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HomeMy WebLinkAbout15 2006 COPs Financingenda Item # ACTION 15 To: Board of Directors From: Jeremy Popov Date: May 04, 2016 Subject: Consideration of the 2006 COPs Financing Approval Documentation 1. WHY THIS MATTER IS BEFORE THE BOARD This item involves the consideration of adopting Resolution 2016-09 authorizing the finalization and execution of documents related to the refunding of the remaining balance of 2006 Certificates of Participation (COPs). 2. HISTORY On March 02, 2016, a workshop item was presented that informed the Board of an opportunity to refund the remaining balance of the 2006 COPs. On April 06, 2016 the Board authorized the General Manager to accept a lenders commitment letter for the 2006 COPs refunding. As background, in 2006 Truckee Donner Public Utility District Financing Corporation issued $265570,000 of COPs to finance various water system improvements. In 2015 the COPs were partially refunded to achieve an improved interest rate and reduce debt service. At the time of the August 2015 refunding, a remaining balance of $4,315,000 was not eligible for refunding. With support from Brandis Tallman, a full service investment banking firm and broker/ dealer, the District issued an RFP to several lenders for the 2006 COPs remaining balance refunding. 3. NEW INFORMATION Three proposals were received in response to the RFP. Proposals were evaluated considering interest rate, rate lock terms, compliance to closing schedule, and overall total savings to the District. On April 07, 2016 the General Manager accepted the most favorable lender's proposal. JPMorgan Chase (Chase) was selected as the most favorable lender, providing the most favorable interest rate at 1.54% for a bank qualified issue. Chase's rate lock closing terms are in compliance with the District's RFP and provide for a rate lock through October 7, 2016. Closing is scheduled for October 4, 2016. This refunding will also involve the Truckee Donner Public Utility Financing Corporation (Corporation). In this transaction, the District is one party to the Installment Sale Agreement and the Corporation is the second party. The Corporation is a California non-profit public benefit corporation, whose involvement does not jeopardize the tax-exempt status of the interest components. The Corporation provides a legal entity that ensures the District's borrowing goals do not get compromised. The Corporation will then enter into an assignment agreement that sells, assigns, and transfers to the Assignee (Chase) without recourse, all of its rights, title, and interest in the Installment Sale Agreement, including the right to receive installment payments from the District. The Corporation was formed many years ago when the District first sold Certificates of Participation. 4. FISCAL IMPACT The District is estimated to save $243,860 ($48,772 annually), which equates to a NPV savings of over 5.8%. Cost of issuance is included in the financing and results in an all -in total interest cost of 2.32%. The refunding is a direct savings to District ratepayers. Savings are not yet included in the Financial Master Plan. 5. RECOMMENDATION Adopt Resolution 2016-09 to authorize the finalization and execution of certain financing documents for the refunding of the remaining balance of 2006 Certificates of Participation (COPs). 040 Jeremy Popov Administrative Services Manager l D. MichaeHolley General Manager Resolution No. 201 a - 09 RESOLUTION OF THE BOARD OF DIRECTORS OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT, NEVADA AND PLACER COUNTIES, CALIFORNIA, AUTHORIZING THE EXECUTION AND DELIVERY OF AN INSTALLMENT SALE AGREEMENT WITH TRUCKEE DONNER PUBLIC UTILITY DISTRICT FINANCING CORPORATION AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION THEREWITH WHEREAS, the Truckee Donner Public Utility District (the "District"), a public utility district duly organized and existing under and pursuant to the Constitution and laws of the State of California (the "State"), including the Public Utility District Act (the "Act"), Division 7 of the Public Utilities Code (the "Code"), is authorized under the Constitution and laws of the State, including without limitation, Section 16431 of the Code, to acquire equipment and facilities as the Board of the Directors of the District (the "Board") determines is in the best interests of the District; and WHEREAS, the District and the Truckee Donner Public Utility District Financing Corporation (the "Corporation") have previously entered into that certain Installment Purchase Agreement, dated as of September 1, 2006, as supplemented by that certain First Supplemental Installment Purchase Agreement, dated as of August 1, 2015, by and between the District and the Corporation (so supplemented, the "2006 Installment Purchase Agreement") for the purpose of financing and refinancing certain equipment and facilities within the District through the execution and delivery of the Refunding Revenue Certificates of Participation (Water System Improvement Projects) Series 2006 (the "2006 Certificates"); and WHEREAS, the District is authorized under Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the State Government Code, including all laws amendatory thereof or supplemental thereto (the "Law"), to refinance the acquisition of property for its water system; and WHEREAS, pursuant to the Law, in August 2015, the District issued its Water System Refunding Revenue Bonds, Series 2015 to provide funds to prepay a portion of the then -outstanding installment payments due under the 2006 Installment Purchase Agreement and, in turn, a portion of the then -outstanding 2006 Certificates; and WHEREAS, the District and the Corporation now desire to enter into an Installment Sale Agreement (the "Installment Sale Agreement") to prepay the remaining outstanding installment payments due under the 2006 Installment Purchase Agreement and, in turn, the remaining outstanding 2006 Certificates, in order to reduce the District's borrowing costs; and WHEREAS, to obtain funds to effectuate such refinancing, the Corporation will assign certain of its rights under the Installment Sale Agreement to JPMorgan Chase Bank, N.A. (the "Purchaser") in accordance with the terms of that certain Assignment Agreement, dated as of October 1, 20167 by and between the Corporation and the Purchaser; and WHEREAS, the Board has determined that it is in the best interest of the District to enter into the Installment Sale Agreement with the Corporation, and to approve certain other documents in connection with the refinancing of the 2006 Certificates; and WHEREAS, the Board desires to appoint certain professionals to provide services related to the execution and delivery of the Installment Sale Agreement; and NOW, THEREFORE, the Board of Directors of Truckee Donner Public Utility District DOES HEREBY RESOLVE, DETERMINE AND ORDER as follows: SECTION 1. Recitals. The foregoing recitals are true, correct and a substantive part of this Resolution. SECTION 2. Approval of Documents. The (i) Installment Sale Agreement, in a principal amount not to exceed $3,266,000, (ii) Escrow Agreement, by and between the District and The Bank of New York Mellon Trust Company, N.A., as Escrow Agent, and (iii) Placement Agent Agreement, by and between the District and Brandis Tallman LLC, as the placement agent of the District with respect to the Installment Sale Agreement, each in substantially the form on file with the Secretary, are hereby approved. In accordance with Section 16033 of the Code, the President of this Board (the 'President") is hereby authorized and directed to execute and deliver the such documents with such changes, insertions and omissions as may be recommended by Stradling Yocca Carlson & Rauth, a Professional Corporation ("Special Counsel") and approved by the President executing the same, said execution being conclusive evidence of such approval, and in accordance with Section 16115 of the Code, the Secretary is hereby authorized and directed to countersign the same. SECTION 3. Professional Services. The Board hereby appoints The Bank of New York Mellon Trust Company, N.A., as the Escrow Agent, Stradling Yocca Carlson & Rauth, a Professional Corporation, as Special Counsel, Brandis Tallman LLC, as the Placement Agent, and JPMorgan Chase Bank, N.A., as the Purchaser, each with respect to the Installment Sale Agreement. SECTION 4. Authorized Officers. The President, General Manager, and Treasurer, or the designee and any other proper officer of the District, acting singly, is hereby authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things and to execute and deliver any and all documents and certificates which such officers may deem necessary or advisable in order to consummate the execution and delivery of the Installment Sale Agreement, the Escrow Agreement and the Placement Agent Agreement and otherwise effectuate the purposes of this Resolution, and such actions previously taken by such officers are hereby ratified and confirmed. SECTION 5. Definitions. Terms used he, and not otherwise defined herein shall have the meanings assigned to them in the Installment Sale Agreement. SECTION 6. Effective Date. This Resolution shall take effect immediately. PASSED AND ADOPTED by the Board of Directors of the Truckee Donner Public Utility District in a meeting duly called and held within said District on May 4, 2016 by the following roll call vote. AYES: Directors: NOES: None. ABSENT: None. TRUCKEE DONNER PUBLIC UTILITY DISTRICT By: Joseph Aguera, President of the Board ATTEST: Michael D. Holley, Clerk of the Board