community Center Complex will be funded by a variety of sources including the following:
• Measure X (local sales tax) expected to provide $7.5M of project funding. • $5.0 M State grant for the Teen Innovation Center secured by State Senator Anna Caballero • Community Development Block Grant (CDBG FY 2022/23 and FY 2023/24) • County contribution of $1.8M to relocate existing library from the Gonzales Shopping Center • Two grants (Electric Vehicle Charging Station Grant from the California Energy Commission and Building Forward Library Infrastructure Grant Program)
• Capital Campaign with a $10.0M goal with current contributions totaling $5.8M The City project team applied to the US Department of Agriculture (USDA) for a loan that would be secured by long term City revenue sources including Measure X. This financing is needed for construction of the first phase of the Community Center Project. The USDA loan program is available to rural communities and offers a low interest rate as well as a long repayment period, both of which are advantageous for the city. The current interest rate is 3.75% with up to a 38-year term.
AGENDA
ITEM
8 REVIEW AND ANALYSIS
The USDA’s loan application requires the city to engage a firm to provide bond counsel services and the city’s long-time financial advisor, NHA Advisors (NHA) has recommended Kutak Rock, LLP (Kutak).
NHA has made this recommendation based upon Kutak’s overall firm reputation, the assigned Kutak attorney, Albert Reyes’ specific and significant experience serving as bond counsel on USDA financings, Mr. Reyes’ previous satisfactory professional service to the City and the low proposed fee. Their proposed fee is $40,000. The use of bond counsel services is included in the project budget for Phase 1 of the project.
Therefore, staff recommends that the City Council authorize the City Manager to execute an Agreement with Kutak Rock, LLP for Bond Counsel Services relating to the expected financing for the Community Center Complex Project per the requirements established by the USDA.
How Recommendation Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small-town charm.
Explain: Constructing a Community Center will provide residents with a facility for a wide variety of public and private functions, recreation programs and other activities which will enhance the quality of life of Gonzales residents.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment and resources necessary to provide excellent services that enhance the quality of life of our diverse community. X Yes ____ No____ N/A
Explain: See explanation above for the Mission.
City services will be delivered in a cost-effective, respectful and friendly manner to insure the safety and well-being of the residents and the promotion of business, recreational, housing and employment opportunities in an environmentally sustainable manner. X Yes ____No ____ N/A Explain: See Vision explanation above.
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety Yes X No N/A
• Housing Yes X No N/A
• Recreation X Yes No N/A
• Environment X Yes No N/A
• Education X Yes No N/A
ALTERNATIVES
The City’s loan application to the USDA requires execution of an agreement with a firm to provide bond counsel services. The city could seek other financing options for the $8.0M needed to advance the Community Center Complex Project but staff recommends pursuing the USDA loan due to the low interest rate and long repayment term.
BUDGET IMPACT
The cost of Bond Counsel services is included in the budget for Phase 1 of the Community Center Complex Project
CONCLUSION
It is recommended that the City Council Approve an Agreement Between the City of Gonzales and Kutak Rock, LLP for Bond Counsel Services for the Community Center Complex Project, and Authorize the City Manager to sign it.
Attachments:
1. Agreement for Bond Counsel Services
2. Kutak Rock, LLD Proposal