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HomeMy WebLinkAboutCC Reso 2026-41 - Tax and Revenue Anticipation NotePage 1 of 11 City of Ukiah Issuance Resolution 2026-27 TRANs 4896-3938-2681.3 RESOLUTION NO. 2026-41 A RESOLUTION OF THE COUNCIL OF THE CITY OF UKIAH PROVIDING FOR THE BORROWING OF FUNDS FOR FISCAL YEAR 2026-27 AND THE ISSUANCE AND SALE OF THE CITY OF UKIAH 2026-27 TAX AND REVENUE ANTICIPATION NOTE AND APPROVING THE EXECUTION OF A NOTE PURCHASE AGREEMENT RELATING TO SUCH NOTE AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, pursuant to Sections 53850 to 53858, both inclusive, of the California Government Code, being Article 7.6, Chapter 4, Part 1, Division 2, Title 5 thereof (the “Law”), the City Council (the “Council”) of the City of Ukiah (the “City”) has found and determined that at least $10,000,000 is needed by the City in Fiscal Year 2026-27 to satisfy obligations of the City payable from the General Fund of the City (the “General Fund”) during Fiscal Year 2026-27 before the receipt of taxes, income, revenue, cash receipts and other moneys of the City to be received for or accrued to the General Fund during Fiscal Year 2026-27 will be available for such purpose, and that it is necessary that at least such sum be borrowed for such purpose by the issuance of a temporary note in anticipation of such receipt; and WHEREAS, the City intends to initially borrow up to $10,000,000 to be outstanding at any time for such purpose by the issuance and sale of its 2026-27 Tax and Revenue Anticipation Note (as defined more particularly in Section 3 hereof, the “Note”), which such principal may be repaid and reborrowed up to a principal amount that, when added to the interest payable thereon and to all previous principal amounts borrowed, in the aggregate, does not exceed eighty-five percent (85%) of the estimated amount of the estimated uncollected taxes, income, revenue, cash receipts and other moneys of the City anticipated to be received for or accrued to the General Fund during Fiscal Year 2026-27 that will be available for the payment of the interest on and the principal of the Note (such amount, the “Maximum Amount”); and WHEREAS, it appears, and the Council hereby finds and determines, that the total principal amount of the Note, when added to the interest payable thereon, will not exceed eighty- five percent (85%) of the estimated amount of the estimated uncollected taxes, income, revenue, cash receipts and other moneys of the City anticipated to be received for or accrued to the General Fund during Fiscal Year 2026-27 that will be available for the payment of the interest on and the principal of the Note; and WHEREAS, no money has heretofore been borrowed by the City in anticipation of the receipt of, or payable or secured by, any taxes, income, revenue, cash receipts or other moneys of the City to be received for or accrued to the General Fund during Fiscal Year 2026-27; and WHEREAS, in compliance with Government Code Section 8855, the City has previously adopted a local debt policy and the Council hereby finds and determines that the Note will be issued in conformance with said policy; and WHEREAS, the City wishes to authorize the issuance of the Note (to be issued in portions) to be purchased by Columbia Bank (as successor in name to Umpqua Bank and including its successor and assigns, the “Bank”) in an amount not to exceed the Maximum Amount from the City in accordance with a note purchase agreement by and between the City and the Bank, as originally executed and as they may be amended from time to time in accordance with its terms (the “Note Purchase Agreement”); and Page 2 of 11 City of Ukiah Issuance Resolution 2026-27 TRANs 4896-3938-2681.3 WHEREAS, pursuant to Government Code Section 5852.1, the Council has obtained from the Bank certain good faith estimates of (a) the true interest cost of the Note, (b) the finance charge of the Note, (c) the amount of proceeds received for the sale of the Note, less the finance charge and any reserves or capitalized interest paid or funded with the proceeds of the Note, and (d) the total payment amount calculated to the final maturity of the Note, and such estimates are disclosed and set forth in Exhibit C attached hereto; and WHEREAS, pursuant to the Law, certain taxes, income, revenue, cash receipts and other moneys of the City which will be received for or accrued to the General Fund during Fiscal Year 2026-27 can and will be pledged for the payment of the principal of and interest on the Note; and WHEREAS, pursuant to the Law and this Resolution, the City has pledged all Revenues (as such terms are defined in the Note Purchase Agreement) to the payment of the principal of and interest on the Note. NOW THEREFORE, the City Council of the City of Ukiah does hereby resolve, find, and determine as follows: Section 1. Recitals. All of the recitals hereinabove set forth are true and correct, and the Council so finds and determines and the Council further finds and determines that all acts, conditions and things required by law to exist, to have occurred and to have been performed precedent to the issuance and sale of the Note do exist, have occurred and have been performed in regular and due time, form and manner as required by law, and that the Council is empowered under the Law to issue and sell the Note as provided herein. Section 2. Defined Terms. Unless otherwise defined herein, capitalized terms used in this Resolution shall have the meanings given such terms in the Note Purchase Agreement. Section 3. Issuance of Note. a. Solely for the purpose of anticipating taxes, income, revenue, cash receipts and other moneys of the City to be received for or accrued to the General Fund during Fiscal Year 2026-27, the City hereby determines at this time to and shall borrow up to the initial principal sum of $10,000,000 by the issuance of the Note under the Law, designated the “City of Ukiah 2026- 27 Tax and Revenue Anticipation Note.” b. The Note is subject to optional prepayment, without premium, prior to the maturity date thereof, in accordance with the terms of the Note Purchase Agreement; and each draw thereupon can be prepaid without premium or penalty. Amounts repaid under the Note may be reborrowed in an amount not to exceed $10,000,000 at any time; provided, however, that such additional principal amount, when added to the interest payable thereon and to all previous principal amounts borrowed under the Note, does not exceed the Maximum Amount. c. The Note shall be dated the date of issuance thereof and shall mature and be payable as provided in the Note Purchase Agreement. Interest on the Note shall be calculated upon the amount of principal outstanding for each Interest Period (as such term is defined in the Note Purchase Agreement), in no event to exceed ten percent (10%) per annum The principal amount of the Note (including the portions purchased by the Bank thereof) and the then applicable interest rate shall be noted by the Bank on the form of the Note in accordance with the Note Purchase Agreement and shall not exceed the Maximum Amount. Page 3 of 11 City of Ukiah Issuance Resolution 2026-27 TRANs 4896-3938-2681.3 d. The Note shall be issued in the name of the City and registered in the name of the Bank, as the registered owner thereof (together with any of the Bank’s successors or assigns as permitted in the Note Purchase Agreement, the “Owner”), and shall be evidenced by a single note. The Bank shall have the right to sell or transfer the Note or to otherwise directly or indirectly transfer or assign any interest in the Note only to the extent permitted in the Note Purchase Agreement. The City shall be entitled to treat the Bank as the “Owner” of the Note as indicated therein and as the absolute owners of the Note for all purposes under this Resolution and for purposes of payment of principal of and interest on such Note, notwithstanding any notice to the contrary received by the City. e. The City Manager, the Director of Finance or their authorized designees (each an “Authorized Representative”), each acting alone, are hereby authorized and directed to provide any notices or other directions of the City to the Bank pursuant to the Note Purchase Agreement. f. An Authorized Representative will maintain or cause to be maintained, at his or her office in Ukiah, California, sufficient books for the registration of the Note. Section 4. Form of Note. The Note shall be issued without coupons and shall be substantially in the form thereof set forth in Exhibit A attached hereto and incorporated herein, together with such changes, additions, and deletions thereto as deemed necessary and as approved by an Authorized Representative before the execution, authentication and delivery of the Note. Section 5. Execution of Note. Each Authorized Representative (including officials acting in this position on an interim basis) acting alone are authorized to execute the Note by their manual or facsimile signature, and the City Clerk (including officials acting in this position on an interim basis) is hereby authorized to countersign the Note by manual or facsimile signature. The Note shall not be valid, however, unless and until an Authorized Representative (including the person acting in such position on an interim basis) shall have manually authenticated such Note by executing the Certificate of Authentication printed thereon. Section 6. Use of Proceeds of Note. The City shall, immediately upon receiving the proceeds of the sale of the Note or portions thereof, deposit in the General Fund all amounts representing the proceeds of the Note received from such sale, and such proceeds shall be used for the purpose specified in the Note Purchase Agreement or otherwise permitted by applicable law. Section 7. Security for Note; Security Interest. a. The City hereby pledges all Revenues (as that term is defined in the Note Purchase Agreement) excluding moneys which, when received by the City, will be encumbered for a special purpose (collectively, the “Pledged Revenues”) to the payment of the principal of and interest on the Note. The Note shall be equally and ratably secured by the Pledged Revenues. This pledge is valid and binding in accordance with the terms of this Resolution and the Pledged Revenues shall immediately be subject to the pledge, and the pledge shall constitute a first lien and security interest which shall immediately attach to the Pledged Revenues and be effective, binding, and enforceable against the City, its successors, creditors, and all others asserting the rights therein, to the extent set forth, and in accordance with this Resolution irrespective of Page 4 of 11 City of Ukiah Issuance Resolution 2026-27 TRANs 4896-3938-2681.3 whether those parties have notice of the pledge and without the need for any physical delivery, recordation, filing, or further act. b. Subject to written consent from the Bank, nothing in this Resolution shall prohibit the City from issuing additional tax and revenue anticipation notes payable from the Pledged Revenues or other available funds on a basis subordinate to the Note (“Subordinate Notes”); provided that with respect to any such Subordinate Notes, the City shall not, prior to the payment in full of the Note, (i) make any scheduled payments of principal of or interest on such Subordinate Notes prior to the payment of principal of or interest on the Note, (ii) make any prepayment thereof, or (iii) issue any such Subordinate Notes that have a maturity date earlier than the stated maturity date of the Note. Section 8. Sale of Note. The Note Purchase Agreement, in the form thereof set forth in Exhibit B attached hereto and incorporated herein, is hereby approved, and the Authorized Representatives, or their designee, each acting alone, are hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Bank the Note Purchase Agreement in said form (which Note Purchase Agreement shall contain the maturity date and the interest rates and the prepayment provisions for the Note), with such changes as such Authorized Representative may require, deem necessary, or approve upon consultation with the City Attorney, such approval to be conclusively evidenced by the execution and delivery thereof; provided however, the maximum rate of interest on the Note shall not exceed 10.00%, for the utilized portion of the Note. Section 9. Further Actions. Each Authorized Representative is hereby authorized and directed to execute and deliver the Note to the Bank in accordance with the Note Purchase Agreement, and the City Manager, the Director of Finance, and the City Clerk are hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, including but not limited to an agreement relating to the breakage fee related to the Note, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Note in accordance with this Resolution, and all actions heretofore taken by such officers with respect to the sale and issuance of the Note are hereby approved, confirmed and ratified. Any authority delegated under this Resolution to a specified official (including officials acting in these positions on an interim basis) of the City may also be exercised by the specified official’s authorized designee. Section 10. Resolution to Constitute Contract. It is hereby covenanted and warranted by the City that all representations and recitals contained in this Resolution are true and correct, and that the City, and its appropriate officials, have duly taken all proceedings necessary to be taken by them, and will take any additional proceedings necessary to be taken by them, for the levy and collection and deposit of the Revenues (as defined in the Note Purchase Agreement) pledged hereunder in accordance with the Law and with this Resolution and for carrying out the provisions of this Resolution. It is hereby further covenanted and warranted by the City that the provisions of the Note and of this Resolution shall constitute a contract between the City and the Owner, and such provisions shall be enforceable by mandamus or any other appropriate suit, action or proceeding at law or in equity in any court of competent jurisdiction; provided, that notwithstanding any other provision hereof to the contrary, upon the City’s failure to observe, or refusal to comply with, the covenants contained herein, no one other than the Owner or former Owner of the Note shall be entitled to exercise any right or remedy under this Resolution on the basis of the City’s failure to observe, or refusal to comply with, such covenants. Page 5 of 11 City of Ukiah Issuance Resolution 2026-27 TRANs 4896-3938-2681.3 Section 11. Amendments. This Resolution may be amended by a supplemental resolution adopted by the Council with the written consent of the Owners of one hundred percent (100%) of the principal amount of the Note outstanding. Section 12. Severability. If any one or more of the provisions of this Resolution shall to any extent be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the decision, finding, order or decree of which becomes final, none of the remaining provisions of this Resolution shall be affected thereby, and such provisions shall be valid and enforceable to the fullest extent permitted by applicable law. Section 13. Effective Date. This Resolution shall take effect from and after its adoption. Section 14. Certification. The City Clerk shall certify as to the adoption of this Resolution. ADOPTED this 3rd day of June, 2026, by the following vote on roll call vote: AYES: Councilmembers Crane, Rodin, Criss, Orozco, and Mayor Sher. NOES: None. ABSENT: None. ABSTAIN: None. _______________________________ Susan Sher, Mayor ATTEST: _______________________________ Araceli Sandoval, Deputy City Clerk SUSAN SHER (Jun 4, 2026 13:54:23 PDT) SUSAN SHER A-1 EXHIBIT A FORM OF NOTE R-2026-41 ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF HAS AN INTEREST HEREIN. THIS NOTE IS NON-NEGOTIABLE AND THE OWNER HEREOF HAS THE RIGHT TO SELL OR TRANSFER THE NOTE OR TO OTHERWISE DIRECTLY OR INDIRECTLY TRANSFER OR ASSIGN ANY INTEREST IN THE NOTE ONLY TO THE EXTENT PERMITTED BY THE NOTE PURCHASE AGREEMENT. CITY OF UKIAH 2026-27 Tax and Revenue Anticipation Note INTEREST RATE DATED DATE MATURITY DATE As set forth in the Note Purchase Agreement July 1, 2026 June 30, 2027 REGISTERED OWNER: COLUMBIA BANK (including its successors and assigns) PRINCIPAL AMOUNT: UP TO $10,000,000 TO BE OUTSTANDING AT ANY TIME AND NOT TO EXCEED THE MAXIMUM AMOUNT (AS DEFINED HEREIN) FOR VALUE RECEIVED, the City of Ukiah, California (“City”) acknowledges itself indebted to and promises to pay to the Registered Owner hereof (together with any of its successors and assigns as permitted under the Note Purchase Agreement (defined below), the “Bank”), at the office of the City, the principal sum stated above, in lawful money of the United States of America, on the dates and in the amounts, together with interest on the principal amount outstanding hereunder from time to time, calculated upon the amount of principal outstanding for each Interest Period (as such term is defined in the Note Purchase Agreement) at the rate or rates per annum set forth above and computed on the basis set forth in that certain Note Purchase Agreement (the “Note Purchase Agreement”) by and between the City and the Bank dated as of July 1, 2026 in like lawful money from the date hereof until payment in full of said principal sum. Interest hereon shall be payable to the Registered Owner at the address shown on the registration books of the City; provided that the address may be changed pursuant to the terms of the Note Purchase Agreement, and at such other times as may be required under the Note Purchase Agreement. The principal of and interest at maturity on this Note shall be payable only to the Registered Owner and in the manner provided in the Note Purchase Agreement. This Note is subject to a default rate upon the occurrence of an Event of Default, as provided in the Note Purchase Agreement. Upon payment in full of this Note, this Note shall be surrendered for cancellation. It is hereby certified, recited and declared that this Note is entitled “City of Ukiah 2026-27 Tax and Revenue Anticipation Note” (the “Note”), and is authorized and issued under and pursuant A-2 City of Ukiah Issuance Resolution 2026-27 TRANs to the authority of Article 7.6, Chapter 4, Part 1, Division 2, Title 5 of the Government Code of the State of California and in accordance with Resolution No. 2026-41 adopted by the City Council of the City on June 3, 2026 (together with the Note Purchase Agreement appended thereto, the “Resolution”), and that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of this Note have existed, happened and been performed in regular and due time, form and manner as required by law, and that this Note, together with all other indebtedness and obligations of the City does not exceed any limit prescribed by the Constitution or laws of the State of California. Capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Resolution. The Note is subject to optional and mandatory prepayment prior to the maturity date thereof, in accordance with the terms of the Note Purchase Agreement. Amounts repaid under this Note may be reborrowed in an amount not to exceed $10,000,000 at any time pursuant to the terms of the Note Purchase Agreement; provided, however, that such additional principal amount, when added to the interest payable thereon and to all previous principal amounts borrowed under the Note, does not exceed eighty-five percent (85%) of the estimated amount of the estimated uncollected taxes, income, revenue, cash receipts and other moneys of the City anticipated to be received for or accrued to the General Fund during Fiscal Year 2026-27 that will be available for the payment of the interest on and the principal of the Note (such amount, the “Maximum Amount”). Pursuant to the Resolution, the City has pledged all Revenues to the payment of the principal of and interest on the Note. The Note shall be equally and ratably secured by the Pledged Revenues. The Note is a general obligation of the City and is payable from the Pledged Revenues and the income derived from the investment of moneys held in the accounts as provided in the Resolution. The principal of the Note and the interest thereon shall constitute a first lien and charge on such Pledged Revenues, and shall be payable therefrom, and to the extent not so paid from any other moneys of the City lawfully available therefor. This Note shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by the [Director of Finance] [City Manager] of the City, or their designee. A-3 City of Ukiah Issuance Resolution 2026-27 TRANs IN WITNESS WHEREOF, the City of Ukiah has caused this Note to be executed by the manual or facsimile signature of its City Manager and countersigned by the manual or facsimile signature of the City Clerk, all as of the 1st of July, 2026. CITY OF UKIAH By: Sage Sangiacomo, City Manager Countersigned: By: Its: City Clerk CERTIFICATE OF AUTHENTICATION This Note is the City of Ukiah, California 2026-27 Tax and Revenue Anticipation Note described in the within mentioned Resolution. Date of Authentication: ____________, 2026 [Authorized Representative] A-4 City of Ukiah Issuance Resolution 2026-27 TRANs TRANSACTION ON 2026-27 Tax and Revenue Anticipation Note DATE NOTE PORTION AMOUNT REMAINING MAXIMUM AMOUNT INTEREST RATE AMOUNT OF PRINCIPAL PAID DATE TO WHICH INTEREST PAID NOTATION MADE BY 4896-3938-2681.3 B-1 EXHIBIT B FORM OF NOTE PURCHASE AGREEMENT [TO BE ATTACHED] C-1 EXHIBIT C GOOD FAITH ESTIMATES The good faith estimates set forth herein are provided with respect to the Note authorized by this Resolution. Such good faith estimates have been provided to the City by Columbia Bank. Estimated Principal Amount. Columbia Bank has informed the City that, based on the City’s financing plan and current market conditions, the good faith estimate of the aggregate principal amount of the Note is $10,000,000 (the “Estimated Principal Amount”). True Interest Cost. Columbia Bank has informed the City that the good faith estimate of the true interest cost of the Note, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Note, is [5.830]%. Finance Charge. Columbia Bank has informed the City that the good faith estimate of the finance charge for the Note, which means the sum of all fees and charges paid to third parties for costs in connection with the issuance and sale of the Note (the “Finance Charge”), is $12,500. The City has stated that all costs of issuance will be paid from proceeds of the Note. Amount of Proceeds to be Received. Columbia Bank has informed the City that the good faith estimate of the amount of proceeds of the Note expected to be received by the City, less the Finance Charge, and any reserves or capitalized interest paid or funded with proceeds of the Note, is $9,987,500. Total Payment Amount. Columbia Bank has informed the City that the good faith estimate of the total payment amount, which means the sum total of all principal and interest payments made for the Note, plus the Finance Charge, not paid with proceeds of the financing, calculated to the final maturity of the Note, is $10,583,000, assuming a $10,000,000 draw on the closing date. The foregoing estimates constitute good faith estimates only. The estimates above may differ from the actual amounts due to (a) the actual dated date of the Note being different from the date assumed for purposes of such estimates, (b) the actual aggregate principal amount of the Note being different from the Estimated Principal Amount, (c) the actual interest rate on the Note, (d) the actual amortization of the debt service on the Note being different from the amortization assumed for purposes of such estimates, (e) other market conditions, or (f) alterations in the City’s financing plan, or a combination of such factors. The actual dated date of the Note and the actual aggregate principal amount of the Note will be determined by the City based on market conditions and other factors.