HomeMy WebLinkAboutReso 2008-257
RESOLUTION NO. 2008-257
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA REGARDING AMENDMENTS TO
INDENTURES AND LOAN AGREEMENTS RELATING TO
OUTSTANDING INDUSTRIAL DEVELOPMENT
REFUNDING REVENUE BONDS OF THE CITY OF CHULA
VISTA ISSUED TO REFINANCE COSTS OF CERTAIN
ELECTRIC F ACIUTIES FOR SAN DIEGO GAS & ELECTRIC
COMPANY AND RELATED BOND INSURANCE
TERMINATION AND RELEASE AGREEMENT
WHEREAS, the City of Chula Vista (the City) is authorized pursuant to its Charter and
Chapter 3.48 of the Municipal Code of the City (the Municipal Code) to assist in financing or
refinancing utility facilities (located within and without the City); and
WHEREAS, the Municipal Code provides that the City may issue revenue bonds payable
exclusively from the revenues derived from such utility facilities in order to provide funds to
finance or refinance such facilities; and
WHEREAS, the Municipal Code provides that such revenue bonds shall be secured by a
pledge of the revenues out of which such bonds shall be payable; and
WHEREAS, the City Council previously adopted Resolution 2004-093 on March 23,
2004, authorizing the issuance and sale of up to $686,400,000 aggregate principal amount of its
Industrial Development Revenue Refunding Bonds (San Diego Gas & Electric Company) in one
or more series, and authorizing the execution and delivery of one or more indentures of trust and
one or more loan agreements in substantially the form presented to the City Council in
connection with such Industrial Development Revenue Refunding Bonds (San Diego Gas &
Electric Company); and
WHEREAS, pursuant to Resolution 2004-093, the City has previously issued its
Industrial Development Refunding Revenue Bonds (San Diego Gas & Electric Company) 2004
Series A, B, C, D, E and F (the 2004 Bonds) pursuant to an Indenture of Trust with U.S. Bank
National Association, dated as of June I, 2004 (the 2004 Indenture) and loaned the proceeds
thereof to San Diego Gas & Electric Company (the Company) pursuant to a Loan Agreement,
dated as of June 1,2004 (the 2004 Loan Agreement) to refinance certain electricity generation,
transmission and distribution facilities located within and without the City; and
WHEREAS, pursuant to Resolution 2004-093, the City has previously issued its
Industrial Development Refunding Revenue Bonds (San Diego Gas & Electric Company) 2006
Series A (the 2006 Bonds) pursuant to an Indenture of Trust with U.S. Bank National
Association, dated as of September 1, 2006 (the 2006 Indenture) and loaned the proceeds thereof
to the Company pursuant to a Loan Agreement, dated as of September 1,2006 (the 2006 Loan
Agreement) to refinance certain electricity generation, transmission and distribution facilities
located within and without the City; and
Resolution No. 2008-257
Page 2
WHEREAS, the Industrial Development Refunding Revenue Bonds (San Diego Gas &
Electric Company) 2004 Series A, B, C, D and E Bonds (the XL-Backed Bonds) presently are
insured by Financial Guaranty Insurance Policies (the XL Policies) issued by XL Capital
Assurance Inc. (XL); and
WHEREAS, the Industrial Development Refunding Revenue Bonds (San Diego Gas &
Electric Company) 2004 Series F Bonds as well as the 2006 Bonds (together, the Ambac-Backed
Bonds) presently are insured by Municipal Bond Insurance Policies (the Ambac Policies) issued
by Ambac Assurance Corporation (Ambac); and
WHEREAS, one or more national credit rating agencies have downgraded XL and
Ambac and have placed XL and Ambac on credit watch with negative implications; and
WHEREAS, the Company has advised the City that the XL-Backed Bonds and the
Ambac-Backed Bonds could be remarketed to the general public in most or all interest rate
modes at lower costs to the Company if the XL Policies and Ambac Policies are terminated; and
WHEREAS, representatives of XL have indicated to the Company that XL is willing to
terminate the XL Policies, subject to certain conditions, without requiring any action by the City;
and
WHEREAS, representatives of Ambac have indicated to the Company that Ambac is
willing to terminate the Ambac Policies, subject to certain conditions, including that the
Company and the City execute a Termination and Release Agreement with respect to the Ambac
Policies, a form of which the Company has presented to the Director of Finance and the Director
of Finance has presented to the City Council (the Termination Agreement); and
WHEREAS, the Company purchased all the Ambac-Backed Bonds when the interest rate
period of those Ambac-Backed Bonds converted from an Auction Rate Period to a Weekly Rate
Period and when those Ambac-Backed Bonds were tendered for purchase pursuant the
indentures under which the Ambac-Backed Bonds were issued; and
WHEREAS, the Company purchased all the XL-Backed Bonds when the interest rate
period of those XL-Backed Bonds converted from an Auction Rate Period to a Weekly Rate
Period and when those XL-Backed Bonds were tendered for purchase pursuant the indentures
under which the XL-Backed Bonds were issued; and
WHEREAS, the Company or its parent corporation, Sempra Energy, currently is the
beneficial owner of all the 2004 Bonds and all the 2006 Bonds; and
WHEREAS, the Company advises that remarketing of the XL-Backed Bonds to the
general public will be facilitated if the 2004 Indenture, the 2006 Indenture, the 2004 Loan
Agreement and the 2006 Loan Agreement are revised to provide clear procedures and other
provisions that are to apply once the XL Policies and Ambac Policies are terminated; and
Resolution No. 2008-257
Page 3
WHEREAS, the Company has presented to the Director of Finance such amendments to
the 2004 Indenture, the 2006 Indenture, the 2004 Loan Agreement and the 2006 Loan Agreement
in the forms of "Amended and Restated Indentures of Trust" and "Amended and Restated Loan
Agreements", respectively, and the Director of Finance has presented these forms of documents
to the City Council; and
WHEREAS, the 2004 Indenture, the 2006 Indenture, the 2004 Loan Agreement and the
2006 Loan Agreement permit the City to amend the provisions therein subject to the
requirements set forth therein; and
WHEREAS, Resolution 2004-093 authorizes the Director of Finance to take actions
implementing amendments of the 2004 Indenture, the 2006 Indenture, 2004 Loan Agreement and
the 2006 Loan Agreement, and to execute the Termination Agreement, without further
authorization from the City Council.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City ofChula Vista
as follows:
SECTION I. The City Council hereby finds and determines that the foregoing recitals
are true and correct.
SECTION 2. The City Council hereby finds and determines that it would be prudent and
appropriate for the Director of Finance to exercise the authority previously granted to the
Director of Finance under Resolution 2004-093 to approve, execute and deliver the Amended
and Restated 2004 Indenture of Trust, the Amended and Restated 2006 Indenture of Trust, the
Amended and Restated 2004 Loan Agreement, the Amended and Restated 2006 Loan
Agreement and the Termination Agreement in substantially the forms presented to the City
Council and authorizes the Director of Finance to execute the Termination Agreement in
substantially the same form as presented herewith and Director of Finance is directed to execute
the Termination Agreement.
SECTION 3. All resolutions or parts thereof in conflict herewith, ifany (of which none
are known to the City) are hereby repealed to the extent of such conflict.
SECTION 4. This resolution shall become effective immediately.
Presented by
Approved as to form
u7 ~<.::: 4. ^" .k0l-
Maria achadoorian
Finance/Treasurer Director
Resolution No. 2008-257
Page 4
PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista,
California, this 4th day of November 2008 by the following vote:
AYES:
Councilmembers:
Castaneda, McCann, Ramirez, Rindone, and Cox
NAYS:
Councilmembers:
None
ABSENT:
Councilmembers:
None
ATTEST:
(Uw-eft; ,
Cheryl Cob M yor
L f~J1Ghd
Donna R. Norris, C~C, City Clerk
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
CITY OF CHULA VISTA )
I, Donna R. Norris, City Clerk of Chula Vista, California, do hereby certify that the foregoing
Resolution No. 2008-257 was duly passed, approved, and adopted by the City Council at a
regular meeting of the Chula Vista City Council held on the 4th day of November 2008.
Executed this 4th day of November 2008.
JgvuAO-- f j{;,J.l'4
Donna R. Norri~, C*'rt, City Clerk