County Contract No. Department Auditor/Controller TRINITY COUNTY 3.01 Board Item Request Form 2015-07-21 Contact Angela Bickle Phone 623-1317 Requested Agenda Location County Matters Requested Board Action: Adopt a resolution authorizing Trinity County to issue a Tax Revenue Anticipation Note for Fiscal Year 2015-16 in the amount of $3,000,000 with Umpqua Bank and authorize the County Auditor and County Treasurer to sign the Tax Revenue Anticipation Note, 2015. Fiscal Impact: Provide operating funds to meet cash flow needs. Motion: Second Roll Call: Ayes: Nays: Tabled To: Action: Notes:
STAFF REPORT Subject: Approve the Resolution authorizing FY 2015-16 Tax Revenue Anticipation Note Date: July 21, 2015 ISSUE: Adopt Resolution which authorizes the issuance of a note in the principal amount of $3,000,000 for Fiscal Year 2015-16. Further authorize the County Auditor and County Treasurer to sign the Tax Revenue Anticipation Note, 2015. Tax Revenue Anticipation Notes (TRAN) are short-term loans used to address a cash flow problem created when expenditures are incurred before tax revenues are received. Typically, tax revenues are received in two primary installments during the year, while expenditures must be made on a daily basis for county government to operate. As discussed during the July 7, 2015 agenda, this will be the eighth year the County has entered into this type of an arrangement with Umpqua Bank. The Terms and Conditions are unchanged. Costs Legal Fee: $ 2,500 Note Fee: $ 9,850 Documentation Fee: $ 150 Total Costs $12,500 Interest Rate: No less than 2.5% (floor rate) All documents have been reviewed and approved by County Counsel, Bond Counsel, County Administrative Office, Treasurer and Auditor. ALTERNATIVES INCLUDING FINANCIAL IMPLICATION: RECOMMENDATION: 1) Approve this request as presented. 2) Denying the request as presented will result in a deficit cash balance for the General Fund. It is the staff s recommendation that the Board adopts the Resolution and authorizes the County Auditor and Treasurer to sign the Tax Revenue Anticipation Note, 2015. Angela Bickle Interim Auditor-Controller CAO RECOMMENDATION: Concur: Yes No Comments:
August 1, 2015 (No. R-1) $3,000,000 UNITED STATES OF AMERICA STATE OF CALIFORNIA TRINITY COUNTY TAX REVENUE ANTICIPATION NOTE (2015-2016) REGISTERED OWNER: PRINCIPAL AMOUNT: UMPQUA BANK THREE MILLION DOLLARS Trinity County, California (the County ), a political subdivision of and organized and organized and existing under and by virtue of the Constitution and laws of the State of California promises to pay to the order of the Registered Owner hereof, on or before May 1, 2016 (the Maturity Date ), the principal amount of Three Million Dollars ($3,000,000) in accordance with the terms of this Tax Revenue Anticipation Note (the Note ) and the County s Resolution No. 2015-067, adopted by a majority of the Board of Supervisors of the County on July 21, 2015 (the Note Resolution ). This Note shall bear interest at an annual rate equal to the Federal Home Loan Bank of Seattle (the FHLB Rate) plus two and twenty five one-hundredths percent (2.25%) ( BQ Rate ), but in no event shall the BQ Rate be less than two and five tenths percent (2.50%) per annum, which BQ Rate shall be determined as of the date of this Note and shall continue for the term of this Note. Interest shall accrue and shall be computed on the principal amount outstanding on the basis of a 365/360-day year for the actual number of days the principal amount of the Note is outstanding. Accrued interest shall be due and payable by the County monthly, commencing on September 1, 2015 and on the first of each month thereafter until the Maturity Date. The County shall make a principle payment to Bank reducing the outstanding principal amount of this Note to Two Million Dollars ($2,000,000) on or before January 2, 2016 (the Paydown Date ). The entire principal balance of this Note and accrued interest thereon shall be due and payable on the Maturity Date. Both principal and interest shall be payable in available funds on or before the dates specified herein. The BQ Rate is contingent upon the County being and continuing to be qualified to issue the indebtedness evidenced by this Note as tax-exempt under applicable Internal Revenue Code sections and regulations. If the indebtedness evidenced by this Note ceases to be taxexempt, then the BQ Rate shall increase to 5.00% per annum from and after the effective date of such disqualification (the Default Rate ). This Note shall be subject to call and redemption, at the option of the County, at any time prior to the Maturity Date at the principal amount thereof and accrued interest thereon to date of redemption upon two (2) days' written notice thereof to the holder hereof. The County shall not be subject to any penalty, fees, expenses, or other detriment for paying off any and all unpaid principal and accrued interest thereon prior to the Maturity Date. Tax Revenue Anticipation Note (2015-2016) Page 1
If the Note, or any portion of the principal balance thereof, is not paid in full on the Maturity Date or the Paydown Date, then interest on such unpaid principal balance shall continue to accrue at the Default Rate until all principal of and interest on the Note is paid in full. This Note shall be payable solely out of the special fund of the County known as the Tax Revenue Anticipation Note Fund (2015-2016) (the Note Fund ). Pursuant to Section 53856 of the California Government Code, the County has pledged all taxes, income, revenue, cash receipts, or other moneys of the County, including moneys deposited in inactive or term deposits which are received by the County s General Fund for fiscal year 2015-2016, to the payment of this Note and the interest hereon, except, however, that no moneys which, when received by the County, are encumbered for a special purpose are pledged to the repayment of this Note. This Note and the interest hereon shall be a first lien and charge against, and shall be payable from the first moneys received by the County from, such pledged moneys. Notwithstanding the foregoing, this Note is a general obligation of the County and, to the extent not paid from the taxes, income, revenue, cash receipts or other moneys of the County pledged for the payment hereof shall be paid with the interest thereon from any other moneys of the County lawfully available therefor. Reference is hereby made to the Note Resolution for other covenants and declarations of the County and other terms and conditions upon which this Note has been issued, which terms and conditions are made a part hereof by this reference. The County irrevocably and unconditionally covenants that it will keep and perform all of the covenants of this Note and of the Note Resolution. The County shall not rescind, terminate, amend or otherwise modify the Note Resolution without the prior written consent of the Bank, which may not be unreasonably withheld by the Bank. Reference also is made to the Note Resolution for the definitions of capitalized terms used but not otherwise defined herein. This Note shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon has been signed by the Note Registrar. The principal of and interest on this Note shall be paid only to the Registered Owner whose name appears on the Note Register and to no other person or entity, and this Note may be assigned or transferred in whole by the Bank to another federally insured financial institution. As used herein, Registered Owner means the person or entity named as Registered Owner of this Note on the first page hereof and on the Note Register. It is hereby certified, recited and declared that this Note is issued in strict conformity with the Constitution and laws of the State of California and with the provisions of Sections 53850-53858, inclusive of the California Government Code and the proceedings of the Board of Supervisors of the County, including a resolution duly and regularly passed and adopted by the Board of Supervisors on July 21, 2015, authorizing the same, and that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of this Note have existed, happened, and been performed in regular and due time, form, and manner as required by law, and that this Note, together with all other indebtedness and obligations of the County, does not exceed any limit prescribed by the Constitution or statutes of the State of California. Tax Revenue Anticipation Note (2015-2016) Page 2
IN WITNESS WHEREOF, the County of Trinity has caused this Note to be executed by the Chair of its Board of Supervisors and to be countersigned by its Treasurer and its Auditor and the Clerk of the Board of Supervisors and its official seal to be affixed hereto this 21st day of July, 2015. TRINITY COUNTY, CALIFORNIA By: Chair of the Board of Supervisors Judy Morris By: Clerk of the Board of Supervisors Wendy G. Tyler By: Treasurer Terri McBrayer By: Auditor Angela C. Bickle Tax Revenue Anticipation Note (2015-2016) Page 3
CERTIFICATE OF AUTHENTICATION The foregoing Note is the fully registered Trinity County, California, Tax Revenue Anticipation Note (2015-2016) described in the Note Resolution. DATED this day of, 2015. Auditor-Controller of Trinity County, California Note Registrar
RESOLUTION NO. 2015-067 A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF TRINITY RELATING TO CONTRACTING INDEBTEDNESS; ACCEPTING THE COMMITMENT OF UMPQUA BANK FOR A CREDIT FACILITY EVIDENCED BY A PROMISSORY NOTE PAYABLE FROM THE TAXES AND OTHER REVENUES RECEIVED BY THE COUNTY FOR THE GENERAL FUND ATTRIBUTED TO FISCAL YEAR 2015-2016; AUTHORIZING THE ISSUANCE OF A PROMISSORY NOTE IN THE PRINCIPAL AMOUNT OF $3,000,000 FOR THE PURPOSE OF PAYING THE COUNTY S EXPENSES AND OTHER OBLIGATIONS PENDING THE RECEIPT OF TAXES AND OTHER REVENUES LAWFULLY AVAILABLE TO THE GENERAL FUND DURING THE FISCAL YEAR 2015-2016; FIXING THE FORM, TERMS AND COVENANTS OF SUCH PROMISSORY NOTE; CREATING A SPECIAL FUND FOR THE PAYMENT THEREOF; AND PROVIDING FOR THE DELIVERY OF THE PROMISSORY NOTE TO UMPQUA BANK. WHEREAS, the Board of Supervisors for the County of Trinity, California (the County ), finds that periodic collections of tax revenues and other money for deposit in the County s General Fund and certain other County funds from time to time may not be sufficient to meet necessary County expenses, with such debt to be paid from tax revenues and other money deposited in the County s General Fund; and WHEREAS, Sections 53850-53858, inclusive, of the California Government Code gives the County authority to borrow money, the indebtedness to be represented by a promissory note or notes issued; and WHEREAS, The money borrowed may be used and expended by the County for any purpose for which the County is authorized to use and expend moneys, including but not limited to current expenses, capital expenditures, investment and reinvestment, and the discharge of any obligation or indebtedness of the County; and WHEREAS, it is in the best interest of the County to make a contract for borrowing by the issuance of a tax revenue anticipation note in the principal amount of Three Million Dollars ($3,000,000) attributable to Fiscal Year 2014-2015, so that the County may meet the obligations for which it is authorized to borrow money pursuant to Section 53852 of the California Government Code; and WHEREAS, no money has heretofore been borrowed by the County through the issuance of any promissory 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 2015-2016; and WHEREAS, Umpqua Bank has submitted to the County an offer to enter into a contract for such borrowing;
Resolution No. 2015-067 July 21, 2015 Page 2 of 7 NOW, THEREFORE, BE IT RESOLVED by the Board of Supervisors of the County of Trinity as follows: SECTION 1. Definitions. As used in this resolution, the following words shall have the following meanings: Auditor means the Auditor of the County. Bank means Umpqua Bank. Board means the Board of Supervisors of the County. BQ Rate means the interest rate payable on the Note equal to two and twenty-five onehundredths percent (2.25%) over the FHLB Rate, but in no event shall the BQ Rate be less than two and fifty one-hundredths (2.50%), which BQ Rate shall be fixed as of the Closing Date and shall continue for the term of the Note. Business Day means any day that is not a Saturday or Sunday or a day on which commercial banks located in the State of California are closed for business. Closing Date means August 1, 2015, being the date the disbursement of the funds specified in the Note occurs. Code means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. Commitment Letter means the letter of the Bank dated May 14, 2015, as it may be amended and supplemented, describing certain terms of the credit facility to be evidenced by the Note. County means Trinity County, California, a political subdivision of and duly organized and existing under and by virtue of the laws of the State of California. County s General Fund means the fund maintained by the County into which it places its revenue that is not encumbered for a special purpose. Default Rate means 5.00% per annum. FHLB Rate means the intermediate term fixed rate for the stated duration of the Note as quoted by the Federal Home Loan Bank of Seattle as of the date of the Note. Fiscal Year means the period beginning on July 1 of each year and ending on the next succeeding June 30. Interest Payment Date means the first Business Day of each month commencing September 1, 2015 and in the first day of each month thereafter until the Maturity Date. Loan Fee means the Nine Thousand Eight Hundred Fifty Dollars ($9,850.00) fee payable as a loan fee under the Commitment Letter. Maturity Date means May 1, 2016. Note shall mean the Tax Revenue Anticipation Note (2015-2016) issued pursuant to and for the purposes provided in this resolution. Note Registrar means the Auditor-Controller for the County. Note Purpose means any lawful purpose as specified in Section 53852 of the California Government Code for the use of the Note proceeds. SECTION 2. Authorization to Incur Indebtedness. The County is authorized by Section 53850 et seq. of the California Government Code to incur the indebtedness evidenced by the Note.
Resolution No. 2015-067 July 21, 2015 Page 3 of 7 SECTION 3. Authorization of Note. For the purpose of anticipating taxes, income, revenue, cash receipts and other moneys to be received by the County s General Fund allocable to Fiscal Year 2015-2016, or accrued to or held by the County and provided for or attributable to Fiscal Year 2015-2016, and not pursuant to any common plan of financing, the County may borrow money pursuant to the Commitment Letter and this resolution and, as evidence thereof, shall issue its Note in the principal amount of $3,000,000. The Note shall be designated the Tax Revenue Anticipation Note (2015-2016) ; shall be issued in fully registered form; shall be dated as of the Closing Date; shall be numbered R-1; and shall mature on the Maturity Date. The County will draw the full amount of the Note on the Closing Date for any Note Purpose and shall pay the Loan Fee and other fees payable under the Commitment Letter to the Bank on the Closing Date. SECTION 4. Interest Rates; Computation of Interest. The Note shall bear interest at the BQ Rate. Interest on the Note shall be computed on the principal amount of the Note outstanding on the basis of the actual number of days elapsed over a 365/360-day year. The Board finds that the determination of the interest rate on the Note in the manner described herein in the best interest of the County. SECTION 5. Billing Statement. The Bank shall provide the County with a written statement (the Billing Statement ) of all interest, payments, principal prepayments, and other transactions relating to the Note. The Billing Statement shall be in a form agreed to by the Bank and the County and shall be provided to the County not later than five Business Days before each Interest Payment Date. SECTION 6. Repayment of Note. The Note shall be repaid in full on the Maturity Date. The County shall make a principal payment on the Note on or before January 2, 2016 (the Paydown Date ) so that the then outstanding principal is not greater than Two Million Dollars ($2,000,000). Interest accrued on the Note shall be payable on each Interest Payment Date, and shall be paid in full on or upon any partial prepayment of the principal of the Note. The entire principal balance of the Note and accrued interest thereon shall be due and payable on the Maturity Date. If the Note, or any portion of the principal balance thereof, is not paid in full on the Maturity Date or the Paydown Date, then interest on such unpaid principal balance shall accrue at the Default Rate until all principal of and interest on the Note is paid in full. Both principal of and interest on the Note shall be payable in available funds on or before the dates specified above. SECTION 7. Note Fund; Pledge of Taxes; Borrowing Funds; Investment of Money. There is created in the Office of the Auditor for the County a special fund to be called the Tax Revenue Anticipation Note Fund (2015-2016) (the Note Fund ).
Resolution No. 2015-067 July 21, 2015 Page 4 of 7 The Note shall be paid solely from the Note Fund. Pursuant to Section 53856 of the Government Code, the principal of the Note and the interest thereon are secured by and payable from all taxes, income, revenue, cash receipts, or other moneys received by the County for the County s General Fund for the Fiscal Year 2014-2015, including moneys deposited in inactive or term deposits, are hereby pledged to the payment of the Note and the interest thereon, except, however, that no moneys which, when received by the County, are encumbered for a special purpose are pledged therefor. The Note and the interest thereon shall be a first lien and charge against, and shall be payable from the first moneys received by the County from, such pledged moneys. Notwithstanding the foregoing, the Note shall be a general obligation of the County, and, to the extent not paid from the taxes, income, revenue, cash receipts or other moneys of the County pledged for the payment thereof shall be paid with the interest thereon from any other moneys of the County lawfully available therefor. Pending the prepayment or payment of the Note and subject to Section 11 hereof, the County may invest money deposited in the Note Fund in any legal investment maturing not later than the earlier of the Maturity Date, and the investment earnings shall be retained in the Note Fund and expended for the purpose of that fund or, if sufficient money is on deposit in the Note Fund for the prepayment or payment, both principal and interest, of the Note, such investment earnings may be transferred to the County s General Fund and expended for the purposes of such fund. SECTION 8. Prepayment of Note. The Note shall be subject to call and redemption, at the option of the County, at any time prior to its fixed maturity date at the principal amount thereof and accrued interest thereon to date of redemption upon two days written notice thereof to the holder of the Note. The County shall not be subject to any penalty, fees, expenses, or other detriment for paying off any and all unpaid principal and accrued interest thereon prior to the Maturity Date. SECTION 9. Registration of Note. The Note shall be issued to the Bank only in registered form as to both principal and interest and recorded on the books or records maintained by the Note Registrar (the Note Register ). The Note Register shall contain the name and mailing address of the registered owner of the Note. The Auditor-Controller shall serve as Note Registrar for the Note. The Note Registrar is authorized, on behalf of the County, to authenticate and deliver the Note if transferred or exchanged in accordance with the provisions of the Note and this Resolution and to carry out all of the Note Registrar s powers and duties under this resolution. The Note may not be assigned or transferred by the Bank, except that the Bank may assign or transfer the Note, only in whole, by the Bank to another federally insured financial institution. When the Note has been paid in full, both principal and interest, the Note shall be surrendered by the Bank to the Note Registrar, who shall cancel the Note.
Resolution No. 2015-067 July 21, 2015 Page 5 of 7 SECTION 10. Form and Execution of Note. The Note shall be printed, typed or photocopied on good bond paper or other suitable paper in a form consistent with the provisions of this resolution and shall be signed by the Chair of the Board of Supervisors, the Clerk of the Board, the Auditor and the County Treasurer. Only a Note bearing a Certificate of Authentication in the following form, manually signed by the Note Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this resolution: CERTIFICATE OF AUTHENTICATION The foregoing Note is the fully registered Trinity County, California, Tax Revenue Anticipation Note (2015-2016), described in the Note Resolution. DATED this 21st day of July, 2015. By Auditor-Controller of Trinity County, California Note Registrar SECTION 11. Preservation of Tax Exemption for Interest on Note. The County covenants that it will take all actions necessary to prevent interest on the Note from being included in gross income for federal income tax purposes, and it will neither take any action nor make or permit any use of proceeds of the Note or other funds of the County treated as proceeds of the Note at any time during the term of the Note that will cause interest on the Note to be included in gross income for federal income tax purposes. The County also covenants that it will, to the extent the arbitrage rebate requirement of Section 148(f) of the Code is applicable to the Note, take all actions necessary to comply (or to be treated as having complied) with that requirement in connection with the Note, including the calculation and payment of any penalties that the County has elected to pay as an alternative to calculating rebatable arbitrage, and the payment of any other penalties if required under Section 148 of the Code to prevent interest on the Note from being included in gross income for federal income tax purposes. The County, within thirty days after filing, shall provide the Bank with a copy of each IRS Form 8038, 8038G or 8038GC filed in connection with the indebtedness evidenced by the Note. SECTION 12. Designation of Note as Qualified Tax Exempt Obligation. The County has determined and certifies that (a) the Note is not a private activity bond within the meaning of Section 141 of the Code; (b) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) which the County and any entity subordinate to the County (including any entity that
Resolution No. 2015-067 July 21, 2015 Page 6 of 7 the County controls, that derives its authority to issue tax-exempt obligations from the County, or that issues tax-exempt obligations on behalf of the County) will issue during the calendar year in which the Note is issued will not exceed $10,000,000; and (c) the amount of tax-exempt obligations, including the Note, designated by the County as qualified tax-exempt obligations for the purposes of Section 265(b)(3) of the Code during the calendar year in which the Note is issued does not exceed $10,000,000; and (d) the County is a qualified small issuer under Section 265(b)(3)(C) of the Code. The County designates the Note as a qualified tax-exempt obligation for the purposes of Section 265(b)(3) of the Code. SECTION 13. Reporting Requirements. For so long the Note is outstanding, the County covenants with the Bank to provide the following information to the Bank: (a) Within 30 days of filing with the State of California Controller s Office a copy of the audited financial statements of the County, audited by a certified public accountant, but in any event not later than March 31, 2015; (b) Within 30 days after approval by the Board, a copy of the County s annual approved budget for fiscal year 2015-2016; (c) Within 30 days after December 31, 2015 a detailed semi-annual actual vs. budget revenue and expense statement of the County prepared by the Auditor; and (d) Upon request by the Bank, such interim financial statements, budget statements, forecasts, list of assets and liabilities, assigns of property, tax receivables, inventory schedules and other documents regarding the County s financial condition and business operations as may be reasonably requested by the Bank. SECTION 14. Acceptance of Commitment Letter. The Bank has submitted an offer to accept delivery of the Note under the terms and conditions of its Commitment Letter. The Board finds that accepting the commitment evidenced by the Commitment Letter is in the County s best interest and therefore authorizes the Auditor to accept such commitment. The Note will be prepared at County expense and will be delivered to the Bank in accordance with the Commitment Letter, with the approving legal opinion of David A. Prentice, counsel for the County and acting as bond counsel thereof, regarding the Note. The proper County officials are authorized and directed to do everything necessary for the prompt delivery of the Note to the Bank and for the proper application and use of the proceeds of the Note. SECTION 15. Designation of Officer. The Board has determined it to be in the best interest of the County that the Auditor be authorized to undertake on behalf of the County all actions required to be undertaken by the County in accordance with the terms and provisions set forth in this Resolution. SECTION 16. Performance of Certain Duties. Any action required or authorized by this resolution to be taken by the Auditor may be taken by the Chief Deputy Auditor (if applicable). SECTION 17. Effective Date; Ratification. This resolution shall be in full force and effect from and after its adoption and approval. All actions heretofore taken by the County consistent with the provisions of this resolution are ratified, confirmed and approved.
Resolution No. 2015-067 July 21, 2015 Page 7 of 7 DULY PASSED AND ADOPTED this 21st day of July, 2015 by the Board of Supervisors of the County of Trinity by motion, second (/), and the following vote: AYES: NOES: ABSENT: ABSTAIN: RECUSE: ATTEST: WENDY G. TYLER Clerk of the Board of Supervisors JUDY MORRIS, CHAIRMAN Board of Supervisors County of Trinity State of California By: Deputy Approved as to Form: By: Margaret Long County Counsel
CERTIFICATE I, the undersigned, Clerk of the Board for the Board of Supervisors of Trinity County, California (the County ), hereby certify as follows: The attached copy of Resolution No. 2015-067 is a full, true and correct copy of a resolution duly adopted at a regular meeting of the Board of Supervisors for Trinity County held at the regular meeting place thereof on July 21, 2015, as that resolution appears on the minute book of the County; and the Resolution is now in full force and effect; and A quorum of the members of the Board was present throughout the meeting and a majority of those present voted in the proper manner for the adoption of the foregoing resolution. DATED this 21 st day of July, 2015. Clerk of the Board WENDY G. TYLER