PISMO BEACH CITY COUNCIL and
PISMO BEACH PUBLIC FINANCING AGENCY
STAFF REPORT
Agenda Item #11.A
Meeting Date: May 7, 2024
TITLE:
City of Pismo Beach and Pismo Beach Public Financing Agency Authorization for Issuance of 2024 Lease Revenue Bonds to Finance the Public Safety Facility Project
RECOMMENDATION:
1. Adopt a Resolution of the City Council of the City of Pismo Beach making required findings authorizing the execution and delivery of documents relating to the sale and issuance of not to exceed $48,500,000 Pismo Beach Public Financing Agency Series 2024A Lease Revenue Bonds (Public Safety Facility Project) to finance construction of a Public Safety Facility Project and authorizing and directing certain actions in connection therewith;
and
2. Adopt a Resolution of the Pismo Beach Public Financing Agency approving the execution and delivery of documents in connection with the sale and issuance of the Pismo Beach Public Financing Agency Series 2024A Lease Revenue Bonds (Public Safety Facility Project) in a principal amount not to exceed $48,500,000 and authorizing and directing certain actions in connection therewith.
DISCUSSION:
On March 19, 2024, the City Council adopted a resolution setting forth Council’s intention to proceed with the issuance of proceeds of tax-exempt bonds, notes, certificates of participation, revenue bonds or other forms of tax-exempt debt for the purpose of financing (the “Financing”) certain costs of designing and constructing a new Public Safety Facility located in the city (the “Facility Project”).
On April 29, 2024, the City Manager and Administrative Services Director met with Standard & Poor’s (S&P) in order to obtain a rating for the Series 2024A Lease Revenue Bonds (the “Bonds”). The City, Municipal Advisor, and Underwriter prepared a comprehensive presentation that included pertinent information on the City’s management, demographics, and relevant financial information as well as a description of the Bonds. The City expects to receive the rating the week of May 6, 2024.
Next Steps
It is anticipated that the Bonds will be sold on a “negotiated” basis with BofA Securities, Inc., serving as underwriter (“Underwriter”) pursuant to a Bond Purchase Agreement (the "Bond Purchase Agreement"). In addition, it is anticipated that the pricing (the “Pricing”) and sale of the Bonds will be completed during the week of June 24, 2024, and that the Bonds will be issued mid-July of 2024. However, the Bonds could be sold earlier if market conditions are advantageous. Finally, in order to avoid the need for capitalized interest, Council Agenda 05-07-2024 11.A-1
the City is encumbering several City government facilities, parks, and other assets as leased assets. Once the Facility Project is completed, City Hall and the Facility Project will remain as leased assets, and all other assets will be released.
Bond Structure
The Bonds are being scheduled to mature over a thirty-year payback period. The final interest rate and aggregate principal amount of the Bonds will be determined during the Pricing and will become final upon execution of the Bond Purchase Agreement and the Bonds are closed. However, in no case will the final aggregate principal amount exceed $48,500,000, nor will the Underwriter’s discount exceed 0.30% of the principal amount of the Bonds, nor will the true interest cost exceed 5.50%.
Public Hearing
In accordance with Government Code Section 6586 (a), (c) and (d), the City must hold a public hearing to consider public testimony concerning the possible issuance of Bonds by the Pismo Beach Public Financing Agency (“Agency”) to finance certain public capital improvements within the boundaries of the city, including the Facility Project. The City resolution approves the sale of the Bonds by the Agency and finds that there are significant public benefits in connection with the Facility Project, and the associated Financing thereof with the proceeds of the Bonds.
This meeting has been convened as a joint meeting of the City Council and the Agency Board of Directors in order to allow the City Council, and the Council Members acting in their capacity as the Agency Board, to hold the hearing as described above and consider adoption of a resolution of each body authorizing the issuance of the bonds and approving the form of related financing documents and other actions.
Summary of Financing Documents
The resolutions that are recommended for adoption (Attachments 1 and 2) authorize and approve the form of all the legal documents (“Financing Documents”) necessary to provide for the successful issuance of the Bonds.
The Financing Documents (Attachments 3 through 6) are being presented to the City Council and Agency Board as form documents, as they cannot be fully completed at this time because certain components will not be finalized until after the Pricing of the Bonds.
This method of approval is the normal method of approving a bond issue in California.
Due to the volume of these documents, they are provided as online attachments only.
These documents are available online in the Access Pismo public records portal at www.pismobeach.org/accesspismo1 , or upon request from the City Clerk’s Office.
The individual Financing Documents needed to complete this financing are each briefly described below. Several of the documents are supplements to the documents of the 2017 Lease Revenue Bonds (Pismo Beach Municipal Pier Project) (the “Pier Bonds”) and the 2017B Lease Revenue Bonds (Federally Taxable Clean Renewable Energy Bonds).
1 Full URL:
https://accesspismo.pismobeach.org/WebLink/DocView.aspx?id=529015&dbid=0&repo=Laserfiche Council Agenda 05-07-2024 11.A-2
The supplements add the Bonds to the documents, and the terms of the original documents apply to the 2024A Lease Revenue Bonds.
1. Second Supplement to Site and Facility Lease Agreement and Second Supplement to the Lease Agreement: The City will lease the Leased Property to the Agency under the Site and Facilities Lease, which was initially entered into in connection with the Pier Bonds, as supplemented by the Second Supplement to Site and Facility Lease, and the Agency will lease the Leased Property back to the City under the Lease Agreement, which was initially entered into in connection with the Pier Bonds, as supplemented by the Second Supplement to Lease Agreement, in consideration of the payment by the City to the Agency of semi-annual rental payments (the “Base Rental Payments”), which are pledged to the repayment of the Bonds. In addition, the City agrees to annually budget for and appropriate the Base Rental Payments for the use and occupancy of the Leased Property. The City further agrees to provide specified forms of insurance and to maintain the Leased Property. See Attachment 3 and Attachment 4.
2. Second Supplement to Indenture: Under the Indenture (under which the Pier Bonds and the 2017B Bonds were previously issued), as supplemented by the Second Supplement to Indenture, Wilmington Trust, N.A., as the Trustee, agrees to deliver the Bonds to the Underwriter in exchange for the purchase price of the Bonds. The majority of the Bond proceeds are deposited into a Project Fund maintained by the Trustee, and are disbursed by the Trustee to pay for costs of the Facility Project in accordance with requisitions from the City.
The Indenture and Second Supplement to the Indenture further provide for the Trustee to receive directly the Base Rental Payments made by the City under the Lease Agreement, which are equal in amount to the interest and principal payments due on the Bonds, the Pier Bonds and the 2017B Bonds. The Trustee receives and disburses the Base Rental Payments semiannually. Finally, the Indenture and Second Supplement to the Indenture set forth the covenants and specifics of the Bonds, including the flow of funds, prepayment provisions, investment and management of funds and accounts, repayment mechanisms and Bond owners’ rights and remedies.
See Attachment 5.
3. Second Supplement to Assignment Agreement: Under the Assignment Agreement, the Agency agrees to assign to the Trustee its right to receive the Base Rental Payments made under the Lease Agreement. The Second Supplement to Assignment Agreement is being entered into to provide for the assignment of the additional Base Rental Payments relating to the Bonds. See Attachment 6.
4. Preliminary Official Statement: As a necessary prerequisite to the public marketing and selling of the Bonds, a preliminary official statement (the “Preliminary Official Statement”) has been prepared by Stradling Yocca Carlson & Rauth LLP, as Disclosure Counsel to the City and Agency, with the help of the Municipal Advisor, Underwriter, and City staff. This document describes the City, the Financing, the Council Agenda 05-07-2024 11.A-3
Facility Project, the Leased Property, the Bonds, the Financing Documents, and the risk factors associated with an investment in the Bonds. The Preliminary Official Statement is the central source of information to potential bond buyers, and is subject to federal securities law, which requires that the information contained in the Preliminary Official Statement be accurate and complete, except for certain permitted missing information that will be inserted following Pricing. Once the Bond Purchase Agreement (described below) is executed, the final pricing detail will be used to fill in the blanks of the Preliminary Official Statement, which will then be used as the basis for the final Official Statement. See Attachment 7.
Important Information about Securities Disclosure: The Preliminary Official Statement has been reviewed and approved for transmittal to the City Council and Agency Board by staff and the financing team. The Preliminary Official Statement must include all facts that would be considered material to an investor in the Bonds. Material information is information that there is a substantial likelihood would have actual significance in the deliberations of the reasonable investor when deciding whether to buy or sell the Bonds.
Members of the City Council and Agency Board are obligated to review the Preliminary Official Statement to make sure they feel comfortable that it includes all material facts.
5. Bond Purchase Agreement: This is an agreement among the City, the Agency, and the Underwriter, which provides the terms and conditions for the sale of the Bonds to the Underwriter, and once signed, locks in the final terms and interest rates of the Bonds. See Attachment 8.
6. Continuing Disclosure Certificate: This agreement obligates the City to continue providing certain information regarding the City and the Bonds as long as they are outstanding. See Attachment 9.
Financing Team and Cost of Issuance
Through a Request for Proposals and historical experience working with various members of the financing team to issue the Bonds, City staff has selected the following firms as part of the bond issuance:
Municipal Advisor: Urban Futures, Inc.
Bond and Disclosure Counsel: Stradling Yocca Carlson & Rauth LLP Underwriter: BofA Securities, Inc.
Underwriter’s Counsel: Hawkins Delafield & Wood LLP
Trustee/Filing Agent: Wilmington Trust, N.A.
Conclusion and Recommendation
Staff recommends that the City Council adopt a Resolution (Attachment 1) of the City Council of the City of Pismo Beach making required findings authorizing the execution and delivery of documents relating to the sale and issuance of not to exceed $48,500,000 Pismo Beach Public Financing Agency Series 2024A Lease Revenue Bonds (Public Council Agenda 05-07-2024 11.A-4
Safety Facility Project) to finance construction of a Public Safety Facility Project and authorizing and directing certain actions in connection therewith.
Staff recommends that the Board of the Pismo Beach Public Financing Agency adopt a Resolution (Attachment 2) of the Pismo Beach Public Financing Agency approving the execution and delivery of documents in connection with the sale and issuance of the Pismo Beach Public Financing Agency Series 2024A Lease Revenue Bonds (Public Safety Facility Project) in a principal amount not to exceed $48,500,000 and authorizing and directing certain actions in connection therewith.
FISCAL IMPACT:
The attached resolutions and other documents provide a not-to-exceed principal amount of $48,500,000. This figure represents an upper limit, while the actual proceeds from the bonds are anticipated to be approximately $41,106,732 (net of finance charges), reflecting the current estimated cost of the Facility Project. Based on these projections, staff expects to issue approximately $38,530,000 in principal amount of the 2024A Lease Revenue Bonds for Public Safety Facility. Annual lease payments (amortized over a period of 30 years), payable from the City’s General Fund and expected to be supported by amounts transferred from the Parking Enterprise Fund to the General Fund, are expected to be approximately $2.5 million per year. Total aggregate base rental payments are estimated to be $76.1 million over the 30-year period. The final payment date of the Bonds will be December 1, 2054 and no later than December 1, 2055. In accordance with Government Code § 5852.1, good faith estimates are provided with respect to the Bonds below.
Table 1: 2024A Lease Revenue Bonds for Public Safety Facility Financing Terms and Structure*
Description Details
Term 30 years
True Interest Rate 4.40%
Principal Amount $38,530,000 + Premium $2,928,034
Matures December 1, 2054
Finance Charge $351,302
Proceeds Amount (for
Facility Project) $41,106,732
Total Base Rental Payment $76,130,243
Annual Base Rental Payment General Fund $2.5 million/year Call Provisions 10-year call with no prepayment penalty of outstanding par amount
*Preliminary and subject to change.
ATTACHMENTS:
1. City Resolution
2. Pismo Beach Public Financing Agency Resolution
3. Second Supplement to Lease Agreement (online attachment) Council Agenda 05-07-2024 11.A-5
4. Second Supplement to Site Lease (online attachment)
5. Second Supplement to Indenture (online attachment)
6. Second Supplement to Assignment Agreement (online attachment)
7. Preliminary Official Statement (online attachment)
8. Bond Purchase Agreement (online attachment)
9. Continuing Disclosure Certificate (online attachment) Online attachments are available online in the Access Pismo public records portal at www.pismobeach.org/accesspismo2 , or upon request from the City Clerk’s Office.
Submitted by: Nadia Feeser, Administrative Services Director City Manager Approval:
2 Full URL:
https://accesspismo.pismobeach.org/WebLink/DocView.aspx?id=529015&dbid=0&repo=Laserfiche Council Agenda 05-07-2024 11.A-6
RESOLUTION NO. R-2024-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH,
CALIFORNIA MAKING REQUIRED FINDINGS AUTHORIZING THE EXECUTION
AND DELIVERY OF DOCUMENTS RELATING TO THE SALE AND ISSUANCE OF NOT TO EXCEED $48,500,000 PISMO BEACH PUBLIC FINANCING AGENCY SERIES 2024A LEASE REVENUE BONDS (PUBLIC SAFETY FACILITY PROJECT)
TO FINANCE CONSTRUCTION OF A PUBLIC SAFETY FACILITY PROJECT AND
AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION
THEREWITH
WHEREAS, the City of Pismo Beach (the “City”) is a municipal corporation and a general law city duly organized and existing under and pursuant to the Constitution and laws of the State of California (the “State”); and
WHEREAS, the Pismo Beach Public Financing Agency (the “Agency”) has assisted the City to finance certain improvements of the City through the prior issuance of various series of bonds (the “Prior Bonds”) pursuant to that certain Indenture, dated as of June 1, 2017, as supplemented by a First Supplement to Indenture, dated as of December 1, 2017 (together, the “Original Indenture”), each by and between the Agency and Wilmington Trust, N.A., as trustee (the “Trustee”); and WHEREAS, in connection with the issuance of the Prior Bonds, the Agency and the City entered into that certain Site and Facilities Lease, dated as of June 1, 2017, as supplemented by a First Supplement to Site and Facilities Lease, dated as of December 1, 2017 (together, the “Original Site Lease”), pursuant to which the City leased to the Agency certain real property and the improvements thereon (the “Leased Property”), and that certain Lease Agreement, dated as of June 1, 2017, as supplemented by the First Supplement to Lease Agreement dated as of December 1, 2017 (together, the “Original Lease Agreement”), pursuant to which the Agency subleased the Leased Property back to the City; and
WHEREAS, the Original Indenture allows for the issuance of Additional Bonds (as such term is defined in the Original Indenture) to finance additional improvements for the City; and
WHEREAS, the City desires to cause the Agency to issue the Pismo Beach Public Financing Agency Series 2024A Lease Revenue Bonds (Public Safety Facility Project), in the aggregate principal amount not to exceed $48,500,000 (the “2024 Bonds”), which 2024 Bonds will be secured by certain Base Rental Payments (as such term is defined in the Original Indenture) to be made pursuant to the Lease (as defined below), in order to provide financing for the costs of the design and construction of a public safety facility and related improvements to be located within the City (the “Project”); and WHEREAS, to accomplish the sale, preparation and issuance of the 2024 Bonds, the City and the Agency desire to enter into a Second Supplement to Site and Facilities Lease Attachment 1
Council Agenda 05-07-2024 11.A-7
(the “Second Supplement to Site Lease” and, together with the Original Site Lease, the “Site Lease”) and a Second Supplement to Lease Agreement (the “Second Supplement to Lease Agreement” and together with the Original Lease Agreement, the “Lease”), in order to make certain amendments thereto; and
WHEREAS, to facilitate the issuance of the 2024 Bonds, the City desires to approve the Agency’s execution and delivery of a Second Supplement to Indenture (the “Second Supplement to Indenture”), by and between the Agency and the Trustee, and a Second Supplement to Assignment Agreement (the “Second Supplement to Assignment Agreement”), by and between the Agency and the Trustee; and WHEREAS, the 2024 Bonds will be issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code (the “Act”); and
WHEREAS, the City and the Agency have selected BofA Securities, Inc. (the “Underwriter”) to serve as the underwriter of the 2024 Bonds and, in connection therewith, to purchase the 2024 Bonds from the Agency pursuant to a Bond Purchase Agreement (the “Bond Purchase Agreement”); and
WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”), requires that, in order to be able to purchase or sell the 2024 Bonds, the Underwriter thereof must have reasonably determined that the City has undertaken in a written agreement or contract for the benefit of the holders of the 2024 Bonds to provide disclosure of certain financial information and certain events on an ongoing basis; and
WHEREAS, in order to cause such requirement to be satisfied, the City desires to execute and deliver a Continuing Disclosure Certificate (the “Continuing Disclosure Certificate”); and
WHEREAS, a form of the Preliminary Official Statement with respect to the 2024 Bonds (the “Preliminary Official Statement”) has been prepared; and WHEREAS, the City is a member of the Agency and the Project is located within the boundaries of the City; and
WHEREAS, the City has prior to the consideration of this Resolution held a public hearing on the issuance of the 2024 Bonds in accordance with Section 6586.5 of the Act, which hearing was held at 760 Mattie Road, Pismo Beach, California, on May 7, 2024; and WHEREAS, in accordance with Section 6586.5 of the Act, notice of such hearing was published once at least five days prior to the hearing in a newspaper of general circulation in the City; and
WHEREAS, the City Council has been presented with the form of each document referred to herein to be executed and delivered in connection with the financing contemplated Attachment 1
Council Agenda 05-07-2024 11.A-8
hereby, and the City Council desires to authorize and direct the execution of such documents and the consummation of such financing; and
WHEREAS, all acts, conditions and things required by the Constitution and laws of the State to exist, to have happened and to have been performed precedent to and in connection with the issuance of the 2024 Bonds do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City 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.
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Pismo Beach as follows:
SECTION 1. Approval of Recitals. Each of the above recitals is true and correct.
SECTION 2. Findings and Determinations.
A.The City Council hereby specifically finds and declares that each of the statements, findings and determinations of the City set forth in the foregoing recitals and in the preambles of the documents approved herein is true and correct.
B.Following a duly noticed and conducted public hearing, the City Council hereby finds and determines that there are significant public benefits to the citizens of the City through the use of the Act to assist the City with the financing for the Project and the issuance of the 2024 Bonds and otherwise hereunder within the meaning of Section 6586(a)-(d), inclusive, of the Act and that the issuance of the 2024 Bonds and related transactions will result in more efficient delivery of local agency services to residential and commercial development.
SECTION 3. Authorization of 2024 Bonds. The City Council hereby authorizes the preparation, sale and issuance of the 2024 Bonds in one or more series in a combined aggregate principal amount not to exceed $48,500,000 in order to finance: (i) design and construction of the Project, and (ii) costs of issuing the 2024 Bonds. The 2024 Bonds may be issued as tax-exempt or taxable bonds, or any combination thereof.
SECTION 4. Approval of Second Supplement to Lease Agreement. The form of the Second Supplement to Lease Agreement presented at this meeting and on file with the City Clerk (the “Clerk”), is hereby approved. Each of the City Manager of the City (the “City Manager”) and the Administrative Services Director of the City (the “Administrative Services Director”) or their authorized designee(s), and any other proper officer of the City (collectively, the “Authorized Officers”), is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Second Supplement to Lease Agreement in substantially said form, with such changes 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 amount of the principal component of the payments attributable to the Second Supplement to Lease Agreement shall not exceed $48,500,000 and the final scheduled payment shall not be Attachment 1
Council Agenda 05-07-2024 11.A-9
later than December 1, 2055 (subject to extension as provided in the Lease). The property to be leased pursuant to the Second Supplement to Lease Agreement to finance the Project shall consist of the Leased Property, provided that, in the event that it is determined by an Authorized Officer that there are limitations or restrictions on the ability of the City to lease or sublease any portion of the Leased Property as contemplated by the Lease, the Authorized Officers may designate other or additional real property of the City to be leased or subleased pursuant to the Site Lease and the Lease, with such designation to be conclusively evidenced by the execution and delivery of the Lease by the Authorized Officer, and the City Council hereby finds and determines that the annual lease payments and additional payments due under the Original Lease Agreement as amended and supplemented by the Second Supplement to Lease Agreement in each fiscal year will not exceed the fair rental value of the Leased Property during such fiscal year.
SECTION 5. Approval of Second Supplement to Site Lease. The form of the Second Supplement to Site Lease presented at this meeting and on file with the Clerk is hereby approved. Each of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Second Supplement to Site Lease in substantially said form, with such changes 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 Second Supplement to Indenture. The form of the Second Supplement to Indenture presented at this meeting and on file with the Clerk is hereby approved for execution and delivery by the Agency.
SECTION 7. Approval of Second Supplement to Assignment Agreement. The Second Supplement to Assignment Agreement substantially in the form on file with the Clerk is hereby approved for execution and delivery by the Agency.
SECTION 8. Approval of Bond Purchase Agreement. The form of the Bond Purchase Agreement presented at this meeting and on file with the Clerk is hereby approved. Each of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Bond Purchase Agreement in substantially said form, with such changes 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 aggregate underwriter’s discount shall not exceed 0.30% of the aggregate principal amount of the 2024 Bonds (not including any original issue discount or premium) and the all-in true interest cost applicable to the 2024 Bonds shall not exceed 5.50% per annum.
SECTION 9. Approval of Preliminary Official Statement; Official Statement. The preparation and distribution of the Preliminary Official Statement, in substantially the form presented at this meeting and on file with the Clerk, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is approved. The Authorized Officers are hereby authorized to sign a certificate pursuant to Rule relating to the Preliminary Official Statement. Each Authorized Officer is hereby authorized and Attachment 1
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directed to execute, approve and deliver the final Official Statement (the “Official Statement”) in the form of the Preliminary Official Statement, 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 Underwriter is hereby authorized to distribute copies of the Preliminary Official Statement to persons who may be interested in the initial purchase of the 2024 Bonds and are directed to deliver copies of the final version of the Official Statement to all actual initial purchasers of the 2024 Bonds.
SECTION 10. Continuing Disclosure Certificate. The form of the Continuing Disclosure Certificate presented at this meeting and on file with the Clerk is hereby approved. Each of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Continuing Disclosure Certificate in substantially said form, with such changes 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 11. Retention of Financing Professionals. Wilmington Trust, N.A. shall continue to act as trustee under the Second Supplement to Indenture unless and until replaced in accordance with the provisions of the Original Indenture. Stradling Yocca Carlson & Rauth LLP is hereby appointed as Bond Counsel and Disclosure Counsel, and Urban Futures, Inc. is hereby appointed as Municipal Advisor. The City Manager or any Authorized Officer is hereby authorized and directed to execute contracts with such consultants.
SECTION 12. Attestations. The Clerk and such person or persons as may have been designated by the Clerk to act on her behalf, are hereby authorized and directed to attest the signature of the Authorized Officers designated herein to execute any documents described herein, and to affix and attest the seal of the City, as may be required or appropriate in connection with the execution and delivery of the Second Supplement to Lease Agreement and the Second Supplement to Site Lease.
SECTION 13. Official Actions. The Authorized Officers are each hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which each may deem necessary or advisable (including the payment of other costs of issuance approved by the City Manager or his designee) in order to consummate the sale and issuance of the 2024 Bonds and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, the 2024 Bonds, the Second Supplement to Lease Agreement, the Second Supplement to Indenture, the Second Supplement to Site Lease, including but not limited to, adding property to, substituting property for or removing property from the Leased Property and making such further amendments to the Original Site Lease, the Original Lease Agreement and the Original Indenture as may be necessary to facilitate the issuance of the 2024 Bonds in accordance with the terms of such agreements and paying for fees and other costs of issuance of the 2024 Bonds as agreed to by the City and the respective parties thereto and causing documents to be recorded with the County Recorder of San Luis Obispo County. Such actions heretofore taken by such officers or designees are hereby ratified, Attachment 1
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confirmed and approved. Each of the Authorized Officers is hereby authorized and directed to determine which of the other real property assets of the City, if any, shall be included as a part of the Site (as such term is defined in the Original Site Lease) and the Leased Property.
The City Manager or any other Authorized Officer, acting on behalf of the City, is hereby authorized to evaluate and determine whether to (a) procure a municipal bond insurance policy (“Insurance Policy”) and/or a municipal bond debt service reserve fund surety or policy (a “Reserve Policy”) with respect to the 2024 Bonds, and (b) to negotiate and enter into such contracts or agreements as may be necessary and appropriate in connection with the purchase of such Insurance Policy and/or Reserve Policy.
SECTION 14. Good Faith Estimates. In accordance with Government Code Section 5852.1, there has been presented to this City Council in the Staff Report accompanying this Resolution certain good faith estimates provided to the City by its municipal advisor with respect to the 2024 Bonds.
SECTION 15. Effective Date. This Resolution shall take effect immediately upon its passage and adoption.
UPON MOTION OF Council Member , seconded by Council Member , the foregoing resolution was adopted by the City Council of the City of Pismo Beach this 7th day of May 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
Approved: Attest:
________________________ ________________________
Ed Waage, Mayor Erica Inderlied, City Clerk
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Pismo Beach, California, on _______________________. ________________________
Erica Inderlied, City Clerk
Attachment 1
Council Agenda 05-07-2024 11.A-12
RESOLUTION NO. PFA2-R-2024-XXX
A RESOLUTION OF THE PISMO BEACH PUBLIC FINANCING AGENCY
APPROVING THE EXECUTION AND DELIVERY OF DOCUMENTS IN CONNECTION
WITH THE SALE AND ISSUANCE OF THE PISMO BEACH PUBLIC FINANCING AGENCY SERIES 2024A LEASE REVENUE BONDS (PUBLIC SAFETY FACILITY PROJECT) IN A PRINCIPAL AMOUNT NOT TO EXCEED $48,500,000 AND
AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION
THEREWITH
WHEREAS, the Pismo Beach Public Financing Agency (the “Agency”) is a joint exercise of powers authority with the authority to assist in the financing of the construction, reconstruction, modernization and equipping of certain capital improvements on behalf of the City of Pismo Beach (the “City”); and
WHEREAS, the Agency has assisted the City to finance certain improvements of the City through the prior issuance of various series of bonds (the “Prior Bonds”) pursuant to that certain Indenture, dated as of June 1, 2017, as supplemented by a First Supplement to Indenture, dated as of December 1, 2017 (together, the “Original Indenture”), each by and between the Agency and Wilmington Trust, N.A., as trustee (the “Trustee”); and WHEREAS, in connection with the issuance of the Prior Bonds, the Agency and the City entered into that certain Site and Facilities Lease, dated as of June 1, 2017, as supplemented by a First Supplement to Site and Facilities Lease, dated as of December 1, 2017 (together, the “Original Site Lease”), pursuant to which the City leased to the Agency certain real property and the improvements thereon (the “Leased Property”), and that certain Lease Agreement, dated as of June 1, 2017, as supplemented by the First Supplement to Lease Agreement, dated as of December 1, 2017 (together, the “Original Lease Agreement”), pursuant to which the Agency subleased the Leased Property back to the City; and
WHEREAS, in connection with the issuance of the Prior Bonds, the Agency and the Trustee entered into an Assignment Agreement, dated as of June 1, 2017, as supplemented by a First Supplement to Assignment Agreement, dated as of December 1, 2017 (together, the “Original Assignment Agreement”), each by and between the Agency and the Trustee pursuant to which, among other things, all rights to receive the Base Rental Payments (as such term is defined in the Original Indenture) under the Original Lease Agreement have been assigned without recourse by the Agency to the Trustee; and
WHEREAS, the Original Indenture allows for the issuance of Additional Bonds (as such term is defined in the Original Indenture) to finance additional improvements for the City; and
WHEREAS, the Agency desires to issue the Pismo Beach Public Financing Agency Series 2024A Lease Revenue Bonds (Public Safety Facility Project), in the aggregate Attachment 2
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principal amount not to exceed $48,500,000 (the “2024 Bonds”), which 2024 Bonds will be secured by certain Base Rental Payments to be made pursuant to the Lease (as defined below), in order to provide financing for the costs of the design and construction of a public safety facility and related improvements to be located within the City (the “Project”); and
WHEREAS, to accomplish the sale, preparation and issuance of the 2024 Bonds, the City and the Agency desire to enter into a Second Supplement to Site and Facilities Lease (the “Second Supplement to Site Lease” and, together with the Original Site Lease, the “Site Lease”) and a Second Supplement to Lease Agreement (the “Second Supplement to Lease Agreement” and together with the Original Lease, the “Lease”), in order to make certain amendments thereto; and
WHEREAS, to facilitate the issuance of the 2024 Bonds, the Agency desires to enter into a Second Supplement to Indenture (the “Second Supplement to Indenture”), by and between the Agency and the Trustee, and a Second Supplement to Assignment Agreement (the “Second Supplement to Assignment Agreement”), by and between the Agency and the Trustee; and
WHEREAS, the 2024 Bonds will be issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code (the “Act”); and
WHEREAS, the City and the Agency have selected BofA Securities, Inc. (the “Underwriter”) to serve as the underwriter of the 2024 Bonds and, in connection therewith, to purchase the 2024 Bonds from the Agency pursuant to a Bond Purchase Agreement (the “Bond Purchase Agreement”); and
WHEREAS, a form of the Preliminary Official Statement with respect to the 2024 Bonds (the “Preliminary Official Statement”) has been prepared; and WHEREAS, the City is a member of the Agency and the Project is located within the boundaries of the City; and
WHEREAS, the City has prior to the consideration of this Resolution held a public hearing on the issuance of the 2024 Bonds in accordance with Section 6586.5 of the Act, which hearing was held at 760 Mattie Road, Pismo Beach, California, on May 7, 2024; and WHEREAS, in accordance with Section 6586.5 of the Act, notice of such hearing was published once at least five days prior to the hearing in a newspaper of general circulation in the City; and
WHEREAS, the Board of Directors of the Agency (the “Board of Directors”) has been presented with the form of each document referred to herein to be executed and delivered in connection with the financing contemplated hereby, and the Board of Directors desires to authorize and direct the execution of such documents and the consummation of such financing.
Attachment 2
Council Agenda 05-07-2024 11.A-14
NOW, THEREFORE BE IT RESOLVED by the Board of Directors of the Pismo Beach Public Financing Agency as follows:
SECTION 1. Approval of Recitals; Finding of Public Benefits. Each of the above recitals is true and correct. The Board of Directors has determined and hereby finds that the Agency’s assistance in financing the Project by the issuance of the 2024 Bonds will result in significant public benefits of the types described in Section 6586 (a) through (d), inclusive, of the Act, in that the issuance of the 2024 Bonds and related transactions will result in more efficient delivery of local agency services to residential and commercial development.
SECTION 2. Second Supplement to Site Lease. The Second Supplement to Site Lease presented at this meeting is approved. Each of the Chair, Vice Chair, Executive Director, Assistant Executive Director, Treasurer and Secretary of the Agency, or their authorized designee(s), and any other proper officer of the Agency (collectively, the “Authorized Officers”), in the name and on behalf of the Agency, is authorized and directed to execute and deliver the Second Supplement to Site Lease. The Second Supplement to Site Lease shall be executed in substantially the form hereby approved, with such changes therein as the Authorized Officer executing the same may require or approve (including, without limitation, the description of the Leased Property to be leased thereunder), such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 3. Second Supplement to Lease Agreement. The Second Supplement to the Lease Agreement presented at this meeting is approved. Each Authorized Officer, in the name and on behalf of the Agency, is authorized and directed to execute and deliver the Second Supplement to Lease Agreement. The Second Supplement to Lease Agreement shall be executed in substantially the form hereby approved, with such changes therein as the Authorized Officer executing the same may require or approve (including, without limitation, the description of the Leased Property to be leased thereunder), such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 4. Second Supplement to Indenture. The Second Supplement to the Indenture presented at this meeting is approved. Each Authorized Officer, in the name and on behalf of the Agency, is authorized and directed to execute and deliver Second Supplement to Indenture. The Second Supplement to Indenture shall be executed in substantially the form hereby approved, with such changes 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, that such changes shall be consistent with the terms of the 2024 Bonds established at a negotiated sale pursuant to the Bond Purchase Agreement; provided further, that the aggregate principal amount of the 2024 Bonds shall not exceed $48,500,000, the final maturity date of the 2024 Bonds shall be no later than December 1, 2055 and the true interest cost applicable to the 2024 Bonds shall not exceed 5.50% per annum. In the event that it is determined by the Treasurer, or her designee, that the funding or financing of capitalized interest on the 2024 Bonds would be in the best interests of the Agency, the Second Supplement to the Indenture may be modified to provide for capitalized interest on such basis as is Attachment 2
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determined by the Treasurer or her designee, such determination to be conclusively evidenced by the execution and delivery of the Second Supplement to the Indenture by an Authorized Officer.
SECTION 5. Approval of 2024 Bonds. The issuance by the Agency of not to exceed $48,500,000 aggregate principal amount of the 2024 Bonds, in one or more series, in the principal amounts, bearing interest at the rates and maturing on the dates as specified in the Second Supplement to Indenture as finally executed, is hereby authorized and approved. The 2024 Bonds may be issued as tax-exempt or taxable bonds, or any combination thereof.
SECTION 6. Second Supplement to Assignment Agreement. The Second Supplement to Assignment Agreement presented at this meeting is approved. Each Authorized Officer, in the name and on behalf of the Agency, is authorized and directed to execute and deliver the Second Supplement to Assignment Agreement. The Second Supplement to Assignment Agreement shall be executed in substantially the form hereby approved, with such changes 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 7. Bond Purchase Agreement. The Bond Purchase Agreement presented at this meeting is approved. Each Authorized Officer, in the name and on behalf of the Agency, is authorized and directed to execute and deliver the Bond Purchase Agreement.
The Bond Purchase Agreement shall be executed in substantially the form hereby approved, with such changes 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 aggregate underwriter’s discount shall not be in excess of 0.30% of the aggregate principal amount of the 2024 Bonds (not including original issue discount or premium).
SECTION 8. Preliminary Official Statement; Official Statement. The preparation and distribution of the Preliminary Official Statement, in substantially the form presented at this meeting, with such changes therein as may be approved by an Authorized Officer, is approved. The Authorized Officers are hereby authorized to sign a certificate pursuant to Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 relating to the Preliminary Official Statement. Each Authorized Officer is hereby authorized and directed to execute, approve and deliver the final Official Statement (the “Official Statement”) in the form of the Preliminary Official Statement, with such changes as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. The Underwriter is hereby authorized to distribute copies of the Preliminary Official Statement to persons who may be interested in the initial purchase of the 2024 Bonds and are directed to deliver copies of the final version of the Official Statement to all actual initial purchasers of the 2024 Bonds.
SECTION 9. Official Actions. The officers and agents of the Agency are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized Attachment 2
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and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, including but not limited to, adding property to, substituting property for, or removing property from the Leased Property and making such further amendments to the Original Site Lease, the Original Lease Agreement, the Original Assignment Agreement and the Original Indenture as may be necessary to facilitate the issuance of the 2024 Bonds in accordance with the terms of such agreements and paying for fees and other costs of issuance of the 2024 Bonds as agreed to by the City and the respective parties thereto. All actions heretofore taken by the officers and agents of the Agency with respect to the transactions set forth above are hereby approved, confirmed and ratified.
SECTION 10. Good Faith Estimates. In accordance with Government Code Section 5852.1, there has been presented to this Board of Directors in the Staff Report accompanying this Resolution certain good faith estimates provided to the Agency by its municipal advisor with respect to the 2024 Bonds.
SECTION 11. Effect. This Resolution shall take effect immediately upon its passage and adoption.
UPON MOTION OF Board Member , seconded by Board Member , the foregoing resolution was adopted by the Governing Board of the Pismo Beach Public Financing Agency this 7th day of May 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
Approved: Attest:
________________________ ________________________
Ed Waage, Chairperson Erica Inderlied, Secretary
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the Pismo Beach Public Financing Agency, on _______________________. ________________________
Erica Inderlied, Secretary
Attachment 2
Council Agenda 05-07-2024 11.A-17