RESOLUTION NO. 2023-24
RESOLUTION OF THE CITY OF HESPERIA APPROVING, AUTHORIZING AND DIRECTING EXECUTION OF CERTAIN FINANCING DOCUMENTS AND DIRECTING CERTAIN RELATED ACTIONS IN CONNECTION WITH THE REFINANCING OF OUTSTANDING LEASE PAYMENT OBLIGATIONS WHEREAS, the City of Hesperia (the “City”) and the Hesperia Water District entered into a Joint Exercise of Powers Agreement, dated as of October 2, 2012, establishing the Hesperia Joint Public Finance Authority (the “Finance Authority”) for the purpose, among others, of providing assistance to the City with its financing programs; and WHEREAS, to provide assistance to the City with the financing of its acquisition of approximately 5,971 acre-feet of base annual production rights in the Alto Subarea of the Mojave Water Basin previously held by Rancho Las Flores, LLC, the Finance Authority previously issued its 2012 Lease Revenue Bonds (Water Rights Acquisition) in the aggregate principal amount of $26,735,000 (the “2012 Bonds”), under an Indenture dated as of December 1, 2012; the 2012 Bonds are payable from lease payments made by the City under a Property Lease dated as of December 1, 2012 (the “2012 Property Lease”), between the Finance Authority as lessor and the City as lessee; and WHEREAS, the property leased by the City from the Finance Authority under the 2012 Lease Agreement includes the real property and improvements constituting the Hesperia Branch Library, the Civic Plaza Park and the Hesperia Police Station; and WHEREAS, in order to finance acquisition and construction of a new Civic Plaza and related on-site improvements, the City previously caused execution and delivery of its 2005 Variable Rate Demand Certificates of Participation (Civic Plaza Financing) (the “2005 Certificates”) pursuant to a Trust Agreement, dated as of May 1, 2005, among the City, the Hesperia Public Financing Authority (the “Financing Authority”) and a corporate trustee; the 2005 Certificates represented interests in lease payments made by the City to the Financing Authority pursuant to a Lease Agreement, dated as of May 1, 2005; and WHEREAS, for the purpose of refinancing the 2005 Certificates, the City subsequently caused the Finance Authority to issue its 2013 Refunding Lease Revenue Bonds (Refinancing of 2005 Civic Plaza Financing) in the aggregate principal amount of $12,445,000 (the “2013 Bonds”), under an Indenture dated as of October 1, 2013; the 2013 Bonds are payable from lease payments made by the City under a Property Lease dated as of October 1, 2013 (the “2013 Lease Agreement”), between the Finance Authority as lessor and the City as lessee; and WHEREAS, the City leased the real property and improvements comprising City Hall from the Finance Authority under the 2013 Lease Agreement; and WHEREAS, the 2013 Bonds maturing on or after October 1, 2024 are subject to optional redemption, without premium, prior to maturity on any date on or after October 1, 2023, at the option of the Finance Authority; and WHEREAS, in order to achieve cash flow savings, the City wishes to prepay the lease payments payable by the City under the 2013 Lease Agreement and to cause the Finance Authority to defease and redeem the 2012 Bonds and the 2013 Bonds, and, for that purpose, the Finance Authority proposes to issue lease revenue bonds (the “2023 Lease Revenue Bonds”) under the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the “Law”); and WHEREAS, in order to accomplish the refinancing plan, (i) the City and the Finance Authority will enter into a Site and Facilities Lease (the “Site Lease”), under which the City will lease to the Finance Authority certain real property and improvements of the City (the “Leased Property”), (ii) the City and the Finance Authority will enter into a Property Lease (the “Property Lease”), under which the Finance Authority will sublease the Leased Property to the City, (iii) the City and the Finance Authority will enter into an Escrow Deposit and Trust Agreement (the “Escrow Agreement”) with U.S. Bank Trust Company, National Association, as escrow bank and trustee for the 2013 Bonds, (iv) the Finance Authority will enter into an Indenture (the “Indenture”) with U.S. Bank Trust Company, National Association, as trustee (the “Trustee”) and (v) the Finance Authority will issue the 2023 Lease Revenue Bonds, which will be payable from the lease payments made by the City to the Finance Authority under the Property Lease; and WHEREAS, there has been submitted to the City Council a form of preliminary Official Statement in connection with the marketing of the 2023 Lease Revenue Bonds and the City Council, with the aid of its staff, has reviewed the preliminary Official Statement to assure proper disclosure of all material facts relating to the 2023 Lease Revenue Bonds that are in the personal knowledge of the Council Members and the City staff; and WHEREAS, the Finance Authority and the City propose to sell the 2023 Lease Revenue Bonds to Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) pursuant to a bond purchase agreement (the “Bond Purchase Agreement”), the form of which is on file with the City Clerk; and WHEREAS, in order to assist the Underwriter in complying with Rule 15c2-12 of the Securities and Exchange Commission, the City will undertake certain continuing disclosure obligations with respect to the 2023 Lease Revenue Bonds pursuant to a continuing disclosure certificate to be executed by the City (the “Continuing Disclosure Certificate”); and WHEREAS, pursuant to Government Code Section 5852.1, certain information relating to the 2023 Lease Revenue Bonds is set forth in Exhibit A attached to this Resolution, and such information is hereby disclosed and made public; and WHEREAS, the City and the Public Finance Authority intend to lease the Hesperia Branch Library and the Civic Plaza Park under the Property Lease and the Site Lease, but, in order to lease the Hesperia Branch Library, the City needs to receive from the County of San Bernardino (the “County”) a written subordination of its interests under an unrecorded lease agreement (“County Library Lease Agreement”) to the Property Lease and the Site Lease; and WHEREAS, as a result, the City intends to lease the City Hall under the Property Lease and the Site Lease in place of the Hesperia Branch Library until the County has agreed to subordinate the County Library Lease Agreement to the Property Lease and the Site Lease, after which the City intends to substitute the Hesperia Branch Library for the Hesperia City Hall; and WHEREAS, the City has duly considered such transactions and wishes at this time to approve certain matters relating to the transactions as being in the public interest of the City; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Hesperia, as follows:
Section 1. Pursuant to the Law, and based on the information provided to the City Council by City staff and consultants, all as set forth in the proceedings and documents providing for the issuance and delivery of the 2023 Lease Revenue Bonds, the City Council hereby finds and determines that the issuance of the 2023 Lease Revenue Bonds and the transactions related thereto will result in significant public benefits.
Section 2. The City Council hereby approves the preparation of, and hereby authorizes the Mayor, the City Manager, or the written designee of the City Manager (each, a “Designated Officer”), acting alone, to deem final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, as amended (except for permitted omissions), the preliminary form of the Official Statement describing the 2023 Lease Revenue Bonds (the “Preliminary Official Statement”) on file with the City Clerk, together with such changes or additions as a Designated Officer, acting alone may deem necessary, desirable or appropriate upon consultation with bond counsel. Distribution of the Preliminary Official Statement by the Underwriter is hereby approved. A Designated Officer, acting alone, is hereby authorized to execute the final form of the Official Statement with such changes or additions as the Designated Officer deems necessary, desirable or appropriate upon consultation with bond counsel, and the execution of the final Official Statement by the City shall be conclusive evidence of the approval of any such additions and changes. The City Council hereby authorizes the distribution of the final Official Statement.
Section 3. The City Council hereby approves the forms of the Site Lease and the Property Lease on file with the City Clerk, with such additions thereto and changes therein as a Designated Officer, acting alone, deems necessary, desirable or appropriate upon consultation with bond counsel, the execution of which by a Designated Officer shall be conclusive evidence of the approval of any such additions and changes. A Designated Officer, acting alone, is hereby authorized and directed to execute, and the City Clerk is hereby authorized to attest, as appropriate, the Site Lease and the Property Lease. The City Council hereby authorizes the performance by the City of its obligations under the Site Lease and the Property Lease. The City Council further hereby authorizes and directs execution and delivery by a Designated Officer of a memorandum of Property Lease.
Section 4. The City Council hereby approves the forms of the amendments to the site lease and the 2012 Property Lease related to the 2012 Bonds (the “2012 Lease Amendments”) on file with the City Clerk, with such additions thereto and changes therein as a Designated Officer, acting alone, deems necessary, desirable or appropriate upon consultation with bond counsel, the execution of which by a Designated Officer shall be conclusive evidence of the approval of any such additions and changes. A Designated Officer, acting alone, is hereby authorized and directed to execute, and the City Clerk is hereby authorized to attest, as appropriate, the 2012 Lease Amendments and such other agreements, documents and certificates as may be necessary or desirable to effectuate the purposes of the 2012 Lease Amendments. For the avoidance of doubt, the City Council hereby approves and directs execution and delivery of the 2012 Lease Amendments regardless of whether the 2023 Lease Revenue Bonds are issued.
Section 5. The City Council hereby approves the form of a subordination agreement (the “Subordination Agreement”) between the City and the County on file with the City Clerk, with such additions thereto and changes therein as a Designated Officer, acting alone, deems necessary, desirable or appropriate upon consultation with bond counsel, the execution of which by a Designated Officer shall be conclusive evidence of the approval of any such additions and changes. A Designated Officer, acting alone, is hereby authorized and directed to execute, and the City Clerk is hereby authorized to attest, as appropriate, the Subordination Agreement and such other agreements, documents and certificates as may be necessary or desirable to effectuate the purposes of the Subordination Agreement. If requested by the County or another interested party, the Subordination Agreement may be updated to add the Finance Authority as a party.
Section 6. The City Council hereby approves the Continuing Disclosure Certificate in the form on file with the City Clerk, together with such changes thereto as a Designated Officer, acting alone, deems necessary, desirable or appropriate, the execution of which by a Designated Officer shall be conclusive proof of the approval thereof. A Designated Officer, acting alone, is hereby authorized and directed to execute the Continuing Disclosure Certificate, with such changes, insertions and omissions as may be approved by such official executing the Continuing Disclosure Certificate.
Section 7. The City Council hereby approves the form of the Bond Purchase Agreement on file with the City Clerk, with such additions thereto and changes therein as a Designated Officers, acting alone, deems necessary, desirable or appropriate upon consultation with bond counsel, the execution of which by a Designated Officer shall be conclusive evidence of the approval of any such additions or changes; provided that no such addition or change shall provide for an underwriter’s discount (exclusive of any original issue discount) of greater than 1.1% of the principal amount of the 2023 Lease Revenue Bonds or net present value savings of less than 3% of the outstanding principal amount of the 2013 Bonds. A Designated Officer, acting alone, is hereby authorized and directed to execute the Bond Purchase Agreement on behalf of the City and to take all actions necessary to fulfill the City’s obligations thereunder.
Section 8. The City Council hereby approves the form of the Escrow Agreement on file with the City Clerk, with such additions thereto and changes therein as a Designated Officer, acting alone, deems necessary, desirable or appropriate upon consultation with bond counsel, the execution of which by a Designated Officer shall be conclusive evidence of the approval of any such additions and changes. A Designated Officer, acting alone, is hereby authorized and directed to execute, and the City Clerk is hereby authorized to attest, the Escrow Agreement. The City Council hereby authorizes the performance by the City of its obligations under the Escrow Agreement.
Section 9. The Designated Officers, the City Clerk and any and all other officers of the City are hereby authorized and directed, for and in the name of and on behalf of the City, to do any and all things and take any and all actions, including execution and delivery of any and all documents, assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and sale of the 2023 Lease Revenue Bonds, the refinancing of the 2013 Bonds, the selection of the Leased Property under the Property Lease, the removal of the Hesperia Branch Library and Civic Plaza Park as leased property with respect to the 2012 Bonds, the Subordination Agreement, the elimination of encumbrances on title to the Leased Property (including any amendments to the documents related to the 2013 Bonds), the purchase of one or more insurance policies for the 2023 Lease Revenue Bonds if determined to be in the best interest of the City by a Designated Officer, and the consummation of the transactions as described herein, and such documents, assignments, certificates and agreements as may be required by any of the documents approved herein.
Section 10. This Resolution shall take effect immediately upon its passage and adoption. * * * * * * * * * * * *
PASSED, APPROVED AND ADOPTED by the City Council of the City of Hesperia at a regular meeting held this 6th day of June, 2023.
AYES: Councilmember:
NOES: Councilmember:
ABSENT: Councilmember:
ABSTAIN: Councilmember
Brigit Bennington, Mayor
ATTEST:
Erin Baum, Assistant City Clerk
EXHIBIT A
REQUIRED GOOD FAITH ESTIMATES PURSUANT TO
GOVERNMENT CODE SECTION 5852.1
1. True Interest Cost of the 2023 Lease Revenue Bonds: 3.53%.
2. Finance charge for the 2023 Lease Revenue Bonds, being the sum of all fees and charges paid to third parties (Costs of Issuance of approximately $287,744 plus estimated underwriter’s compensation of $82,280): $370,024.
3. Amount of proceeds of the 2023 Lease Revenue Bonds expected to be received by the Finance Authority, net of proceeds for Costs of Issuance described in (2) above and net of capitalized interest (if any) and reserves (if any) paid or funded with the proceeds of the 2023 Lease Revenue Bonds: $7,983,372.
4. Total payment amount for the 2023 Lease Revenue Bonds, being the sum of (a) debt service to be paid on the 2023 Lease Revenue Bonds to final maturity, plus (b) any financing costs not paid from proceeds of the 2023 Lease Revenue Bonds: $10,417,722. *All amounts and percentages are estimates, and are made in good faith by the City based on information available as of the date of adoption of this Resolution.