Susana Alcala Wood, City Attorney Jorge Oseguera, City Auditor Mindy Cuppy, City Clerk Howard Chan, City Manager John Colville, City Treasurer City Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-00343 March 8, 2022 Consent Item 03
Title: Extension of City’s Pool of Bond Trustee Providers
Location: Citywide
Recommendation: Adopt a Resolution approving the extension of the pool of firms qualified to provide bond trustee services to the City through FY2022-23.
Contact: Claudia Lara, Debt Analyst, (916) 808-2267, [email protected] ;
Brian Wong, Debt Manager, (916) 808-5811, [email protected], Office of the City Treasurer
Presenter: None
Attachments:
1-Description/Analysis
2-Resolution
File ID: 2022-00343 Consent Item 03
March 8, 2022
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City of Sacramento
Description/Analysis
Issue Detail: On December 6, 2016, Council approved by resolution (Resolution No. 2016-0420) a City’s pool of bond trustee providers for a five-year period. The pool of bond trustee providers that was in place through FY2020-21, consisted of the following:
• U.S. Bank
• MUFG Union Bank
• Wilmington Trust
• Zions Bank
Debt Management Division of the City Treasurer’s Office needs additional time to prepare a comprehensive Request for Qualifications (RFQ) to establish a new pool of bond trustee providers.
The City Treasurer’s Office recommends Council extend the term of the current pool of bond trustee providers through June 30, 2023, so that the City Treasurer’s Office may prepare a RFQ for the purpose of establishing a new pool of bond trustee providers.
Policy Considerations: Maintaining a pool of financial firms to provide various administrative financial services as specified in the Indenture, Trust Agreement or related document associated with municipal-bond issues. An established pool of trustee providers provides staff with immediate access to expertise, maintains continuity for City projects, and ensures competitive exposure and access to trustee offered services.
Economic Impacts: Not applicable.
Environmental Considerations: Not applicable. This report concerns an action that does not constitute “approval” as defined in the CEQA Guidelines because it does not commit the City to a definite course of action in regards to the project (14 Cal. Code Regs. § 15352).
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: Extending the term of the pool of bond trustees will enable the City the ability to select a bond trustee for each of the anticipated bond-financings through June 30, 2023. The financial firm selected to serve as the trustee of a financing that closes on or prior to June 30, 2023 (prior to the establishment of a new pool of bond trustee providers) will be subject to the terms of the indenture or trust agreement of the respective financing which typically runs 30 years. In FY2022-23, the City Treasurer’s Office intends to develop a comprehensive RFQ to establish a new pool of bond trustee providers to meet the City’s anticipated bond-financing needs over the next five years.
File ID: 2022-00343 Consent Item 03
March 8, 2022
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City of Sacramento
Financial Considerations: There are no immediate financial impacts to the City. Any work performed under future agreements with the financial firms for trustee services will be negotiated at the time of each financing. Typically, there are two types of costs: one-time costs and on-going costs. One-time costs are generally paid exclusively with bond proceeds upon the sale of bonds in the form of costs of issuance and on-going costs are paid from the City Treasurer’s operating budget, with reimbursement from funds of the department or agency responsible for the debt or, in the case of land-secured financings, from the special-tax redemption funds.
Local Business Enterprise (LBE): Not applicable.
RESOLUTION NO. 20xx-xxxx
Adopted by the Sacramento City Council
March 8, 2022
Resolution Extending the Term of City’s Pool of Bond Trustee Providers
BACKGROUND
A. On December 6, 2016, the City Council adopted Resolution No. 2016-0420 (“Establishing the City’s Pool of Bond Trustee Providers for the fiscal years 2016-17 through 2020-21”) (“City’s Trustee Pool”). The City Treasurer’s Office (“CTO”) did not intend to replace existing trustees of each of its outstanding bond issues, but rather establish a pool of trustees eligible to provide the City with trustee services in all financial matters related to the issuance and maintenance of bonds and debt obligations.
Additionally, the pool of bond trustee providers is not intended to be exclusive, as the City reserves the right to utilize a provider that is not part of the proposed pool as it sees fit.
B. The term for the City’s Trustee Pool, which is comprised of U.S. Bank, MUFG Union Bank, Wilmington Trust, and Zions Bank, expired on June 30, 2021.
C. The City is currently working on several concurrent bond financings, which each require a bond trustee provider to effectuate the terms and conditions of the respective bond indentures.
D. CTO’s Debt Management Division needs additional time to prepare a comprehensive request for qualifications to establish the City’s new Trustee Pool.
E. Extending the term of the City’s Trustee Pool through fiscal year 2022-23 enables the CTO to select a bond trustee provider from the City’s Trustee Pool for the current financings and the planned financings that are to occur in the near future without impacting the timing of those financings.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Treasurer's recommendation to extend the City’s pool of bond trustee providers through fiscal year 2022-23 is hereby approved, with the pool consisting of the following four firms: US Bank, MUFG Union Bank, Wilmington Trust, and
2 Zions Bank.
Section 2. The Council hereby authorizes the City Treasurer or his designee, at the discretion and in his judgment, to select from the pool the firm or firms that will serve as the bond trustee provider for each of the City’s bond financings through fiscal year 2022-23.