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SR-203-001-05 (9) OFFICIAL NOTICE INVITING BIDS $15,000,000* Santa Monica Public Financing Authority Lease Revenue Bonds, Series 1999 (Public Safety Facility Project) Series 1999 (Book-Entry-Only) NOTICE IS HEREBY GIVEN that sealed bids and electronic bids will be received by the Santa Monica Public Financing Authority (the “Authority”) for the purchase of all of its $15,000,000* original principal amount of the Santa Monica Public Financing Authority Lease Revenue Bonds, Series 1999 (Public Safety Facility Project) (the “Bonds”). Bids for less than all of the Bonds will not be accepted. The bids will be received at the place and up to the time specified below (unless postponed as described herein): Date: September 29, 1999 9:00 a.m., PDT Place: Department of Finance City of Santa Monica 1717 4th Street, Suite 250 Santa Monica, California 90401 Sealed Bids: All Sealed Bids must be in an envelope clearly marked “Proposal For Santa Monica Public Financing Authority Lease Revenue Bonds, Series 1999 (Public Safety Facility Project)”. Sealed Bids may be mailed or hand delivered to the address shown above on the date and before the time shown above. See instructions under “Terms of Sale; Form of Bid” below. Electronic Bids: Electronic proposals may be submitted only through Dalcomp/Parity. Bidders intending to submit an electronic proposal must complete and deliver the attached Authorization to Accept Electronic Bid (the “Authorization”) to the Authority at the address indicated on the Authorization prior to the time stated above for the receipt of proposals. Dalcomp/Parity will act as agent of the bidder and not of the Authority in connection with the submission of bids and the Authority assumes no responsibility or liability for bids submitted through Dalcomp/Parity. See “Information Regarding Electronic Proposals” herein. Facsimile Bids: No bids will be accepted by facsimile. The Issue The proceeds from the sale of the Bonds will be used for the acquisition, construction, and installation of certain capital improvements constituting a public safety facility and related improvements (the “Project”). The Bonds will be issued pursuant to the Indenture, dated as of September 1, 1999 (the “Indenture”), by and among the Authority, the City of Santa Monica (the “City”) and BNY Western Trust Company, as trustee (the “Trustee”), authorizing the issuance of the Bonds. Capitalized terms not defined herein shall have the same definitions as used in the Indenture. * Preliminary, subject to change as set forth herein. -1- Authorization The Bonds were authorized by the Board of the Authority on September 14, 1999. The Bonds are to be issued under the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code (the “Act”) and the laws of the State of California. Security and Sources of Payments The Bonds will be issued in accordance with the Indenture and the Act. The Bonds are payable as to both principal and interest solely from certain base rental payments (the “Base Rental Payments”) under and pursuant to the Lease Agreement, dated as of September 1, 1999 (the “Lease Agreement”), by and between the City, as lessee, and the Authority, as lessor, all of which rights to receive such Base Rental Payments have been assigned by the Authority to the Trustee. The foregoing obligations, however, may be limited by bankruptcy, insolvency, reorganization, moratorium, or other laws affecting the enforcement of creditors’ rights. Reference is made to the Preliminary Official Statement and the Indenture for a more exact description of the security for the Bonds. Book-Entry-Only The Bonds will be issued in fully registered book-entry only form, initially registered in the name of CEDE & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Purchasers will not receive certificates representing their interest in the Bonds. Individual purchases will be in principal amounts of $5,000 and integral multiples thereof. Principal of, interest and premium, if any, on the Bonds will be made by the Trustee to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the Bonds. Principal Amortization The aggregate principal amount of $15,000,000* of the Bonds will mature either through serial maturities or sinking amount installments on the following dates: July 1, Principal Amount* July 1, Principal Amount* 2002 $ 2012 $ 2003 $ 2013 $ 2004 $ 2014 $ 2005 $ 2015 $ 2006 $ 2016 $ 2007 $ 2017 $ 2008 $ 2018 $ 2009 $ 2019 $ 2010 $ 2020 $ 2011 $ 2021 $ Serial Bonds and/or Term Bonds Bidders may provide that all the Bonds of a series be issued as serial bonds or may provide that any two or more provided consecutive annual principal amounts of a series be combined into one or more term bonds, that no term bond maturing after the first optional call date as specified in the maturity schedule has sinking fund payments prior to such redemption date. * Preliminary, subject to change as set forth herein. -2- Principal and Interest Payments The Bonds will be dated as of September 15, 1999 and will bear interest from that date. Delivery of the Bonds is expected to occur on October 13, 1999. Interest on the Bonds will be payable semi-annually on January 1 and July 1, beginning July 1, 2000 (each an “Interest Payment Date”). Principal of and premium (if any) on the Bonds will be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the principal corporate trust office of the Trustee. Payment of principal and interest to DTC is the responsibility of the Authority or the Trustee; disbursement of such payments to Direct Participants of DTC will be the responsibility of DTC; and disbursements of such payments to the Beneficial Owners will be the responsibility of DTC’s Direct Participants and Indirect Participants. The Authority and the City cannot and do not give any assurances that DTC, the Participants or others will distribute payments of principal, interest or premium with respect to the Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption notices or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the manner described in the Official Statement. The Authority and the City are not responsible or liable for the failure of DTC or any Participant to make any payment or give any notice to a Beneficial Owner with respect to the Bonds or an error or delay relating thereto. Optional Redemption Bonds maturing on or before July 1, 20 are not subject to optional redemption prior to maturity. The Bonds maturing on or after July 1, 20 are subject to optional redemption, in whole or in part, on any Interest Payment Date on or after July 1, 2009, in denominations of $5,000 or any integral multiple thereof, from and to the extent of prepaid Base Rental Payments. Such redemptions shall be at the following redemption prices (expressed as a percentage of the principal amount of such Bonds), plus accrued and unpaid interest to the date fixed for redemption: Redemption Dates Redemption Price July 1, 2009 and January 1, 2010 101.00% July 1, 2010 and thereafter 100.00% Whenever provision is made for the redemption of less than all of the Bonds, the Trustee will select the Bonds to be redeemed from all Bonds not previously called for redemption (a) with respect to any optional redemption of Bonds of a Series, among maturities of Bonds of such Series as directed by the Authority, (b) with respect to any redemption from and to the extent of any insurance proceeds or condemnation award received with respect to all or a portion of the Property and the corresponding provision of any Supplemental Indenture pursuant to which Additional Bonds are issued, among maturities of all Series of Bonds on a pro-rata basis as nearly as practicable, and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued, and by lot among Bonds of the same Series with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Bonds shall be deemed to be to be comprised of separate $5,000 denominations and such separate denominations shall be treated as separate Bonds which may be separately redeemed. Notice of Redemption Notice of redemption shall be given at least 15 days but not more than 60 days prior to the date fixed for redemption. Such notice shall be given by the Trustee by first class mail. So long as the Bonds are in book-entry form only, such notices will be given only to DTC or its nominee. * Preliminary, subject to change as set forth herein. -3- Mandatory Sinking Fund Redemption If the successful bidder designates principal amounts to be combined into one or more term bonds, each such term bond shall be subject to mandatory sinking fund redemption commencing on July 1 of the first year which has been combined to form such term bonds and continuing on July 1 in each year thereafter until the stated maturity date of that term bond. The amount redeemed in any year shall be equal to the principal amount for such year set forth in the table above under the caption “Principal Amortization”. Bonds to be redeemed in any year by mandatory sinking fund redemption shall be redeemed at par and shall be selected by lot from among the Bonds then subject to redemption. The Authority, at its option, may credit against any mandatory sinking fund redemption requirement term bonds of the maturity then subject to redemption, which have been redeemed and not theretofore applied as a credit against any mandatory sinking fund redemption requirement. Adjustments of Principal Amounts The principal amounts set forth in the Official Bid Form for the Bonds will reflect certain estimates of the Authority, the City and its Financial Advisor with respect to the likely interest rates of the winning bid and the premium/discount contained in the applicable winning bid. After selecting the winning bid, the amortization schedule contained in the Official Bid Form may be adjusted as necessary in the determination of the Financial Advisor in $5,000 increments to reflect the actual interest rates and any premium/discount in the winning bid, to create a more level annual debt service on the Bonds, and/or to accommodate certain other sizing requirements or preferences of the Authority and the City. Such adjustments will not change the aggregate principal amount of the Bonds to be issued from the amount set forth in the Official Bid Form by more than 10% or change the principal amount due on such Bonds in any year by more than 10%. The dollar amount bid for the Bonds by the winning bidder will be adjusted, if applicable, to reflect any such adjustment in the amortization schedule. The adjusted bid price will reflect changes in the dollar amount of the underwriter’s discount and original issue discount/premium, if any, but will not change the per bond underwriter’s discount (net of insurance premium, if any) provided in the winning bid. Any such adjustments will be communicated to the winning bidder within 27 hours after the opening of the bid. Successful bidder may not withdraw its bid as a result of any adjustment made within the foregoing limits. TERMS OF SALE Form of Bid All bids must be for not less than all of the Bonds hereby offered for sale at not less than 99% of the par value thereof, plus accrued interest to the date of delivery. Bids for less than all of the Bonds will not be accepted. Each bid must be on the Official Bid Form. Every sealed bid must be unconditional and irrevocable, addressed to the Authority in a sealed envelope and endorsed “Proposal for Santa Monica Public Financing Authority Lease Revenue Bonds, Series 1999 (Public Safety Facility Project)”. All electronic proposals shall be deemed to incorporate the provisions of the Official Bid Form and must be unconditional and irrevocable. Except for proposals submitted in accordance with the following paragraph, each bid must be accompanied by the applicable bid check or Surety Bond described under the caption “Bid Check” below. In addition, bidders are requested to supply an estimate of the true interest cost resulting from their bid, computed as prescribed below under the caption “Award, Delivery and Payment,” which shall be considered as informative only and not binding on either the bidder or the Authority. Each bid must be in accordance with the terms and conditions set forth in this Official Notice Inviting Bids. The Authority will make its best efforts to accommodate both electronic and sealed bids; however, the Authority, the Financial Advisor and Bond Counsel assume no responsibility for any error contained in any electronic or sealed bid, or for failure of any electronic or sealed bid to be transmitted, received or opened at the official time for receipt of such bids. The official time for receipt of bids will be determined by the Authority at the place of the bid opening, and the Authority shall not be required to accept the time kept by Dalcomp/Parity as the official time. The Authority assumes no responsibility for informing any bidder prior to the deadline that its bid is incomplete, or not received. In the event that multiple timely bids are received from a single bidder the Authority shall accept the best of such bids and each bidder agrees by submitting any bid to be bound by its best bid. * Preliminary, subject to change as set forth herein. -4- Information Regarding Electronic Proposals Electronic proposals must be submitted through Dalcomp/Parity. Bidders who elect to use Dalcomp/Parity must also complete and deliver (in the form attached to this Official Notice Inviting Bids) the Authorization to Accept Electronic Bid (the “Authorization”) to the address indicated on the Authorization prior to the time stated above for the receipt of proposals. If any provision of this Official Notice Inviting Bids conflicts with information provided by Dalcomp/Parity, this Official Notice Inviting Bids shall control. The Authority is not responsible for the proper operation of, and shall have no liability for any delays or interruptions of or any damages caused by Dalcomp/Parity. The Authority is using Dalcomp/Parity as a communication mechanism and not as the Authority’s agent to conduct electronic bidding for the Bonds. The Authority is not bound by any advice of or determination by Dalcomp/Parity to the effect that any particular bid complies with the terms of this Official Notice Inviting Bids. All costs and expenses incurred by prospective bidders in connection with their submission of bids through Dalcomp/Parity are the sole responsibility of such bidders and the Authority is not responsible for any such costs or expenses. Further information about Dalcomp/Parity, including any fee charged, may be obtained from rd Dalcomp/Parity, 395 Hudson Street, 3 Floor, New York, N.Y. 10014 (Jennifer Emery, 212-806-8304). Neither the City nor the Authority assumes any responsibility or liability for bids submitted through Dalcomp/Parity. Interest Rates Bidders must bid to purchase all of the Bonds and bids for less than all of the Bonds will not be accepted. Bidders must specify a rate of interest for each maturity of the Bonds. The rates of interest must be expressed in multiples of one-eighth (1/8) or one-twentieth (1/20) of one percent (1%), and no interest rate may exceed 10% per annum. Each Bond must bear interest at the rate specified by the bidder in the Official Bid Form from its date to its maturity date. All Bonds of the same maturity must bear the same rate of interest. The maximum differential between the highest and lowest interest rates specified in any bid for the Bonds shall not exceed 3% per annum. The interest rate specified for Bonds maturing on or after July 1, 20 shall not be less than the interest rate specified for any earlier maturity of Bonds. Insurance The successful bidder may purchase municipal bond insurance, if available, for some or all of the Bonds. However, the delivery of the Bonds shall not be conditioned upon the issuance of any such insurance. The Authority and the City make no representation as to whether the Bonds qualify for insurance. Payment of any insurance premium and satisfaction of any conditions to the issuance of a municipal bond insurance policy, including payment for any legal opinion to be delivered to any insurer, shall be the sole responsibility of the bidder. In particular, the Authority and the City, at their options, may not enter into any additional agreements with respect to the provision of any such insurance. FAILURE OF THE INSURANCE PROVIDER TO ISSUE ITS POLICY SHALL NOT JUSTIFY FAILURE OR REFUSAL BY THE SUCCESSFUL BIDDER TO ACCEPT DELIVERY OF, OR PAY FOR, THE BONDS. Each successful bidder must provide the Authority with the municipal bond insurance commitment, if any, including the amount of the policy premium, as well as information with respect to the municipal bond insurance policy and insurance provider for inclusion in the final Official Statement within two business days following the award of the bid by the Authority. Award, Delivery and Payment If satisfactory bids are received, the Bonds will be awarded to the highest responsible bidder not later than 27 hours after the time established for the receipt of bids. The highest bidder shall be the bidder submitting the best price for the Bonds, which best price shall be that resulting in the lowest true interest cost. The true interest cost shall be computed by doubling the semiannual interest rate (compounded semiannually) necessary to discount the debt service payments from their respective payment dates to the date of the Bonds and to the price bid, not including accrued interest. For the purpose of calculating the true interest cost, the principal amount of bonds scheduled for mandatory sinking fund redemption as part of a term bond shall be treated as a serial maturity in each year. If two or more bidders have bid the same true interest cost, the award shall be made by lot. The purchaser shall pay accrued interest (computed on the basis of a 360-day year of twelve 30-day months) on the Bonds from and including the dated date of the Bonds to, but not including, the date of delivery. * Preliminary, subject to change as set forth herein. -5- Delivery of the Bonds is expected to occur on or about October 13, 1999. Bonds will be delivered in New York, New York for deposit with DTC. The successful bidder shall pay for the Bonds on the date of delivery in immediately available federal funds. Any expenses of providing federal funds shall be borne by the purchaser. Payment on the delivery date shall be made in amount equal to the price bid for the Bonds plus accrued interest from the dated date less the amount of the good- faith deposit. Bid Check Each bidder must provide with its bid a certified or cashier's check payable in same day or next day funds drawn on a responsible bank having an office in Los Angeles, California equal to 1% of the aggregate amount of Bonds shown in the Official Bid Form (“Bid Check Amount”) payable to the order of “Santa Monica Public Financing Authority”, or a financial surety bond (“Surety Bond”) in the amount of the Bid Check Amount issued by an insurance company rated AAA by Standard & Poor's and licensed to issue such a bond in the State of California, naming the Authority as the beneficiary and identifying the bidder whose deposit is guaranteed by the Surety Bond. If the successful bidder has provided a Surety Bond, such bidder shall wire transfer to the Authority the amount of the Bid Check Amount in immediately available federal funds not later than 12:00 p.m. PDT on the business day next succeeding the day of acceptance of the proposal, which amount shall be deposited in an escrow fund or account or a similar fund and applied to the purchase price of the Bonds. In the event the Authority has not received such federal funds wire transfer by the time stated, the Authority may draw upon the Surety Bond to satisfy the successful bidder's deposit requirements. The check accompanying any accepted proposal shall be cashed and deposited in a fund held by the Authority and applied to the purchase price of the Bonds at the time of delivery of the Bonds. If after the award of the Bond, the successful bidder fails to complete the purchase on the terms stated in its proposal, unless such failure of performance shall be caused by any act or omission of the Authority, any amount received from such bidder by the Authority, whether by paid check or pursuant to a Surety Bond, shall be retained by the City as stipulated liquidated damages. Any check accompanying an unaccepted proposal will be returned promptly. No interest will be paid upon the deposit made by any bidder List of Members of Account Bidders are requested to list on the Official Bid Form the names of the members of the account on whose behalf the bid is made. The apparent winning bidder will be required to verify such list or to provide an updated list by facsimile prior to award of the Bonds. Reoffering Price The successful bidder will, within one hour after being notified of the award of the Bonds, advise the Authority of the initial public offering prices of the Bonds. The successful bidder will also be required, prior to delivery of the Bonds, to furnish a certificate acceptable to Bond Counsel stating the amount of the initial offering price to the public (excluding bond houses and brokers) at which a substantial portion (at least 10%) of the Bonds of each maturity were sold and that there was a bonafide public offering made of each maturity. Official Statement The Authority and the City have approved a Preliminary Official Statement for the Bonds, dated September , 1999, which the Authority and the City have “deemed final” for purposes of SEC Rule 15c2-12. The Authority will provide the successful bidder such reasonable number of printed copies of the final Official Statement as such bidder may request no later than seven business days after the day the Bonds are awarded. Up to 200 copies of the final Official Statement will be furnished without cost to the successful bidder and further copies, if desired, will be made available at the successful bidder's expense. The bidder shall file the final Official Statement with a nationally recognized municipal securities information repository on a timely basis. The bidder shall at all times comply with the provisions of SEC Rule 15c2-12 and with all applicable rules of the Municipal Securities Rulemaking Board. Right to Reject Bids; Waive Irregularities The Authority reserves the right to reject any and all bids and to the extent permitted by law to waive any irregularity or informality in any bid. * Preliminary, subject to change as set forth herein. -6- CUSIP Numbers It is anticipated that CUSIP numbers will be printed on the Bonds, but the Authority will assume no obligation for the assignment or printing of such numbers on the Bonds or for the correctness of such numbers, and neither the failure to print such numbers on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the purchasers thereof to accept delivery of and make payment for the Bonds. The cost for the assignment of CUSIP numbers to the Bonds will be the responsibility of the successful bidder. California Debt and Investment Advisory Commission The successful bidder will be required to pay any fees due to the California Debt and Investment Advisory Commission (“CDIAC”) under California law. CDIAC will invoice the successful bidder after the delivery of the Bonds. Legal Opinions Deleted: The Authority and the City will furnish to the successful bidder at the The Authority and the City will furnish to the successful bidder at the closing of the Bonds, the legal opinion of Bond closing of the Bonds, the legal opinion of Counsel, Orrick, Herrington & Sutcliffe LLP, that based upon an analysis of existing laws, regulations, rulings and court Bond Counsel, Orrick, Herrington & decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from Sutcliffe LLP, that based upon an analysis gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from of existing laws, regulations, rulings and court decisions, and assuming, among State of California personal income taxes; and interest on the Bonds is not a specific preference item for purposes of the other matters, compliance with certain federal individual or corporate alternative minimum taxes; provided, although such counsel may observe that such interest is covenants, interest on the Bonds is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel excluded from gross income for federal income tax purposes under Section 103 of expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or the Internal Revenue Code of 1986 and is receipt of interest on, the Bonds. exempt from State of California personal income taxes; and interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate Change in Tax Exempt Status alternative minimum taxes; provided, although such counsel may observe that At any time before the Bonds are tendered for delivery, the successful bidder may disaffirm and withdraw its proposal if such interest is included in adjusted current earnings when calculating corporate the interest received by private holders of obligations of the same type and character of the Bonds (as determined by Bond alternative minimum taxable income. Counsel) shall be declared to be includable in gross income under present federal income tax laws, either by a ruling of the Bond Counsel expresses no opinion Internal Revenue Service or by a decision of any federal court, or shall be declared taxable by the terms of any federal income regarding any other tax consequences tax law enacted subsequent to the date of this Official Notice Inviting Bids. related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. Closing Documents The Authority and the City will furnish to the successful bidder at the closing of the Bonds: (i) no-litigation certificates certifying that as of and at the time of delivery of the Bonds, there is no litigation or administrative proceeding pending or threatened concerning the validity of Bonds, the corporate existence of the Authority or the City or the title of the officers legally responsible for the authorization, execution and delivery of the Bonds to their respective offices; (ii) certificates of the Authority and the City to the effect that, to the best knowledge of the Authority and the City, respectively, the Preliminary Official Statement did not on the date of sale, and the final Official Statement does not on the date of delivery contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein contained, in light of the circumstances under which they were made, not misleading; and (iii) a receipt of the Authority showing that the purchase price of such Bonds has been received by the Authority. Continuing Disclosure In order to assist bidders in complying with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the Indenture and a Continuing Disclosure Agreement, to provide certain annual financial information, and notices of the occurrence of certain events, if material. A description of this undertaking is set forth in the Preliminary Official Statement and will be set forth in the final Official Statement. * Preliminary, subject to change as set forth herein. -7- Additional Information Copies of the Indenture and Lease Agreement, when available, this Official Notice Inviting Bids, the Official Bid Form, and the Preliminary Official Statement will be furnished to any potential bidder upon request made to the Authority’s Financial Advisor at: Public Resources Advisory Group, 3550 Wilshire Blvd., Suite 1630, Los Angeles, California 90010, (213) 380-9344. Right to Modify or Amend The Authority reserves the right to modify or amend this Official Notice Inviting Bids and the Official Bid Form including, but not limited to the right to adjust and change the principal amount of the Bonds being offered; however, such notifications or amendments shall be made not later than Tuesday, September 28, 1999, by 12:00 p.m., PDT (3:00 p.m., EDT) and communicated through Thompson Municipal News and by facsimile transmission to any qualified bidder timely requesting such notice. Bid Extension or Postponement The Authority reserves the right to extend or postpone, from time to time, the date or time established for the receipt of bids. Any such postponement will be announced via Thompson Municipal News. On any such alternative date or time for receipt of bids, any bidder may submit a sealed and/or electronic bid for the purchase of the Bonds in conformity in all respects with the provisions of this Official Notice Inviting Bids except for the date of sale and except for the changes announced by Thompson Municipal News at the time the sale date and time are announced. Dated: September , 1999 Santa Monica Public Financing Authority By: ____________________________ * Preliminary, subject to change as set forth herein. -8-