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DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
RESOLUTION NO. _______
A RESOLUTION OF THE COUNCIL OF THE CITY OF
SAN JOSE APPROVING AND AUTHORIZING THE
EXECUTION AND DELIVERY OF A FOURTH
AMENDMENT TO CREDIT AGREEMENT AND A FOURTH
AMENDED AND RESTATED FEE LETTER AGREEMENT
WITH WELLS FARGO BANK, NATIONAL ASSOCIATION
RELATED TO THE ISSUANCE BY THE CITY OF
SAN JOSE FINANCING AUTHORITY OF ITS
SUBORDINATE WASTEWATER REVENUE NOTES FOR
A TERM THROUGH OCTOBER 16, 2026, IN AN
AGGREGATE PRINCIPAL AMOUNT OUTSTANDING AT
ANY ONE TIME NOT TO EXCEED $300,000,000 UNTIL
THE EFFECTIVE DATE OF THE FOURTH AMENDMENT
TO CREDIT AGREEMENT AND UP TO $200,000,000
THEREAFTER, FOR THE PURPOSE OF FINANCING OR
REFINANCING WASTEWATER SYSTEM PROJECTS
AND AUTHORIZING OTHER RELATED ACTIONS IN
CONNECTION THEREWITH
WHEREAS, the City of San José (the “City”) and the former Redevelopment Agency of the City of San José (the “Former Agency”) previously entered into a Joint Exercise of Powers Agreement (the “Joint Powers Agreement”) establishing the City of San José Financing Authority (the “Authority”) for the purpose, among others, of assisting the City in its financing needs; and
WHEREAS, the Former Agency, as of February 1, 2012, has been dissolved and the City has become the successor agency of the Former Agency pursuant to Part 1.85 of Division 24 of the California Health and Safety Code and pursuant to California Health and Safety Code Section 34178(b)(3), the joint exercise of powers agreement establishing the Authority remains in effect; and
WHEREAS, the City is empowered by its charter to own, operate and maintain systems, plants, buildings, works and other facilities for the collection, treatment and disposal of sewage and wastewater, including sewage treatment and disposal plants and works and facilities in connection therewith; and
WHEREAS, pursuant to such authority, the City owns and operates its sanitary sewer collection and conveyance system (the “Sanitary Sewer Collection System”); and
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Item Number: SJFA1(a)
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
WHEREAS, pursuant to such authority, on May 6, 1959, the City and the City of Santa Clara entered into that certain Agreement Between San José and Santa Clara Respecting Sewage Treatment Plant regarding the ownership, operation, maintenance and use of the existing “San Jose-Santa Clara Water Pollution Control Plant” currently known as the “San José-Santa Clara Regional Wastewater Facility” (the “Treatment Plant” and, collectively with the Sanitary Sewer Collection System, the “Wastewater System”); and
WHEREAS, pursuant to such authority, the City has determined to finance and refinance the acquisition, construction and installation from time to time of certain improvements, additions, and betterments to, and extensions and rehabilitations of, the Wastewater System (collectively, the “Projects”); and
WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Act”), the Joint Powers Agreement, and Section 53580 et seq. of the Government Code of the State of California (the “Refunding Revenue Bond Law”), the Authority is authorized to issue revenue bonds, notes or other evidences of indebtedness for the purposes of, among other things, financing the acquisition, construction and installation of the Projects and refunding any bonds, notes or other evidences of indebtedness of the Authority or the City issued or incurred for such purpose (the “Refunded Obligations”); and
WHEREAS, the Authority previously determined to assist the City in the financing and refinancing of the acquisition, construction and installation of the Projects by entering into a Credit Agreement, dated as of October 1, 2017, as amended by a First Amendment to Credit Agreement, dated as of June 27, 2018, by a Second Amendment to Credit Agreement, dated as of October 15, 2020, and by a Third Amendment to Credit Agreement, dated as of March 30, 2022 (collectively, the “Credit Agreement”), each with the City and Wells Fargo Bank, National Association (the “Bank”) under which the Authority issues its Subordinate Wastewater Revenue Notes (the “Notes”) from time to time in one or more series, with the aggregate principal amount of the Notes outstanding at any one time currently limited to $300,000,000, and may request advances under the Notes for the purpose of financing the acquisition, construction and installation of the Projects and/or the refunding of any Refunded Obligations; and
WHEREAS, in connection with the Credit Agreement, the Authority entered into a Third Amended and Restated Fee Letter Agreement dated March 30, 2022 (the “Fee Letter Agreement”) with the Bank; and
WHEREAS, the Authority and the City previously entered into a Subordinate Installment Purchase Contract dated as of October 1, 2017 (the “Installment Purchase Contract”) under which the Authority agreed to sell the Projects to the City and also agreed to refinance the purchase price of Projects previously financed and/or refinanced with any NVF:RLT:KML
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Item Number: SJFA1(a)
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
Refunded Obligations and the City agreed to purchase the Projects and pay the refinanced purchase price of Projects previously financed and/or refinanced with any Refunded Obligations; and
WHEREAS, in order to purchase the Projects and pay the refinanced purchase price of Projects previously financed and/or refinanced with any Refunded Obligations, the City agreed in the Installment Purchase Contract to make installment payments (the “Installment Payments”) to the Authority in an amount sufficient to pay the purchase price or refinanced purchase price of the Projects, together with interest thereon, and all other amounts payable by the Authority under the Credit Agreement and the Fee Letter Agreement, as amended from time to time; and
WHEREAS, the City Council on October 3, 2017 duly adopted Resolution No. 78382 titled “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JOSE
PROVIDING FOR THE ALLOCATION OF WASTEWATER SYSTEM REVENUES, THE
PLEDGE OF WASTEWATER NET SYSTEM REVENUES AND ESTABLISHING
COVENANTS TO SECURE THE PAYMENT OF OBLIGATIONS PAYABLE FROM WASTEWATER NET SYSTEM REVENUES”; and
WHEREAS, the City Council on November 15, 2022 duly adopted Resolution No. 80770 titled “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JOSE AMENDING AND RESTATING RESOLUTION NO. 78382 PROVIDING FOR THE
ALLOCATION OF WASTEWATER SYSTEM REVENUES, THE PLEDGE OF
WASTEWATER NET SYSTEM REVENUES AND ESTABLISHING COVENANTS TO
SECURE THE PAYMENT OF OBLIGATIONS PAYABLE FROM WASTEWATER NET SYSTEM REVENUES” (the “Master Resolution”); and
WHEREAS, in the Installment Purchase Contract the City designated the Installment Payments as Subordinate Obligations under the Master Resolution; and
WHEREAS, as Subordinate Obligations under the Master Resolution, the Installment Payments are payable solely from, and secured by a pledge of and lien on, the Net System Revenues (as defined in the Master Resolution) subject to the terms of, and as provided in, the Master Resolution; and
WHEREAS, the term of the Credit Agreement and the Notes currently expires on October 18, 2023 (the “Stated Expiration Date”); and
WHEREAS, the Authority, the City and the Bank wish to enter into the Fourth Amendment to Credit Agreement (the “Fourth Amendment”), to extend the Stated Expiration Date through October 16, 2026, to make certain changes to the calculation of interest on the Notes and fees payable under the Credit Agreement and the Fee Letter Agreement, to reduce the aggregate principal amount of the Notes that may be NVF:RLT:KML
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Item Number: SJFA1(a)
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
outstanding at any one time from $300,000,000 to $200,000,000 beginning on the effective date of the Fourth Amendment, and to make other related changes; and
WHEREAS, the Authority and the Bank also wish to amend and restate the Fee Letter Agreement by entering into a Fourth Amended and Restated Fee Letter Agreement (the “Amended Fee Letter Agreement”) to extend the Stated Expiration Date through October 16, 2026, to make certain changes to the calculation of interest on the Notes and fees payable under the Credit Agreement and the Fee Letter Agreement, to reduce the aggregate principal amount of the Notes that may be outstanding at any one time from $300,000,000 to $200,000,000 beginning on the effective date of the Fourth Amendment, and to make other related changes; and
WHEREAS, the Authority previously issued a Tax-Exempt Note (as defined in the Credit Agreement) under the Credit Agreement, designated as the City of San José Financing Authority Subordinate Wastewater Revenue Note, Series A (the “Series A Tax-Exempt Note”), the outstanding principal amount of which was paid in full with the proceeds of the City of San José Financing Authority Wastewater Revenue Bonds, Series 2022B (Green Bonds – Climate Bond Certified); and
WHEREAS, to continue to request advances under Tax-Exempt Notes under the Credit Agreement, it may be necessary for the Authority to issue a new Tax-Exempt Note under and as contemplated by the Credit Agreement, to be designated as the City of San José Financing Authority Subordinate Wastewater Revenue Note, Series B (the “Series B Tax-Exempt Note”); and
WHEREAS, the Notes and the other payment obligations of the Authority under the Credit Agreement as amended by the Fourth Amendment and the Amended Fee Letter Agreement are payable solely from, and secured by a pledge and lien on, the Installment Payments made by the City under the Installment Purchase Contract;
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SAN JOSE THAT:
Section 1. The proposed form of Fourth Amendment, as posted to the agenda webpage for this joint meeting of the Authority and the City, is hereby approved. Any of the City Manager, the Director of Finance, the Assistant Finance Director, the Deputy Director of Finance responsible for managing the City’s debt programs, and their authorized designees (each, an “Authorized Officer”), each acting alone, are hereby authorized and directed, for and on behalf of the City, to execute and deliver the Fourth Amendment in substantially said form with such additions thereto and changes therein as the Authorized Officer executing the same, with the advice of the City Attorney, may approve, such approval to be conclusively evidenced by the execution and delivery thereof.
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Item Number: SJFA1(a)
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
Section 2. The proposed form of Amended Fee Letter Agreement, as posted to the agenda webpage for this joint meeting of the Authority and the City, the execution and delivery of the Amended Fee Letter Agreement by the Authority, and the payment by the Authority of the fees described therein, are hereby approved.
Section 3. The issuance by the Authority of the Series B Tax-Exempt Note and the requesting of advances thereunder from time to time as provided in, in accordance with the terms of, and for the purposes stated in the Credit Agreement are hereby approved.
The City Council previously determined, and hereby further determines, that the public interest and necessity demand that the Authority issue the Notes, including the Series B Tax-Exempt Note, from time to time and request advances under the Notes, including the Series B Tax-Exempt Note, from time to time, in each case for the purposes described in this Resolution. The Authorized Officers, the City Clerk, the City Clerk’s authorized designees, and any and all other officers and agents of the City are hereby authorized, 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, certificates, agreements, notices and reports, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance of the Notes (including the Series B Tax-Exempt Note) from time to time, the making of advances under the Notes (including the Series B Tax-Exempt Note), and the consummation of the transactions as described herein, including without limitation, such documents, certificates, agreements, notices and reports as may be required by the Credit Agreement as amended by the Fourth Amendment, the Amended Fee Letter Agreement or the Installment Purchase Contract. Further, any Authorized Officer is hereby authorized and directed, for and on behalf of the City, to execute and deliver any tax certificates or tax agreements and any and all other necessary certificates or forms to ensure the tax-exempt status of the interest on any Tax-Exempt Notes, including the Series B Tax-Exempt Note.
Any authority delegated under this Resolution to a specified official may also be exercised by either the City Manager or by the specified official’s authorized designee.
Section 4. All actions heretofore taken by the Authorized Officers, the City Clerk, the City Clerk’s authorized designees, and any and all other officers and agents of the City with respect to the issuance of the Notes and the execution and delivery of the Fourth Amendment and the Amended Fee Letter Agreement are hereby ratified, confirmed and approved.
Section 5. This Resolution shall take effect from and after its adoption.
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Item Number: SJFA1(a)
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
ADOPTED this 20th day of June, 2023, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
MATT MAHAN
Mayor
ATTEST:
TONI J. TABER, CMC
City Clerk