Document elcerrito_gov_doc_d5fe9acf1b

AGENDA BILL Agenda Item No. 5(8) Date: August 21, 2012 To: El Cerrito City Council El Cerrito Public Financing Authority Board From: Mary Dodge, Administrative Services Director/City Treasurer Subject: Recycling Center Refinancing -Change from a Lease to a Bond Structure ACTION REQUESTED Adopt a City Council resolution and a Public Financing Authority resolution authorizing the City Manager/Executive Director to enter into the required agreements with JP Morgan Chase Bank (Chase) for refinancing of the Recycling Center $3,500~'000, 2010 Lease-Purchase Financing as a Revenue Bond. f. BACKGROUND As discussed at the June 11, 2012 Council meeting, declines in interest rates have enabled the City to reduce interest costs on certain existing debt obligations. The City Council previously approved refinancings for the City's Storm Drain Revenue Bonds and six equipment capital leases, which were successfully concluded last month. At that same meeting the Council also approved resolutions for refinancing the Recycling Center Lease-Purchase financing, but due to a required change in the financing structure to a Revenue Bond by JP Morgan Chase Bank (Chase), additional resolutions are required to complete the financing. The refinancing cost/savings factors previously presented to Council have been updated; the main difference between the analysis presented June 11, 2012 and the one attached, is a scheduled payment that was made as of July 1, 2012 that reduced the principal balance by $53,000 and that the current proposed interest rate has decreased about 1/6 of a percent ANALYSIS As noted in our report in June, the City, with assistance of Cooperman Associates, an independent Financial Advisor, conducted an informal bid process with multiple financial institutions to obtain a market interest rate for the refunding of the Storm Drain Revenue Bonds, the Swim Center Revenue Bonds, the Recycling Center lease-purchase debt and capital leases on fire trucks, recycling vehicles and toters. Four bids were received and Chase submitted the most advantageous rates and terms. Subsequent to this, the four refundings were individually reviewed by the Financial Advisory Board (FAB) at meetings in April and May, and the FAB recommended approval of each of the transactions to the City Council. Council approved the ---PAGE BREAK--- Agenda Item No. 5(8) Recycling Center, Storm Drain and equipment lease refinancings at its June 11, 2012 meeting, however, the reports to Council showed the structure for the Recycling Center agreement to be a lease-purchase financing when Chase was actually requiring a lease revenue bond due to their internal financing requirements. Resolutions are required from the City Council and the Public Financing Authority Board to effect this change, which does not change the overall economics of the refinancing, and necessary to complete this transaction. FINANCIAL CONSIDERATIONS While the actual rate for the bond will not be determined until shortly before the closing, the rates as of August 5th for the Federal Reserve index used by Chase would be 2.34% for the recycling center. The rate on the term sheet presented in June was 2.496%, so the delay in closing due to the debt structure change has generated an even more favorable interest rate. The current financing is at 3.88% and extends until October 1, 2025. The refunding bond would mature at the same time and with the same quarterly payment schedule as is in the current issue. After payment of costs of issuance and & r~quired 3% call premium under the existing lease, savings to the City would be about $2 1'2,000 over the term, or almost $174,000 on a present value basis. LEGAL CONSIDERATIONS The change necessitated by internal guidelines by Chase is to have the Public Financing Authority issue Revenue Bonds, backed by a lease arrangement with the City, as opposed to a lease-purchase certificate of participation financing with the City. As previously discussed, the impact to the City from this change is negligible new resolutions are required) as the debt service and underlying credit remain the same whether bonds or a lease is issued. Legal documents are being drafted by municipal bond attorneys at Meyers Nave, which serves as the City's outside counsel. Documents will also be reviewed by Squire Sanders, a national law finn, on behalf of the Bank. Standard opinions of counsel respecting the validity and tax-exempt nature of the obligations will be provided to the City as part of the closing. Scott Hanin, City Manager Attachments: 1. Recycling Facility Bond Refunding City Resolution 2. Recycling Facility Public Financing Authority Bond Refunding Resolution 3. Recycling Facility Bond Refunding Financial Analysis 4. Recycling Facility Bond proposal from Chase Page2 ---PAGE BREAK--- Agenda Item No. S(B) RESOLUTION 2012-XX RESOLUTION APPROVING ISSUANCE AND SALE BY THE EL CERRITO PUBLIC FINANCING AUTHORITY OF NOT TO EXCEED $3,405,600 PRINCIPAL AMOUNT OF 2012 RECYCLING CENTER LEASE REVENUE REFUNDING BONDS; APPROVING FORM AND SUBSTANCE OF A SITE LEASE AND A LEASE/PURCHASE AGREEMENT, AUTHORIZING MODIFICATIONS THEREOF AND EXECUTION AND DELIVERY THEREOF AS MODIFIED; APPROVING THE FORM AND SUBSTANCE OF A FISCAL AGENT AGREEMENT, AND AN ASSIGNMENT AGREEMENT; AND AUTHORIZING RELATED ACTIONS NECESSARY TO IMPLEMENT THE PROPOSED REFUNDING PROGRAM WHEREAS, on November 1, 2010 the City entered into that certain site lease and lease purchase agreement with Holman Capital Corporation for the purpose of(financing (the "Prior Financing") a portion of the cost of construction of a recycling facility (the "Project"); and WHEREAS, by separate resolution adopted by its Governing Board (the "Authority Resolution"), the Authority has authorized the issuance of its El Cerrito Public Financing Authority 2012 Lease Revenue Refunding Bonds (the "Bonds") in a principal amount not to exceed $3,405,600 to provide funds needed to implement the refunding of the remaining outstanding Prior Financing (the "Refunding Program") and, for said purpose, has approved the form and substance of a Site Lease, dated as of October 1, 2012 (the "Site Lease"), between the Authority and the City, a Lease Purchase Agreement, dated as of October 1, 2012 (the "Lease Purchase Agreement"), between the City and the Authority, a Fiscal Agent Agreement, dated as of October 1, 2012 (the "Fiscal Agent Agreement"), between the Authority and the Administrative Services Director of the City of El Cerrito (the "City"), as Fiscal Agent; and WHEREAS, the Authority has received a proposal from JPMorgan Chase Bank, NA (the "Bank"), dated August 9, 2012 (the "Proposal"), a copy of which is attached to the Authority Resolution as Exhibit A thereto, to purchase the Bonds by private placement, subject to certain conditions, and the Authority has authorized the sale of the Bonds to the Bank on terms and conditions substantially the same as those set forth in the Proposal; and WHEREAS, among the conditions of the Proposal is that the Bonds be designated as "qualified tax-exempt obligations" within the meaning of Section 265(b) of the Internal Revenue Code of 1986 (the "Code"), and this City Council of the City (this "City Council") concurs in the finding set forth in the Authority Resolution that neither the City nor any subordinate entity of the City, including but not limited to the Authority, expects or intends to provide for the issuance of more than $10,000,000 aggregate principal amount of tax-exempt obligations during calendar year 2012; and 1 ---PAGE BREAK--- Agenda Item No. S(B) WHEREAS, the Bonds will be payable from rental payments made by the City from the Integrated Waste Management System Fund (the "Revenues") and the City Council agrees to pledge the Revenues to secure the payment of the rental payments; and WHEREAS, the Authority has determined that all things necessary to make the Bonds, when executed on behalf of the Authority and authenticated by the Fiscal Agent, as provided in the Fiscal Agent Agreement, the valid, binding and legal obligations of the Authority according to the import thereof and hereof have been done and performed; and WHEREAS, in furtherance of implementing the Refunding Program, there has been filed with the City Clerk for consideration and approval by this City Council forms of the following: the Site Lease, under the terms of which the City leases to the Authority for a nominal consideration the real property on which the Project has been constructed (the "Site"); the Lease Purchase Agreement, under the terms of which the Authority leases back to the City the Site, as improved by the Project (together, the "Leased Property"), and the City agrees to make certain rental payments (the "Base Rental Payments" and the "Additional Payments") for the use and enjoyment of the Leased Property; the Fiscal Agent Agreement, under the terms of which the Bonds are to be issued and the Revenues (as said term is defined in the Fiscal Agent Agreement) are to be administered to pay the principal of and interest on the Bonds; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of El Cerrito as follows: Section 1. The foregoing recitals are true and correct, and this City Council so finds and determines. Section 2. This City Council hereby finds and determines that the implementation of the Refunding Program, including issuance by the Authority of the Bonds and sale thereof to the Bank, as provided by the Authority Resolution, and the resulting redemption of the Prior Financing will result in significant public benefits, including demonstrable savings in effective interest rate, bond preparation, bond underwriting and bond issuance costs. Section 3. This City Council hereby approves of the issuance of the Bonds by the Authority and the sale thereof to the Bank, as more fully provided by the Authority Resolution. Section 4. The forms of the Site Lease and Lease Purchase Agreement, substantially in the form on file with the City Clerk, are hereby approved, subject to such changes as the City Manager or designee shall approve, such approval to be conclusively established by the execution thereof on behalf of the City. The City Manager is authorized and directed to execute the Site Lease and the Lease Purchase Agreement and each of them on behalf of the City. 2 ---PAGE BREAK--- Agenda Item No. 5(B) Section 5. The forms of Fiscal Agent Agreement and Assignment Agreement, substantially in the form on file with the City Clerk, are hereby approved, with such changes as the Authority shall approve prior to execution thereof. Section 6. All actions heretofore taken by the officers and agents of the City with are hereby approved, confirmed and ratified. Notwithstanding any provision of this resolution authorizing the City Manager to take any action or execute any document to the contrary, in the absence of the City Manager or in lieu of the City Manager, the person designated in writing by the City Manager, may take such action or execute such document with like effect as fully as though named in this resolution instead of the City Manager. Section 7. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to carry out, give ~ffect to and comply with the terms and intent of this resolution and to implement the refunding program. Such actions heretofore taken by such officers are hereby ratified, confirmed and approved. I. I CERTIFY that at the regular meeting on August 21, 2012, the El Cerrito City Council passed this resolution by the following vote: AYES: NOES: ABSENT: ABSTAIN: COUNCILMEMBERS COUNCILMEMBERS COUNCILMEMBERS COUNCILMEMBERS IN WITNESS of this action, I sign the document and affix the corporate seal of the City ofEl Cerrito on August XX, 2012 Cheryl Morse, City Clerk APPROVED: William Jones, III, Mayor 3 ---PAGE BREAK--- Agenda Item No. 5(B) Attachment 2 EL CERRITO PUBLIC FINANCING AUTHORITY RESOLUTION 2012-:XX: RESOLUTION OF THE GOVERNING BOARD OF THE EL CERRITO PUBLIC FINANCING AUTHORITY AUTHORIZING THE ISSUANCE AND SALE BY PRIVATE PLACEMENT TO JPMORGAN CHASE BANK, NA, OF NOT TO EXCEED $3,405,600 PRINCIPAL AMOUNT OF 2012 RECYCLING CENTER LEASE REVENUE REFUNDING BONDS; DESIGNATING THE BONDS AS QUALIFIED TAX-EXEMPT OBLIGATIONS PURSUANT TO SECTION 265(b) OF THE INTERNAL REVENUE CODE OF 1986; APPROVING THE FORM AND SUBSTANCE OF A SITE LEASE, A LEASE PURCHASE AGREEMENT, A FISCAL AGENT AGREEMENT AND AN ASSIGNMENT AGREEMENT AND AUTHORIZING THE MAKING OF MODIFICATIONS THERETO AND THE EXECUTION AND DELIVERY THEREOF AS MODIFIED; AND AUTHORIZING RELATED ACTIONS NECESSARY TO IMPLEMENT THE PROPOSED REFUNDING PROGRAM WHEREAS, the El Cerrito Public Financing Authority is a joint exercise of powers entity duly organized and existing under and by virtue of the laws of the State of California (the "Authority"); and WHEREAS, the City of El Cerrito is a municipal corporation organized and existing under the Constitution and laws of the State of California (the "City"); and WHEREAS, the Authority is empowered under the provisions of the Marks-Roos Local Bond Pooling Act of 1985, being Article 4, Chapter 5, Division 7, Title 1 of the California Government Code (the "Law"), to issue its bonds for the purpose of refunding bonds previously issued by the Authority; and WHEREAS, on November 1, 2010 the City entered into that certain site lease and lease purchase agreement with Holman Capital Corporation for the purpose of financing (the "Prior Financing") a portion of the cost of construction of a recycling facility (the "Project"); and WHEREAS, the Authority has determined to issue its El Cerrito Public Financing Authority 2012 Recycling Center Lease Revenue Refunding Bonds (the "Bonds") for the purpose of implementing a program to refund the remaining outstanding Prior Financing (the "Refunding Program"); and WHEREAS, the Bonds will be payable from rental payments made by the City from the Integrated Wast~ Management System Fund (the "Revenues") and the City Council had agreed to pledge the Revenues to secure the payment of the rental payments; and WHEREAS, the Authority has determined that, in order to implement the Refunding Program, including payment of the redemption price of the Prior Financing on the date to be selected for such redemption (after taking into consideration funds on hand with respect to the Prior Financing), and payment of the costs of the Refunding Program, including the costs of issuance of the Bonds, the Authority needs to authorize the issuance and sale of Bonds in the 1 ---PAGE BREAK--- Agenda Item No. S(B) Attachment 2 aggregate principal amount of not to exceed Three Million Four Hundred Five Thousand Six Hundred Dollars ($3,405,600); and WHEREAS, the Authority has determined that all things necessary to make the Bonds, when executed on behalf of the ·Authority, authenticated by the Trustee, and delivered to JPMorgan Chase Bank, NA (the "Bank"), the valid, binding and legal obligations of the Authority according to the import thereof and hereof have been done and performed; and WHEREAS, in furtherance of implementing the above-described Refunding Program, Meyers, Nave, Riback, Silver & Wilson, as bond counsel to the Authority for the Refunding Program ("Bond Counsel"), has prepared and submitted to the Authority Secretary for consideration and approval by this Board forms of the following: a Site Lease, dated as of October 1, 2012 (the "Site Lease"), between the City and the Authority, under the terms of which the City leases to the Authority for a nominal consideration the real property on which the Project has been constructed (the "Site''); , a Lease Purchase Agreement, dated as of October 1, 2012 (the "Lease P~rchase Agreement"), between the Authority and the City, under the terms of which the Authority leases back to the City the Site, as improved by the Project (together, the "Leased Property"), and the City agrees to make certain rental payments (the "Base Rental Payments" and the "Additional Payments") for the use and enjoyment of the Leased Property; a Fiscal Agent Agreement, dated as of October 1, 2012 (the "Fiscal Agent Agreement"), between the Authority and the Administrative Services Director of the City (the "Fiscal Agent"), under the terms of which the Bonds are to be issued and the Revenues (as said term is defined in the Fiscal Agent Agreement) are to be administered to pay the principal of and interest on the Bonds; and an Assignment Agreement, dated as of October 1, 2012 (the "Assignment Agreement"), between the Authority and the Fiscal Agent (the "Assignee"), under the terms of which the Bonds are to be issued and the Revenues (as said term is defined in the Assignment Agreement) are to be administered to pay the principal of and interest on the Bonds; and WHEREAS, being fully advised in the matter of the proposed Refunding Program, this Board wishes to proceed with implementation of the Refunding Program, provided that certain prescribed conditions set forth herein are satisfied; and WHEREAS, as required by the Law, the City has by separate resolution determined that the issuance of the Bonds by the Authority will result in significant public benefits, including demonstrable savings in effective interest rate, bond preparation and bond issuance costs; and WHEREAS, the Authority has received a proposal from the Bank, dated August 9, 2012 (the "Proposal"), to purchase by private placement $3,405,600 principal amount of 2012 Recycling Center Lease Revenue Refunding Bonds, subject to certain prescribed conditions; and WHEREAS, this Board hereby finds and determines that the proposed sale of the Bonds in accordance with and upon terms and conditions which are substantially the same as those 2 ---PAGE BREAK--- Agenda Item No. 5(B) Attachment 2 specified in the Proposal will result in significant public benefits, including demonstrable savings in effective interest rate, bond preparation and bond issuance costs; and WHEREAS, all acts, conditions and things required by the Constitution and laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the issuance, sale and delivery of the Bonds and the consummation of the Refunding Program authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law,· and the Authority is now duly authorized and empowered, pursuant to each and every requirement of law, to authorize the execution and delivery of certain documents in order to further implement the Refunding Program in the manner and upon the terms herein provided; and WHEREAS, this Board wishes by this resolution to authorize the issuance, sale and delivery of the Bonds by private placement to the Bank on terms and conditions substantially the same as those specified in the Proposal, a copy of which is attached to this resolution as Exhibit A and by this reference incorporated herein; ( ~ - NOW THEREFORE, BE IT RESOLVED by the Governing Board of the El Cerrito Public Financing Authority as follows: Section 1. determines. The foregoing recitals are true and correct, and this Board so finds and Section 2. Pursuant to the Law, this Board hereby authorizes the issuance of the Bonds in the aggregate principal amount of not to exceed Three Million Four Hundred Five Thousand Six Hundred Dollars ($3,405,600). The term of the Bonds, which shall be issued as a single, fully-registered term bond with annual mandatory partial sinking fund redemptions of the principal amount thereof, shall not extend beyond October 1, 2025, which is the last maturity of the Prior Financing. Section 3. The Bonds shall be sold and delivered to the Bank on terms and conditions substantially the same as those specified by the Proposal, as modified by the Bank with the approval of the Executive Director of the Authority (the "Executive Director") prior to the execution thereof (the "Final Proposal"); provided that any modifications of the Proposal in arriving at the Final Proposal shall not substantially change the terms and conditions of the Proposal, as set forth in Exhibit A hereto; and provided further that the purchase price shall be equal to not less than one hundred percent (100%) of the principal amount of the Bonds and the interest rate specified in the Final Proposal shall not exceed the interest rate in the Proposal by more than fifty (50) basis points. Subject to the approval of the Final Proposal by the Executive Director, the Executive Director is hereby authorized and directed to execute the Final Proposal on behalf of the Authority; provided that the Executive Director shall not be obligated to approve any proposed modifications of the Proposal requested by the Bank which the Executive Director, in the Executive Director's sole discretion, deems not to be in the best interest of the Authority, and in the event that the Executive Director and the Bank are unable to agree on modifications to the 3 ---PAGE BREAK--- Agenda Item No. 5(B) Attachment 2 Proposal to establish the Final Proposal, the Authority shall have no obligation to issue and deliver the Bonds. Section 4. The form and substance of the Site Lease, the Lease Purchase Agreement, the Fiscal Agent Agreement and the Assignment Agreement are hereby approved. The Executive Director or designee thereof (all references hereafter in this resolution to "Executive Director" shall be deemed to include reference to any designee of the Executive Director) is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Site Lease, the Lease Purchase Agreement, the Fiscal Agent Agreement, and the Assignment Agreement in substantially said form, with such changes therein as the Executive Director, following consultation with Bond Counsel, may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 5. In satisfaction of one of the conditions of the Proposal, this Board hereby designates the Bonds and all of them as "qualified tax-exempt obligations" within the meaning of Section 265(b of the Internal Revenue Code of 1986. In furtherance of such designation, this Board finds and determines and hereby declares that it has no expectation or inteNtion of issuing additional tax-exempt obligations during calendar year 2012 in a principal amount, which when combined with the principal amount of the Bonds, would result in issuance of tax-exempt obligations during calendar year 2012 in an aggregate principal amount in excess of $10,000,000. Section 6. The officers of the Authority are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this resolution. Such actions heretofore taken by such officers are hereby ratified, confirmed and approved. Section 7. This resolution shall take effect immediately upon its passage. I CERTIFY that at the regular meeting on August 21, 2012, the Governing Board of the El Cerrito Public Financing Authority passed this resolution by the following vote: AYES: NOES: ABSENT: ABSTAIN: BOARD MEMBERS BOARD MEMBERS BOARD MEMBERS BOARD MEMBERS * * * * * 4 ---PAGE BREAK--- Agenda Item No. 5(B) Attachment 2 IN WITNESS of this action, I sign the document and affix the corporate seal of the City of El Cerrito on August XX, 2012 Cheryl Morse Secretary of the El Cerrito Public Financing Authority APPROVED: William C. Jones, III Chair of the El Cerrito Public Financing Authority Board ~ 5 ---PAGE BREAK--- El Cerrito Public Financing Authority, California 2012 Refunding Loan Agreement (Holman Capital Lease Purchase - Recycling Center) Sources and Uses of Funds (Proposed Pricing 8/5/12) Notes: (Private Placement, BQ, 10/1/12 Settlement I Prior Issue Call) Sources of Funds Uses of Funds Assumptions ( 1) Not Applicable Not Applicable Not Applicable Not Applicable Loan Amount Plus: Accrued Interest Less: (OlD) Plus: OIP Less: Underwriter's Discount Net Proceeds at Closing Prior Issue Reserve Fund Other Source of Funds Total Prior Issue Funds Total Sources of Funds Cost to Payoff Lease Beginning Escrow Cash Balance Reserve Fund Surety Bond Premium Bond Insurance Premium Costs of Issuance Accrued Interest Total Uses of Funds Adjustment See Attached Schedule Run Date Run Time August 10, 2012 11:27 AM Page 1 of6 3,405,600.00 3,405,600.00 3,405,600.00 3,362,016.67 43,583.33 3,405,600.00 Agenda Item No. 5(8) Attachment 3 ---PAGE BREAK--- El Cerrito Public Financing Authority, California 2012 Refunding Loan Agreement (Holman Capital Lease Purchase - Recycling Center) Bond Counsel Financial Advisor Investor Counsel Title Insurance Rounding Adjustment Total Costs of Issuance 15,000.00 15,000.00 10,000.00 3,500.00 83.33 43,583.33 Page 2 of6 ' ---PAGE BREAK--- El Cerrito Public Financing Authority, California 2012 Refunding Loan Agreement (Holman Capital Lease Purchase - Recycling Center) Arbitrage Yield TIC "AII-In" TIC Average Coupon Net Interest Cost (NIC) Average Life Summary Statistics 2.34000% 2.34000% 2.54625% 2.34000% 2.34000% 6.953 Years Page 3 of6 ---PAGE BREAK--- El Cerrito Public Financing Authority, California 2012 Refunding Loan Agreement Holman Ca ital Lease Purchase - Rec clin Center Gross Debt Service Schedule and Savings Calculation (NPV Basis) Prior Issue Prior Issue 2.34000 Periodic Fiscal Periodic Fiscal Fiscal Present Date Princi[!al Rate Interest Debt Service Debt Service Debt Service Debt Service (Savings}/ Cost Value 10/1/2012 1/1/2013 56,200 2.340 19,922.76 76,122.76 80,224.75 (4,070.24) 4/1/2013 56,500 2.340 19,593.99 76,093.99 80,224.75 (4,067.07) 7/1/2013 56,900 2.340 19,263.47 76,163.47 228,380.22 80,224.75 240,674.25 (12,294.04) (3,967.71) 10/1/2013 57,200 2.340 18,930.60 76,130.60 80,224.75 (3,968.87) 1/1/2014 57,500 2.340 18,595.98 76,095.98 80,224.75 (3,971.45) 4/1/2014 57,900 2.340 18,259.61 76,159.61 80,224.75 (3,879.98) 7/1/2014 58,200 2.340 17,920.89 76,120.89 304,507.08 80,224.75 320,899.00 (16,391.92) (3,886.62) 10/1/2014 58,600 2.340 17,580.42 76,180.42 80,224.75 (3,800.60) 1/1/2015 58,900 2.340 17,237.61 76,137.61 80,224.75 (3,811.10) 4/1/2015 59,300 2.340 16,893.05 76,193.05 80,224.75 (3,730.31) 7/1/2015 59,600 2.340 16,546.14 76,146.14 304,657.22 80,224.75 320,899.00 (16,241.78) (3,744.50) 10/1/2015 59,900 2.340 16,197.48 76,097.48 80,224.75 (3,759.85) 1/1/2016 60,300 2.340 15,847.07 76,147.07 80,224.75 (3,685.93) 4/1/2016 60,700 2.340 15,494.31 76,194.31 80,224.75 (3,615.03) 7/1/2016 61,000 2.340 15,139.22 76,139.22 304,578.07 80,224.75 320,899.00 (16,320.93) (3,636.08) 10/1/2016 61,400 2.340 14,782.37 76,182.37 80,224.75 (3,569.83) 1/1/2017 61,700 2.340 14,423.18 76,123.18 80,224.75 (3,594.07) 4/1/2017 62,100 2.340 14,062.23 76,162.23 80,224.75 (3,532.30) 7/1/2017 62,400 2.340 13,698.95 76,098.95 304,566.72 80,224.75 320,899.00 (16,332.29) (3,559.56) 10/1/2017 62,800 2.340 13,333.91 76,133.91 80,224.75 (3,502.08) 1/1/2018 63,200 2.340 12,966.53 76,166.53 80,224.75 (3,447.27) 4/1/2018 63,500 2.340 12,596.81 76,096.81 80,224.75 f (3,479.35) 7/1/2018 63,900 2.340 12,225.33 76,125.33 304,522.57 80,224.75 320,899.00 (16,376.44) (3,428.56) 10/1/2018 64,300 2.340 11,851.52 76,151.52 80,224.75 (3,380.30) 1/1/2019 64,700 2.340 11,475.36 76,175.36 80,224.75 (3,334.50) 411/2019 65,000 2.340 11,096.87 76,096.87 80,224.75 (3,372.83) 7/1/2019 65,400 2.340 10,716.62 76,116.62 304,540.36 80,224.75 320,899.00 (16,358.65) (3,330.71) 10/1/2019 65,800 2.340 10,334.03 76,134.03 80,224.75 (3,290.93) 1/1/2020 66,200 2.340 9,949.10 76,149.10 80,224.75 (3,253.43) 4/1/2020 66,600 2.340 9,561.83 76,161.83 80,224.75 (3,218.16) 7/1/2020 67,000 2.340 9,172.22 76,172.22 304,617.16 80,224.75 320,899.00 (16,281.84) (3,185.09) 10/1/2020 67,400 2.340 8,780.27 76,180.27 80,224.75 (3,154.16) 1/1/2021 67,800 2.340 8,385.98 76,185.98 80,224.75 (3,125.33) 4/1/2021 68,200 2.340 7,989.35 76,189.35 80,224.75 (3,098.55) 7/1/2021 68,600 2.340 7,590.38 76,190.38 304,745.96 80,224.75 320,899.00 (16,153.04) (3,073.79) 10/1/2021 69,000 2.340 7,189.07 76,189.07 80,224.75 (3,050.99) 1/1/2022 69,400 2.340 6,785.42 76,185.42 80,224.75 (3,030.11) 4/1/2022 69,800 2.340 6,379.43 76,179.43 80,224.75 (3,011.12) 7/1/2022 70,200 2.340 5,971.10 76,171.10 304,725.00 80,224.75 320,899.00 (16,174.00) (2,993.97) 10/1/2022 70,600 2.340 5,560.43 76,160.43 80,224.75 (2,978.61) 1/1/2023 71,000 2.340 5,147.42 76,147.42 80,224.75 (2,965.02) 4/1/2023 71,400 2.340 4,732.07 76,132.07 80,224.75 (2,953.15) 7/1/2023 71,800 2.340 4,314.38 76,114.38 304,554.28 80,224.75 320,899.00 (16,344.72) (2,942.96) 10/1/2023 72,200 2.340 3,894.35 76,094.35 80,224.75 (2,934.41) 1/1/2024 72,700 2.340 3,471.98 76,171.98 80,224.75 (2,856.98) 4/1/2024 73,100 2.340 3,046.68 76,146.68 80,224.75 (2,852.56) 7/1/2024 73,500 2.340 2,619.05 76,119.05 304,532.05 80,224.75 320,899.00 (16,366.96) (2,849.66) 10/1/2024 74,000 2.340 2,189.07 76,189.07 80,224.75 (2,779.38) 1/1/2025 74,400 2.340 1,756.17 76,156.17 80,224.75 (2,780.35) 4/1/2025 74,800 2.340 1,320.93 76,120.93 80,224.75 (2,782.73) 7/1/2025 75,300 2.340 883.35 76,183.35 304,649.52 80,224.75 320,899.00 (16,249.48) (2,719.19) 10/1/2025 75,700 2.340 442.85 76,142.85 80,224.75 (2,725.19) 111/2026 4/1/2026 7/1/2026 76,142.85 80,224.75 (4,081.91) Totals 3,405,600 554,119.02 3,959,719.02 3,959,719.02 4,171,687.00 4,171,687.00 (211,967.98) (173,732.52) Plus: Prior Issue Reserve Fund Plus: Prior Issue Other Funds Less: New Issue Reserve Fund Net Total (211,967 .98) (173,732.52) Savings % New 5.10% Savings % Prior 5.32% Page4of6 ---PAGE BREAK--- El Cerrito Public Financing Authority, California 2012 Refunding Loan Agreement Holman Capital Lease Purchase - Rec clin Center) Gross Debt Service Schedule Periodic Fiscal Date Principal Rate Interest Debt Service Debt Service 10/1/2012 1/1/2013 56,200 2.340 19,922.76 76,122.76 4/1/2013 56,500 2.340 19,593.99 76,093.99 7/1/2013 56,900 2.340 19,263.47 76,163.47 228,380.22 10/1/2013 57,200 2.340 18,930.60 76,130.60 1/1/2014 57,500 2.340 18,595.98 76,095.98 4/1/2014 57,900 2.340 18,259.61 76,159.61 7/1/2014 58,200 2.340 17,920.89 76,120.89 304,507.08 10/1/2014 58,600 2.340 17,580.42 76,180.42 1/1/2015 58,900 2.340 17,237.61 76,137.61 4/1/2015 59,300 2.340 16,893.05 76,193.05 7/1/2015 59,600 2.340 16,546.14 76,146.14 304,657.22 10/1/2015 59,900 2.340 16,197.48 76,097.48 1/1/2016 60,300 2.340 15,847.07 76,147.07 4/1/2016 60,700 2.340 15,494.31 76,194.31 7/1/2016 61,000 2.340 15,139.22 76,139.22 304,578.07 10/1/2016 61,400 2.340 14,782.37 76,182.37 1/1/2017 61,700 2.340 14,423.18 76,123.18 I 4/1/2017 62,100 2.340 14,062.23 76,162.23 7/1/2017 62,400 2.340 13,698.95 76,098.95 304,566.72 10/1/2017 62,800 2.340 13,333.91 76,133.91 1/1/2018 63,200 2.340 12,966.53 76,166.53 4/1/2018 63,500 2.340 12,596.81 76,096.81 7/1/2018 63,900 2.340 12,225.33 76,125.33 304,522.57 10/1/2018 64,300 2.340 11,851.52 76,151.52 1/1/2019 64,700 2.340 11,475.36 76,175.36 4/1/2019 65,000 2.340 11,096.87 76,096.87 7/1/2019 65,400 2.340 10,716.62 76,116.62 304,540.36 10/1/2019 65,800 2.340 10,334.03 76,134.03 1/1/2020 66,200 2.340 9,949.10 76,149.10 4/1/2020 66,600 2.340 9,561.83 76,161.83 7/1/2020 67,000 2.340 9,172.22 76,172.22 304,617.16 10/1/2020 67,400 2.340 8,780.27 76,180.27 1/1/2021 67,800 2.340 8,385.98 76,185.98 4/1/2021 68,200 2.340 7,989.35 76,189.35 7/1/2021 68,600 2.340 7,590.38 76,190.38 304,745.96 10/1/2021 69,000 2.340 7,189.07 76,189.07 1/1/2022 69,400 2.340 6,785.42 76,185.42 4/1/2022 69,800 2.340 6,379.43 76,179.43 7/1/2022 70,200 2.340 5,971.10 76,171.10 304,725.00 10/1/2022 70,600 2.340 5,560.43 76,160.43 1/1/2023 71,000 2.340 5,147.42 76,147.42 4/1/2023 71,400 2.340 4,732.07 76,132.07 7/1/2023 71,800 2.340 4,314.38 76,114.38 304,554.28 10/1/2023 72,200 2.340 3,894.35 76,094.35 1/1/2024 72,700 2.340 3,471.98 76,171.98 4/1/2024 73,100 2.340 3,046.68 76,146.68 7/1/2024 73,500 2.340 2,619.05 76,119.05 304,532.05 10/1/2024 74,000 2.340 2,189.07 76,189.07 1/1/2025 74,400 2.340 1,756.17 76,156.17 4/1/2025 74,800 2.340 1,320.93 76,120.93 7/1/2025 75,300 2.340 883.35 76,183.35 304,649.52 10/1/2025 75,700 2.340 442.85 76,142.85 1/1/2026 4/1/2026 7/1/2026 76,142.85 Totals 3,405,600 554,119.02 3,959,719.02 3,959,719.02 Page 5 of6 ---PAGE BREAK--- 10/1/2012 3.00% Periodic Fiscal Called Call Periodic Defeasance Date Principal Rate Interest Debt Service Debt Service Bonds Premium Debt Service Debt Service 7/1/2012 3,362,016.67 10/1/2012 1/1/2013 48,563.04 3.880 31,661.71 80,224.75 48,563.04 1,456.89 4/1/2013 49,034.10 3.880 31,190.65 80,224.75 49,034.10 1,471.02 711/2013 49,509.73 3.880 30,715.02 80,224.75 240,674.25 49,509.73 1,485.29 10/1/2013 49,989.98 3.880 30,234.77 80,224.75 49,989.98 1,499.70 1/1/2014 50,474.88 3.880 29,749.87 80,224.75 50,474.88 1,514.25 4/1/2014 50,964.49 3.880 29,260.26 80,224.75 50,964.49 1,528.93 7/1/2014 51,458.84 3.880 28,765.91 80,224.75 320,899.00 51,458.84 1,543.77 10/1/2014 51,957.99 3.880 28,266.76 80,224.75 51,957.99 1,558.74 1/1/2015 52,461.98 3.880 27,762.77 80,224.75 52,461.98 1,573.86 4/1/2015 52,970.87 3.880 27,253.88 80,224.75 52,970.87 1,589.13 7/1/2015 53,484.68 3.880 26,740.07 80,224.75 320,899.00 53,484.68 1,604.54 10/1/2015 54,003.48 3.880 26,221.27 80,224.75 54,003.48 1,620.10 1/1/2016 54,527.32 3.880 25,697.43 80,224.75 54,527.32 1,635.82 4/1/2016 55,056.23 3.880 25,168.52 80,224.75 55,056.23 1,651.69 7/1/2016 55,590.28 3.880 24,634.47 80,224.75 320,899.00 55,590.28 1,667.71 10/1/2016 56,129.50 3.880 24,095.25 80,224.75 56,129.50 1,683.89 1/1/2017 56,673.96 3.880 23,550.79 80,224.75 56,673.96 1,700.22 4/1/2017 57,223.70 3.880 23,001.05 80,224.75 57,223.70 1,716.71 7/1/2017 57,778.77 3.880 22,445.98 80,224.75 320,899.00 57,778.77 1,733.36 10/1/2017 58,339.22 3.880 21,885.53 80,224.75 58,339.22 1,750.18 1/1/2018 58,905.11 3.880 21,319.64 80,224.75 58,905.11 1,767.15 4/1/2018 59,476.49 3.880 20,748.26 80,224.75 59,476.49 1,784.29 7/1/2018 60,053.41 3.880 20,171.34 80,224.75 320,899.00 60,053.41 1,801.60 10/1/2018 60,635.93 3.880 19,588.82 80,224.75 60,635.93 1,819.08 1/1/2019 61,224.10 3.880 19,000.65 80,224.75 61,224.10 1,836.72 4/1/2019 61,817.97 3.880 18,406.78 80,224.75 61,817.97 1,854.54 7/1/2019 62,417.61 3.880 17,807.14 80,224.75 320,899.00 62,417.61 1,872.53 10/1/2019 63,023.06 3.880 17,201.69 80,224.75 63,023.06 1,890.69 1/1/2020 63,634.38 3.880 16,590.37 80,224.75 63,634.38 1,909.03 4/1/2020 64,251.64 3.880 15,973.11 80,224.75 64,251.64 1,927.55 7/1/2020 64,874.88 3.880 15,349.87 80,224.75 320,899.00 64,874.88 1,946.25 10/1/2020 65,504.16 3.880 14,720.59 80,224.75 65,504.16 1,965.12 1/1/2021 66,139.55 3.880 14,085.20 80,224.75 66,139.55 1,984.19 4/1/2021 66,781.11 3.880 13,443.64 80,224.75 66,781.11 2,003.43 7/1/2021 67,428.88 3.880 12,795.87 80,224.75 320,899.00 67,428.88 2,022.87 10/1/2021 68,082.94 3.880 12,141.81 80,224.75 68,082.94 2,042.49 1/1/2022 68,743.35 3.880 11,481.40 80,224.75 68,743.35 2,062.30 4/1/2022 69,410.16 3.880 10,814.59 80,224.75 69,410.16 2,082.30 7/1/2022 70,083.44 3.880 10,141.31 80,224.75 320,899.00 70,083.44 2,102.50 10/1/2022 70,763.25 3.880 9,461.50 80,224.75 70,763.25 2,122.90 1/1/2023 71,449.65 3.880 8,775.10 80,224.75 71,449.65 2,143.49 4/1/2023 72,142.71 3.880 8,082.04 80,224.75 72,142.71 2,164.28 7/1/2023 72,842.50 3.880 7,382.25 80,224.75 320,899.00 72,842.50 2,185.28 10/1/2023 73,549.07 3.880 6,675.68 80,224.75 73,549.07 2,206.47 1/1/2024 74,262.50 3.880 5,962.25 80,224.75 74,262.50 2,227.88 4/1/2024 74,982.84 3.880 5,241.91 80,224.75 74,982.84 2,249.49 7/1/2024 75,710.17 3.880 4,514.58 80,224.75 320,899.00 75,710.17 2,271.31 10/1/2024 76,444.56 3.880 3,780.19 80,224.75 76,444.56 2,293.34 1/1/2025 77,186.08 3.880 3,038.67 80,224.75 77,186.08 2,315.58 4/1/2025 77,934.78 3.880 2,289.97 80,224.75 77,934.78 2,338.04 7/1/2025 78,690.75 3.880 1,534.00 80,224.75 320,899.00 78,690.75 2,360.72 10/1/2025 79,453.78 3.880 770.97 80,224.75 79,453.78 2,383.61 1/1/2026 4/1/2026 7/1/2026 80,224.75 Totals 3,264,093.85 907,593.15 4,171,687.00 4,171,687.00 3,264,093.85 97,922.82 3,362,016.67 Page 6 of6 ---PAGE BREAK--- CHASEO August 10, 2012 Mary Dodge Agenda Item No. 5(B) Attachment 4 Administrative Services Director/City Treasurer City of El Cerrito 10890 San Pablo Avenue El Cerrito, CA, 94530 RE: Private Placement for $3,405,600 Recycling Facility Lease Revenue Refunding Bonds, Series 2012 for TheEl Cerrito Public Financing Authority (El Cerrito, California) JPMorgan Chase Bank, NA ("Bank") is pleased to submit this proposal for tax-exempt financing to the City of El Cerrito acting as the El Cerrito Public Financing Authority (the "City" or "Issuer"). This proposal is presented in the form of a non-binding "Term Sheet", subject to final credit approval~ n,.~gotiation and acceptance of all terms, conditions and documentation for the transaction. The letter does NOT. signify a commitment by Bank to extend credit or purchase the Bonds. TYPE OF FINANCING: FORM OF BONDS: BANK QUALIFIED: LEGAL OPINION: Bank Qualified tax-exempt Revenue Refunding Bonds (the "Bonds") to be issued by the El Cerrito Public Financing Authority and privately placed with Bank pursuant to the provisions of federal state and local statutes. Bank will require a single term instrument with mandatory sinking fund maturities, and without DTC registration. Bank intends to hold the Bonds to final maturity. Bank will not require either a Standard & Poor's rating for the bonds, or the purchase of bond insurance for repayment. Bank will require a single term bond with sinking fund payments equivalent to the maturity schedule. The Bonds will be designated as "bank qualified" tax-exempt obligations under the Code Section 265(b Purchase of the Bonds will be subject to the opm10n of Meyers, Nave, Riback, Silver & Wilson, Bond Counsel, to the effect that under existing laws and assuming continuous compliance by the Borrower with certain covenants designed to meet the requirements of the Internal Revenue Code of 1986, as amended (the "Code"), interest on the Bonds will be excluded from gross income of the owners for Federal income tax purposes and is also exempt from California personal income taxes. Purchase of the Bonds will also be subject to a satisfactory opinion of Issuer's Counsel or Bond Counsel that the Issuer's obligations under the bond documents are legal, valid, binding and enforceable against the Issuer. Page 1 of5 ---PAGE BREAK--- USE OF PROCEEDS: PRINCIPAL AMOUNT: FINANCING TERM: INTEREST RATE REPAYMENT TERMS: OPTIONAL REDEMPTION: SECURITY: ADDITIONAL PROVISIONS: FINANCIAL REPORTING: Approximately $3,405,600 to provide for a refunding of the City's outstanding Lease Purchase Agreement and related Site Lease, in addition to the cost of issuance of the Bonds. $3,405,600 Thirteen (13) years or 156 months The interest rate will be fixed immediately prior to closing, based upon an index of the 1 0-year Treasury Constant Maturity Rate as most recently published by the Federal Reserve Board in the Federal Reserve Statistical Release H.l5 (519) (the "Index") plus 0.80% (the "Margin") over the Index. However, prior to acceptance, the interest rate may increase if the Bank's cost of funds increases. );3ank's cost of funds may increase due to a number of factor~· including, but not limited to, changes in market conditions. lnter~st will be calculated on a 30/360 basis. To illustrate, if the financing closed on the date of this Term Sheet, the interest rate would be fixed at 2.34 based upon the Index for August 6, 2012. Fifty-four (52) quarterly payments of principal and accrued interest on each Apri11 st, July 1st, October 1st and Jan 1st (each a "Payment Date") commencing January 1 ,20 13 with a final maturity of October 1, 2025. The Bonds are not subject to optional redemption, in whole or in part, on any date prior to October 1, 2017. Thereafter, redemption at City's option may be made on any payment date, at the price of par plus accrued interest, with thirty (30) days written notice to Bank via US mail. Lease Revenue Bonds payable from lease payments by the city from the Integrated Waste Management System Fund, without limitation to such fund by the City, which is a Major Proprietary Fund of the City that accounts for the City's recycling collection services. No other bonds payable from Integrated Waste Management System revenues may be issued without written consent of Bank. Bank consent will not be unreasonably withheld, especially where the System is operating profitably, is in compliance with all of its financial performance covenants, and covers current outstanding debt at least 1.25x. The City will be required to provide Bank with audited annual financial statements, free of significant deficiencies or Page 2 of5 ---PAGE BREAK--- DOCUMENTATION: BANK COUNSEL FEES: WAIVER OF IMMUNITY: EXPIRATION: MATERIAL CHANGE: DISPUTE RESOLUTION: material weakness, and prepared by an independent Certified Public Accountant, within 270 days of the close of its fiscal year. ·Additionally, the City will provide Bank with a copy of its annual budget, as adopted or amended, within 30 days of adoption or amendment. Other reporting, such as Bank may require from time to time, could include copies of any long- term capital improvement plans. Documentation shall be prepared by Issuer's counsel, Meyers, Nave, Riback, Silver & Wilson which firm represents Issuer at Issuer's expense. This Term Sheet is subject to approval of the documentation by the Bank and its independent Bank counsel, Squire Sanders, in the Bank's sole discretion, including but not limited to the form of bond resolution and form of bond. Independent Bank counsel fees and costs not e~pected to exceed $10,000, to be paid by Issuer regardless of whether a closing occurs. Documentation will provide that Issuer expressly waives and agrees not to claim any such sovereign immunity in any suits or judicial proceedings in connection with the provision of Bank products and services. This Term Sheet must be accepted on or before August 22, 2012 and funded on or before October 31, 2012. If acceptance or funding has not occurred by the respective dates, the Bank may, at its option and in its sole discretion, terminate the Term Sheet and/or the Interest Rate may be adjusted. Any change (whether material or not) in the amount to be financed or a material change in the financial condition or prospects of the Issuer may constitute a re-pricing event and Bank may, at its option and in its sole discretion, terminate this Term Sheet and/or the Interest Rate may be adjusted. As a material inducement for Lender making entering in to this transaction, the Bond documentation shall contain a Dispute Resolution Provision concerning the resolution of any controversies or claims between or among any guarantor, Lender, Borrower or any other parties to the transaction, whether arising in contract, tort or by statute. Except to the extent expressly provided, any Dispute shall, upon the mutual agreement of the parties, acting in their sole and absolute discretion, be resolved by binding arbitration in accordance with the Federal Arbitration Act {Title 9, U.S. Code) (the "Federal Arbitration Act"). The Federal Arbitration Act will Page 3 of5 ---PAGE BREAK--- apply even though the Governing Law Section provides that the transaction is governed by the laws of the State. To the extent any Disputes are not arbitrated, the Disputes shall be resolved in court by a judge without a jury, except any Disputes which are brought in California state court shall be determined by judicial reference. Any Dispute which is not arbitrated and which is brought in California state court will be resolved by a general reference to a referee (or a panel of referees) as provided in California Code of Civil Procedure ("CCP") Section 638. The referee (or presiding referee of the panel) shall be a retired Judge or Justice. The referee (or panel of referees) shall be selected by mutual written agreement of the parties. ~ ' Page 4 of5 ---PAGE BREAK--- We appreciate your interest in us and look forward to your favorable response. Should you have any questions regarding this Term Sheet, please contact me at (51 0)420-0757 or via email at [EMAIL REDACTED]. Sincerely, JPMORGAN CHASE BANK, NA Laura Jones Vice President ACCEPTED BY: The City ofEI Cerrito By: Name: Title: Date: IRS Circular 230 Disclosure: Bank and its affiliates (collectively, "Chase") do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with Chase of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties. Page 5 of5