REFINANCE 2004 CERTIFICATE OF PARTICIPATION 22 (COP) (Resolution No )

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1 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT Board of Trustees Meeting June 11, 2018 REFINANCE 2004 CERTIFICATE OF PARTICIPATION 22 (COP) (Resolution No ) Status: Presented by: Action (Roll Call Vote) Christine Statton Vice President, Administrative Services Issue The 2004 Certificate of Participation (COP) is due in The interest expense for the next 16 years totals $1,188,920. Interest rates vary from 4.84% to 5.25%. Analysis The remaining principal balance on the 2004 COP is $2,645,000. A refinance proposal offered by Municipal Finance Corporation, on behalf of Citizen s Business Bank will offer the District a ten (10) year Lease Refunding with an interest rate of 3.95%. The interest savings to the District totals $575,953 over the ten-year period. Municipal Finance Corporation will assess a $20,000 Documentation/Arrangement Fee at closing of the finance, to be paid from refinance proceeds. The structure of the financing will be a lease/leaseback, where the District will lease certain real property to the financing corporation pursuant to a site lease, and will lease back the leased property from the corporation pursuant to a lease agreement. This is a similar financing arrangement to the 2004 COPS being refinanced. There will be no prepayment penalty after the fourth payment date (two years, or May ). Thus, if the Board of Trustees should decide the District has sufficient one-time funds or sufficient fund balance to pay the debt off in its entirety that will be an option after May With the possible new state funding formula, and specific California community college funding for not yet finalized, administration did not feel it could recommend paying off the debt in full at this time, and knew that if we did not pursue refunding now, rates would soon climb over 4%. Currently the annual debt payment of approximately $238,905 is shared between the general fund (approximately $141K/year), the student center ($65K per year via student fees), and the health center ($33K per year via student fees). With the refinance, the General Fund would pay a bit more, but the overall debt would be retired six years earlier. Recommended Action It is recommended that the Board of Trustees approve Resolution to accept the offer provided by Municipal Finance Corporation, on behalf of Citizen s Business Bank for

2 the refinance of the 2004 Certificate of Participation (COP) for 10 years at a rate of 3.95%. The total amount to refinance is $2,665,000.

3 RESOLUTION NO RESOLUTION OF THE BOARD OF TRUSTEES OF THE COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT APPROVING CERTAIN LEASE FINANCING DOCUMENTS RELATING TO THE PREPAYMENT AND REFINANCING OF 2004 CERTIFICATES OF PARTICIPATION, AND AUTHORIZING AND DIRECTING ACTIONS WITH RESPECT THERETO WHEREAS, the College of the Sequoias Community College District (the District ) desires to provide for the prepayment and refinancing of its 2004 Certificates of Participation (the 2004 Certificates ) for the construction of a bookstore and student center and; WHEREAS, the District intends to procure the funds to prepay the 2004 Certificates by leasing certain real property designated by the (the Leased Property ), to the Public Property Financing Corporation of California (the Corporation ) pursuant to a site lease (the Site Lease ) and leasing back the Leased Property from the Corporation pursuant to a lease agreement (the Lease Agreement ), for which the District shall be obligated to make lease payments to the Corporation for the use and occupancy of the Leased Property (the Lease Payments ); and WHEREAS, in order to provide the funds needed for the up-front lease payment, the Corporation shall assign its rights under the Lease Agreement, including the right to receive Lease Payments thereunder to Citizens Business Bank (the Assignee ), pursuant to an Assignment Agreement, between the Corporation and the Assignee, and in consideration therefor, the Assignee shall provide a source of funds for the prepayment of the 2004 Certificates by purchasing the Lease Payments from the Corporation; and WHEREAS, in accordance with Government Code Section , the Board of Trustees has obtained and disclosed the information set forth in Appendix A hereto; WHEREAS, the Board of Trustees approves all of said transactions in furtherance of the public purposes of the District and wishes at this time to authorize all proceedings relating to the prepayment and refinancing of the 2004 Certificates. NOW, THEREFORE, IT IS HEREBY RESOLVED by the Board of Trustees of the College of the Sequoias Community College District as follows: Section 1. Approval of Site Lease and Lease Agreement. The Board hereby approves the financing plan outlined above. To that end, the Board hereby approves the Site Lease, between the District and the Corporation, and the Lease Agreement between the Corporation and the District, in substantially the forms on file with the Clerk of the Board, together with any changes therein or additions thereto deemed advisable by the President of the Board or the Superintendent (each, a District Representative ). A District Representative is hereby authorized and directed for and in the name and on behalf of the District to execute the final forms of the Site Lease and Lease Agreement. Section 2. Material Terms of Lease Agreement. The Lease Agreement shall be for a term that does not extend beyond May 1, 2028 (unless extended in the event of abatement of Lease Payments or default) and in the maximum principal amount of $2,665,000.

4 Section 3. Official Actions. The President of the Board, the Superintendent, and all other officers of the District are each authorized and directed in the name and on behalf of the District to make any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they or any of them might deem necessary or appropriate in order to consummate any of the transactions contemplated by the agreements and documents approved pursuant to this Resolution, including specifically a placement agent agreement and a custodian agreement for the payment of costs of issuance related to the financing of the Project. Whenever in this resolution any officer of the District is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable. Section 4. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. * * * * * * * * * * * PASSED AND ADOPTED this 11th day of June, AYES: NOES: ABSENT: ABSTAIN: ATTEST: President of the Board of Trustees Clerk of the Board of Trustees 2

5 APPENDIX A GOVERNMENT CODE SECTION DISCLOSURE (SEE TERM SHEET AND PAYMENT SCHEDULE ATTACHED)

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8 May 8, :53 pm Prepared by Municipal Finance Corporation (Finance Financings:SCCD-18REF2,18REF2) Page 3 BOND DEBT SERVICE College of the Sequoias Community College District 2018 Lease Refunding (10 Years) Period Ending Principal Coupon Interest Debt Service 05/01/ , % 105, , /01/ , % 96, , /01/ , % 87, , /01/ , % 77, , /01/ , % 68, , /01/ , % 57, , /01/ , % 47, , /01/ , % 35, , /01/ , % 24, , /01/ , % 12, , ,665, , ,277,965.48