HomeMy WebLinkAbout03/02/1993, C-7 - APPROVAL OF 1993 WATER REVENUE BONDS MEETINGDATE:
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COLAMCIL AGENDA REPORT MEM NUMBER:/f
FROM: William C. Statler, Director of Finance
Prepared by: Linda Asprion, Revenue Manager
SUBJECT: APPROVAL OF 1993 WATER REVENUE BONDS
CAO RECOMMENDATION
Adopt a resolution approving the sale of water revenue bonds, not to exceed $11.5 million,
to finance the construction costs of upgrading the existing water treatment plant.
DISCUSSION
Background
On January 5, 1993, the City Council awarded a construction contract in the amount of
$8,510,000 for this project, and approved a total construction budget of $9,855,700. As
noted at all phases of this project (budget, study, design, and contract award), it has
consistently been Council's policy to debt finance the construction portion of this project.
Project Summary
This upgrade to the water treatment plant is necessitated by the 1986 amendments to the
Safe Drinking Water Act (SDWA). The most significant issue for the City of San Luis
Obispo is the new regulations aimed at reducing the formation of disinfection-by-products,
specifically trihalomethanes (THMs), which are a group of compounds formed during
disinfection by the reaction of chlorine with naturally occuring organics. This upgrade will
increase water capacity from 11.5 million gallons per day to 16.0 million gallons per day and
produce a water quality equal to or better than the proposed Health Department drinking
water standards for water received from either Whale Rock or Salinas Reservoirs. It should
be emphasized that the increase in overall plant capacity is merely a result of the improved
efficiency of existing processes due to the upgrade and not a goal of the project. This
project will extend the life of the facilities by another 30 to 50 years.
Capital Financing and Debt Managment Policy Links
The proposed financing is a direct result of Council action on January 5, 1993, awarding the
construction contract for this project to R. P. Richards. The proposed financing for the
water treatment plant is consistent with the City's adopted capital financial and debt
management policies as provided on pages B-8 thru B-10 of the 1991-93 Financial Plan.
Most notably, the proposed financing meets the following key criteria outlined in this policy:
■ The project's useful life is equal to or greater than the proposed term of the
financing (30 years).
■ The proposed financing will support an investment grade rating and will be
conducted on a competitive basis.
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COUNCIL AGENDA REPORT
■ Current market conditions present favorable interest rates and demand for municipal
financings.
Proposed Financing Structure
Under the proposed financing structure, the debt service payments on the revenue bonds
will be funded through water rates. As security for the bonds, the City will pledge net
revenues from the City's water enterprise fund. In general terms, net revenues are defined
as gross revenues less any operations and maintenance costs.
The water rate structure already meets the above requirements. As Council is aware, debt
service on this project was included in the five year water rate review presented to Council
on June 2, 1992. This projection indicated that only modest rate increases of approximately
6% annually would be needed to fund operations and other planned improvements,
including this project. Although debt service costs were based on a project cost of $7.6
million rather than the $9.85 million currently anticipated, debt service requirements will
be approximately the same ($750,000 annually) due to the anticipated favorable interest
rates on the bond issue.
Description of Financing Documents
The attached resolution approves a variety of.financing documents which are required in
order to proceed with the project financing. Prepared by. the City's Bond Counsel (Jones
Hall Hill & White) and Financial Advisor (Evensen Dodge), the following is a brief
description of these documents which are on file in the Council's offices:
■ Indenture of Trust
This document contains all of the terms and provisions relating to the water revenue
bonds, including prepayment provisions, maturity schedules, rights, and remedies of
the bond owners and the trustee in the event of a default.
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■ Official Statement
Prepared by the Financial Advisor, the Official Statement (OS) describes the
financing for prospective purchasers of the revenue bonds, and constitutes the
primary marketing document for the financing.
As reflected in the attached resolution approving these financing documents, the City
Administrative Officer is authorized to make minor amendments to these documents as
recommended by Bond Counsel and the Financial Advisor, and to execute the final
documents.
Professional Assistance
In accordance with service agreements previously executed with these firms, Bond Counsel
services will be provided by the law firm of Jones Hall Hill & White and Financial Advisor
services will be provided by Evensen Dodge. Additionally, Trustee services are anticipated
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COUNCIL AGENDA REPORT
to be provided by Bank of America based on their experience in serving as the City's trustee
for the 1986 Lease Revenue Bonds, 1988 Certificates of Participation, and the 1990
Certificates of Participation. However,to ensure competitiveness,proposals will be solicited
from other firms providing this service, and the contract will be awarded by the City
Administrative Officer to the most responsible bidder.
CONCURRENCE
The Utilities Department concurs with the proposed financing which will enable the
construction of the water treatment plant improvements to begin on schedule.
FISCAL IMPACT
The net debt service payments to be made by the City will be approximately $750,000
annually and will be paid from the Water Fund beginning in fiscal year 1993-94. As
previously mentioned, accommodating this increase in next year's budget in order to fund
this high priority project has been planned for in our most recent rate review.
The following detail schedules regarding the financial terms of the water revenue bond
issuance are provided in Schedule 2:
■ Source and Use of Funds (Attachment 2a)
■ Debt Service Schedule (Attachment 2b)
■ Interest Rate Summary (Attachment 2c)
■ Net Debt Service Requirements (Attachment 2d)
ALTERNATIVES
The recommended financing is in accordance with adopted Council policies and objectives.
Given Council actions to date, there are no viable alternatives to the proposed financing
which will achieve the Council approved project objectives in a timely manner that is
consistent with the sound and prudent financial management policies currently in effect.
Failure to adopt the attached resolution implementing the proposed financing will:
■ Significantly delay or prevent the upgrading of the water treatment plant, which is
dependent upon the proceeds from the financing for funding as identified in the
1991-93 Financial Plan and recently approved by Council.
■ Create fiscal and legal difficulties with the contractor since award of bid has already
been made.
■ Result in a potential lost opportunity to benefit from current market conditions which
are especially favorable at this time for an issuance of this type.
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00 COUNCIL AGENDA REPORT
SUMMARY
In order to provide the funding required to implement the upgrade to the water treatment
plant, it is recommended that the Council adopt the proposed resolution which authorizes
the issuance of water revenue bonds not to exceed $11.5 million for this purpose.
ATTTACHMENT
Resolution of the City Council of the City of San Luis Obispo authorizing the issuance and
sale of not to exceed $11,500,000 revenue bonds and authorizing official actions
EXHIBITS
A Official Notice of Sale
B. Notice of Intention to Sell Bonds
SCHEDULES
1. Summary of the Proposed Project Financing
2. Detailed Financial Schedules
a. Source and Use of Funds
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b. Debt Service Schedule
C. Interest Rate Summary
d. Net Debt Service Requirements
ON FILE IN COUNCIL OFFICE
■ Indenture of Trust
■ Preliminary Official Statement
RESOLUTION NO.
RESOLUTION OF THE CITY OF SAN LUIS OBISPO AUTHORIZING
THE ISSUANCE AND SALE OF NOT TO EXCEED $11,500,000
REVENUE BONDS AND AUTHORIZING OFFICIAL ACTIONS
WHEREAS, the City of San Luis Obispo (the "City") is authorized pursuant to Section 203
of the City Charter of the City to make and enforce all laws and regulations in respect to municipal
affairs, subject only to such restrictions and limitations as may be provided therein and in the
Constitution and laws of the State of California; and
WHEREAS, pursuant to such authorization the City Council of the City proposes to
authorize proceedings for the issuance of 1993 Water Revenue Bonds of the City in the aggregate
principal amount of not to exceed $11,500,000 (the 'Bonds") for the purpose of financing the
improvement of the existing water treatment plant which is used in connection with the water
treatment and distribution enterprise of the City (the "Enterprise"); and
WHEREAS, the City and the City of San Luis Obispo Capital Improvement Board have
previously entered into that certain Lease Agreement dated as of December 1, 1988, whereby the
City has incurred certain lease obligations which are payable from the net revenues of the
Enterprise (the "1988 Lease Payments"), and the Bonds are proposed to be issued on a parity with
the 1988 Lease Payments; and
WHEREAS, the City wishes at this time to authorize the issuance of the Bonds and
authorize and direct the public sale thereof,
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San Luis
Obispo as follows:
SECTION 1. Adoption of City of San Luis Obispo Revenue Bond Law. Pursuant to the
municipal affairs powers of the City which are granted to it by the City Charter of the City and by
the Constitution of the State of California, the City Council does hereby enact municipal legislation
to be known as the "City of San Luis Obispo Revenue Bond Law" (the "Law") which shall consist
of all of the provisions (which provisions are herein incorporated by reference with the same force
and effect as if such provision were expressly set forth herein) of the Revenue Bond Law of 1941,
constiting Chapter 6 of Part 1 of Division 2 of Title 5 of the Government Code of the State of
California, excluding therefrom the provisions of Article 3 of said Chapter 6 (consisting of
Sections 54380 through 54388, inclusive), as such provisions are in effect on the date of adoption
hereof or as they may thereafter by amended. The enactment of the Law pursuant hereto shall
constitute a law made by the City in respect of municipal affairs, within the meaning of Section 203
of the City Charter of the City.
SECTION 2. Issuance of Bonds: Approval of Documents. The City Council hereby
authorizes the issuance of the Bonds pursuant to the Law in the.aggregate principal amount of not
to exceed $11,500,000. The Bonds shall be issued under and in accordance with the Indenture of
Trust dated as of April 1, 1993,by and between the City and Bank of America National Trust and
Savings Association, as trustee, in substantially the form on file with the City Administrative
Officer together with any changes therein or additions thereto deemed advisable by the City
Administrative Officer, whose execution thereof shall be conclusive evidence of his approval of
such changes and additions. The City Council hereby authorizes and directs the City
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Administrative Officer to execute, and the City Clerk to attest and affix the seal of the City to, said
form of the Indenture of Trust for and in the name of the City.
SECTION 3. Call for Bids: Authorization of Competitive Sale of Bonds. The City hereby
calls for bids to be received for the purchase of the Bonds at the offices of Jones Hall Hill &
White, A Professional Law Corporation, Four Embarcadero Center, Suite 1950, San Francisco,
California 94111, on Wednesday, March 17, 1993 at 10:00 a.m. California time. Bids shall be
received, and the Bonds shall be sold, subject to the terms and conditions set forth in the Official
Notice of Sale of the Bonds in substantially the form attached hereto as Exhibit A and by this
reference incorporated herein, together with any additions thereto or changes therein (including but
not limited to changes in the time and date fixed for sale of the Bonds) as may be deemed necessary
or advisable by the Director of Finance. The Director of Finance is hereby authorized and directed
to accept the best bid determined in accordance with the Official Notice of Sale, in the name and on
behalf of the City.
SECTION 4. Publication of Notices. Pursuant to Section 53692 of the Government
Code, the Director of Finance is hereby authorized and directed to execute, and Jones Hall Hill &
White, A Professional Law Corporation, is hereby authorized to cause to be published, the Notice
of Intention to Sell Bonds in substantially the form attached hereto as Exhibit B and by this
reference incorporated herein, together with any additions thereto or changes therein (including but
not limited to changes in the time and date fixed for sale of the Bonds) as may be deemed necessary
or advisable by the Director of Finance. Such publication shall be made once in The Bond BuYer,
not later than fifteen (15) days prior to the date set for the receipt of bids for the sale of the Bonds.
The financial advisor is hereby authorized and directed to cause to be circulated to potential bidders
a copy of the final form of the Official Notice of Sale.
SECTION 5. Official Statement. The City hereby approves, and hereby deems nearly
final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, the preliminary
Official Statement describing the Bonds, in the form on file with the Director of Finance. The
financial advisor is hereby authorized to distribute the Official Statement in connection with the sale
of the Bonds. The Director of Finance is hereby authorized and directed to (a) execute and deliver
to the purchaser of the Bonds a certificate deeming the preliminary Official Statement to be nearly
final as of its date, (b) approve any changes in or additions to cause such Official Statement to be
put in final form, and (c) execute said final Official Statement for and in the name and on behalf of
the City.
SECTION 6. Engagement of Professional Services. Evensen Dodge, Inc. is hereby
retained as financial advisor to the City, and the firm of Jones Hall Hill & White, A Professional
Law Corporation, is hereby retained as bond counsel to the City, in connection with the issuance
and sale of the Bonds. The Director of Finance is hereby authorized and directed on behalf of the
City to execute an agreement with each of said firms, in the respective forms on file with the
Director of Finance.
SECTION 7. Official Actions. The City Administrative Officer, the Director of Finance,
the City Clerk, the City Attorney and all other officers of the City are each authorized and directed
in the name and on behalf of the City to make any and all assignments, certificates, requisitions,
agreements, notices, consents, instruments of conveyance, warrants and other documents, which
they or any of them might deem necessary or appropriate in order to consummate any of the
transactions contemplated by the documents approved pursuant to this Resolution. Whenever in
this resolution any officer of the City is authorized to execute or countersign any document or take
any action, such execution, countersigning or action may be taken on behalf of such officer by any
person designated by such officer to act on his or her behalf in the case such officer shall be absent
or unavailable.
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SECTION 8, Effective Date. This resolution shall take effect from and after the date of
approval and adoption thereof.
On motion of , seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this 2nd day of March, 1993.
Mayor
ATTEST:
City Clerk
APPROVED:
CittAstrative Officer
ApWie
Director of Finance
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EXHIBIT A
.OFFICIAL NOTICE OF SALE
CITY OF SAN LUIS OBISPO
1993 WATER REVENUE BONDS
NOTICE IS HEREBY GIVEN by the City of San Luis Obispo (the "City") that bids will
be received by a representative of the City at the offices of]ones Hall Hill &White, A Professional
Law Corporation, Four Embarcadero Center, Suite 1950, San Francisco, California 94111, on
WEDNESDAY, MARCH 17, 1993
at 10:00 a.m. California Time for the purchase of$ principal amount of bonds of the
City designated the "City of San Luis Obispo 1993 Water Revenue Bonds" (the 'Bonds"). The
Bonds will be issued under the provisions of an Indenture of Trust by and between the City and
Bank of America National Trust and Savings Association as Trustee (the "Trustee") dated as of
April 1, 1993 (the "Indenture"),and pursuant to the laws of the State of California. The Bonds are
more particularly described in the proposed form of the Indenture on file with the City Clerk of the
City (which is incorporated herein by reference) and copies thereof will be fumished to the bidder
upon request.
DESCRIPTION OF BONDS
FORM OF BONDS: The Bonds will be issued in fully registered form in denominations
of$5,000 or authorized integral multiples thereof, to be dated initially as of April 1, 1993. The
Bonds will be issued initially under the book-entry system of The Depository Trust Company of
New York, New York ("DTC'), and the ownership of the Bonds will be registered to the nominee
of DTC. Bidders are referred to the Official Statement for further details.
MATURITIES: The Bonds will mature, or be subject to mandatory sinking fund
redemption, on June I in each of the years and in the amounts, as set forth in the following table.
Each bidder is required to specify in its bid whether,for any particular year, the Bonds will mature
or, alternately, be subject to mandatm y sinking fund redemption in such year.
Year Principal Year Principal
June 1 Amount June 1 Amount
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PAYMENT PROVISIONS: Interest on the Bonds will be payable on December 1, 1993,
and on June 1 and December 1 in each year thereafter (the "Interest Payment Dates"), to the
registered owners by check or draft of the Trustee or, in the case of the owner of Bonds in an
aggregate principal amount of at least $1,000,000, at the written request of such.owner by wire
transfer. Principal of any Bond will be paid upon presentation and surrender thereof at the
corporate trust office of the Trustee in Los Angeles, California. Both the principal of and interest
on the Bonds are payable in lawful money of the United States of America.
OPTIONAL REDEMPTION: The Bonds maturing on or before June 1, 2003, are not
subject to optional redemption prior to maturity. The Bonds maturing on or after June 1, 2004, are
subject to redemption prior to their respective maturity dates, at the option of the City, as a whole
or in part, from any source of available funds, on any date on or after June 1, 2003, at a
redemption price equal to the one hundred percent(100%) of the principal amount of the Bonds to
be redeemed plus accrued interest thereon to the date of redemption, without premium.
SPECIAL MANDATORY REDEMPTION. The Bonds are also subject to redemption as
a whole or in part, on any Interest Payment Date, from and to the extent of the proceeds of
disposition of properties of the City's water enterprise (the "Enterprise") or the proceeds of hazard
insurance not used to repair or rebuild the Enterprise, which proceeds are required to be used for
such purpose pursuant to the Indenture, at a redemption price equal to the principal amount of the
Bonds plus interest accrued thereon to the date fixed for redemption, without premium.
The Bonds are also subject to redemption as a whole or in part, on the first Interest
Payment Date (commencing June 1, 1996) for which notice of redemption can be timely given
following the transfer of funds from the Construction Fund to the Redemption Fund pursuant to
the Indenture, from and to the extent of the funds so transferred, at a redemption price equal to the
principal amount of the Bonds plus interest accrued thereon to the date fixed for redemption,
without premium.
SINKING FUND REDEMPTION: Any bidder may, at its option, specify that one or more
maturities of the Bonds will consist of term Bonds which are subject to mandatory sinking fund
redemption in consecutive years immediately preceding the maturity thereof, as designated in the
bid of such bidder. In the event that the bid of the successful bidder specifies that any maturity of
Bonds will be term Bonds, such term Bonds will be subject to mandatory sinking fund redemption
on June I in each year so designated in the bid, in the respective amounts for such years as set
forth above under the heading "MATURITIES", at a redemption price equal to the principal
amount thereof to be redeemed together with accrued interest thereon to the redemption date,
without premium.
PURPOSE: The proceeds .of the Bonds will be applied by the City to finance the
construction of improvements to the existing water treatment plant of the City, together with the
acquisition, construction and improvement of other facilities and property in connection with the
Enterprise.
SECURITY: The Bonds are special obligations of the City, payable solely from and
secured by a lien on and pledge of the Net Revenues of the water treatment and distribution
enterprise of the City, which Net Revenues are pledged therefor in the Indenture. The Bonds are
additionally secured by a lien on amounts held in the funds and accounts established under the
Indenture. The Bonds will be issued on a parity with the obligations of the City under a Lease
Agreement previously entered into by the City in the aggregate original principal amount of
$5,000,000. Bidders should be aware of certain factors affecting the availability and amount of the
Net Revenues in amounts and at times sufficient to pay the Bonds, and the bidders are referred to
the Indenture and the Official Statement for further details.
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TAX-EXEMPT STATUS: In the opinion of Jones Hall Hill & White, A Professional Law
Corporatio bond counsel to the City, interest on the Bonds is excluded from gross income for
federal inc me tax purposes and is not an item of tax preference for purposes of the federal
individual and corporate alternative minimum taxes, although it is included in certain income and
earnings in computing the alternative minimum tax imposed on certain corporations. In the further
opinion of Bond Counsel, such interest is exempt from California personal income taxes. In the
event that prior to the delivery of the Bonds (a) the interest on other obligations of the same type
and character shall be declared to be taxable (either at the time of such declaration or at any future
date) under any federal income tax laws, either by the terms of such laws or by ruling of a federal
income tax authority or official which is followed by the Internal Revenue Service, or by decision
of any federal court, or (b) any federal income tax law is adopted which will have a substantial
adverse effect upon owners of the Bonds as such, the successful bidder for the Bonds may, at its
option,prior to the tender of the Bonds, be relieved of its obligation under the contract to purchase
the Bonds, and in such case the deposit accompanying its proposal will be returned.
LEGAL OPINION: The legal opinion of Jones Hall Hill & White, A Professional Law
Corporation, San Francisco, California, approving the validity of the Bonds and the Indenture,
will be furnished to the purchaser of the Bonds without cost. A copy of the legal opinion, certified
by the official in whose office the original is filed, will be printed on each Bond at the expense of
the City.
FURTHER INFORMATION: A copy of the preliminary Official Statement describing the
Bonds, and any other information concerning the proposed financing, will be furnished upon
request to the financial consultant to the City, Evensen Dodge, Inc., 650 Town Center Drive,
Costa Mesa, California 92626, telephone: (714) 545-2675.
TERMS OF SALE
FORM OF BID; MAXIMUM DISCOUNT: Each bid must be for not less than all of the
Bonds hereby offered for sale. The purchase price to be paid for the Bonds may not be less than
ninety-eight percent(98%) of the par value thereof and accrued interest thereon to the delivery date.
The amount of any discount specified for the Bonds shall not exceed two percent (2%) of the
aggregate principal amount of the Bonds. Each bid must be delivered in writing to the City at the
address set forth above, to be received not later than the date and time of sale set forth above.
DESIGNATION OF INTEREST RATES: Each bidder must specify the rate or rates of
interest which the Bonds shall bear. The maximum rate bid on any maturity of the Bonds may not
exceed percent (_%) per annum. A bidder will be permitted to bid different rates of
interest for each maturity of Bonds; but (i) each interest rate specified must be in a multiple of one-
twentieth or one-eighth of one percent; (ii) the rate of interest bid on any maturity of Bonds must be
greater than or equal to rate of interest bid on the preceding maturity of Bonds; (iii) no Bond shall
bear more than one rate of interest; (iv) interest on each Bond shall be computed from April 1,
1993, to its stated maturity (or, in the case of term Bonds, to the respective dates of mandatory
sinking fund redemption thereof as designated in the bid) at the interest rate specified in the bid,
payable on the Interest Payment Dates as set forth above; (v) all Bonds maturing at any one time
shall bear the same rate of interest; and (vi) any premium must be paid as part of the purchase
price, and no proposal will be accepted which contemplates the waiver of any interest or other
concession by the bidder as a substitute for payment in full of the purchase price.
BOND INSURANCE: The City has applied for the issuance of a policy of municipal
bond insurance on the Bonds. Information concerning such municipal bond insurance will be
available prior to the time set for receipt of bids, and bidders should contact the financial consultant
to the City, Evensen Dodge, Inc., 650 Town Center Drive, Costa Mesa, California 92626,
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telephone: (714) 545-2675, fo'r fi=her information. The premium for any such insurance will be
paid by the City. Be
DETERMINATION OF BEST BID: The best bid will be determined by deducting the
amount of the premium bid (if any) from, and adding the amount of the discount bid (if any)to, the
total amount of interest which would be required to be paid on the Bonds from April 1, 1993, to
their respective maturity dates, or in the case of the Term Bonds to their respective sinking account
prepayment dates set forth above,at the respective interest rates specified in the bid, on the basis of
the lowest net interest cost determined thereby. The purchaser must pay accrued interest,
computed on a 30-day month, 360-day year basis,from April 1, 1993, to the date of delivery.
RIGHT TO REJECT ANY BID: The City reserves the right, in its discretion, to reject
any and all proposals and to waive any irregularity or informality in any proposal.
TIME OF AWARD The City has authorized its Director of Finance to award the sale of
the Bonds to the bidder whose proposal is the best responsible proposal determined in accordance
herewith. Notice of the award will be given in writing to the successful bidder within twenty-four
(24) hours from the time proposals are received.
DELIVERY AND PAYMENT: Delivery of the definitive Bonds will be made to DTC or
its nominee upon the issuance thereof, which is expected to occur on April _, 1993. Payment
for the Bonds must be made by wire transfer of Federal Reserve Bank funds, or Federal Reserve
Bank funds check, which is immediately available to the Trustee on the date of delivery. Any
expense in providing immediately available funds shall be bome by the purchaser.
RIGHT OF CANCELLATION: The purchaser shall have the right, at its option, to cancel
the contract of purchase if the City fails to execute the Bonds and tender the same for delivery
within 60 days from the date of award thereof, and in such event the accompanying good faith
deposit will be returned.
GOOD FAITH DEPOSIT: A certified or cashier's check drawn on a responsible bank or
trust company having an office in Los Angeles, California, or in San Francisco, California, in the
amount of $ , payable to the order of the City, must accompany each proposal as a
guaranty that the bidder, if successful, will accept and pay for the Bonds in accordance with the
terms of its proposal. The good faith deposit accompanying any accepted proposal will be cashed
by the City following the award to the successful bidder. The amount will be applied as a credit
towards the payment of the purchase price by the successful bidder. If after the award of the
Bonds, the successful bidder fails to complete its purchase on the terms stated in its proposal, the
full amount of the good faith deposit will be retained by the City.
The check accompanying unaccepted proposals will be made available for recovery by each
unsuccessful bidder as soon as the successful bid has been verified. No interest will be paid upon
any good faith check held or deposited by the City.
STATEMENT OF NET INTEREST COST: Each bidder is requested, but not required, '
to state in its bid the total net interest cost and the percentage net interest rate represented by the bid,
which will be informative only and not binding on either the bidder or the City.
CERTIFICATION OF REOFFERING PRICE: The successful bidder shall be required,
as a condition to the delivery of the Bonds by the City, to deliver to the City a certificate, in form
and substance satisfactory to the City, stating (i) that, as of the date of award, the Bonds were
expected to be reoffered in a bona fide public offering, (ii) the initial offering price at which a
substantial amount (at least 10%) of each maturity of the Bonds were sold to the public, and (iii)
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that no Bonds of a single maturity were offered at one price to the general public and at a discount
from that price to institutional or other investors.
NO LITIGATION: There is no litigation pending concerning the validity of the Bonds, the
corporate existence of the City, or the entitlement of the officers thereof to their respective offices,
and the purchaser will be furnished a no-litigation certificate certifying to the foregoing as of and at
the time of delivery of the Bonds.
CUSIP NUMBERS: It is anticipated that CUSIP numbers will be printed on the Bonds,
but neither the failure to print such numbers on any Bonds nor any error with respect thereto will
constitute cause for a failure or refusal by the purchaser to accept delivery of and pay for the Bonds
in accordance with the terms hereof. All expenses in relation to the printing of CUSIP numbers on
the Bonds will be paid for by the City;provided, however, that the CUSIP Service Bureau charge
for the assignment of said numbers will be the responsibility of and shall be paid for by the
purchaser.
CALIFORNIA DEBT ADVISORY COMMISSION FEES: All fees payable to the
California Debt Advisory Commission in connection with the issuance of the Bonds shall be the
responsibility of the purchaser of the Bonds.
OFFICIAL STATEMENT: The City has approved a preliminary Official Statement
relating to the Bonds. Copies of such preliminary Official Statement will be distributed to any
bidder, upon request, prior to the sale in a form "deemed final" by the City for purposes of Rule
15c2-12 under the Securities Exchange Act of 1934 (the 'Rule"). Within seven business days
from the sale date,the City will deliver to the purchaser copies of the final Official Statement(in an
amount not to exceed 250 copies), executed by an authorized representative of the City and dated
the date of delivery thereof to the purchaser, in sufficient number to allow the purchaser to comply
with paragraph (b)(4) of the Rule and to satisfy the Municipal Securities Rule making Board (the
"MSRB") Rule G-32 or any other rules adopted by the MSRB, which shall include information
permitted to be omitted by paragraph (b)(1) of the Rule and such other amendments or supplements
as shall have been approved by the City (the "Final Official Statement"). The purchaser agrees that
it will not confirm the sale of any Bonds unless the confirmation of sale is accompanied or
preceded by the delivery of a copy of the Final Official Statement.
Dated: March_, 1993
CITY OF SAN LUIS OBISPO
By:
Director of Finance
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EXHIBIT B
l
NOTICE OF INTENTION TO SELL BONDS
CITY OF SAN LUIS OBISPO
1993 WATER REVENUE BONDS
NOTICE IS HEREBY GIVEN by the City of San Luis Obispo (the "City") that bids will
be received by a representative of the City at the offices of Jones Hall Hill &White, A Professional
Law Corporation, Four Embarcadero Center, Suite 1950, San Francisco, California 94111, on
WEDNESDAY, MARCH 17, 1993
at 10:00 a.m. California Time for the purchase of$ principal amount of bonds of the
City designated the "City of San Luis Obispo 1993 Water Revenue Bonds" (the "Bonds"). The
sale of the Bonds will be conducted upon the terms and conditions set forth in the Official Notice
of Sale for the Bonds. Such Official Notice of Sale and the preliminary form of the Official
Statement describing the Bonds may be obtained from the financial adviser to the City, Evensen
Dodge, Inc., 650 Town Center Drive, Costa Mesa, California 92626, telephone: (714) 545-2675.
Dated: March_, 1993
CITY OF SAN LUIS OBISPO
By:
Director of Finance
B-1
SCHEDULE 1
SUMMARY OF PROPO,—L) WATER TREATMENT PLANT i .�4ANCING
■ Policy Links 1991-93 Financial Plan
,• Recent Council Actions:
Approved Water Treatment Project (9/22/92)
Awarded Construction Contract (1/5/93)
■ Bond Sizing/Use of Proceeds
Project costs $ 9,855,700
Debt service reserve 793,200
Underwriter's discount 92,800
Fixed costs of issuance 100,000
Variable costs of issuance 65,500
Bond insurance 143,000
Interest earnings during construction (130.20 )
Total Proceeds $10,920,000
5% Contingency 580.000
Issue not to exceed $11,500,000
■ Project Cost Summary
Project inspection and management $ 750,000
Construction Contract 8,510,000
Contingencies 595.700
Total Estimated Project Costs $ 9,855,700
Note: The bond documents will allow reimbursement of design and study costs
(estimated at $760,000); however, they are not included in the recommended sizing
of the issue.
■ Type of Debt Instrument Water Revenue Bonds
■ Issued Through City of San Luis Obispo
■ Maturity Period 30 Years
■ Estimated Interest Rate 6.0010 to 6.5%
■ Estimated Annual Debt Service
Gross debt service $793,000
Net debt service after interest on reserve $755,000
Net debt service after interest on reserve
and including final year payment made
from reserve $725,000
® Source of Funding Water Revenues
■ Scheduled Key Events
Council approval of the financing March 2, 1993
Underwriter bid closing March 17, 1993
Receipt of proceeds April 1, 1993
SCHEDULE 2a
Yater Revenue Bonds
The City of Ban Lute Obispo, California
Assumes DN 96; Bond Insurance at 60 BPs and U/Y Disc of 58.50
a.naaac-�saaa rm■■■eases aaa�aaaaaaaa■a aanacaa
9 0 U R C 1 2 AND UIEI OF FUNDI
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DELIVERY DATE: 3/30/93
Sources of Funds
■■■NmN■■miN■■.
Par Amount of Bonds*,................ 6101920,000.00
+Premiva /-Discount................... $0.00
Bond Proceeds........................................... 10,920,000.00
Accrued Interest........................................ $08927.63
...................
$10,970,927.63
Uses Of Furls
■NN■N■sNq
Estimated Deaign/Monagam■nt Cost...................,.... 760,000.00
Underwriters, Discount..................( 0.850000x)... 92,820.00
Fixed Coats of Issuance. ............................... 100,000.00
Variable Costa of lassuanee.............( 0.600000X).,, 65,520.00
Bond Insurance..........................( 0.600000%)... 142,956.34
Accrued Interest......................................... 50,927.63
Debt service Reserve.................................... 793,180.00
Net construction Fund Amount............................ 8,965,442.704
Contingency.........................I................... 80.95
-------------------
$10,970,927.63
Prepared by Everson Dods, Inc.
RUNDATE: OZ-04-IM 0 14:46:42 FILENAME: $LO KEY: HATER2-3A
/3o,zoa in ec:ti Gel in Ervrof
rslh'►/ CfliY!/!�J �I�LJ b'Ll G LL"L�r7.
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SCHEDULE 2b
Yater Revonuo Bonds
.ae City of Sen Luis Obispo, CaLlfornts
Assures DR 96; Bond Inauranea at 60 BPs and U/Y Disc of $8,50
mruggqausc:auu■■
DEBT SERVICE SCHEDULE
AG'S���Ogpq�iggitE
DATE PRINCIPAL COUPON INTEREST PERIOD TOTAL FISCAL TOTAL
........ .............. .......... ..............
12/ 1/93 4740153.75 474,153.75
6/ 1/94 160,000.00 2.900000 316,102.50 476,102.50 950,256.25
12/ 1/94 313,782.50 3131782.50
6/ 1/95 165,000.00 3.700000 313,782.50 478,782.50 792,565.00
12/ 1/95 310,730.00 310,730.00
6/ 1/96 170,000.00 4.200000 310,730.00 4801730.00 7911460.00
12/ 1/96 307,160.00 307,160.00
6/ 1/97 175,000,00 4.450000 307,160.00 482,160.00 7890320.00
12/ 1/97 303,266.25 3030266.25
6/ 1/98 185,000.00 4.700000 303,266.25 488,266.25 791,532.50
12/ 1/96 2980918.75 298,918.75
6/ 1/99 195,000.00 4.850000 298,918.75 493,918.75 792,837.50
12/ 1/99 294,190.00 294,190.00
d/ 1/ 0 200,000.00 5.000000 294,190.00 494,190.00 788,380.00
12/ 1/ 0 289,190.00 289,190.00
6/ 1/ 1 210,000.00 5.150000 2898190.00 499,190.00 788,380.00
12/ 1/ 1 283,782.50 283,782.50
6/ 1/ 2 225,000.00 5.250000 283,782.50 508,782.50 792,565.00
12/ 1/ 2 277,876.25 2770876.25
6/ 1/ 3 235,000.00 5.350000 277,876.25 512,876.25 790,752.50
12/ 1/ 3 271,590.00 271,590.00
6/ 1/ 4 250,000.00 5.500000 271,590.00 521,590.00 793,180.00
12/ 1/ 4 2648715.00 264,715.00
6/ 1/ 5 2601000.00 5.600000 264,715.00 524,715.00 7898430.00
12/ 1/ 5 - 2571435.00 257,435.00
6/ 1/ 6 275,000.00 5.700000 257,435.00 532,435.00 789,870.00
12/ 1/ 6 249,597.50 249,597.50
6/ 1/ 7 290,000.00 5.800000 249,597.50 539,597.50 789,195.00
12/ 1/ 7 2410187.50 241,187.50
6/ 1/ 8 310,000.00 5.850000 241,187.50 551,187.50 792,375.00
12/ 1/ 8 232,120.00 2328120.00
6/ 1/ 9 325,000.00 5.900000 232,120.00 557,120.00 789,240.00
12/ 1/ 9 222,532.50 222,532.50
6/ 1/10 345,000.00 5.950000 222,532.50 5670532.50 790,065.00
12/ 1/10 212,266.75 212,268.75
6/ 1/11 365,000.00 6.000000 212,268.75 $77,268.75 789,537.50
12/ 1/11 201,318.75 201,318.75
6/ 1/12 390,000.00 6.050000 201,318.75 591,318.75 792,637.50
12/ 1/12 189,521.25 189,521.25
6/ 1/13 410,000.00 6.050000 189,521.25 599,521.25 789,042.50
12/ 1/13 177,118.75 177,118.75
6/ 1/14 435,000.00 6.100000 177,118.75 612,118.75 789,237.50
12/ 1/14 163,851.25 163,851.25
6/ 1/15 465,000.00 6.100000 163,951.25 626,851.25 792,7D2.50
12/ 1/15 1491668.75 149,660.75
6/ 1/16 490,000.00 6.100000 149,668.75 639,668.75 789,337.50
12/ 1/16 134,723.75 134,723.75
6/ 1/17 520,000.00 6.100000 134,723.75 654,723.75 789,447.50
12/ 1/17 1188863.75 118,863.75
6/ 1/18 5551000.00 6.100000 118,863.75 673,863.75 7928727.50
12/ 1/18 101,936.25 101,936:25
6/ 1/19 5850000.00 6.150000 1010936.23 656,936.25 788,872.50
12/ 1/19 83,947.50 83,947.50
6/ 1/20 625,000.00 6.150000 83,947.50 708,947.50 792,895.00
12/ 1/20 64,728.75 64,728.75
6/ 1/21 660,000.00 6.150000 66,778.75 724,728.75 789,437.50
12/ 1/21 44,433.75 44,433.75
6/ 1/22 700,000.00 6.150000 44,433.75 744,433.75 788,867.30
12/ 1/22 22,908.75 22,908.75
6/ 1/23 7431000.00 6.150000 22,908.75 767,908.75 790,817.50
Prepared by Evanson Dodge, Inc.
RUNDATE: 02-04-1993 3 14:46:54 FILENAME: SLO KEY: HATER2-3A
SCHEDULE 2c
Water Revenue Bonds
she City of San Luis Obispo, Ca[lfornis
Assumes ON 96; land Insurance st60 BPs and UN Diac of $8.5G
��iate■useeq///t/e
{ DEBT SERVICE SCHEDULE
r•
DATE PRINCIPAL COUPON INTEREST PERIOD TOTAL FISCAL TOTAL
........ -- .............. ..............
.. .............. ..............
101920,000.00 12,956,983.75 23,876,983.75
ACCRUED 50,927.63 50,927.63
10,920,000.00 12,904,056.12 231826,056.12
■eeeeeeNAy/ eeeeteeeeeeee■ eIIz*�IIIIieeeo
Dated 3/ 1/93 with Delivery of 3/30/93
Bond Years 2151595.000
Average Coupon 6.010151
Average Life 19.762216
N I C % 6.053206 % Using 99.1500000
Bond Insurance:
0.600000 % of (Total D/6 - Accrued • Cap. Int.) 142,956.34
Prepared by Evensen Dodge, Irc.
RWIDATE: 02.04.1993 0 14:4607 FILENAME: SLD KET: wATER2-3A
water Reyenue Bonds SCHEDULE 2d
'he City of Son Luis Obispo, California
Assume D Bond Insurance at 60 BPs and LIN Disc 0 i0
eeeccas..uu■■uscousscccs
NET DEBT SERVICE REQUIREMENTS
cccadseecseeeeacv.uosu.as '
DELIVERY DATE: 3/30/93
PERIOD TOTAL CONSTR. FUND DEBT SVC. RES. NET SURPLUS FUNDS
ENDING PRINCIPAL COUPON INTEREST DEBT SERVICE EARNINGS ♦ CAP. IMT. DEBT SERVICE REMAINING
.......... .............. .............. .............. .............. ..............
1Z/ 1/93 474,153.75 474,153.75 77,477.13 396,676.62
6/ 1/94 160,000.00 2.900000 316,102.50 476,102.50 19,829.50 456,273.00
12/ 7/94 313,782.50 313,782.50 19,629.50 293,953.00
6/ 1/95 165,000.00 3.700000 313,782.50 478,782.50 19,829.50 4$8,953.00
19,829.50 290,900.50
12/ 1/95 31Dj30.00 310,730.00
19,829.50 460,900.50
6/ 1/96 770,000.00 4.200000 310,730.00 480,730.00
12/ 1/96 307,160.00 307060.00 19,829.50 287,330.50
6/ 1/97 175,000.00 4.450000 307,160.00 482,160.00 19,829.50 462,330.50
12/ 1/97 303,266.25 303,266.25 19,829.50 283,436.75
6/ 1/98 185,000.00 4.700000 303,266.25 •488,266.25 19,829.50 468,436.75
12/ 1/98 298,918.75 298,916.75 19,829.50 279,089.25
6/ 1/99 195,000.00 4.850000 298,918.75 493,918.75 19,829.50 474,089.25
12/ 1/99 294,190.00 294,190.00 19,829.50 274,360.50
6/ 1/ 0 200,000.00 5.000000 294,190.00 494,190.00 19,829.50 474,360.50
12/ 1/ 0 289,190.00 289,190.00 19,829.50 269,360.50
6/ 1/ 1 210,000.00 5.150000 289,190.00 499,190.00 19,829.50 479,360.50
12/ 1/ 1 283,782.50 283,762.50 19,829.50 263,953.00
6/ 1/ 2 225,000.00 5.250000 283,782.50 508,782.50 19,829.50 488,953.00
12/ 1/ 2 277,876.25 277,876.25 19,829.50 258,046.75
6/ 1/ 3 235,000.00 5.350000 277,876.25 512,876.25 19,829.50 493,046.75
12/ 1/ 3 Z71,590.00 271,590.00 19,829.50 251,760.50
6/ 1/ 4 250,000.00 5.500000 271,590.00 521,590.00 19,829.50 501,760.50
12/ 1/ 4 264,715.00 264,715.00 19,829.50 244,085.50
6/ 1/ 5 260,000.00 5.600000 264,715.00 524,715.00 19,829.50 829.50 237 605.50
885.50
12/ 1/ 5 257,435.00 257,435.00 , ,
6/ 1/ 6 275,000.00 5.700000 257,433.00 532,435.00 19,629.50 512,605.50
12/ 1/ 6 249,597.50 249,597.50 19,829.50 229,768.00
6/ 1/ 7 290,000.00 5.800000 249,597.50 539,597.50 19,829.50 519,768.00
12/ 1/ 7 241,187.50 241,187.50 19,829.50 221,358.00
6/ 1/ 8 310,000.00 5.850000 241,187.50 551,167.50 19,829.50 531,358.00
12/ 1/ 8 232,120.00 232,120.00 19,829.50 212,290.50
6/ 1/ 9 325,000.00 5.900000 232,120.00 557,120.00 19,829.50 537,290.50
12/ 1/ 9 222,532.50 222,532.50 19,829.50 202,703.00
6/ 1/10 345,000.00 5.950000 222,532.50 567,532.50 19,829.50 547,703.00
12/ 1/10 212,268.75 212,268.75 19,829.50 102,439.25
6/ 1/11 365,000.00 6.000000 212,268.75 577,268.75 19,829.50 557,439.25
12/ 1/11 201,318.75 201,318.75 19,829.50 181,489.25
6/ 1/12 390,000.00 6.050000 201,318.75 591,318.75 19,829.50 $71,489.25
12/ 1/12 189,521.25 189,521.25 19,829.50 169,691.75
6/ 1/13 410,000.00 6.050000 189,521.25 599,521.25 19,829.50 579,691.75
12/ 1/13177,118.75 177,116.75 19,829.50 157,289.25
6/ 1/14 435,000.00 6.100000 177.118,75 612,118.75 19,829.50 592,289.25
12/ 1/14 163,851.25 163,851.75 19,829.50 144,021.75
6/ 1/15 465,000.00 6.100000 163,851.25 628,851.25 19,829.50 609,021.75
12/ 1/15 149,668.75 149,668.75 19,829.50 129,1139.25
6/ 1/16 490,000.00 6.100000 149,668.75 639,668.75 19,829.50 619,839.25
12/ 1/16 1341723.75 134,723.75 19,829.50 114,894.25
6/ 1/17 520,000.00 6.100000 134,723.75 654,723.75 19,829.50 634,894.25
12/ 1/17 718,663.75 116,663.75 19,829.50 99,034.25
6/ 1/18 555,000.00 6.100000 118,863.75 675,863.75 19,a29.50 654,034.25
12/ 1/18 101,936.25 101,936.25 19,829.50 82,106.75
6/ 1/19 585,000.00 6.150000 101,936.25 686,936.25 19,829.50 667,106.75
72/ 1/19 83,947.50 83,947.50 19,829.50 64,118.00
6/ 1/20 6250000.00 6.150000 83,947.50 708,947.50 19,829.50 689,118.00
12/ 1/20 64,728.75 64,728.75 19,829.50 44,899.25
6/ 1/21 660,000.00 6.150000 64,728.75 724,720.75 19,829.50 704,899.25
12/ 1/21 44,433.75 44,433.75 19,829.50 24,604.25
6/ 1/22 700,000.00 6.150000 44,433.75 744,433.75 19,829.50 724,604.25
12/ 1/Z2 22,908.75 22,908.75 19,829.50 3,079.25
6/ 1/23 745,000.00 6.150000 22,908.75 767,908.75 813,009.50 45,100.75
.- -------- .............. .............. ._.. .....
10,920,000.00 12,956,983.75 23,876,983.75 2,040,597.63 21,881,486.87
m............ ca■s.c.cssaccc __-------- -=====eceeenu ..u.ou.ou •.............
Prepared by Evensen Dodge, Inc.
RUNDATE: 02-16-1993 a 12:33:48 FILENAME: SLO KEY: UATERZ-3A
- --------- C�r�x