AGENDA
SPECIAL CITY COUNCIL MEETING
(This meeting is virtual)
Tuesday, July 19, 2022
4:00 p.m.
Community Services Building
440 Civic Center Plaza
Richmond, CA 94804
Members
Thomas K. Butt, Mayor
Demnlus Johnson III, Councilmember at Large
NathanielBates, Councilmember at Large
Claudia Jimenez, Councilmember District 6
Eduardo Martinez, Vice Mayor at Large
Melvin Willis, Councilmember District 1
Gayle McLaughlin, Councilmember District 5
Link to City Council Agendas/Packets
http://www.ci.richmond.ca.us/4157/City-ofRichmond-Council-Meetings Register to receive notification of new agendas, etc.
http://www.ci.richmond.ca.us/list.aspx
CORONAVIRUS DISEASE (COVID-19) ADVISORY
PURSUANT to the Governor of the State of California’s Assembly Bill 361 and in the interest of the public health and safety, attendance at the City of Richmond City Council meeting will be limited to Council members, essential City of Richmond staff, and members of the news media.
Public comment will be confined to items appearing on the agenda and will be limited to the methods provided below.
How to watch the meeting from home:
1. KCRT – Comcast Channel 28 or AT&T Uverse Channel 99
2. Livestream online at http://www.ci.richmond.ca.us/3178/KCRT-Live
Public comment may be submitted by mail, eComment, email and/or Zoom video conference in the manner that follows, provided that no member of the public may submit more than one verbal comment per agenda item.
Via mail: received by 1:00 p.m. the day of the meeting, sent to 450 Civic Center Plaza, 3rd Floor, Office of the Clerk, Richmond, CA 94804.
Via eComments: eComments are available once an agenda is published. Locate the meeting in "upcoming meetings" and click the comment bubble icon. Click on the item you wish to comment on. eComments can be submitted when the agenda is published and until the conclusion of public comments for the agenda item. eComments can be viewed by the City Council and members of the public as they are submitted. Email your comment to [email protected] should you have difficulty submitting an eComment during a meeting.
Via email: to [email protected] by 1:00 p.m. the day of the meeting.
Emails MUST contain in the subject line 1) public comments – Open Session prior to Closed Session; 2) public comments – agenda item #__ [include the agenda item number]. All such email with correctly labeled subject lines will be posted on-line and emailed to the City Council before the meeting is called to order. Email received after 1:00 p.m. will be posted on-line following the meeting as part of the supplemental materials attached to the meeting minutes.
Via Zoom by video conference: for Open Session and City Council: Please click the link below to join the webinar:
https://zoom.us/j/99312205643?pwd=MDdqNnRmS2k4ZkRTOWhlUldQOUF1Zz09 Passcode: ccmeeting
By iPhone one-tap: US: +16699006833,,99312205643# or +13462487799,,99312205643# By Telephone: Dial (for higher quality, dial a number based on your current location): US: +1 669 900 6833 or +1 346 248 7799 or +1 253 215 8782 or +1 312 626 6799 or +1 929 205 6099 or +1 301 715 8592
Webinar ID: 993 1220 5643
International numbers available: https://zoom.us/u/aehrwCgISx
To comment by video conference: click on the Participants button at the bottom of your screen and
select the “Raise Your Hand” button to request to speak when Public Comment is being asked for.
When called upon, press the unmute button. After the allotted time, you will then be re-muted. **
To comment by phone: you will be prompted to “Raise Your Hand” by pressing “*9” to request to speak when Public Comment is asked for. When called upon, you will be asked to unmuted by pressing *6. After the allotted time, you will then be re-muted. Instructions of how to raise your hand by phone are available at:
https://support.zoom.us/hc/en-us/articles/201362663 -Joining-a-meeting-by-phone. **
**The mayor will announce the agenda item number and open public comment when appropriate.
The City cannot guarantee that its network and/or the site will be uninterrupted. To ensure that the City Council receives your comments, you are strongly encouraged to submit your comments in writing in advance of the meeting.
AB 361 Procedures in the Event of Technical Difficulties: In the event the meeting broadcast is disrupted, or if a technical issue on the agency's end disrupts public participation, the legislative body board cannot take any further action on the agenda until the technical issue is resolved.
Properly labeled public comments will be considered a public record, put into the official meeting record, available after the meeting as supplemental materials, and will be posted as an attachment to the meeting minutes when the minutes are posted:
http://www.ci.richmond.ca.us/Archive.aspx?AMID=31.
Accessibility for Individuals with Disabilities:
Upon request, the City will provide for written agenda materials in appropriate alternative formats, or disability-related modification or accommodation, including auxiliary aids or services and sign language interpreters, to enable individuals with disabilities to participate in and provide comments at/related to public meetings. Please submit a request, including your name, phone number and/or email address, and a description of the modification, accommodation, auxiliary aid, service or alternative format requested at least two days before the meeting. Requests should be emailed to [email protected] or submitted by phone at 510-620-6513, ext. 9, or 510-620-6509.
Requests made by mail to City Clerk’s Office, City Council meeting, 450 Civic Center Plaza, Richmond, CA 94804 must be received at least two days before the meeting. Requests will be granted whenever possible and resolved in favor of accessibility.
Effect of Advisory on In-person public participation: During the pendency of assembly Bill 361, the language in this Advisory portion of the agenda supersedes any language contemplating in-person public comment.
Disclaimer: The City Clerk's Office translates agendas to enhance public access. Translated agendas are provided as a courtesy and do not constitute legal notice of the meeting or items to be discussed. In case of discrepancy, the English agenda will prevail.
Pages
A. SPECIAL COUNCIL MEETING OF THE RICHMOND CITY COUNCIL 4:00 p.m.
B. ROLL CALL
C. STATEMENT OF CONFLICT OF INTEREST
D. PUBLIC COMMENT - LIMITED TO ITEMS ON THE AGENDA ONLY E. NEW BUSINESS
E.1. Mandatory Disclosure Training on Issuance of Taxable Pension Refunding Bonds, Series 2022 ("2022 Refunding Bonds")
5 RECEIVE Mandatory Disclosure Training – Finance Department (Delmy Cuellar 510-620-6740).
F. ADJOURNMENT
________________________
July 19, 2022
Finance Department
DATE: July 19, 2022
TO: Mayor Butt and Members of the City Council
FROM:
Anil Comelo, Interim Deputy City Manager
Delmy Cuellar, Director of Finance
Subject:
Mandatory Disclosure Training on Issuance of Taxable
Pension Refunding Bonds, Series 2022 ("2022 Refunding
Bonds")
FINANCIAL IMPACT: Potential increase in annual debt service required because of need to fund termination payment on an
interest rate swap. Potential future interim General Fund budget savings because of term extension.
PREVIOUS COUNCIL
ACTION:
April 6, 2021; October 5, 2021; December 7, 2021, June
7th, 2022, June 21, 2022
STATEMENT OF THE
ISSUE:
On June 21st, the City Council approved a resolution
authorizing the issuance of refunding bonds for the 2005 Pension Obligation Bonds. The Disclosure Training is
helpful for the City when reviewing the disclosure
document which will be used to sell the bonds and which will be considered by the city at a later meeting.
RECOMMENDED ACTION:
RECEIVE Mandatory Disclosure Training – Finance
Department (Delmy Cuellar 510-620-6740).
AGENDA
REPORT
July 19, 2022
DISCUSSION:
The Securities Exchange Commission ("SEC") regulates the disclosure of information to potential investors regarding municipal bond transactions. These regulations assign legal responsibility for the adequacy of this disclosure to the public entity issuing the bonds. Accordingly, the best practice in public finance is to brief both electeds and staff regarding SEC disclosure requirements prior to the issuance of any new municipal debt obligation. This briefing will be conducted by the law firm retained by the City to prepare the disclosure documents for the proposed 2022 pension obligation bond ("2022 POB") refinancing, Best, Best & Krieger. Representatives of the two bond underwriting firms retained by the City, Loop Capital and Hilltop Securities, will also be at the City Council meeting. Note that Best, Best & Krieger will give the City a legal opinion regarding the adequacy of the investor disclosure document for the 2022 POB. However, as noted above, the City is still legally responsible for the adequacy of investor disclosure document.
Next Steps. During the regular part of the July 19th, 2022 City Council Meeting, City Council will receive information on the Issuance of Taxable Pension Refunding Bonds, Series 2022 ("2022 Refunding Bonds").
The City Council will be asked to consider approval of other legal documents required for the 2022 Refunding Bonds at its meeting of July 26th. At that time, the City Council will need to make a final decision on whether or not to extend the term of the 2022 Refunding Bonds, and if so, by how much.
Assuming City Council approval of the other legal documents required by the 2022 Refunding Bonds, as well as the final recommendations on the financing plan, as described above, anticipated at the Council meeting of July 26th, the 2022 Refunding Bonds will be sold in approximately late August.
DOCUMENTS ATTACHED:
Attachment 1 – City Council Disclosure Training
2020 Best Best & Krieger LLP
Best Best & Krieger
Company/BestBestKrieger
@BBKlaw
City of Richmond
Disclosure Obligations of Issuers
in Public Offerings
Overview of Disclosure
• Purpose
• Initial Disclosure
• Continuing Disclosure
SEC Anti-Fraud Regulations
Excerpts
• Rule 10b-5 of Securities and
Exchange Act of 1934
• It is unlawful for any
person to directly or
indirectly make any
untrue statement of a
material fact or omit to
state a material fact
necessary in order to
make the statements
made, in light of the
circumstances under
which they were made,
not misleading.
• Section 17(a) of Securities and Exchange Act of
1933
• It is unlawful for any person in the offer or
sale of any securities to:
• (1) to employ any device, scheme,
or artifice to defraud, or
• (2) to obtain money or property by
means of any untrue statement of a
material fact or any omission to
state a material fact necessary in
order to make the statements
made, in light of the circumstances
under which they were made, not
misleading; or
• (3) to engage in any transaction,
practice, or course of business
which operates or would operate as
a fraud or deceit upon the
purchaser.
Rule 15c2-12 of the Securities
Exchange Act of 1934 Excerpts
• Initial Disclosure Requirements
• General.
• As a means reasonably designed to prevent fraudulent, deceptive, or manipulative acts or practices, it shall be unlawful for any broker, dealer, or municipal securities dealer (a “Participating Underwriter” when used in connection with an Offering) to act as an underwriter in a primary offering of municipal securities with an aggregate principal amount of $1,000,000 or more (an “Offering”) unless the Participating Underwriter complies with the requirements of this section or is exempted from the provisions of this section.
• (b) Requirements.
• (1) Prior to the time the Participating Underwriter bids for, purchases, offers, or sells municipal securities in an Offering, the Participating Underwriter shall obtain and review an official statement that an issuer of such securities deems final as of its date, except for the omission of no more than the following information: The offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, any other terms or provisions required by an issuer of such securities to be specified in a competitive bid, ratings, other terms of the securities depending on such matters, and the identity of the underwriter(s).
Preliminary Official Statement
(POS) and Final Official Statement
(OS)
• Description of Security
• Purpose Issued
• Description of Issuer and Financial
Condition
• Rating and Bond Insurance
• Risk Factors
• Tax Analysis
• Litigation
• Continuing Disclosure Compliance
Excerpts of Rule 15c2-12(b)(5) of
Securities Exchange Act of 1934
Continuing Disclosure Requirements
• Annual Filing
• A Participating Underwriter shall not purchase or sell municipal securities in connection with an Offering unless the Participating Underwriter has reasonably determined that an issuer of municipal securities, or an obligated person for whom financial or operating data is presented in the final official statement has undertaken … in a written agreement or contract for the benefit of holders of such securities, to provide the following to the Municipal Securities Rulemaking Board in an electronic format …
• Annual financial information for each obligated person for whom financial information or operating data is presented in the final official statement …
• If not submitted as part of the annual financial information, then when and if available, audited financial statements for each obligated person covered by paragraph (b)(5)(i)(A) of this section;
Excerpts of Rule 15c2-12(b)(5)(C) of
Securities Exchange Act of 1934
Continuing Disclosure Requirements
• Event Notices
• (1) Principal and interest payment delinquencies;
• (2) Non-payment related defaults, if material;
• (3) Unscheduled draws on debt service reserves reflecting financial difficulties;
• (4) Unscheduled draws on credit enhancements reflecting financial difficulties;
• (5) Substitution of credit or liquidity providers, or their failure to perform;
• (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other
material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security;
• (7) Modifications to rights of security holders, if material; • (8) Bond calls, if material, and tender offers;
• (9) Defeasances;
• (10) Release, substitution, or sale of property securing repayment of the securities, if material;
• (11) Rating changes;
• (12) Bankruptcy, insolvency, receivership or similar event of the obligated person;
• (13) The consummation of a merger, consolidation, or
acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; • (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material;
• (15) Incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material; and
• (16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties; and
Duty of Public Officials
• As Council members, you have a different perspective from the financing team and staff.
• Some of the questions you may ask, and may review the Preliminary Official Statement to be sure it discloses information concerning answers to those questions, include:
• 1. Is the discussion of the City and its operations, revenue sources or tax base as you understand it? Is there additional information an investor should know before purchasing the Bonds?
• 2. Is there any pending or threatened litigation against the City that can negatively impact finances?
• 3. Are there any circumstances that exist or that are now unfolding that can place an undue demand on City finances, or, are there any indirect demands that can impact the City’s general fund budget that are not described in the Preliminary Official Statement and that should be discussed before the Preliminary Official Statement is finalized?
Continuing Disclosure
Agreement
• Annual reporting requirements and event notices
• Contents
• Audited financial statements
• Specified Information
• Posted to the Municipal Securities Rulemaking
Board’s (MSRB) online service, Electronic
Municipal Market Access (EMMA)
Consequences of Violating SEC
Statutes
• SEC investigation
• SEC enforcement action or private
lawsuit
• Rating downgrade
• Civil and/or criminal investigation
• Imposition of fines/penalties
• Market access
• Sanctions
SEC Enforcement Actions
• Allen Park, MI (2014)
• City of Miami, FL (2013)
• City of Harrisburg, PA (2013)
• City of San Diego, CA (2006)
CDIAC Disclosure
Requirements
• California Debt and Investment Advisory Commission
(CDIAC) requires the following disclosures:
• Report of proposed debt issuance at least 30 days
before bonds are sold and a final report after sale
• Annual report
• Immediate reporting (within 10 days) of:
• Non-payment of any portion of the payment of
principal of or interest on the bonds; or
• Draw on reserve fund
Disclosure in the Age of
COVID-19
• Examples of certain types of
disclosures that may be important
to provide:
• Information regarding the
impact of COVID-19 on
operations and financial
conditions
• Information regarding sources
of liquidity
• Information regarding
availability of federal, state
and local aid
• Reports prepared for other
governmental purposes
• Cautionary language