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Home My WebLink AboutMINUTES - 10272009 - D.15RECOMMENDATION(S): ADOPT Resolution No. 2009/912 approving the form of and authorizing the execution and delivery of a purchase and sale agreement and related documents with respect to the sale of the Contra Costa County Service Area M-29's Proposition 1A receivable from the State; and DIRECTING and AUTHORIZING certain other actions in connection therewith. FISCAL IMPACT: The Proposition 1A Securitization Program mitigates the impact of the 8% property tax withholding. The estimated amounts to be mitigated are attached. The County and Special Districts will not have to pay any interest costs or costs of issuance in connection with participation. BACKGROUND: Proposition 1A Suspension: Proposition 1A was passed by California voters in 2004 to ensure local property tax and sales tax revenues remain with local government thereby safeguarding funding for public safety, health, libraries, parks, and other local services. Provisions can APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 10/27/2009 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Gayle B. Uilkema, District II Supervisor Mary N. Piepho, District III Supervisor Susan A. Bonilla, District IV Supervisor Federal D. Glover, District V Supervisor Contact: Lisa Driscoll (925) 335-1023 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: October 27, 2009 David J. Twa, County Administrator and Clerk of the Board of Supervisors By: June McHuen, Deputy cc: D.15 To:Board of Supervisors From:David Twa, County Administrator Date:October 27, 2009 Contra Costa County Subject:Proposition 1A Securitization Program - Approving the Form and Authorizing the Execution of Required Documents only be suspended if the Governor declares a fiscal necessity and two-thirds of the Legislature concur. The emergency suspension of Proposition 1A was passed by the Legislature and signed by the Governor as ABX4 14 and ABX4 15 as part of the 2009-10 budget package on July 28, 2009. Under the provision, the State will borrow 8% of the amount of property tax revenue apportioned to cities, counties and special districts. The state will be required to repay those obligations plus interest by June 30, 2013. BACKGROUND: (CONT'D) Proposition 1A Securitization Program Authorized under ABX4 14 and ABX4 15, the Proposition 1A Securitization Program was instituted by California Communities to enable Local Agencies to sell their respective Proposition 1A Receivables to California Communities. Under the Securitization Program, California Communities will simultaneously purchase the Proposition 1A Receivables, issue bonds (“Prop 1A Bonds”) and provide each local agency with the cash proceeds in two equal installments, on January 15, 2010 and May 3, 2010 (to coincide with the dates that the State will be shifting property tax from local agencies). The purchase price paid to the local agencies will equal 100% of the amount of the property tax reduction. All transaction costs of issuance and interest will be paid by the State of California. Participating local agencies will have no obligation on the bonds and no credit exposure to the State. If a County/Special District sells its Proposition 1A Receivable under the Proposition 1A Securitization Program, California Communities will pledge the Proposition 1A Receivable to secure the repayment of a corresponding amount of the Prop 1A Bonds. The County/Special District’s sale of its Proposition 1A Receivable will be irrevocable. Bondholders will have no recourse to the County/Special District if the State does not make the Proposition 1A Repayment. Proposition 1A Program Sponsor: California Statewide Communities Development Authority (“California Communities”) is a joint powers authority sponsored by the California State Association of Counties and the League of California Cities. The member agencies of California Communities include approximately 230 cities and 54 counties throughout California. Benefits/Risks of Participation in the Proposition 1A Securitization Program: The benefits/risks to the County/Special District of participation in the Proposition 1A Securitization Program include: Immediate cash relief– the sale of the County/Special District's Proposition 1A Receivable will provide the County/Special District with 100% of its Proposition 1A Receivable in two equal installments, on January 15, 2010 and May 3, 2010. Mitigates impact of 8% property tax withholding in January and May– Per ABX4 14 and ABX4 15 and the clean-up legislation SB 67, the State will withhold 8% of property tax receivables due to Cities, Counties, and Special Districts under Proposition 1A. The financing outlines bond proceeds to be distributed to coincide with the dates that the State will be shifting property tax from local agencies. All costs of financing borne by the State of California – The County/Special District will not have to pay any interest cost or costs of issuance in connection with its participation. No obligation on Bonds – The County/Special District has no obligation with respect to the payment of the bonds, nor any reporting, disclosure or other compliance obligations associated with the bonds. Risk - The County/Special District, as the seller, specifically disclaims any right to rescind the Agreement, or to assert that title to the Proposition 1A Receivable has not passed to the Purchaser. This means that if for any reason the Purchaser (California Communities) doesn't pay the County, the Purchaser still owns the Proposition 1A Receivable. Proceeds of the Sale of the [City/County/Special District]'s Proposition 1A Receivable: Upon delivery of the Proposition 1A Bonds, California Communities will make available to the County/Special District its fixed purchase price, which will equal 100% of the local agency’s Proposition 1A Receivable. These funds may be used for any lawful purpose of the County/District and are not restricted by the program. Proposed Proposition 1A Receivables Sale Resolution: Authorizes the sale of the County/Special District's Proposition 1A Receivable to California Communities for 100% of its receivable; 1. Approves the form, and directs the execution and delivery, of the Purchase and Sale Agreement with California Communities and related documents; 2. Authorizes and directs any Authorized Officer to send, or to cause to be sent, an irrevocable written instruction required by statute to the State Controller notifying the State of the sale of the Proposition 1A Receivable and instructing the disbursement of the Proposition 1A Receivable to the Proposition 1A Bond Trustee; 3. Appoints certain County/Special District officers and officials as Authorized Officers for purposes of signing documents; and 4. Authorizes miscellaneous related actions and makes certain ratifications, findings and determinations required by law. 5. The proposed Purchase and Sale Agreement: Provides for the sale of the Proposition 1A Receivable to California Communities; 1. Contains representations and warranties of the County/District to assure2. Contains representations and warranties of the County/District to assure California Communities that the Proposition 1A Receivable has not been previously sold, is not encumbered, that no litigation or other actions is pending or threatened to disrupt the transaction and that this is an arm's length "true sale" of the Proposition 1A Receivable; 2. Provides mechanics for payment of the Purchase Price; and3. Contains other miscellaneous provisions.4. The proposed Proposition 1A Purchase and Sale Agreement Exhibits: (B1) Opinion of Counsel: This is an opinion of County Counsel covering basic approval of the documents, litigation, and enforceability of the document against the Seller. It will be dated as of the Pricing date of the bonds (currently expected to be November 10, 2009). (B2) Bringdown Opinion: This simply "brings down" the opinions to the closing date (currently expected to be November 19, 2009). (C1) Certificate of the Clerk of the Local Agency: A certificate of the Clerk confirming that the resolution was duly adopted and is in full force and effect. (C2) Seller Certificate: A certification of the Seller dated as of the Pricing Date confirming that the representations and warranties of the Seller are true as of the Pricing Date, confirming authority to sign, confirming due approval of the resolution and providing payment instructions. (C3) Bill of Sale and Bringdown Certificate: Certificate that brings the certifications of C2 down to the Closing Date and confirms the sale of the Proposition 1A Receivable as of the Closing Date. (D) Irrevocable Instructions to the Controller: Required in order to let the State Controller know that the Proposition 1A Receivable has been sold and directing the State to make payment of the receivable to the Trustee on behalf of the Purchaser. (E) Escrow Instruction Letter: Instructs Transaction Counsel (Orrick) to hold all documents in escrow until closing, and if closing does not occur by December 31, 2009 for any reason, to destroy all documents. CONSEQUENCE OF NEGATIVE ACTION: CHILDREN'S IMPACT STATEMENT: ATTACHMENTS Resolution 2009-912 Purchase and Sale Agreement 912 Proposition 1A Estimates Fund County/Special District Name Loan Amount 100300 Contra Costa County 23,510,876.99 120600 Contra Costa County Library 1,664,616.14 202000 Contra Costa County Fire Protection District 6,972,862.71 202800 Crockett Carquinez Fire Protection District 35,884.01 206000 East Contra Costa Fire Protection District 843,470.57 240100 Contra Costa County Service Area L-100 67,691.30 247000 Contra Costa County Service Area M-1 2,446.44 247500 Contra Costa County Service Area M-29 (Dougherty Valley) 163,098.89 248800 Contra Costa County Service Area M-16 2,066.60 248900 Contra Costa County Service Area M-17 12,610.69 249200 Contra Costa County Service Area M-20 829.68 249400 Contra Costa County Service Area Rd-4 (Bethel Island) 679.43 249600 Contra Costa County Service Area M-23 Blackhawk 146,230.05 250500 Contra Costa County Flood Control And Water Conservation District 209,861.91 252000 Contra Costa County Flood Control And Water Conservation District Zone 3B 331,444.29 252100 Contra Costa County Flood Control And Water Conservation District Zone 1 125,940.92 252700 Contra Costa County Flood Control And Water Conservation District Zone 7 4,120.68 253000 Contra Costa County Flood Control And Water Conservation District Zone 8 1,393.17 253100 Contra Costa County Flood Control And Water Conservation District Zone 8A 1,796.64 255000 Contra Costa County Flood Control And Water Conservation District Drainage Area 290 142.33 255100 Contra Costa County Flood Control And Water Conservation District Drainage Area 300 330.42 255200 Contra Costa County Flood Control And Water Conservation District Drainage Area 13A 19,582.70 255400 Contra Costa County Flood Control And Water Conservation District Drainage Area 10 19,857.98 256300 Contra Costa County Flood Control And Water Conservation District Drainage Area 127 970.15 258300 Contra Costa County Flood Control And Water Conservation District Drainage Area 16 4,964.26 265200 Contra Costa County Service Area P-2, Danville/Alamo Area 574.97 265300 Contra Costa County Service Area P-2 Zone A 9,811.67 265500 Contra Costa County Service Area P-5 16,088.15 265600 Contra Costa County Service Area P-6 359,645.43 265700 Contra Costa County Service Area P-2 Zone B 11,581.20 270200 Contra Costa County Service Area Lib-2 7,786.61 271000 Contra Costa County Service Area Lib-10 (Pinole) 97.29 271200 Contra Costa County Service Area Lib-12, Moraga Area 729.82 271300 Contra Costa County Service Area Lib-13, Ygnacio Valley Area 9,030.82 275100 Contra Costa County Service Area R-4, Moraga Area 2,131.33 275800 Contra Costa County Service Area R-7 Alamo-Danville Area 68,142.25 282500 Contra Costa County Water Agency 39,870.22 34,669,258.72 Contra Costa County Prop 1A Estimates