STAFF REPORT. California Infrastructure Bank Loan Resolution Supporting Accelerated Great Streets SUMMARY

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1 STAFF REPORT Date: September 2,2014 To: Steven A. Preston, City Manager ~ From: Thomas C. Marston, Finance Directo~ City ofsan Gabriel Subject: California Infrastructure Bank Loan Resolution Supporting Accelerated Great Streets SUMMARY The City is requesting the California Infrastructure and Economic Development Bank for a $6.4 million loan as part of the City's Accelerated Great Streets Capital Improvement Program. This loan would fund street repairs immediately, opposed to the City's historical "pay as you go" method. As part of the California Infrastructure and Economic Development Bank loan application and approval process, the City Council is being asked to approve Resolution 14-2 Authorizing the incurring of an obligation, payable to the California Infrastructure and Economic Development Bank for the financing of the City's Accelerated Great Streets Capital Improvement Program. Staffrecommends that the City Council approve Resolution I. BACKGROUND As part of the Capital Improvement Program, City Council directed staff to analyze an option for funding street pavement rehabilitation by borrowing funds from the California Infrastructure and Economic Development Bank. That loan application was submitted this past spring and City Staff have been working with California State Infrastructure and Economic Development Bank to process the loan application pursuant to their Criteria, Priorities and Guidelines for the selection of projects for financing.

2 II. FACTS The California State Infrastructure and Economic Development Bank's Staff have determined the City's application can support borrowing $6.4 million dollars to be used towards the City of San Gabriel's Accelerated Great Streets Program. This Program will fund street repairs immediately as an alternative to waiting for monthly allocations of Measure R and Gas Tax revenues which will now be pledged to be used towards loan repayment. The Accelerated Great Streets Project consists of the repair and replacement of over a dozen street segments throughout the City of San Gabriel. The City currently finances public street improvements through a number of funding sources in a "pay-as-you-go" method of financing which constitutes combining regular funding allocations along with irregular special allocations received in the form of grants. The requested financing from the California State Infrastructure and Economic Development Bank will permit the City to make a larger number of street repairs all at once instead of waiting to receive sufficient allocations over a number ofyears to begin and continue construction. As part of the loan application procedure the City of San Gabriel is required to meet the California State Infrastructure and Economic Development Bank Criteria, Priorities, and Guidelines adopted October 29, Towards that end, the City of San Gabriel will need to approve the attached resolution. This resolution will be included as a component of the presentation and recommendation to the California State Infrastructure and Economic Development Bank's Board for approval. It is anticipated that the California State Infrastructure and Economic Development Bank's Board will approve extending a $6.4 million debt issuance offering at their regularly scheduled meeting on September 23, Upon their approval, City staff anticipate presenting the $6.4 million debt issuance for City Council approval at our first regularly scheduled meeting in October. III. RECOMMENDATION Staff recommends that the City Council approve Resolution 14-2.

3 1 RESOLUTION NO A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN GABRIEL 3 AUTHORIZING THE INCURRING OF AN OBLIGATION, PAYABLE TO THE 4 CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK, 5 FOR THE FINANCING OF A CAPITAL IMPROVEMENT PROJECT AND 6 APPROVING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH 8 WHEREAS, the California Infrastructure and Economic Development Bank 9 ("I Bank") administers a financing program to assist local governments with the 1 0 financing of public development facilities as defined in Section et seq. of the 11 California Government Code (the "Act"); and 12 WHEREAS, the IBank created the Infrastructure State Revolving Fund 13 Program ("ISRF Program") pursuant to the provisions of the Act; and, 14 WHEREAS, the IBank's Amended and Restated Criteria, Priorities and 15 Guidelines for the Selection of Projects for Financing under the ISRF Program, 16 adopted on October 29, 2013 (the "Criteria"), establishes requirements for the 1 financing of projects under the ISRF Program; and 18 WHEREAS, the City of San Gabriel ("Borrower" or "City"), in connection with 19 its application to the IBank for the financing of the costs of upgrading, reconstructing 20 and rehabilitating certain public streets that are located in the major economic areas 21 of the City] ("Project") in an amount not to exceed $6,400,000 and 22 WHEREAS, the Act requires the Borrower to make, by resolution of its 23 governing body, certain findings prior to a Project being selected for financing by the 24 IBank; and 25 WHEREAS, the Borrower reasonably expects that a financing arrangement 26 ("Obligation") in an amount not expected to exceed $6,400,000 will be entered into 2 under and memorialized by one or more financing agreements and related 28 documents (collectively, the "Financing Agreements") and that certain proceeds of Resolution 14-2

4 such Obligation will be used to reimburse the Borrower for Project expenditures incurred or paid prior to incurring the Obligation; and WHEREAS, the Borrower acknowledges that the IBank funds the ISRF Program, in part, with the proceeds of tax exempt bonds and, as such, has certain compliance obligations that may require it to have the Borrower enter into new financing agreements to replace the Financing Agreements (the "Replacement Agreements") on terms and conditions substantially identical to the original Financing Agreements. NOW, THEREFORE, be it resolved by the City Council of the City of San Gabriel (the "City Council") as follows: Section 1. The City Council hereby approves and affirms the actions of the Borrower's representatives heretofore taken in connection with submitting an application for financing for the Project; and in connection therewith finds and certifies that: 1. The Project facilitates effective and efficient use of existing and future public resources so as to promote both economic 1 development and conservation of natural resources. The Project develops and enhances public infrastructure in a manner that will attract, create, and sustain long-term employment opportunities; 2. That the Project is consistent with the General Plan of the City, and any elements of the General Plan of the County of Los Angeles, that are applicable to the Borrower and the Project; 3. The proposed financing is appropriate for the Project; 4. The Project is consistent with the IBank's Criteria for the ISRF Program; and 2 Resolution 14-2

5 It has considered (i) the impact of the Project on California's land resources and the need to preserve such resources; (ii) whether the Project is economically or socially desirable; and (iii) whether the project is consistent with, and in furtherance of the State Environmental Goals and Policy Report (as defined in the Criteria). 6 Section 2. The Borrower hereby declares its official intent to use certain proceeds of the Obligation to reimburse itself for expenditures reimbursable with the proceeds of tax exempt bonds or other tax exempt securities under the provisions of the Internal Revenue Code of 1986, as amended, and those U.S. Treasury Regulations implementing such provisions (collectively, "Federal Tax Law"). This declaration is made solely for purposes of establishing compliance with applicable requirements of Federal Tax Law. This declaration does not bind the Borrower to make any expenditure, incur any indebtedness, or proceed with the Project. Section 3. The City Manager and his or her designee is hereby authorized and directed to act on behalf of the City of San Gabriel in all matters pertaining to its application for financing from the IBank, including but not limited to, the authority to pledge certain Measure R Tax revenues and State Gas Tax revenues, received by the City, to the repayment of the Obligation and to provide covenants relating to rates and charges to be pledged and as to any other security or collateral securing the Obligation. Section 4. If the Obligation is approved by the IBank, the City Manager and his or her designee is authorized to enter into and sign financing documents and any amendments thereto, including, but not limited to the Financing Agreements and the Replacement Agreements, with the IBank for the purpose of financing the Obligation. 3 Resolution 14-2

6 1 Section 5. This resolution shall become effective immediately upon adoption PASSED, APPROVED and ADOPTED this 2nd day of September, 2014 by the following vote: John R. Harrington, Mayor 9 ATTEST: Eleanor K. Andrews, City Clerk Resolution 14-2