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Item CC/PFA-1

City Council Meeting 09-14-99 Santa Monica, California

TO: Mayor and City Council

Santa Monica Public Financing Authority

FROM: City Staff and Authority Staff

SUBJECT: Recommendation to Adopt Resolutions Authorizing the Issuance of Santa Monica Public Financing Authority Lease Revenue Bonds for the Public Safety Facility and Approval of Documents, Actions and Other Matters Related Thereto

INTRODUCTION

This staff report requests that the City Council and the Santa Monica Public Financing Authority (AAuthority@) adopt the attached resolutions authorizing the issuance of the Authority Lease Revenue Bonds, Series 1999 for the Public Safety Facility.

BACKGROUND

In February 1997, the City Council approved a financing plan for the Public Safety Facility which included the issuance of lease revenue bonds that would produce proceeds ranging from $11.64 to $18.04 million for a portion of the project costs. Excavation and utility relocation for the new facility is currently underway, and the contract for building construction and sitework will be awarded this winter. Background information and an update on the project are attached.

DISCUSSION

The attached resolutions authorize the City and the Authority to proceed with all steps necessary for issuance of the bonds. The resolutions authorize the issuance of a maximum of $15 million aggregate principal amount of bonds at a maximum interest rate of 6% for a maximum term of twenty-two years. They also provide approvals of all steps necessary to complete the financing, including the approval of all necessary documents and certificates and related actions.

Attached to this staff report are copies of the following documents necessary for issuance of the bonds:

1. A Ground Lease between the City of Santa Monica as lessor and the Santa Monica Public Financing Authority as lessee;

2. A Lease Agreement between the City of Santa Monica as lessee and the Santa Monica Public Financing Authority as lessor;

3. An Assignment Agreement between Santa Monica Public Financing Authority and BNY Western Trust Company, as Trustee.

4. An Indenture by and among Santa Monica Public Financing Authority, City of Santa Monica and BNY Western Trust Company, as Trustee.

5. A Continuing Disclosure Certificate, wherein the City agrees to provide certain information annually to designated national bond information depositories;

6. A Preliminary Official Statement to be used in connection with the offering and sale of the Bonds.

7. An Official Notice Inviting Bids for use in connection with the solicitation of bids for the Bonds; and

8. A Notice of Intention to Sell to be published in The Bond Buyer or other financial publication for use in connection with solicitation of bids for the Bonds.

The attached resolutions approve all of these documents and authorize their execution and delivery by specified City and Authority officials and employees. The resolutions also approve the preparation, execution and delivery of a Final Official Statement, and the execution and delivery of any additional documents and the performance of such acts as may be necessary or desirable to effect the offering, sale and issuance of the Bonds

Also attached to this staff report are a list of questions which various national associations and the Federal Securities and Exchange Commission recommend public officials ask when approving the issuance of bonds. For your convenience, staff and the City=s Financial Advisor and Bond Counsel have provided answers to each question. City staff, Financial Advisor and Bond Counsel are prepared to expand on these answers if requested by the Council.

BUDGET/FINANCIAL IMPACT

As set forth in the attached documents, this bond financing will be structured as follows:

C The City leases the ground upon which the new Public Safety Facility will sit to the Authority.

C To help finance the construction of the Public Safety Facility, the Authority sells the bonds.

C The bond proceeds, in conjunction with other City funds, are used to construct the Public Safety Facility.

C The Authority leases the site and the Public Safety Facility back to the City for the term of the bonds for an annual payment which will be sufficient to pay principal and interest to the bond holders.

C For ease of administration, the Authority assigns its rights to receive the annual lease payment from the City and to pay bond holders to a Trustee.

C Upon completion of construction, the City takes possession of the Public Safety Facility and is responsible for its maintenance.

C At the end of the bonds= term, the City owns the Public Safety Facility.

The estimated annual debt service on the Bonds is $1.1 million which will be financed from the annual revenue flow to the General Fund. To receive and administer the Bond proceeds, it is necessary to establish a revenue budget of $15.0 million at account number 01224.400460; and appropriate $15.0 million at account number C01096000.58900.

RECOMMENDATION

It is respectfully recommended that the City Council and Authority adopt the attached resolutions authorizing the execution and delivery of the various documents necessary for the issuance of the Santa Monica Public Financing Authority, Series 1999 Lease Revenue Bonds (Public Safety Facility Project), and the City Council approve the budget changes set forth above.

Prepared By: Mike Dennis, Director of Finance

Suzanne Frick, Director, Planning and Community Development

Andy Agle, Deputy Director, Planning and Community Development

Linda A. Moxon, Deputy City Attorney

ATTACHMENTS:

Psfbd-1.wpd 1. Resolution of the Santa Monica Public Financing Authority

Psfbd-2.wpd 2. Resolution of the City Council

Psfbd-3.wpd 3. Ground Lease Agreement

Psfbd-4.wpd 4. Lease Agreement

Psfbd-5.wpd 5. Assignment Agreement

Psfbd-6.wpd 6. Indenture Agreement

Psfbd-7.wpd 7. Continuing Disclosure Certificate