lease revenue refunding bonds - City of Norwalk

CITY COUNCIL 

AGENDA REPORT 

TO: 

FROM: 

BY: 

Honorable City Council 

Michael J. Egan, City Manager 

Jana Stuard, Director of Finance/ Treasurer 

Date: February 19, 2013 

SUBJECT: RESOLUTION NO. 13-13 - APPROVING THE ISSUANCE OF LEASE 

REVENUE REFUNDING BONDS SERIES 2013A AND LEASE REVENUE 

REFUNDING BONDS SERIES 2013B, TO BE ISSUED BY THE 

NORWALK COMMUNITY FACILITIES FINANCING AUTHORITY, 

AUTHORIZING AND APPROVING A SITE AND FACILITY SUBLEASE, A 

LEASE AGREEMENT, A FIRST AMENDMENT TO LEASE AGREEMENT, 

TWO PRELIMINARY OFFICIAL STATEMENTS, TWO FINAL OFFICIAL 

STATEMENTS, TWO CONTINUING DISCLOSURE AGREEMENTS, AND 

TWO BOND PURCHASE AGREEMENTS; AND AUTHORIZING CERTAIN 

OTHER ACTIONS IN CONNECTION THEREWITH 

Background: 

As part of the City’s ongoing effort to implement budgetary savings and reduce costs, the 

City has the opportunity to refinance its 1999 and 2001 Lease Revenue Bonds. Due to 

historically low interest rates and the City’s good credit rating, the City can save about 

$1.55 million over the remaining life of the bonds by refinancing today. As part of the 

refinancing, the City will also be able to release the civic center parking garage as 

collateral pledged to the bonds. 

Summary of Bonds to Be Refinanced 

On August 5, 1999, the City approved the Norwalk Community Facilities Financing 

Authority’s (“Financing Authority”) issuance of the 1999 Lease Revenue Refunding Bonds 

(“1999 Bonds”) in the original amount of $10,200,000. The 1999 Bonds were originally 

issued to refinance existing 1990 Bonds and pay for capital costs related to the 

Transportation Office & Operations Facility and City Hall. The 1999 Bonds are currently 

outstanding in the amount of $7,295,000 with interest rates ranging from 5.10% – 

5.375%. The final term of the 1999 Bonds is February 1, 2029. The 1999 Bonds can 

now be prepaid on August 1, 2013 without any penalty.

City Council February 19, 2013 

Resolution No. 13-13 - Issuance of Lease Revenue Refunding Page No. 2 

Bonds Series 2013A & 2013B 

On October 31, 2001, the City approved the Financing Authority’s issuance of the 

Refunding Lease Revenue Bonds, 2001 Series A (“2001 Bonds”) in the original amount of 

$12,795,000. The 2001 Bonds were originally issued to refinance existing 1995 Bonds 

and pay for construction of the civic center parking garage. The 2001 Bonds are currently 

outstanding in the amount of $7,945,000 with interest rates ranging from 4.125% - 5.25%. 

The final term of the 2001 Bonds is April 1, 2025. The 2001 Bonds can now be prepaid 

on October 1, 2013 without any penalty. 

Below is a summary of the key components of the 1999 Bonds and the 2001 Bonds: 

Series 1999 Bonds 2001 Bonds 

Amount Outstanding $7,295,000 $7,945,000 

Final Year of Payment 2029 2025 

Interest Rates 5.10% – 5.375% 4.125% – 5.25% 

Reserve Fund Cash Funded Bond Surety Policy 

Lease Asset City Hall Civic Center Parking 

Garage 

Earliest Prepayment August 1, 2013 October 1, 2013 

Date 

To Be Refinanced by Series 2013A Bonds Series 2013B Bonds 

Financing Structure 

The Financing Authority will issue about $15.7 million of refunding bonds to refinance the 

1999 and 2001 Bonds (“2013 Refunding Bonds”). The 2013 Refunding Bonds will be 

issued with the same final year of payment of 2025 and 2029 as the 1999 and 2001 

Bonds, respectively. The Financing Authority will need to issue the 2013 Refunding 

Bonds in two separate bond series (“2013A Bonds” and “2013B Bonds”, collectively the 

2013 Refunding Bonds) because each existing bond issue has a different prepayment 

date as set forth in the original financing documents. 

Like the 1999 and 2001 Bonds, the 2013 Refunding Bonds will be structured as a leaseleaseback 

financing between the City and the Financing Authority. The Financing 

Authority is a City-controlled joint powers authority consisting of the City and the Parking 

Authority and was originally formed to facilitate bond financing. The Financing Authority 

has used the same financing structure for its prior lease revenue bond financings. 

Currently, the Financing Authority leases the following assets from (and then back to) the 

City: 

- City Hall (lease asset for the 1999 Bonds); and 

- Civic Center Parking Garage (lease asset for the 2001 Bonds).




The 2013 Refunding Bonds will be structured with only City Hall as the lease asset. The 

Civic Center Parking Garage will be released from the bonds since City Hall has sufficient 

rental value to stand alone. The 2013 Refunding Bonds will use City Hall as the lease 

asset in order to garner the highest credit rating possible leading to lower interest rates. 

The 2013 Refunding Bonds will be designed with a “master lease” bond structure. Under 

this structure, the Financing Authority will be allowed to issue additional lease bonds 

secured by the single pool of lease assets so long as the rental value of the pool is 

sufficient to cover the existing and new bonds. The primary benefit of the master lease 

structure is that it enables the City to pledge fewer assets over time to effectuate future 

lease financings. The City will have the flexibility to substitute, remove or add other assets 

over time under this new structure. The financing structure terms will be the same as the 

Financing Authority’s previous lease financings in all other respects. 

The 2013 Refunding Bonds will also be structured with a smaller bond reserve 

requirement equal to 50% of the maximum annual bond payment. Lease revenue bonds 

are typically sold with a larger bond reserve equal 100% of maximum annual bond 

payment. However, based on the City’s strong financial profile, the 2013 Refunding 

Bonds will be structured with the lower amount to save on financing costs. Depending the 

credit rating outcome and market conditions, the 2013 Refunding Bonds may need to be 

structured with a standard reserve requirement equal to 100% of the maximum annual 

bond payment. 

Finance Team 

Fulbright & Jaworski LLP will serve as Bond Counsel. Harrell & Company Advisors, LLC 

will serve as financial advisor for the proposed bond refinancing. E. J. De La Rosa & 

Company will serve as underwriter for the bonds which will be sold on a negotiated basis. 

Stradling Yocca Carlson & Rauth will serve as Underwriter’s Counsel. Bank of New York 

Mellon Trust Company will serve as the bond trustee and escrow agent. 

Fiscal Impact: 

Based on current rates, the City will issue about $15.7 million of 2013 Refunding Bonds. 

The bond authorizing resolution has a combined not-to-exceed issuance amount of $20 

million for both series of proposed bonds which provides additional cushion to 

accommodate a larger bond reserve sizing and structuring flexibility to achieve the lowest 

interest rates. 

The 2013 Refunding Bonds are currently projected to be rated “A+” by the Standard & 

Poor’s rating agency. Based on current market conditions, the interest rates are expected 

to range from 1.20% - 4.10%. The average bond payment is estimated to be $615,000 

and $846,000 for the 2013A and 2013B Bonds, respectively. The total bond payment for




the 2013 Refunding Bonds will be $1.46 million through 2025 and then drop to $615,000 

(after the 2013B Bonds are paid off) from 2026 to 2029. The 2013 Refunding Bonds will 

be structured to achieve level annual savings relative the original payment schedules for 

the 1999 and 2001 Bonds. There will be no change to the final maturity of bonds which 

will remain 2029. 

By taking advantage of low interest rates currently available in the market, the City will 

save about $106,000 annually from 2014 to 2025 and then $68,000 annually from 2026 to 

2029. Over the life of the 2013 Refunding Bonds, the City will save over $1.55 million in 

interest costs for the General Fund. In today’s dollars, this translates into over $1.36 

million of present value savings (equal to 8.97% of the refunded bond amount). Typically, 

municipal issuers set a minimum present value savings goal equal to 3% of the refunded 

bond amount to determine if a refinancing is worthwhile to pursue. As stipulated in the 

bond authorizing resolution, the 2013 Refunding Bonds must be sold at interest rates that 

produce at least 3% present value savings to the General Fund. 

Projected Annual Savings to the General Fund 

1.80 

$106K Annual Savings 

1.60 

1.40 

$ Millions 

1.20 

1.00 

0.80 

0.60 

0.40 

$68K Annual Savings 

0.20 

0.00 

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028* 

New Debt Payment 

Existing Debt Payment 

fund. 

* The final payment in 2029 will be paid fully from the release of the bond reserve 

The total “all-in” cost of issuing the new refunding bonds is $375,000 or 2.39%, which has 

already been factored into the savings stated above.




Schedule 

The City plans to execute the refinancings based on the following schedule: 

Milestone 

2013A Lease 

Bonds 

2013B Lease 

Bonds 

Council approval of refinancing and 

related documents 

Feb. 19 

Sell bonds (i.e. set interest rates) April 10 April 25 

Close bonds May 3 July 3 

Pay off the prior bonds August 1 October 1 

Note: Dates are subject to change based on market conditions. 

Citizens Advised: N/A 

Strategic Plan Implementation: Vision 6, Strategy 4 

Recommended Action: 

Staff recommends City Council adopt Resolution No.13-13 approving the issuance of 

Lease Revenue Refunding Bonds, Series 2013 A and Lease Revenue Refunding Bonds, 

Series 2013B, to be issued by the Norwalk Community Facilities Financing Authority, 

authorizing and approving a Site and Facility Sublease, a Lease Agreement, a First 

Amendment to Lease Agreement, two Preliminary Official Statements, two Final Official 

Statements, two Continuing Disclosure Agreements, and two Bond Purchase 

Agreements; and authorizing certain other actions in connection therewith. 

Attachments: 

1. Resolution No. 13-13 

THE FOLLOWING DOCUMENTS ARE ON FILE IN THE CITY CLERK’S DEPARTMENT 

2. Site and Facilities Sublease Dated as of March 1, 2013 by and between the City of 

Norwalk and the Norwalk Community Facilities Financing Authority. 

3. Lease Agreement Dated as of March 1, 2013 by and between the City of Norwalk 

and the Norwalk Community Facilities Financing Authority. 

4. First Amendment to Lease Agreement Dated as of May 1, 2013 by and between the 

City of Norwalk and the Norwalk Community Facilities Financing Authority. 

(Document provided with the NCFFA packet)




5. Preliminary Official Statement relating to the Norwalk Community Facilities 

Financing Authority Lease Revenue Bonds, Series 2013A. (Document provided with 

the NCFFA packet) 

6. Preliminary Official Statement relating to the Norwalk Community Facilities 

Financing Authority Lease Revenue Bonds, Series 2013B. (Document provided with 

the NCFFA packet) 

7. Norwalk Community Facilities Financing Authority Lease Revenue Bonds, Series 

2013A Bond Purchase Agreement. (Document provided with the NCFFA packet) 

8. Norwalk Community Facilities Financing Authority Lease Revenue Bonds, Series 

2013B Bond Purchase Agreement. (Document provided with the NCFFA packet) 

9. Continuing Disclosure Agreement relating to the Norwalk Community Facilities 

Financing Authority Lease Revenue Bonds, Series 2013A. 

10. Continuing Disclosure Agreement relating to the Norwalk Community Facilities 

Financing Authority Lease Revenue Bonds, Series 2013B.

RESOLUTION NO. 13-13 

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORWALK, 

APPROVING THE ISSUANCE OF LEASE REVENUE REFUNDING 

BONDS SERIES 2013A AND LEASE REVENUE REFUNDING BONDS 

SERIES 2013B, TO BE ISSUED BY THE NORWALK COMMUNITY 

FACILITIES FINANCING AUTHORITY, AUTHORIZING AND 

APPROVING A SITE AND FACILITY SUBLEASE, A LEASE 

AGREEMENT, A FIRST AMENDMENT TO LEASE AGREEMENT, TWO 

PRELIMINARY OFFICIAL STATEMENTS, TWO FINAL OFFICIAL 

STATEMENTS, TWO CONTINUING DISCLOSURE AGREEMENTS, 

AND TWO BOND PURCHASE AGREEMENTS; AND AUTHORIZING 

CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH 

WHEREAS, the City of Norwalk, California (the “City”) and the Norwalk Parking 

Authority have heretofore entered into that certain Joint Exercise of Powers Agreement, 

dated as of August 1, 1989 establishing the Norwalk Community Facilities Financing 

Authority (the “Authority”) for the purpose, among other things, of issuing its bonds to be 

used to provide financing and refinancing for public capital improvements of the City; 

and 

WHEREAS, the Authority has previously issued its 1999 Lease Revenue 

Refunding Bonds (together, the “1999 Bonds”); and 

WHEREAS, in 1999 the City and the Authority entered into a lease agreement 

(the “1999 Lease”), under which the City agreed to make base rental payments to the 

Authority; and 

WHEREAS, pursuant to the 1999 Lease, the City has the right to prepay its base 

rental payments under the 1999 Lease in an amount sufficient to refund and defease 

the 1999 Bonds; and 

WHEREAS, the Authority has previously issued its Lease Revenue Bonds 

(Parking Improvements Project) 2001 Series A (the “2001 Bonds” and, together with the 

1999 Bonds, the “Prior Bonds”); and 

WHEREAS, in 2001 the City and the Authority entered into a lease agreement 

(the “2001 Lease”), under which the City agreed to make base rental payments to the 


WHEREAS, pursuant to the 2001 Lease, the City has the right to prepay its base 

rental payments under the 2001 Lease in an amount sufficient to refund and defease 

the 2001 Bonds; and 

WHEREAS, the City finds it necessary and desirable to exercise its right under 

the 1999 Lease and the 2001 Lease and prepay the remaining unpaid base rental 

payments under such leases to realize net present value savings; and

WHEREAS, the City has requested that the Authority issue its Lease Revenue 

Refunding Bonds Series 2013A (the “2013A Bonds”) and Lease Revenue Refunding 

Bonds Series 2013B (the “2013B Bonds” and, together with the 2013A Bonds, the 

“Bonds”); and 

WHEREAS, the Bonds are to be issued pursuant an Indenture (the “Indenture”), 

by and between the Authority and a trustee, and pursuant to the Marks-Roos Local 

Bond Pooling Act of 1985 (the “Act”), constituting Article 4 (commencing with Section 

6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of 

California and, with respect to the 2013B Bonds, a First Supplemental Indenture; and 

WHEREAS, it is proposed that the Bonds be sold on a negotiated basis in 

accordance with the terms and provisions of bond purchase agreements among the 

Authority, the City and E. J. De La Rosa & Co., Inc., as underwriter for the 2013A Bonds 

and the 2013B Bonds (the “Bond Purchase Agreements”), the proposed forms of which 

have been presented to this City Council; and 

WHEREAS, it is proposed that the City and the Authority enter into one or more 

escrow agreements with an escrow agent to be selected by the City (the “Escrow 

Agreements”) related to the refunding and defeasance of the 1999 Bonds and/or the 

2001 Bonds, the form of which is on file with the City Clerk of the City; and 

WHEREAS, it is proposed that the City and the Authority enter into a Site and 

Facility Sublease (the “Site Lease”) pursuant to which the City will lease the parking 

facility adjacent to the City’s Civic Center, City Hall or such other property of the City as 

an Authorized Officer (defined hereafter) shall designate (the “Leased Property”) to the 


WHEREAS, it is proposed that the City and the Authority enter into a Lease 

Agreement (the “Lease”) pursuant to which City will lease back the Leased Property 

from the Authority, the form of which is on file with the City Clerk of the City; and 

WHEREAS, it is proposed that the City and the Authority enter into a First 

Amendment to Lease Agreement that amends the Lease with respect to the 2013B 

Bonds, the form of which is on file with the City Clerk of the City; and 

WHEREAS, under the Lease and the First Amendment to Lease Agreement, the 

City will be obligated to make base rental payments to the Authority which the Authority 

will use to pay debt service on the Bonds; and 

WHEREAS, to fulfill the requirements of Rule 15c2-12 promulgated under the 

Securities Exchange Act of 1934, as amended (the “Rule”), the City will enter into 

Continuing Disclosure Agreements (the “Continuing Disclosure Agreements”), with 

respect to the 2013A Bonds and the 2013B Bonds, respectively, whereby the City will 

agree to provide disclosure reports and notices of certain enumerated events pursuant 

to the Rule; and 

Resolution No. 13-13 Page 2 of 6

WHEREAS, there have been presented to this meeting the proposed forms of 

the following documents: 

a) the Site Lease; 

b) the Lease; 

c) the First Amendment to Lease Agreement; 

d) the form of Escrow Agreement; 

e) the Continuing Disclosure Agreements; 

f) the Preliminary Official Statements; and 

g) the Bond Purchase Agreements. 

WHEREAS, the City Council has reviewed the documentation related to the 

issuance of the Bonds, which documentation is on file with the City Clerk of the City of 

Norwalk; 

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY HEREBY 

DETERMINES, FINDS, AND RESOLVES AS FOLLOWS: 

Section 1. Approval of Recitals. The City hereby finds and determines that the 

foregoing recitals are true and correct. 

Section 2. Approval of Bonds. The City hereby authorizes the prepayment of 

the base rental payments in accordance with the 1999 Lease and/or the 2001 Lease, 

approves the refunding and defeasance of all or a portion of the Prior Bonds and hereby 

approves the issuance by the Authority of the Bonds. The 2013A Bonds and the 2013B 

Bonds are hereby approved to refund and defease the 1999 Bonds and/or the 2001 

Bonds. 

Section 3. Approval of Site Lease. The Site Lease, in substantially the form on 

file with the City Clerk of the City and presented to the City Council at this meeting, is 

hereby approved. Any one of the Mayor, the Vice Mayor in the Mayor’s absence, or the 

City Manager of the City (each, an “Authorized Officer”), is hereby authorized and 

directed, for and in the name and on behalf of the City, to execute and deliver, the Site 

Lease, with such insertions and changes as may be approved by the Authorized Officer 

executing the same, subject to the provisions of this Resolution, such approval to be 

conclusively evidenced by such execution and delivery, and the City Clerk is hereby 

authorized to attest to such execution. 

Section 4. Approval of the Lease. The Lease, in substantially the form on file 

with the City Clerk of the City and presented to the City Council at this meeting, is 

hereby approved. Any Authorized Officer is hereby authorized to execute the Lease in 

substantially the form on file, with such revisions, amendments and completions as shall 


e approved by an Authorized Officer, such approval to be conclusively evidenced by 

the execution and delivery thereof, and the City Clerk is hereby authorized to attest to 

such execution. 

Section 5. Approval of the First Amendment to Lease Agreement. The First 

Amendment to Lease Agreement, in substantially the form on file with the City Clerk of 

the City and presented to the City Council at this meeting, is hereby approved. Any 

Authorized Officer is hereby authorized to execute the First Amendment to Lease 

Agreement in substantially the form on file, with such revisions, amendments and 

completions as shall be approved by an Authorized Officer, such approval to be 

conclusively evidenced by the execution and delivery thereof, and the City Clerk is 

hereby authorized to attest to such execution. 

Section 6. Approval of the form of Escrow Agreement. The form of Escrow 

Agreement, in substantially the form on file with the City Clerk of the City and presented 

to the City Council at this meeting, is hereby approved. Any Authorized Officer is hereby 

authorized to execute the one or more Escrow Agreements in connection with the 

refunding and defeasance of the 1999 Bonds and/or the 2001 Bonds in substantially the 

form on file, with such revisions, amendments and completions as shall be approved by 

an Authorized Officer, such approval to be conclusively evidenced by the execution and 

delivery thereof, and the City Clerk is hereby authorized to attest to such execution. 

Section 7. Approval of the Preliminary Official Statements and the Official 

Statements. The Preliminary Official Statements, in substantially the forms on file with 

the City Clerk of the City and presented to the City Council at this meeting, are hereby 

approved with such revisions, amendments and completions as shall be approved by an 

Authorized Officer, in order to make the Preliminary Official Statement final as of its 

date, except for the omission of certain information, as permitted by Section 240.15c2- 

12(b)(1) of Title 17 of the Code of Federal Regulations (“Rule 15c2-12”). Any of the 

Authorized Officers is authorized to execute a certificate relating to the finality of the 

Preliminary Official Statements under Rule 15c2-12. An Authorized Officer is authorized 

and directed to execute and deliver the final Official Statements in substantially the 

forms hereby approved, with such additions and changes as may be approved by the 

Authorized Officer executing the same, such approval to be conclusively evidenced by 

the execution and delivery thereof. 

Section 8. Approval of the Continuing Disclosure Agreements. The Continuing 

Disclosure Agreements, in substantially the forms on file with the City Clerk of the City 

and presented to the City Council at this meeting, are hereby approved. Any Authorized 

Officer is hereby authorized to execute the Continuing Disclosure Agreements in 

substantially the forms on file, with such revisions, amendments and completions as 

shall be approved by an Authorized Officer, such approval to be conclusively evidenced 

by the execution and delivery thereof. 

Section 9. Approval of Bond Purchase Agreements. The City hereby authorizes 

and directs that the Bonds be sold on a negotiated basis. Any Authorized Officer is 

hereby authorized to undertake all appropriate steps to implement the sale of the 


Bonds. The total principal amount of 2013A Bonds shall not exceed $10,000,000 and 

the Underwriter’s discount or fee (excluding any original issue discount) shall not 

exceed 1.60% of the original principal amount of the 2013A Bonds. The total principal 

amount of 2013B Bonds shall not exceed $10,000,000 and the Underwriter’s discount 

or fee (excluding any original issue discount) shall not exceed 1.60% of the original 

principal amount of the 2013B Bonds. The net present value savings for a refunding 

accomplished with a portion of the proceeds of the 2013A Bonds or the 2013B Bonds 

shall be no less than 3.00%. The Bond Purchase Agreements, in substantially the forms 

on file with the City Clerk of the City and presented to the City Council at this meeting, 

are hereby approved. Any one of the Authorized Officers is hereby authorized and 

directed, for and in the name and on behalf of the City, to execute and deliver each 

Bond Purchase Agreement, with such insertions and changes as may be approved by 

the Authorized Officer executing the same, subject to the provisions of this Resolution, 

such approval to be conclusively evidenced by such execution and delivery. 

Section 10. Official Actions. The Authorized Officers, the City Clerk and all 

other officers of the City 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 other actions, including 

the publication of any notices necessary or desirable in connection with the sale of the 

Bonds, procurement of municipal bond insurance, and execution and delivery of any 

and all assignments, certificates, requisitions, agreements, notices, consents, 

instruments of conveyance, warrants and other documents, which they, or any of them, 

deem necessary or advisable to consummate the lawful issuance and sale of the Bonds 

and the consummation of the transactions as described herein. 

Section 11. Ratification. All actions heretofore taken by any Responsible Officer 

or any officer, employee or agent of the City with respect to the issuance, delivery and 

sale of the Bonds or in connection with or related to any of the agreements referred to 

herein, are hereby approved, confirmed and ratified. 

Section 12. Effective Date. This Resolution shall become effective immediately 

upon adoption. 

Section 13. Certification. The City Clerk shall certify to the adoption of this 

Resolution, and thenceforth and thereafter the same shall be in full force and effect. 

Notwithstanding the foregoing, such certification and any of the other duties and 

responsibilities assigned to the City Clerk pursuant to this Resolution may be performed 

by a Deputy City Clerk with the same force and effect as if performed by the City Clerk 

hereunder. 


PASSED AND ADOPTED on this 19 th day of February 2013. 

CHERI KELLEY 

MAYOR 

ATTEST: 

____________________________________ 

THERESA DEVOY 

CITY CLERK

lease revenue refunding bonds - City of Norwalk

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