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HomeMy WebLinkAboutMINUTES - 04231996 - C80 TO: BOARD OF SUPERVISORS SE:-L. ° Contra FROM: Phil Batchelor, County Administrator Costa n: s County y DATE: April 10, 1996 7f°s�9 CUUN� `P SUBJECT: 1996-1997 TAX AND REVENUE ANTICIPATION NOTE BORROWING PROGRAM SPECIFIC REOUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. Adopt resolution prepared by the Bond Counsel authorizing the 1996-1997 Tax and Revenue Anticipation Note borrowing program and approving the necessary documents. 2. Acknowledge that the Note Program is an essential tool for financial management and is required to meet the annual cash flow needs of the County during the fiscal year. 3. Acknowledge that while the borrowing is essential to meet the cash flow needs of the County, it also generates substantial revenues above the cost of the borrowing. 4. Acknowledge that the 1995-1996 Notes were sold using a negotiated contract resulting in Contra Costa County receiving the lowest interest rate cost of any county TRAN issue in California. 5. Approve and authorize the sale of the Tax and Revenue Anticipation Notes using a competitive sale and authorize the County Administrator, after consultation with the financial advisors and bond counsel, the flexibility to utilize a negotiated sale if necessary due to market conditions. CONTINUED ON ATTACHMENT: _�—_YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON April 23 , ' 1996 APPROVED AS RECOMMENDED OTHER APPROVED the recommendations set forth above and adopted Resolution No. 96/193 as referenced in Recommendation No. 1. VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ABSENT _ ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. ATTESTED April 2-3, 1 9q6 Contact: De Bell, 646-4093 PHIL BATCHELOR,CLERK OF THE BOARD OF cc: County Administrator SUPERVISORS AND COUNTY ADMINISTRATOR Auditor-Controller Treasurer-Tax Collector County Counsel BY DEPUTY 6. Approve and authorize the County Administrator to carry out the necessary actions to proceed with the 1996-1997 Tax and Revenue Anticipation Note borrowing program for cash flow purposes. 7. Authorize the County Administrator to contract with a Disclosure Counsel to comply with the requirements for proper disclosure to investors and a Trustee/Paying Agent. 8. Approve continuation of the use of Prager, McCarthy & Sealy as the Financial Advisor at a fixed fee for the issue plus reimbursement of expenses for the cost of issuance and other expenses advanced for the issue and authorize the County Administrator or designee to execute the contract. 9. Approve the continuation of Orrick, Herrington & Sutcliffe for bond and tax counsel services for a fixed fee including expenses and authorize the County Administrator or designee to execute the contract. 10. Acknowledge that the County has, since 1951, processed property tax allocations pursuant to the "Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds" (the "Teeter Plan"). 11. Acknowledge that the Teeter Plan requires the County Treasurer to advance a portion of property tax apportionments to the various taxing jurisdictions prior to the actual collection of all property taxes. 12. Approve the inclusion of these property tax apportionment advances required under the Teeter Plan in the Tax and Revenue Anticipation Note borrowing program. 13. Authorize and direct that any additional net revenues generated in the 1996-1997 and future Note Programs from the inclusion of the Teeter Plan advances be utilized for upgrading or replacing the County's central business computer systems (e.g., Human Resources/Payroll, Finance, Property Tax systems). FINANCIAL IMPACTS: The annual program for Tax and Revenue Anticipation Note borrowing has become an essential part of the cash management for the County. It is required in order to meet the cash flow needs during the fiscal year. The expenses of the program are paid from revenues generated by the program and revenues above expenses are available to the General fund. BACKGROUND: The County has issued Notes for cash flow borrowing needs every year since 1979. During 1995 the County issued Notes for $90,000,000. The amount of the borrowing is based upon the maximum cash flow deficit as projected by the Auditor-Controller and is carefully regulated by the Internal Revenue Service. It is essential that the proposed issue be reviewed by an expert, experienced tax attorney in order to fully comply with the complex IRS rules. Orrick, Herrington & Sutcliffe is a recognized leader in this area. The influence in the tax-exempt market from the Orange County bankruptcy appears to be decreasing. There will be long-term impacts upon disclosure and other issues but the Note market is expected to be more stable for 1996-1997. Authorizations for Disclosure Counsel is included in the recommendation in order to comply with the complex new requirements for appropriate disclosure to investors. Bond Counsel has advised that due to a court ruling in Orange County that is under appeal it is advisable to continue with an outside Trustee/Paying agent rather than use the Treasurer for this purpose. The cost for the paying agent service in 1995-1996 was $750. -2- The 1996-1997 TRAN program will include, for the first time, a component to assist in financing the cash flow requirements of the Teeter Plan. Under the Teeter Plan, which was pioneered in this County in 1951, each taxing jurisdiction (county, cities, schools, districts, etc.) receives 100% of the property taxes levied on their behalf in the current fiscal year though a portion of these taxes remain delinquent. The amounts advanced in excess of actual collections have, in prior years, been financed within the County Treasurer's pool of available cash resources. The Treasurer is ultimately reimbursed when the delinquencies (plus penalties and interest) are collected from the property owner or through the proceeds of a tax sale. By incorporating the advances required under the Teeter Plan in the Note Program the current internal borrowing procedure can be eliminated. In addition, it is estimated that the net revenues from the Note Program will increase $300,0004500,000. The Auditor-Controller has recommended that the additional net benefit from this new component be used to assist in financing enhanced County-wide computer systems. In particular, three current 1970's mainframe systems (Finance, Property Tax, Human Resources/Payroll) require replacement in the near future. Using the revenue benefit from the enhanced Note Program will greatly assist the County in implementing these systems without increased charges to all the County departments which utilize these systems. The consulting team of Prager, McCarthy & Sealy and Orrick Herrington & Sutcliffe has provided excellent results for the County in the past for very low fees. The finance team worked together on the Merrithew refinancing in March and are fully acquainted with the County and the rating agency staff. Continuation of the same consulting team will provide the continuity that reassures the rating agencies that Contra Costa County is a stable, well managed county. -3- RESOLUTION NO. 96/193 OF THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA CALIFORNIA RESOLUTION APPROVING ISSUANCE AND SALE OF 1996-1997 TAX AND REVENUE ANTICIPATION NOTES OF THE COUNTY; APPROVING FORM AND EXECUTION OF AN INDENTURE; APPROVING FORMS OF AND DISTRIBUTION OF PRELIMINARY OFFICIAL STATEMENT FOR THE SALE OF SAID NOTES, NOTICE INVITING BIDS, NOTICE OF INTENTION TO SELL SAID NOTES AND CONTINUING DISCLOSURE CERTIFICATE; DELEGATING TO COUNTY ADMINISTRATOR OR HIS DESIGNEE AUTHORIZATION TO AWARD BIDS FOR SAID NOTES; AND AUTHORIZING TAKING OF NECESSARY ACTIONS AND EXECUTION OF NECESSARY CERTIFICATES WHEREAS, the County of Contra Costa (the "County") is a political subdivision of the State of California; WHEREAS, pursuant to Sections 53850 et seq. of the Government Code of the State of California (the "Government Code") , this Board of Supervisors (the "Board") has found and determined that the sum of not to exceed One Hundred Fifty Million Dollars ($150, 000, 000) is needed for the requirements of the County of Contra Costa (the "County") to satisfy obligations payable from the General Fund and that it is necessary that said sum be borrowed for such purpose at this time by the issuance of temporary notes (the "Notes") therefor in anticipation of the receipt of taxes, revenue and other moneys to be received by the County for the General Fund of the County allocable to Fiscal Year 1996-1997; and WHEREAS, it appears, and the Board hereby finds and determines, that said sum of One Hundred Fifty Million Dollars SF2-57592.2 40511-101-TRS-04/19/96 .($150, 000, 000) , when added to the interest estimated to be payable thereon, does not exceed eighty-five percent (85%) of the estimated amount of the uncollected taxes, income, revenue, cash receipts and other moneys of the County for the General Fund of the County attributable to Fiscal Year 1996-1997 and available for the payment of the principal of and interest on the Notes; WHEREAS,, no money has heretofore been borrowed by the County through the issuance of any temporary notes in anticipation of the receipt of, or payable or secured by, taxes, income, revenue, cash receipts or other moneys of the County received or accrued during- or allocable to Fiscal Year 1996-1997; WHEREAS, the County proposes to enter into an Indenture, dated as of July 1, 1996, with U.S. Trust Company of California, N.A. , as paying agent (the "Paying Agent") , to. provide for the issuance and payment of the Notes; WHEREAS, the Notes shall be sold to the highest bidder or bidders pusuant to a competitive sale to be held on June 4, 1996 or on such earlier or later date as is established by the . County Administrator of the County in accordance with the terms of a Notice Inviting Bids for the Notes; WHEREAS, a form of Official .Statement describing the Notes and a form of Notice Inviting Bids for the sale of the Notes will be distributed to potential purchasers of the Notes and a form of Notice of Intention to Sell the Notes will be published in THE BOND BUYER; WHEREAS, this Board has been presented with the form of each document hereinafter referred to, relating to the Notes, and SF2-57592.2 2 40511-101-TRS-0a/19/96 the Board has examined and approved each document and desires to authorize and direct the execution of such documents and the issuance of the Notes; WHEREAS, the County has full legal right, power and authority under the Constitution and the laws of the State of California to enter into the transactions hereinafter authorized; and NOW, THEREFORE, the Board of Supervisors of the County of Contra Costa hereby finds, determines, declares and resolves as follows: Section 1. Recitals. All of the recitals herein above set forth are true and correct, and this Board so finds and determines. Section 2.. Indenture. The proposed form of the Indenture, to be dated as of July 1, 1996, by and between the County and the Paying Agent (a copy of which is on file with the Clerk of the Board of Supervisors) , is hereby approved. The County Administrator of the County (the "County Administrator") and the Clerk of the Board of Supervisors, and their designees, are hereby authorized and directed to execute and deliver the Indenture in substantially said form, with such changes, additions, completions and corrections therein as such officers may require or approve, such approval to be conclusively evidenced -by the execution and. delivery thereof. Section 3. Sale of Notes. The proposed form' of the Notice Inviting Bids for the Notes, in substantially the form presented to this meeting (.a copy of which is on file with the sF2-57592.2 3 40511401-M-04/19/96 Clerk of the Board) , is hereby approved and adopted as the Notice Inviting Bids for the Notes, with such changes, additions, completions and corrections therein as the County Administrator shall require or approve. All of the Notes shall be offered for public sale in accordance with the Notice Inviting Bids. Prager, McCarthy & Sealy (the "Financial Advisor") is hereby authorized and directed to cause to be mailed to prospective bidders for the . Notes copies of said Notice Inviting Bids, subject to such changes, additions and completions as may be acceptable to the County Administrator. \ The proposed form of the Notice of Sale of the Notes, in substantially the form presented to this meeting (a copy of which is on file with the Clerk of the Board) , is hereby approved. The County Administrator is hereby directed to cause said Notice of Sale to be published once, no later than 15 days before the date of sale of the Notes, in THE BOND BUYER, a financial publication generally circulated throughout the State of California. Sealed proposals shall be received by the Treasurer-Tax Collector of the County or his designee up to the hour of 10:00 a.m. California time on June 4, 1996 or on such earlier or later date determined by the County Administrator as set forth in the Notice Inviting Bids, for the purchase of the Notes for cash at not less than their principal amount and accrued interest thereon . to the date of their delivery, the interest rate or rates (which shall not exceed 9% per annum) to be designated in the bid or bids, the County Administrator reserving the right to reject any SP2-57592.2 4 40511-101-TRS-04119/96 and all bids, in accordance with the terms and conditions of said Notice Inviting Bids. The County Administrator is hereby authorized to determine whether to accept partial bids in increments of a specified denominational amount, such as $25, 000, 000, and to award the Notes to the highest responsible bidder or bidders resulting in the lowest net interest cost to the County or to reject any or all bids. If the Notes are awarded to more than one bidder and at different rates of interest, each incremental amount of Notes of the same interest rate shall be given a separate designation. The County Administrator may, in his sole discretion, cancel the public sale of the Notes and negotiate for the sale of the Notes with an underwriter or underwriters, and enter into an agreement for the sale of the Notes, upon such terms and conditions as he shall deem appropriate. Section 4 . Official Statement for Notes. The proposed form of official statement relating to the Notes, in substantially the form presented to this meeting (a copy of which is on file with the Clerk of the Board) , is hereby approved with such changes, additions, completions and corrections as the County Administrator may approve. The Financial Advisor is hereby authorized to distribute such official statement in preliminary form to the potential bidders for the Notes and is hereby authorized and directed to deliver such official statement in final form to the purchasers of the Notes. The County Administrator is authorized to certify on behalf of the County that the preliminary form of the official statement is deemed sF2-57592.2 5 40511-1 01-TRS-04119/96 C-90 final as of its date, within the meaning of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (except for the omission of certain final pricing, rating and related ' information as permitted by said Rule) . Section 5. The form of instrument, entitled "Continuing Disclosure Certificate," to be dated as of its date of execution, in substantially the form submitted to this meeting (a copy of which is on file with the Clerk of the Board) , is hereby approved. The County Administrator or his designee is authorized and directed to .execute and deliver an instrument in substantially said form, with such changes therein as such officer executing such instrument may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 6. approval of Actions. All actions heretofore taken by the officers and agents of the County or the Board with respect to the sale and issuance of the Notes are hereby approved, confirmed and ratified, and the officers of the County and the Board are hereby authorized and directed, for and in the name and on behalf of the County, to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and sale of the Notes in accordance with this Resolution. SF2-57592.2 6 40511-101-TRSO4/19M PASSED AND ADOPTED by the Board of Supervisors of the County of Contra Costa, State of California, this 23rd day of April, 1996, by the following vote: AYES: Supervisors Rogers , Bishop, DeSaulnier, Torlakson, Smith NOES: None ABSENT°, None Chair of a d of Supervisors of the ou ty of Contra Costa (Seal) Attest: Phil Batchelor, County Administrator and Clerk of the Board of Supervisors of the County of Contra Costa By: Deputy SM-57592.1 7 4011-ioi-rxs-osna196 CLERK'S CERTIFICATE I, JEANNE O. MAGLIO, Deputy Clerk and Chief Clerk of the Board of Supervisors of the County of Contra Costa, hereby certify that the foregoing is a full, true and correct copy of a resolution duly adopted at a meeting of the Board of Supervisors of the County of Contra Costa duly and regularly held in Martinez, California, on April 23, 1996, of which meeting all of the members of said Board had due notice. I further certify that I have carefully compared the foregoing copy with the original minutes of said meeting on file and of record in my office; that said copy is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and that said resolution has not been amended, modified, rescinded or revoked in any manner since the date of its adoption, and the same is now in full force and effect. I further certify that an agenda of said meeting was posted at least 72 hours before said meeting at 651 Pine St. Lobby, Martinez, California, freely accessible to the public and a brief general description of the resolution to be adopted at said meeting appeared on said agenda. IN WITNESS 'WHEREOF, I have executed this certificate and affixed the seal of the Board of Supervisors of the County of Contra Costa hereto as of this ,'?,A,4-1�- day of April, 1996. BY a 19- 2Kg Zd puty CleA of the Board of Supervisors of the County of Contra Costa, State of California [SEAL] SF2-57592.2 8 40511-101-TRS-04/19/%