HomeMy WebLinkAbout24977RESOLUTION NO.24977
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, APPROVING AN
UNCONDITIONAL GUARANTY OF THE OBLIGATIONS OF
DESERT COMMUNITY ENERGY UNDER A CREDIT
AGREEMENT WITH RIVER CITY BANK
WHEREAS, Desert Community Energy ("DCE") is a joint powers authority
established on October 30, 2017, for the purpose of implementing community choice
aggregation programs under Public Utilities Code Section 366.2.0; and
WHEREAS, DCE currently provides clean energy for the residents and businesses
of the City; and
WHEREAS, the energy provided by DCE has resulted in a substantial reduction in
greenhouse gas emissions within the City while maintaining competitive rates;
WHEREAS, DCE needs working capital to address short term fluctuations in cash
flow and working capital requirements as a result of its operations; and
WHEREAS, DCE received credit proposals that would provide financing and credit
support for DCE operation and power procurement ("Credit Facility"), as well as working
capital requirements; and
WHEREAS, DCE's Board of Directors has approved entering into a Credit Facility
consistent with a term sheet negotiated with River City Bank ("RCB") to provide a
Commercial Revolving Line of Credit in the amount of up to $8,000,000 ("Credit Facility
Term Sheet"); and
WHEREAS, DCE is a relatively new entity that is still in the process of building
operating reserves, RCB is requiring that the City, as the sole active member of DCE,
provide an unconditional guaranty the Credit Facility as security for its repayment, and
WHEREAS, the financial stability and flexibility provided by the Credit Facility will
directly benefit the City and its ratepayers; and
WHEREAS, the willingness of the City to provide a guaranty will result in favorable
terms pursuant to the Credit Facility Term Sheet that would not otherwise be available to
DCE; and
WHEREAS, DCE staff and DCE's legal counsel are in the process of negotiating
a Credit Agreement and related security agreements that are consistent with the terms of
the Credit Facility Term Sheet pursuant to authority granted by the DCE Board of
Directors, including the draft unconditional guaranty that is attached hereto as Exhibit "A"
("Guaranty"); and
Resolution No. 24977
Page 2
WHEREAS, the City Attorney has reviewed and approved the attached form of
Guaranty and will continue to monitor the negotiation of the Credit Agreement with RCB;
and
WHEREAS, it is important from a timing perspective that the Guaranty of the Credit
Facility be approved by the City Council and that authority be given to the City Manager,
with the advice of the City Attorney, to finalize and execute the Guaranty subject to review
of the final Credit Agreement between DCE and RCB;
THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, HEREBY
RESOLVES, DETERMINES AND APPROVES AS FOLLOWS:
Section 1. Factual Findings. The true and correct recitals above are incorporated by
this reference herein as the basis and foundation for the City's adoption of this Resolution.
Section 2. Approval of Unconditional Guaranty. The City Council hereby approves the
unconditional guaranty of a Credit Facility from River City Bank to provide working capital
for the operations of Desert Community Energy in a principal amount not to exceed
$8,000,000 and agrees that the City of Palm Springs will be liable to River City Bank for
the payment of all amounts due to River City Bank in connection with the Credit Facility
upon the occurrence of an event of default by Desert Community Energy with respect to
its obligations to River City Bank.
Section 3. Authority of City Manager. The City Manager is hereby authorized to
finalize and execute the Guaranty, with the advice of the City Attorney, in substantially
the form which is attached to this resolution and subject to review and approval by the
City Manager, with the advice of the City Attorney, of the terms of the Credit Agreement
between DCE and RCB.
Section 4. Effective Date. This Resolution will become effective immediately upon
adoption and remain effective unless superseded by a subsequent resolution.
El
Resolution No. 24977
Page 3
PASSED, APPROVED, AND ADOPTED BY THE PALM SPRINGS CITY
COUNCIL THIS 27th DAY OF JANUARY 2022.
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JUST# CLIFTON, MANAGER
ATTEST:
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ANTHONY J. MEJIA, MMC, CITY CLERK
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS)
I, ANTHONY J. MEJIA, MMC, City Clerk of the City of Palm Springs, hereby certify
that Resolution No. 24977 is a full, true and correct copy as was duly adopted at a regular
meeting of the City Council of the City of Palm Springs on January 27, 2022, by the
following vote:
AYES: Councilmembers Holstege, Kors, Woods, Mayor Pro Tern Garner, and
Mayor Middleton
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 � day of fib cuox
ANTHONY J. MEJIA, MMC, CITY CLERK
City of Palm Springs, California