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HomeMy WebLinkAbout24826RESOLUTION NO. 24826 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AUTHORIZING THE EXECUTION AND DELIVERY OF A SITE AND FACILITY LEASE, A LEASE AGREEMENT, A PROJECT LEASE ASSIGNMENT, AN EQUIPMENT LEASE ASSIGNMENT AND AN ESCROW AGREEMENT WITH RESPECT TO REFINANCING THE ACQUISITION, INSTALLATION, FINANCING, INSTALLMENT SALE PURCHASE AND LEASING OF CERTAIN EQUIPMENT THAT CONSTITUTES ENERGY CONSERVATION FACILITIES, AUTHORIZING THE EXECUTION AND DELIVERY OF AGREEMENTS AND DOCUMENTS REQUIRED IN CONNECTION THEREWITH; AND AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION WHEREAS, the City of Palm Springs, California (the "City"), a municipal corporation and charter city duly organized and existing under the laws of the State of California, is authorized by the laws of the State of California to acquire, install, finance, installment sale purchase and lease equipment that constitutes energy conservation facilities and to enter into facility financing contracts and facility ground leases with respect thereto; and WHEREAS, the City has previously financed pursuant to a Lease Agreement, dated as of July 1, 2013 (the "Prior Lease") (a) the acquisition and installation of certain lighting, mechanical, utility, water and other energy conservation measures on and to certain of the City's public buildings and other facilities (the "Project") and (b) the demolition and replacement of the City's existing Municipal Central Plant cogeneration system with a new 1.1 MW cogeneration plant, mechanical and electrical systems and upgrades and related improvements (the "Equipment"); and WHEREAS, the City has the opportunity to refinance the Prior Lease, and in that regard, the City proposes to enter into that certain Site and Facility Lease (the "Site Lease"), the Lease Agreement (the "Lease Agreement"), the Equipment Schedule to and incorporating the terms of the Lease Agreement (collectively with the Lease Agreement, the "Equipment Lease") and the Project Schedule to and incorporating the terms of the Lease Agreement (collectively with the Lease Agreement, the "Project Lease"), each with the City of Palm Springs Financing Authority (the "Authority"), and a certain Escrow Agreement (the "Escrow Agreement") among the Authority, the City and U.S. Bank, N.A., and certain assignments for the Project to Capital One Public Funding, LLC, as Project Lease Assignee, and for the Equipment to Capital One Public Funding, LLC, as Equipment Lease Assignee (together, the "Assignments"), the forms of each of which has been presented to the City Council of the City at this meeting; and 55575.70003\33361758.3 Resolution No. 24826 Page 2 WHEREAS, in order to obtain funds to refinance the Project, the City has agreed to lease certain real property to the Authority pursuant to the Site Lease, and the Authority has agreed to lease such real property back to the City pursuant to the Project Lease, in consideration for the payment of lease payments as provided by the Project Lease; and WHEREAS, in order to obtain funds to refinance the acquisition and installation of the Equipment, the City has agreed to lease the Equipment from the Authority, and the Authority has agreed to arrange for and lease the Equipment to the City, in consideration for the payment of lease payments as provided by the Equipment Lease; and WHEREAS, the City is authorized pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the "Bond Law"), to refund existing obligations of the City; and WHEREAS, the City Council of the City determines for the best interest of the City and for the efficient and effective administration thereof to enter into the Site Lease, the Lease Agreement, the Project Lease, the Equipment Lease, the Escrow Agreement, and the Assignments, and the documentation related to the refinancing of the Project and the Equipment upon the terms and conditions therein provided; WHEREAS, Section 5852.1 of the California Government Code requires that the Board obtain from an underwriter, financial advisor or private lender and disclose, in a meeting open to the public, prior to authorization of the Lease Agreement, good faith estimates of (a) the true interest cost of the Lease Agreement, (b) the sum of all fees and charges paid to third parties with respect to the Lease Agreement, (c) the amount of proceeds of the Lease Agreement expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Lease Agreement, and (d) the sum total of all debt service payments on the Lease Agreement calculated to the final maturity of the Lease Agreement, plus the fees and charges paid to third parties not paid with the proceeds of the Lease Agreement; WHEREAS, in compliance with Section 5852.1 of the California Government Code, the Council has obtained from Harrell & Company Advisors, LLC, the City's municipal advisor (the "Municipal Advisor") the required good faith estimates and such estimates are disclosed and set forth in Exhibit A attached hereto; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. Defined Terms. Capitalized terms that are used, but not defined, in this Resolution shall have the same meaning as when such terms are used in the preambles to this Resolution. 55575.70003\33361758.3 Resolution No. 24826 Page 3 SECTION 2. Findings and Determinations. The City finds and determines that the above recitals are true and correct and that the fair rental value of the Project and the Equipment exceeds the present value of Lease Payments to be made under the Lease Agreement. SECTION 3. Approval of Financing Agreements. The form, terms and provisions of the Site Lease, the Lease Agreement, the Project Lease, the Equipment Lease, the Escrow Agreement, and the Assignments (collectively, the "Financing Agreements") are hereby approved in substantially the forms presented at this meeting, with such insertions, omissions and changes as shall be approved by the Mayor, the City Manager or other authorized official of the City executing the same, the execution of such Financing Agreements being conclusive evidence of such approval. The Mayor and the City Manager are each hereby authorized and any such authorized official is hereby directed to execute, and the City Clerk of the City is hereby authorized and directed to attest, each of the Financing Agreements and to deliver each of the Financing Agreements to the respective parties thereto. The combined cost of the refinancing under the Project Lease and the Equipment Lease, respectively, shall not exceed $16,000,000 and shall represent interest at a rate not to exceed 3.05% per annum with respect to the Project Lease and 2.25% per annum with respect to the Equipment Lease. SECTION 4. Other Actions Authorized. The officers and employees of the City shall take all action necessary or reasonably required by the parties to the Financing Agreements to carry out, give effect to and consummate the transactions contemplated thereby (including any tax certificate and agreement, as contemplated in the Lease Agreement) and to take all action necessary in conformity therewith, including, without limitation, the execution and delivery of any closing and other documents required to be delivered in connection with the Financing Agreements. SECTION 5. No General Liability. Nothing contained in this Resolution, any of the Financing Agreements or any other instrument shall be construed with respect to the City as incurring a pecuniary liability or charge upon the general credit of the City or against its taxing power, nor shall the breach of any agreement contained in this Resolution, any of the Financing Agreements or any other instrument or document executed in connection therewith impose any pecuniary liability upon the City or any charge upon its general credit or against its taxing power, except to the extent that the lease payments under the Project Lease and the Equipment Lease are payable by the City as provided therein. SECTION 6. Appointment of Authorized City Representatives. The Mayor and the City Manager of the City are each hereby designated to act as authorized representatives of the City for purposes of the Financing Agreements until such time as the City Council of the City shall designate any other or different authorized representative for purposes of the Financing Agreements. SECTION 7. Severability. If any section, paragraph, clause or provision of this Resolution shall for any reason be held to be invalid or unenforceable, the invalidity or 55575.70003\33361758.3 Resolution No. 24826 Page 4 unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Resolution. SECTION 8. Repealer. All bylaws, orders and resolutions or parts thereof, inconsistent herewith, are hereby repealed to the extent only of such inconsistency. This repealer shall not be construed as reviving any bylaw, order, resolution or ordinance or part thereof. SECTION 9. Effective Date. This Resolution shall be effective immediately upon its approval and adoption. ADOPTED this 12th day of November, 2020 David H. Ready, Es . City Manager ATTEST: Jthony City Cler�Kp, 55575.70003\33361758.3 Resolution No. 24826 Page 5 CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS) I, ANTHONY J. MEJIA, City Clerk of the City of Palm Springs, hereby certify that Resolution No. 24826 is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on November 12, 2020, by the following vote: AYES: Councilmembers Garner, Middleton, Woods, Mayor Pro Tern Holstege, and Mayor Kors NOES: None ABSENT: None ABSTAIN: None IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Palm Springs, California, this i4i+- day of /Jove,n�be,.- , Zo zo ony J. erk City of Palm rings, California 55575.70003\33361758.3 EXHIBIT A GOOD FAITH ESTIMATES The good faith estimates set forth herein are provided with respect to the Lease Agreement in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the City by the Municipal Advisor. Principal Amount. The Municipal Advisor has informed the City that, based on the City's financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Lease Agreement to be sold is $15,853,500, (the "Estimated Principal Amount"). True Interest Cost of the Lease Agreement. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Lease Agreement is sold, and based on market interest rates prevailing at the time of preparation of such estimate, their good faith estimate of the true interest cost of the Lease Agreement, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Lease Agreement, is 2.92%. Finance Charge of the Lease Agreement. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Lease Agreement is sold, and based on market interest rates prevailing at the time of preparation of such estimate, their good faith estimate of the finance charge for the Lease Agreement, which means the sum of all fees and charges paid to third parties (or costs associated with the Lease Agreement), is $56,000. Amount of Proceeds to be Received. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Lease Agreement is sold, and based on market interest rates prevailing at the time of preparation of such estimate, their good faith estimate of the amount of proceeds expected to be received by the City for sale of the Lease Agreement, less the finance charge of the Lease Agreement, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the Lease Agreement, is $15,797,500. Total Payment Amount. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Lease Agreement is sold, and based on market interest rates prevailing at the time of preparation of such estimate, their good faith estimate of the total payment amount, which means the sum total of all payments the City will make to pay debt service on the Lease Agreement, plus the finance charge for the Lease Agreement, as described above, not paid with the proceeds of the Lease Agreement, calculated to the final maturity of the Lease Agreement, is $19,453,000. The foregoing estimates constitute good faith estimates only as of November 12, 2020, and are based on market conditions prevailing at the time of preparation of such estimates. The actual principal amount of the Lease Agreement issued and sold, the 55575.70003\33361758.3 Resolution No. 24826 Page 7 true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Lease Agreement being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Lease Agreement sold being different from the Estimated Principal Amount, (c) the actual amortization of the Lease Agreement being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Lease Agreement being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the City's financing plan, or a combination of such factors. The actual date of sale of the Lease Agreement and the actual principal amount of the Lease Agreement sold will be determined by the City based on the timing of the need for proceeds of the Lease Agreement and other factors. The actual interest rates borne by the Lease Agreement will depend on market interest rates at the time of sale thereof. The actual amortization of the Lease Agreement will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic, national, international and other factors beyond the control of the City, or the Municipal Advisor. 55575.70003\33361758.3