City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-00674 6/13/2023 Consent Item 22.
Establishment of the City’s Pool of Bond Trustee Providers File ID: 2023-00674
Location: Citywide
Recommendation: Adopt a Resolution: 1) approving a pool of financial institutions qualified to provide bond trustee services to the City for fiscal year (FY) 2023/24 through FY2027/28; and 2) authorizing the City Treasurer to select financial institutions from the pool as needed to participate on the City’s bond financing projects.
Contact: Claudia Lara, Debt Analyst, (916) 808-2267, [email protected]; Ellen Hunt, Senior Debt Analyst, (916) 808-5517; Brian Wong, Debt Manager, (916) 808-5811, [email protected], Office of the City Treasurer Presenter: None.
Attachments:
1-Description/Analysis
2-Resolution
Additional Description/Analysis
Issue Detail: Previously, the City Council authorized the City Treasurer to establish a “pool” to provide bond trustee services to the City during a five-year period, and the City Treasurer, at their discretion, has selected financial institutions from the pool to participate in the City’s bond financings.
The current pool was established in December 2016 and set to expire on June 30, 2021; however, City Treasurer’s Office staff obtained City Council approval to extend the term of the pool through June 30, 2023. During the timeframe the pool was in effect, the City completed various bond financings. Over the next five years of the intended term of the new pool, the City anticipates completing additional bond financings in which bond trustee services will be required.
Policy Considerations: Not applicable.
File ID: 2023-00674 6/13/2023 Consent Item 22.
Economic Impacts: Not applicable.
Environmental Considerations: Approval of the recommendation is not a “project” subject to CEQA because it: (a) has no potential to cause a significant effect on the environment; (b) approves a continuing administrative activity and is thus excluded from the definition of a “project”; and (c) concerns governmental fiscal activities that do not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment. (14 Cal. Code Regs. §§ 15061(b)(2), 15378(b)(4), and 15378(b)(5)).
Sustainability: Not applicable.
Commission/Committee Action: None.
Rationale for Recommendation: During the five-year term of the proposed pool, the City anticipates completing multiple bond financings. Although the proposed pool is for a five-year term, the financial institution selected to serve as bond trustee for the specific bond issue will be subject to the terms of the indenture or trust agreement which typically is for a period of 30 years from the date of issuance of the bonds.
Financial Considerations: There are no immediate financial impacts to the City. Any future agreements with the financial institution for bond trustee services will be negotiated at the time of each financing. Typically, there are two types of costs: 1) one-time costs; paid exclusively with bond proceeds upon the sale of the bonds in the form of costs of issuance; and 2) on-going costs, paid by specific City departmental funds responsible for the debt or special tax paid by the property owners in the case of land-secured financings.
Local Business Enterprise (LBE): Not applicable.
Background: On March 27, 2023, the Office of the City Treasurer distributed a Request for Qualifications (RFQ) to financial institutions capable of providing bond trustee services to the City. In response to the RFQ, three financial institutions submitted Statements of Qualifications (SOQ) to the City. After a careful review of the SOQs by the Office of the City Treasurer’s staff with the objective of establishing a pool of bond trustees with a variety of experience, the Office of the City Treasurer recommends that the new pool of bond trustee providers consist of the following three financial institutions:
· Computershare Trust Company, N.A.
· U.S. Bank Trust Company, National Association
· Zions Bancorporation, National Association, Zions Bank Division
File ID: 2023-00674 6/13/2023 Consent Item 22.
The City Treasurer will select a financial institution from the pool to serve as bond trustee on each new bond financing (excluding bond financings that are in progress and in which the City has selected the trustee for the respective, prospective bond financing). The inclusion of the financial institutions does not guarantee that they will be selected to serve as bond trustee for any future bond financing.
RESOLUTION NO. 2023-XXXX
Adopted by the Sacramento City Council
June 20, 2023
ESTABLISHING THE CITY’S POOL OF BOND TRUSTEE PROVIDERS
FOR FISCAL YEARS 2023/24 THROUGH 2027/28
BACKGROUND
A. Previously, in 2016, the City Council authorized the City Treasurer to establish a pool of bond trustee providers. The current pool is set to expire on June 30, 2023. The City Treasurer does not intend to replace existing trustees for any of its outstanding bond issues, nor replace the selected trustee for any bond financing that are currently in progress.
B. The City Treasurer desires to establish a new pool for fiscal year 2023-24 through fiscal year 2027/28 to provide bond trustee services for the City’s financing needs related to the issuance and management of bonds.
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 appropriate.
C. On March 27, 2023, the City Treasurer distributed a Request for Qualifications (“RFQ”) to institutions capable of providing bond trustee services to the City.
D. In response to the RFQ, three firms submitted Statements of Qualifications (“SOQ”) to the City. After a review of the SOQs by staff of the City Treasurer’s Office, the City Treasurer recommends that the pool covering the period of fiscal year 2023/24 through fiscal year 2027/28 consist of the following three firms: Computershare Trust Company, N.A., U.S. Bank Trust Company, National Association, and Zions Bancorporation, National Association, Zions Bank Division.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Treasurer’s recommendation to establish a pool for fiscal year 2023/24 through fiscal year 2027/28 of bond trustee providers eligible to provide the City bond trustee services is hereby approved, with the pool consisting of the following three firms: Computershare Trust Company, N.A., U.S. Bank Trust Company, National
Association, and Zions Bancorporation, National Association, Zions Bank Division.
Section 2. For each new financing or refinancing project that may commence between fiscal year 2023/24 through fiscal year 2027/28, the City
Treasurer is authorized, at their discretion and in their judgment, to select from the pool or outside of the pool the financing institution(s) to provide bond trustee services for that bond issuance.