HomeMy WebLinkAboutRES-08-6593 (PENSION OBLIGATION BONDS)2
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RESOLUTION NO. 08-6593
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HERMOSA
BEACH, CALIFORNIA, AUTHORIZING THE ISSUANCE OF ONE OR
MORE SERIES OF PENSION OBLIGATION BONDS, APPROVING THE
FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF
A TRUST AGREEMENT AND A PURCHASE AGREEMENT, AND
AUTHORIZING A VALIDATION ACTION AND OTHER MATTERS
RELATING THERETO
WHEREAS, the legislative body (the "Legislative Body") of the City of Hermosa Beach
(the "Local Agency") adopted a retirement plan pursuant to the Public Employees' Retirement
Law, commencing with Section 20000 of the Government Code of the State of California, as
amended (the "Retirement Law"); and
WHEREAS, the Retirement Law obligates the Local Agency to (1) make annual
contributions to the California Public Employees' Retirement System (the "System"), to fund
pension benefits for its employees, (2) amortize the unfunded accrued actuarial liability with
respect to such pension benefits, and (3) appropriate funds for the purposes described in (1) and
(2); and
WHEREAS, the obligation of the Local Agency to pay its unfunded accrued actuarial
liability to the System ( the "Pension Obligation") is evidenced by a contract dated July 1, 1952
between the Local Agency and the System, as heretofore and hereafter amended from time to
time (collectively, the "PERS Contract"); and
WHEREAS, the Local Agency desires to issue bonds (the "Pension Obligation Bonds")
in an aggregate principal amount not to exceed the Pension Obligation, plus an additional amount
to pay costs of issuance of the Pension Obligation Bonds, for the purpose of refunding the PERS
Contract and thereby providing funds to the System in payment of all or part of the Pension
Obligation and to authorize the issuance of additional bonds in the future from time to time for
the purpose of paying the obligations of the Local Agency to the System required pursuant to the
Retirement Law, including (i) all or a portion of the unfunded accrued actuarial liability of the
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Local Agency remaining unpaid on the date of issuance of such additional bonds and (ii)
refunding the Pension Obligation Bonds or additional series of bonds; and
WHEREAS, there is on file with the Legislative Body the proposed form of Trust
Agreement (the "Trust Agreement") to be entered into between the Local Agency and Wells
Fargo Bank, National Association, as trustee (the "Trustee"), relating to the Pension Obligation
Bonds, including the forms of Bonds attached thereto as an exhibit.
WHEREAS, there is on file with the Legislative Body the proposed form of Purchase
Agreement (the "Purchase Agreement') to be entered into between the Local Agency and the
California Statewide Communities Development Authority, as pool bond issuer (the "Pool Bond
Issuer"), relating to the Pension Obligation Bonds.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HERMOSA
BEACH, CALIFORNIA, DOES HEREBY RESOLVE:
SECTION 1. This Legislative Body hereby finds and declares that the issuance of the
Pension Obligation Bonds to refund the Pension Obligation, and the other actions contemplated
by this Resolution are in the best interests of the Local Agency and are anticipated to result in
savings based on current actuarial assumptions.
SECTION 2. This Legislative Body hereby authorizes and approves the issuance of the
Pension Obligation Bonds and hereby authorizes and directs the City Manager to execute the
Pension Obligation Bonds, and to cause the Pension Obligation Bonds to be authenticated and
delivered in accordance with the Trust Agreement. The Pension Obligation Bonds shall be in
substantially the forms attached to the Trust Agreement, with such changes therein, deletions
therefrom and additions thereto as the City Manager shall approve, such approval to be
conclusively evidenced by the execution and delivery of the Pension Obligation Bonds; the
Pension Obligation Bonds may be issued as either current interest fixed rate bonds, capital
appreciation bonds, auction rate securities, index bonds or a combination thereof (including bonds
which convert from one mode to another), and may be issued in a single series or in two or more
series, at one time or from time to time, provided, however, that the aggregate initial principal
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amount of the Pension Obligation Bonds shall not exceed the amount of the Pension Obligation
(as confirmed by the System or the Local Agency's actuary) remaining unpaid on the date of
issuance of the Pension Obligation Bonds, plus an additional amount to pay costs of issuance of
the Pension Obligation Bonds, original issue discount, and underwriter's discount on the Pension
Obligation Bonds (such underwriter's discount, excluding original issue discount, not to exceed
one percent (1%) of the aggregate principal amount of the Pension Obligation Bonds); the
maximum interest rate on each series of the Pension Obligation Bonds which are issued as fixed
rate bonds, including current interest fixed rate bonds or capital appreciation bonds shall not
exceed seven and one-half percent (7.5%) per annum and the maximum interest rate on each
series of the Pension Obligation Bonds which are issued as variable rate bonds, including index
bonds or auction rate securities shall not exceed seventeen percent (17%) per annum; and the
Pension Obligation Bonds shall mature not later than thirty (30) years following their date of
issuance. The Pension Obligation Bonds are an obligation of the Local Agency not limited as to
payment from any special source of funds. The Pension Obligation Bonds shall not, however,
constitute an obligation of the Local Agency for which the Local Agency is obligated to levy or
pledge any form of taxation or for which the Local Agency has levied or pledged any form of
taxation.
SECTION 3. The proposed form of Trust Agreement, between the Local Agency and the
Trustee, on file with the City Clerk, is hereby approved. The Mayor, the City Manager and the
Finance Director (the "Authorized Representatives") are each hereby authorized and directed,
severally, or any such officer's designee, for and on behalf of the Local Agency, to execute and
deliver the Trust Agreement, substantially in the form on file with the City Clerk, with such
changes therein, deletions therefrom and additions thereto (including, but not limited to
designating the type of bond to be issued and changes, deletions and additions as may be required
by a municipal bond insurer) as such Authorized Representative shall approve, such approval to
be conclusively evidenced by the execution and delivery of the Trust Agreement. Pursuant to the
terms of the Trust Agreement, the Legislative Body hereby approves the issuance of additional
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series of bonds in the future from time to time (which additional series of bonds may be current
interest fixed rate bonds, capital appreciation bonds, commercial paper, convertible capital
appreciation bonds, index bonds, auction rate securities, variable rate bonds, inflation adjustment
bonds, or tender option bonds, including bonds which convert from one mode to another)
pursuant to supplemental trust agreements to be approved by this Legislative Body, subject to the
limitations contained in the Trust Agreement presented to this meeting, for the purpose of
refunding the Pension Obligation Bonds or any additional series of bonds from time to time
issued pursuant to a supplemental trust agreement or for the purpose of paying the obligations of
the Local Agency to the System required pursuant to the Retirement Law, including all or a
portion of the unfunded accrued actuarial liability of the Local Agency remaining unpaid on the
date of issuance of such additional series of bonds.
SECTION 4. The proposed form of Purchase Agreement, between the Local Agency and
the Pool Bond Issuer, on file with the City Clerk, is hereby approved. The Authorized
Representatives are each hereby authorized and directed, severally, or any such officer's
designee, for and on behalf of the Local Agency, to execute and deliver the Purchase Agreement,
substantially in the form on file with the City Clerk, with such changes therein, deletions
therefrom and additions thereto as such Authorized Representative shall approve, such approval
to be conclusively evidenced by the execution and delivery of the Purchase Agreement.
SECTION 5. If an Authorized Representative determines that it will be advantageous to
the Local Agency to purchase municipal bond insurance or secure other credit or liquidity
enhancement with respect to some or all of the Pension Obligation Bonds, such Authorized
Representative or his designee is hereby authorized to do so at market rates.
SECTION 6. This Legislative Body hereby designates Orrick, Herrington & Sutcliffe
LLP ("Orrick"), as bond counsel for the Pension Obligation Bonds, with bond counsel services to
consist of and be limited to rendering an opinion on the validity of the Pension Obligation Bonds,
the preparation of documents providing for the issuance of the Pension Obligation Bonds and the
validation action relating to the Pension Obligation Bonds. This Legislative Body hereby agrees
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to compensate Orrick in the amount of $7,500 to cover a portion of the cost of the validation
action (plus court filing fees and publication costs if paid by Orrick), such amount to be paid from
proceeds of the Pension Obligation Bonds, or if the Local Agency does not for any reason
(including, without limitation, a challenge to the validation action) issue Pension Obligation
Bonds during the 2008-2009 Fiscal Year, from any available funds of the Local Agency. In the
event the Pension Obligation Bonds are issued for purchase by the Pool Bond Issuer, all other
fees and expenses of Orrick shall be the responsibility of the Pool Bond Issuer to be paid from
proceeds of bonds (the "Pool Bonds") issued by the Pool Bond Issuer to purchase the Local
Agency's Pension Obligation Bonds. If the Local Agency issues Pension Obligation Bonds in
reliance on the validation and other than for purchase by the Pool Bond Issuer and substitutes a
firm other than Orrick as bond counsel, the Legislative Body hereby agrees to compensate Orrick
an additional $17,500 to more clearly approximate its true fees and costs associated with the
validation action, such amount to be paid from proceeds of the Pension Obligation Bonds or from
any available funds. This Legislative Body hereby acknowledges and consents to and waives any
conflict arising from the appointment of Orrick also as bond counsel and issuer counsel to the
Pool Bond Issuer in connection with the Pool Bonds.
SECTION 7. The Authorized Representatives of the Local Agency are, and each of them
hereby is, authorized and directed to do any and all things, including bringing a validation action
under Section 860 of the California Code of Civil Procedure, and to take any and all actions
(including any required publications of summons or other notice) and execute and deliver any and
all documents which they or any of them deem necessary or advisable in order to consummate the
transactions contemplated by this Resolution, the Trust Agreement and the Purchase Agreement
and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution,
the Trust Agreement and the Purchase Agreement, including supplying information for and
approving any portion of any official statement or any future continuing disclosure for the Pool
Bonds pertaining to the Local Agency, approving any bond purchase agreement between the Pool
Bond Issuer and the underwriter of the Pool Bonds, including any representations, warranties or
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covenants of the Local Agency contained therein and entering into investment agreements and/or
forward delivery agreements (including the payment of a breakage fee) in connection with the
investment of moneys held under the Trust Agreement.
SECTION 8. This Resolution shall take effect from and after its date of adoption.
PASSED, APPROVED and ADOPTED this 1 Oth day of June 2008.
PRESIDENT df�the City Council a (MAYOR of the City of Hermosa Beach, California
ATTEST: APPROVED AS TO FORM:
M
Clerk /J City Attorney
M
08-6593
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CITY OF HERMOSA BEACH
I, Elaine Doerfling, City Clerk of the City of Hermosa Beach, California, do
hereby certify that the foregoing Resolution No. 08-6593 was duly and regularly passed,
approved and adopted by the City Council of the City of Hermosa Beach at a Regular
Meeting of said Council at the regular place thereof on June 10, 2008.
The vote was as follows
AYES:
Bobko, DiVirgilio, Keegan, Tucker, Mayor Reviczky
NOES:
None
ABSTAIN:
None
ABSENT:
None
Dated: June 24, 2008
El ine Doerf ing City
C Clerk ( V