Laserfiche WebLink
City of San Luis Obispo, Council Agenda Report, Meeting Date, Item Number <br /> <br />FROM: Wayne Padilla, Finance Director <br /> <br />SUBJECT: ADOPT A RESOLUTION APPROVING A JOINT EXERCISE OF POWERS <br />AGREEMENT CREATING THE SAN LUIS OBISPO PUBLIC FINANCING <br />AUTHORITY AND AUTHORIZING OTHER RELATED ACTIONS <br /> <br />RECOMMENDATION <br />Adopt a resolution creating the SLO Public Financing Authority and authorizing related actions. <br /> <br />DISCUSSION <br />This item is the second in a group of three items related to the formation of a joint powers <br />authority in advance of the request to approve lease revenue financing for the expansion of the <br />Los Osos Valley Road Interchange project. <br /> <br />Background <br /> <br />The City of San Luis Obispo utilizes various forms of debt to construct infrastructure facilities <br />and to acquire equipment. The forms of financing used in the past have included capital leases, <br />revenue bonds and lease revenue bonds. <br /> <br />When a lease revenue bond transaction is created, a city-owned property is identified as the <br />subject of the lease (this is not the structure being completed with the bond proceeds) in order to <br />provide security for the debt transaction. The city enters into a lease arrangement with a third <br />party entity that has approved the debt issuance in order to lease to them and then lease back <br />from that entity, the property that is serving as the collateral for the debt. The payments made by <br />the City under this arrangement fund the debt payments for the bonds that have been issued <br />under an assignment agreement created by the third party that provides that the payments are <br />being made for the benefit of the bondholders. <br /> <br />In the past, the City has utilized the Capital Improvement Board as the third party entity with <br />whom it enters into these lease arrangements. Upon the advice of the City’s new bond counsel, <br />Orrick Herrington, staff is recommending that the City Council create a Public Financing <br />Authority in order to have that entity serve as the third party to the upcoming lease revenue <br />financing for the Los Osos Valley Road interchange construction project. The Public Financing <br />Authority can be formed under the joint exercise of powers law (Government Code Section 6501 <br />and following) and in order to create the Public Financing Authority, the City must enter into a <br />Joint Exercise of Powers Agreement with another public entity. For that reason, the City Council <br />approved the activation of its Public Parking Authority, which was created pursuant to Streets & <br />Highways Code Section 32500 and following. <br /> <br />If the Joint Exercise of Powers Agreement is approved by both the City and the Parking <br />Authority, the Public Financing Authority can issue bonds as required for various city projects, <br />9/2/14 <br />B2 <br />B2 - 1