STAFF REPORT TO THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY TO THE HERCULES REDEVELOPMENT AGENCY DATE: Regular Meeting of March 8, 2022
TO: Board of Directors of the Successor Agency to the Hercules Redevelopment Agency
VIA: Dante Hall, City Manager
SUBMITTED BY: Edwin Gato, Director of Finance
SUBJECT: Securities Law Training (City of Hercules)
RECOMMENDED ACTION: Receive a presentation by Stradling Yocca Carlson & Rauth, P.C., Bond and Disclosure Counsel, regarding federal securities law matters related to the offering of municipal bonds.
FISCAL IMPACT OF RECOMMENDATION: None as a result of this item.
DISCUSSION: The Authority has retained the services of Stifel, Nicolaus & Company, Incorporated to act as underwriter in connection with the proposed sale of two series of bonds by the Successor Agency to the Hercules Redevelopment Agency (the “Successor Agency”) to refinance all outstanding bonds of the former Hercules Redevelopment Agency for debt service savings. The Successor Agency’s bonds will be offered to investors through a Preliminary Official Statement which is similar to a prospectus in the corporate market. It will contain all of the information necessary for investors to make an informed decision regarding a purchase of the Successor Agency’s bonds.
When municipal bonds are sold to investors in a public sale, certain provisions of federal securities laws apply to the offering. Specifically, the offering is governed by Securities and Exchange Commission Rule 10b(5) which makes it unlawful for an issuer of bonds to make a misstatement of a material fact or to omit to state a material fact in connection with the bond offering.
The Securities and Exchange Commission has made clear through various releases and enforcement actions that the members of the governing board of an issuer of municipal bonds have a duty to review the key elements of the preliminary official statement before bonds are sold. The Securities and Exchange Commission has also emphasized the importance of governing board members and key staff members receive securities law training so that they are familiar with the federal securities law standards that are applicable to a sale before bonds are offered.
The purpose of this agenda item is to provide the members of the Successor Agency’s governing board (the City Council of the City of Hercules) with federal securities law training and the opportunity to ask questions regarding the process for preparing the Preliminary Official Statement for the Successor Agency’s proposed sale of bonds.
ATTACHMENT:
Presentation
2 2