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RESOLUTION NO. FA-2024-01
A RESOLUTION OF THE GONZALES PUBLIC FINANCING AUTHORITY
AUTHORIZING THE EXECUTION AND DELIVERY OF A GROUND LEASE, LEASE
AGREEMENT, INDENTURE, BOND PURCHASE AGREEMENT AND ASSIGNMENT
AGREEMENT IN CONNECTION WITH THE ISSUANCE OF THE GONZALES PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS, SERIES 2024A, APPROVING THE
ISSUANCE OF SUCH BONDS IN AN AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $9,825,000, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL
STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH BONDS
AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND
CERTIFICATES AND RELATED ACTIONS
WHEREAS, the City of Gonzales (“City”), a municipal corporation and general law city that is located in Monterey County, California, desires to finance certain capital improvements, consisting primarily of a Community Center (“2024 Project”), on an interim basis, pending the closing of a financing on or before May 1, 2026 with the United States Department of Agriculture, Rural Development (“USDA”), for which USDA has made a funding commitment of $9,825,000; and WHEREAS, the City is a member of the Gonzales Public Financing Authority (the “Authority”), a joint exercise of powers authority; and WHEREAS, the Authority and the City have determined that it would be in the best interests of the City and residents of the City to authorize the preparation, sale and delivery of the “Gonzales Public Financing Authority Lease Revenue Bonds, Series 2024A” (the “Bonds”) for the purpose of financing the 2024 Project on an interim basis; and
WHEREAS, the 2024 Project constitutes “public capital improvements” within the meaning of the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code (the “Act”), all of which are or shall be located within the boundaries of the City; and
WHEREAS, in order to facilitate the issuance of the Bonds, the City and the Authority desire to enter into a Ground Lease (the “Ground Lease”) pursuant to which the City will lease certain real property of the City (which real property consists of the 2024 Project and the associated land), as described in the Ground Lease (collectively, the “Leased Assets”), to the Authority, and a Lease Agreement (the “Lease Agreement”), pursuant to which the City will lease the Leased Assets back from the Authority, and pay certain Base Rental Payments (as such term is defined in the Lease Agreement), which are pledged to the owners of the Bonds by the Authority pursuant to an Indenture, by and among U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), the City and the Authority (the “Indenture”); and
WHEREAS, the Authority and the Trustee desire to enter into an Assignment Agreement (the “Assignment Agreement”) in order to provide, among other things, that all rights to receive the Base Rental Payments payable under the Lease Agreement be assigned without recourse by the Authority to the Trustee; and
WHEREAS, the City and the Authority desire to undertake a negotiated sale of the Bonds to Hilltop Securities Inc., as the underwriter of the Bonds (the “Underwriter”), pursuant to a purchase
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agreement by and among the City, the Authority and the Underwriter (the “Bond Purchase Agreement”); and
WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”) requires that, in order to offer the Bonds for sale to the public, the Underwriter must receive a disclosure document with respect to the Bonds and the City; and WHEREAS, in order to cause such requirement to be satisfied, the City and the Authority have prepared a Preliminary Official Statement (the “POS”) in connection with the issuance of the Bonds; and
WHEREAS, in compliance with California Government Code Section 5852.1, the Authority has obtained from the Authority’s Municipal Advisor required good faith estimates relating to the Bonds, and such estimates are disclosed and set forth in Exhibit A attached hereto; and WHEREAS, the 2024 Project is located within the boundaries of the City; and WHEREAS, the Board of Directors of the Authority has been presented with the form of each document that is referred to herein relating to the financing that is contemplated hereby, and the Board of Directors has examined and approved each document and desires to authorize and direct the execution of such documents and the consummation of such financing; and WHEREAS, all acts, conditions and things that are 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 that are 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 1. Recitals True and Correct. The foregoing recitals are true and correct and are a substantive part of this Resolution.
Section 2. Findings. The Board of Directors hereby approves the financing that is described in this Resolution and further finds and determines that there are significant public benefits to the citizens of the City through the approval of the issuance of the Bonds by the Authority pursuant to the Act and otherwise hereunder within the meaning of Section 6586(a) through (d), inclusive, of the Act, in that the issuance of the Bonds by the Authority and related transactions will result in demonstrable savings in effective interest rate to the City.
Section 3. Approval of Lease Documents. The forms of Ground Lease and Lease Agreement presented at this meeting are hereby approved, and the President of the Authority, the Vice-President of the Authority and the Executive Director of the Authority, or their respective designees (collectively, the “Authorized Officers”), are each hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Ground Lease and the Lease Agreement in substantially said forms, with such changes, insertions and omissions 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: (a) the term of the Ground Lease and the Lease Agreement shall terminate no later than May 1, 2044 (provided that such term may be extended as provided
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therein); and (b) the true interest cost applicable to the interest components of the Base Rental Payments under the Lease Agreement shall not exceed 4.75%.
Section 4. Approval of Indenture. The form of Indenture presented at this meeting is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Indenture in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof.
Section 5. Approval of Assignment Agreement. The form of Assignment Agreement presented at this meeting is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Assignment Agreement in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof.
Section 6. Approval of Bond Purchase Agreement. The form of Bond Purchase Agreement presented at this meeting is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Bond Purchase Agreement in substantially said form, with such changes, insertions and omissions 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 Underwriter’s discount shall not exceed 0.50% of the principal amount of the Bonds.
Section 7. Approval of POS. The form of POS presented at this meeting, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the POS in connection with the offering and sale of the Bonds is hereby authorized and approved. Each Authorized Officer is hereby authorized to certify on behalf of the Authority that the POS is deemed final as of its date within the meaning of Rule 15c2-12 (except for the omission of certain final pricing, rating and related information as permitted by Rule 15c2-12). The Authorized Officers are each hereby authorized and directed to furnish, or cause to be furnished, to prospective bidders for the Bonds a reasonable number of copies of the POS.
Section 8. Authorization of Official Statement. The preparation and delivery of an Official Statement, and its use in connection with the offering and sale of the Bonds, is hereby authorized and approved. The Official Statement shall be in substantially the form of the POS, with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. The Authorized Officers are each hereby authorized and directed, for and in the name of and on behalf of the Authority, to execute the final Official Statement and any amendment or supplement thereto for and in the name and on behalf of the Authority.
Section 9. Further Action. The Authorized Officers are hereby authorized, empowered and directed, individually, to execute such other documents in addition to those enumerated herein and to take such other actions as each deems necessary or advisable in order to consummate the issuance of the Bonds (including, but not limited to, causing the Indenture, the Assignment Agreement, the Lease Agreement and the Ground Lease, or memoranda thereof, to be recorded in the Office of the Monterey County Recorder, causing one or more title insurance policies to be issued relating to the Leased Assets and delivering instructions to the title company with respect thereto, approving changes to the name
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and/or series designation of the Bonds to reflect the timing of the issuance of the Bonds or otherwise and entering into a commitment for municipal bond insurance or a debt service reserve fund insurance policy if determined to be in the best interest of the City). Such actions heretofore taken by the Authorized Officers or their designees are hereby ratified, confirmed and approved.
Section 10. Special Services. Kutak Rock LLP is hereby appointed to serve as Bond Counsel and Disclosure Counsel with respect to the Bonds and NHA Advisors, LLC, will serve as the Authority’s Municipal Advisor per its previously approved contract. Each of the Authorized Officers is further authorized to provide for all other services that are necessary to effect the matters that are described in this Resolution. Such services shall include, but not be limited to, legal services, a credit rating from S&P Global Ratings, trustee services, title insurance services and any other services that are deemed appropriate by an Authorized Officer. Any one of the Authorized Officers is authorized to pay for the cost of such services and to enter into agreements as needed to engage such consultants.
PASSED AND ADOPTED by the Board of Directors of the Gonzales Public Financing Authority at a regular meeting duly held on the 6
th day of May 2024 by the following vote:
AYES: BOARD MEMBERS:
NOES: BOARD MEMBERS:
ABSTAIN: BOARD MEMBERS:
ABSENT: BOARD MEMBERS:
_______________________________
Jose L. Rios, The Honorable Chair
ATTEST:
___________________________
Mary Villegas, Deputy Secretary
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EXHIBIT A
GOOD FAITH ESTIMATES
The following information was obtained from the Authority Municipal Advisor and is provided in compliance with California Government Code Section 5852.1 with respect to the Lease Agreement:
(A) True Interest Cost of the Lease Agreement: 3.928%
(B) Finance Charge of the Lease Agreement (Sum of all fees/charges paid to third parties):
$219,125
(C) Net Proceeds of the Lease Agreement to be Received (net of finance charges, reserves and capitalized interest, if any): $9,825,000
(D) Total Payment Amount through Maturity of Lease Agreement: $14,557,5701 The foregoing constitute good faith estimates only. The principal amount of the Lease Agreement, the true interest cost of the Lease Agreement, 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 execution of the Lease Agreement being different than the date assumed for purposes of such estimates; (b) the actual principal amount of the Lease Agreement being different from the estimated amount used for purposes of such estimates; (c) the actual amortization of the Lease Agreement being different than the amortization assumed for purposes of such estimates; (d) the actual market interest rates at the time of sale of the Lease Agreement 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 execution of the Lease Agreement and the actual principal amount of the Lease Agreement will be determined by the Authority based on a variety of factors. The actual interest rates borne by the Lease Agreement will depend on market interest rates at the time of sale thereof.
The actual amortization of the Lease Agreement 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.
1 Reflects estimated payments through the scheduled 20-year maturity of the Lease Agreement. The Lease Agreement is anticipated to be redeemed on or before May 1, 2026. The Total Payment Amount through May 1, 2026 is estimated to be $731,826.