Loading...
HomeMy WebLinkAboutReso. 1983 - 228 - Resolution ordering sale of bonds greenback lane street assessment district no. 1983-7 • D2RilJ_UUIrn1L'� RESOLUTION NO. %6 -..)---)J RESOLUTION ORDERING SALE OF BONDS GREENBACK LANE STREET ASSESSMENT DISTRICT NO. 1983-7 The City Council of the City of Redding resolves: The City Council accepts the offer of E. W. Cook (attached to this resolution and by reference incorporated in it) , to purchase all of the improvement bonds to be issued in Greenback Lane Street Assessment District No. 1983-7 . The City Council directs the sale and delivery of the bonds to the offeror in accordance with the terms and conditions stated in the offer . I HEREBY CERTIFY that the foregoing resolution was duly and regularly adopted by the City Council of the City of Redding, Shasta County, California, at a regular meeting thereof, held on the 7th day of November , 1983. AYES: Councilmembers Demsher, Fulton, Pugh, and Gard NOES: Councilmembers None ABSENT: Councilmembers Kirkpatrick ETHEL A. NICHOLS , City Clerk, City of Redding, Shasta County, California By Law Offices of STURGIS, NESS, BRUNSELL& SPERRY EUGENE K. STURGIS a professional corporation (415) 652-7588 (1892-1976) 1900 Powell Street, Suite 1150 EDWIN N.NESS Emeryville, California 94608 MAIL ADDRESS: ROBERT BRUNSELL POST OFFICE Box 8808 SAMUEL A. SPERRY November 1, 1983 EMERYVILLE, CA 94662 Mr. E. W. Cook 3435 Riverview Drive Redding, CA 96001 Re: Greenback Lane Street Assessment District No. 1983-7 Dear Mr. Cook: The purpose of this letter is to set forth the terms and conditions of sale to you by the City of Redding of the improvement bonds for Greenback Lane Street Assessment District No. 1983-7. The terms of issuance and sale are as follows: 1 . The principal amount of bonds is $64 , 560. 97. The bonds will mature in accordance with the maturity schedule set forth on Exhibit A attached to this letter. 2 . The bonds will be issued pursuant to the provisions of the Improvement Bond Act of 1915 . 3. The bonds will be dated November 2 , 1983, and delivery will be made to you upon payment of the purchase price at the office of the City Treasurer of the City of Redding on or about November 8 , 1983 . The bonds will bear interest coupons payable at the rate of 10. 5% per annum, with interest payable semi-annually on January 2 and July 2 , with the first interest coupon being dated January 2 , 1985 . Delivery will be made to you of one temporary bond in the total par value, to be exchanged for the definitive bonds as soon as possible. 4 . The bonds will be in even denominations of $1000, except Bond No. 1, which shall be in the denomination of $560. 97. It is understood that the entire principal amount of each bond will mature on July 2 in the year indicated in the maturity schedule and shall be payable to you on that date. 5 . The bonds, and each of them, are subject to prior redemption in accordance with the provisions of the Improvement Bond Act of 1915. In summary, these provisions state that any bond is callable at the discretion of the City of Redding on any interest payment date by payment to the bond holder of the principal amount of the bond, a 5% prepayment premium, and accrued interest to the date of call. S 411 Mr. E. W. Cook Page 2 November 1, 1983 6. Principal and interest of the bonds are payable from a special fund to be administered by the Bank of America, serving as paying agent for the City of Redding. Bond holders must understand that neither the principal nor the interest consti- tute obligations of the City of Redding other than in the strictly limited sense provided by the Improvement Bond Act of 1915, and neither principal nor interest is payable from any fund of the City other than the special bond redemption fund to be established for this bond issue. 7. Moneys flow to said special fund from the installment payments of the respective property owners of the parcels. Attached as Exhibit B to this letter is a copy of the Unpaid. List showing by parcel the amount of unpaid assessment against each of the respective parcels. The annual installment payments from property owners are collected on the tax roll of the County of Shasta as a separately stated item on the tax bill for each of the subject parcels. The installments are payable on the same dates as property taxes and are calculated to provide sufficient funds to pay principal and interest on the bonds, provided that all property owners pay their installments on time. 8 . In the event of delinquency by any property owner in the payment of any installment or part thereof, the Bank of America may have insufficient funds in the special fund from which to pay bond principal and interest on the due date. 9. To protect against this possibility, we have provided in the assessment proceedings for establishment of a special reserve fund in the amount of $3, 228. 05. The amounts contained in this special reserve fund will be available, when needed, to supple- ment the installment collections from property owners so as to assure timely payment of bond principal and interest. It must be expressly understood, however, that any sustained period of default by one or more property owner could exhaust said reserve fund, resulting in an insufficiency of funds to pay both principal and interest on time. 10. The Improvement Bond Act of 1915 further provides that, in the event there are insufficient funds from installment collections and from the special reserve fund to pay both principal and interest on time, the City of Redding is obligated to advance "any available funds not immediately needed" to the special fund for payment of such bond principal and interest. This phrase set forth in quotes in the foregoing sentence is generally construed to mean surplus funds or unappropriated reserves or some similar fund of the City. It must be expressly understood that the City of Redding makes no representation to 411 Mr. E. W. Cook Page 3 November 1, 1983 you whatsoever that it has any such funds available at this time or that it will have any such funds at any future date. To the contrary, as the City adjusts its budgeting and appropriations procedures to meet the limitations imposed by Proposition 13 and Proposi- tion 4 (Article XIIIA and XIIIB of the California Constitution) , it will become increasingly likely that the City will not have any such funds. Prudence suggests that you not purchase these bonds unless you are willing to take the risk of some delay in payment to you, and that in any event you should not rely upon the City to make any advances to the bond redemption fund, 11. In the event that all sources legally available to pay bond principal and interest are insufficient at any time to pay bond principal and interest when due, there will be a default in payment to bond holders of both principal and interest. While this appears to be unlikely, it is a clear possibility. This condition of default would continue until the delinquent property owners cure their installment delinquency or until the City can obtain funds from which to make an advance to the bond redemption fund, or until such time as the City can foreclose its lien against the delinquent property and realize cash proceeds from such sale to a third party. 12 . In purchasing the bonds , it is your obligation to inform your- self to the extent that you deem prudent about the merits of this bond issue and the sufficiency of the lien security against the respective parcels . Neither the City nor any officer or agent thereof, including our firm as bond counsel, intends to prepare any disclosure document describing the financial condition of the City, the improvement bonds, or the property being assessed. Instead, it shall be your obligation to satisfy yourself as to the nature of the investment risk involved in purchasing these bonds. 13. Summarizing the foregoing, it must be expressly understood that this type of improvement bond would most likely not be a suitable investment for any person who would experience financial hardship if there were to be a default in payment of bond principal or interest for a period of time extending to approximately four or five years. Absent unusual circum- stances, this period of default would, in my experience, be the extreme case and would most likely result only from the circumstances of bankruptcy proceedings pertaining to the owner of one or more of the subject parcels. 111 111 Mr. E. W. Cook Page 4 November 1, 1983 The purchase price of the bonds shall be the par value thereof, namely $64 , 560. 97, together with any accrued interest on the bonds from the date of November 2 , 1983, to the date of delivery. As indicated, we presently expect to have the temporary bond available for delivery to you on November 8th, so that there will be accured interest due from November 2nd to November 8th. The temporary bond, when delivered to you, will be accompanied by the customary closing documents, including our approving legal opinion respecting the bonds . You will be required to execute a receipt for the bonds and submit that to the City Treasurer, toget- her with a certified check or cashier' s check payable to the City of Redding. We will be providing you with a copy of our bond delivery instructions , which we will prepare and send to Beverly Cassaday, the City Treasurer, in advance of the bond delivery. To indicate your agreement to the terms of purchase and sale of this bond issue to you, please execute the two enclosed copies of this letter and bring them with you to the City Council meeting this coming Monday evening, November 7, 1983, at 7 : 00 P.M. I would like for you to be present at the time the Council authorizes the sale to you. Yours very truly, STURGIS, NESS , BRUNSELL & SPERRY a pr+fessional - or•oration Samuel A. Sper $ / SAS:p Enclosures cc: Robert Courtney, City Manager Linda Downing, Director of Finance Robert D. Hastings , Public Works Dept. Beverly J. Cassaday, City Treasurer APPROVED: i E. W. COOK