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HomeMy WebLinkAbout08763 City Clerk’s Office Item # R-4 Background Paper for Proposed Ordinance COUNCIL MEETING DATE: July 28, 2014 TO: President Sandra K. Daff and Members of City Council CC: Sam Azad, City Manager VIA: Gina Dutcher, City Clerk FROM: Daniel C. Kogovsek, City Attorney, Law Department SUBJECT: AN ORDINANCE AUTHORIZING AND APPROVING FUNDING OF A CITY- WIDE STREETLIGHT FIXTURE REPLACEMENT PROJECT THROUGH THE LEASE-LEASEBACK OF CERTAIN CURRENTLY OWNED CITY PROPERTY AND APPROVING A SITE LEASE, A LEASE PURCHASE AGREEMENT, AN INDENTURE, A CONTINUING COVENANT AGREEMENT AND OTHER RELATED DOCUMENTS AND ACTIONS IN CONNECTION THEREWITH SUMMARY: This Ordinance authorizes and approves the funding of the City’s Streetlight Fixture Replacement Project by the issuance of a Certificate of Participation (COP) to Wells Fargo Bank, N.A. (in its capacity as the initial purchaser of the Certificate of Participation). The principal amount of the COP shall not exceed $4,200,000 and the net effective interest rate of the COP as a whole upon issuance shall not exceed 2.54%. PREVIOUS COUNCIL ACTION: City Council has determined that it is in the best interests of the City to replace approximately 8,725 high pressure sodium streetlight fixtures with approximately the same number of light emitting diode (LED) streetlight fixtures throughout the City. BACKGROUND: The City previously issued a request for proposals (RFP) for the financing of the City’s Streetlight Fixture Replacement Project. Wells Fargo Bank, N.A.’s proposal was selected as being the most advantageous to the City following a review by the RFP Evaluation Committee. FINANCIAL IMPLICATIONS: On a year to year basis, subject to annual appropriations, the City shall be obligated to make lease payments equal to the principal amount of the COP and the net effective interest rate of the COP. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Ordinance. STAKEHOLDER PROCESS: Members of the public are the primary stakeholders affected by the proposed ordinance. The issue of the replacement of high pressure sodium streetlight fixtures with LED streetlight fixtures has been discussed at numerous public council meetings and work sessions for many years. ALTERNATIVES: If the Ordinance is not approved, the City will be required to seek other financing for the Streetlight Fixture Replacement Project. RECOMMENDATION: City staff recommends approval of this Ordinance. Attachments: None. ORDINANCE NO. 8763 AN ORDINANCE AUTHORIZING AND APPROVING FUNDING OF A CITY-WIDE STREETLIGHT FIXTURE REPLACEMENT PROJECT THROUGH THE LEASE- LEASEBACK OF CERTAIN CURRENTLY OWNED CITY PROPERTY AND APPROVING A SITE LEASE, A LEASE PURCHASE AGREEMENT, AN INDENTURE, A CONTINUING COVENANT AGREEMENT AND OTHER RELATED DOCUMENTS AND ACTIONS IN CONNECTION THEREWITH WHEREAS, the City of Pueblo, Colorado (the “City”), is authorized, pursuant to the Home Rule Charter of the City (the “Charter”) to enter into lease purchase agreements in order to provide lands and facilities for governmental purposes; and WHEREAS, the City Council of the City (the “City Council”) has determined that it is in the best interests of the City and its residents to replace approximately 8,725 high pressure sodium streetlight fixtures with approximately 8,725 light emitting diode streetlight fixtures throughout the City (the “Project”); and WHEREAS, the City Council has determined that it is in the best interests of the City and its residents that the City and the City of Pueblo, Colorado Municipal Building Corporation (the “Corporation”) enter into (a) that certain Site Lease dated as of August 1, 2014 (the “Site Lease”), between the City, as lessor, and the Corporation, as lessee, providing for the leasing of certain City-owned property (the “Leased Property”) from the City to the Corporation, (b) that certain Lease Purchase Agreement, dated as of August 1, 2014 (the “Lease”), between the, Corporation as lessor, and the City, as lessee, providing for the lease back of the Leased property from the Corporation to the City, that the City, the Corporation and Wells Fargo Bank, National Association (in its capacity as the initial purchaser of the Certificate, described below, the “Initial Purchaser”) enter into that Continuing Covenant Agreement, dated as of August 1, 2014 (the “Agreement”), each in substantially the form presented to the City and made available to the City Council prior to this meeting; and WHEREAS, the Corporation shall assign its rights in the Lease to Wells Fargo Bank, National Association, as trustee (the “Trustee”) pursuant to a Mortgage and Indenture of Trust dated as of August 1, 2014 (the “Indenture”) in substantially the form presented to the City and made available to the City Council prior to this meeting; and WHEREAS, in order to further evidence the grant of its rights in the Lease to the Trustee pursuant to the Indenture, the Corporation shall deliver a Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Financing Statement dated as of August 1, 2014 (the “Deed of Trust”), to the Public Trustee of Pueblo County, Colorado (the “Public Trustee”), for the benefit of the Trustee; and WHEREAS, a Certificate of Participation (the “Certificate”) shall be issued pursuant to the Indenture evidencing the undivided interest in the right to receive certain revenues under the Lease Purchase Agreement, to the Initial Purchaser; BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO: Section 1. Ratification of Prior Actions .All action heretofore taken (not inconsistent with the provisions of this Ordinance) by the City Council or the officers or employees of the City, directed toward the lease of the Leased Property to the Corporation and the lease back of the Leased Property from the Corporation are hereby ratified, approved and confirmed. The City Council hereby specifically ratifies, approves and confirms the employment of James Capital Advisors, Inc., as financial advisor, and its activities on behalf of the City in connection herewith. Section 2. Finding and Determination .The City Council hereby finds and determines, pursuant to the provisions of the Charter, that leasing the Leased Property to and subleasing the Leased Property from the Corporation under the terms and provisions set forth in the Site Lease and the Lease is necessary, convenient, efficient and economical, and in furtherance of the governmental purposes of the City, and is in the best interests of the City and its residents; and the City Council hereby authorizes such lease of the Leased Property to the Corporation pursuant to the Site Lease and the lease back of the Leased Property from the Corporation under the terms and provisions of the Lease. Section 3. Approval of Site Lease, Lease and Agreement .The Site Lease, the Lease and the Agreement, in substantially the forms presented to the City and made available to the City Council prior to this meeting and with substantially the same content, are in all respects approved, authorized and confirmed, and the President or Vice President of the City Council is authorized and directed to affix his or her signature to the Site Lease, the Lease and the Agreement in substantially the form and with substantially the same content as presented to this meeting of the City Council, for and on behalf of the City, but with such changes, modifications, additions or deletions therein as the President or Vice President of the City Council and the City Attorney shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the forms and content of the Site Lease, the Lease and the Agreement presented to the City and made available to the City Council prior to this meeting. Section 4. Consent and Approval of Indenture and Deed of Trust .The City Council hereby approves and acknowledges the Indenture and the Deed of Trust in substantially the forms presented to the City and made available to the City Council prior to this meeting of the City Council and with substantially the same content, and the City Council consents to the assignment by the Corporation to the Trustee, pursuant to the Indenture and the Deed of Trust, of all rights, title and interest of the Corporation in, to and under the Lease (with certain exceptions as provided in the Lease and the Indenture), and the delegation by the Corporation to the Trustee, pursuant to the Indenture, of all duties of the Corporation under the Lease. Section 5. Issuance and Sale of Certificate .The City Council hereby authorizes and consents to the issuance and sale of the Certificate pursuant to the Indenture. The City Council hereby authorizes and approves the form, terms and provisions of the Certificate contained in the Indenture, in substantially the form and with substantially the same content as that presented to the City and made available to the City Council prior to this meeting of the City Council; provided, that the principal amount of the Certificate shall not exceed $4,200,000 and the net effective interest rate of the Certificate as a whole upon issuance shall not exceed 2.54%. The City Clerk and the President of the City Council are hereby authorized and directed to affix their facsimile signatures and the City seal, or a facsimile thereof, to authenticate the Certificate, as provided in the Lease and the Indenture. Section 6. Tax Covenants . The City covenants that (i) it shall not use or permit the use of any (a) proceeds of the Certificate or any other funds of the City from whatever source derived, directly or indirectly, to acquire any securities or obligations, and (ii) it shall not take or permit to be taken any other action or actions, either of which would cause any of the Certificate to be an “arbitrage bond” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the “Code”), or would otherwise cause the interest on the Certificate to be includible in the gross income of the recipients thereof for federal income tax purposes. The City covenants that it shall at all times do and perform all acts and things permitted by law and which are necessary in order to assure that interest paid by the City on the Certificate shall, for purposes of federal income taxation, not be includible in the gross income of the recipients thereof under the Code or any other valid provision of law. In particular, but without limitation, the City further represents, (b) warrants and covenants to comply with the following restrictions of the Code, unless it receives an opinion of nationally recognized bond counsel stating that such compliance is not necessary: Gross proceeds of the Certificate shall not be used in a (i) manner which will cause the Certificate to be considered a “private activity bond” within the meaning of the Code. The Certificate is not and shall not become directly or (ii) indirectly “federally guaranteed.” The City shall timely file Internal Revenue Form 8038-G (iii) which shall contain the information required to be filed pursuant to subsection 149(e) of the Code. The City shall comply with the Investment Instructions (iv) delivered to it on the date of issue of the Certificate with respect to the application and investment of the proceeds of the Certificate. Section 7. Other Actions in Furtherance of this Ordinance .The City Clerk is hereby authorized and directed to attest all signatures and acts of any official of the City Council or the City in connection with the matters authorized by this Ordinance, and to place the seal of the City on the Site Lease, the Lease and the Agreement authorized and approved by this Ordinance. The President or Vice President of the City Council and other officials of the City Council or the City are hereby authorized to execute and deliver for and on behalf of the City any and all additional certificates, documents and other papers and to perform all other acts that they may deem necessary or appropriate in order to implement and carry out the transactions and other matters authorized and contemplated by this Ordinance. The appropriate officers of the City Council or the City are authorized to execute on behalf of the City agreements concerning the deposit and investment of funds in connection with the transactions contemplated by this Ordinance. Section 8. No General Obligation or Other Indebtedness of the City Created .NO PROVISION OF THIS ORDINANCE, THE SITE LEASE, THE LEASE, THE INDENTURE OR THE CERTIFICATE SHALL BE CONSTRUED AS CREATING OR CONSTITUTING A GENERAL OBLIGATION OR OTHER INDEBTEDNESS OF THE CITY OR A MANDATORY PAYMENT OBLIGATION OF THE CITY IN ANY FISCAL YEAR BEYOND A FISCAL YEAR FOR WHICH THE CITY HAS APPROPRIATED AMOUNTS TO MAKE PAYMENTS UNDER THE LEASE. THE CITY SHALL HAVE NO OBLIGATION TO MAKE ANY PAYMENT WITH RESPECT TO THE CERTIFICATE EXCEPT IN CONNECTION WITH THE PAYMENT OF THE BASE RENTALS AND ADDITIONAL RENTALS (EACH AS DEFINED IN THE LEASE) TO THE EXTENT AND FOR THE YEAR FOR WHICH FUNDS HAVE BEEN APPROPRIATED AND CERTAIN OTHER PAYMENTS UNDER THE LEASE, WHICH PAYMENTS MAY BE TERMINATED BY THE CITY IN ACCORDANCE WITH THE PROVISIONS OF THE LEASE. Section 9. Determination of Rental Value and Purchase Option Price .The City Council hereby determines and declares that the Base Rentals (as set forth in the Lease) represent the fair value of the use of the Leased Property; and that the Purchase Option Price (as defined in the Lease) represents the fair purchase price of the Leased Property. The City Council hereby determines and declares that the Base Rentals do not exceed a reasonable amount so as to place the City under an economic or practical compulsion to renew the Lease or to exercise its option to purchase the Leased Property pursuant to the Lease. In making such determinations, the City Council has given consideration to the uses and purposes for which the Leased Property will be employed by the City, the benefit to the citizens and residents of the City by reason of the use of the Leased Property pursuant to the terms and provisions of the Lease, the option of the City to purchase the Leased Property, and the expected eventual vesting of title to the Leased Property in the City. The City Council hereby determines and declares that the subleasing of the Leased Property pursuant to the Lease will result in facilities of comparable quality and meeting the same requirements and standards as would be necessary if the construction, acquisition, improvement and equipping of the Leased Property were performed by the City. The City Council hereby determines and declares that the period during which the City has an option to purchase the Leased Property (i.e., the maximum term of the Lease, including all Renewal Terms) does not exceed the useful life of the Leased Property. Section 10. Home Rule Powers Invoked .In authorizing and approving the actions herein set forth, it is the intent of the City Council of the City to exercise the home rule powers of the City granted pursuant to the Colorado Constitution and the Charter, and the City Council of the City hereby finds, determines and declares that the matters herein referred to are matters of local or municipal concern and are appropriate for the exercise of the home rule powers of the City. Section 11. Severability .If any section, paragraph, clause or provision of this Ordinance (other than provisions as to the payment of Base Rentals by the City during the Lease Term and provisions for the conveyance of the Leased Property to the City under the conditions provided in the Lease) shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. Section 12. Repealer .All bylaws, orders and ordinances, or parts thereof, inconsistent with this Ordinance or with any of the documents hereby approved, are hereby repealed only to the extent of such inconsistency. This repealer shall not be construed as reviving any bylaw, order or ordinance, or part thereof. Section 13. Public Hearing .A public hearing on this Ordinance shall be held on Monday, August 11, 2014, at 7:00 p.m., in the City Council Chambers, One City Hall Place, Pueblo, Colorado. INTRODUCED: July 28, 2014 BY: Chris Kaufman COUNCILPERSON APPROVED AS TO FORM: CITY ATTORNEY PASSED AND APPROVED: August 11, 2014