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HomeMy WebLinkAboutPFA Agenda Item No. 4CITY OF LADE ,LSIIYOI~E ` DREAM EXTREME- CITY OF LAKE ELSINORE JOINT REPORT TO CITY COUNCIL, REDEVELOPMENT AGENCY. AND PUBLIC FINANCING AUTHORITY TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL HONORABLE CHAIRMAN AND MEMBERS OF THE PUBLIC FINANCING AUTHORITY HONORABLE CHAIRMAN AND MEMBERS OF THE REDEVELOPMENT AGENCY FROM: ROBERT A. BRADY CITY MANAGER/EXECUTIVE DIRECTOR DATE: OCTOBER 12, 2010 SUBJECT: RESOLUTIONS AUTHORIZING THE ISSUANCE OF BONDS AND APPROVING BOND DOCUMENTS IN CONNECTION WITH THE ISSUANCE OF THE LAKE ELSINORE PUBLIC FINANCING AUTHORITY TAX ALLOCATION REVENUE BONDS (1999 SERIES A REFUNDING), 2010 SERIES C, IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $31,000,000; AND AUTHORIZING THE TAKING OF CERTAIN OTHER ACTIONS RELATED THERETO Background In January 1999, the Lake Elsinore Public Financing Authority (the "Authority") issued Tax Allocation Revenue Bonds, 1999 Series A (the "Authority 1999A Bonds") in the principal amount of $33,450,000. The bond proceeds were then loaned to the Redevelopment Agency for various redevelopment project area debts. Currently, the outstanding principal balance is $27,495,000. The City's Finance Team has been studying for several months the refinancing of the Authority's and Agency's outstanding bonds in order to achieve interest savings and lower annual debt service. However, until recently interest rates were not favorable. AGENDA ITEM NO.4 Page 1 of 8 Resolutions Re Redevelopment Agency Refunding Bonds October 12, 2010 Page 2 Discussion Sa_ vines Currently, the Finance Team has determined it is feasible to refinance the Authority's 1999A Bonds and related loans to the Agency at an estimated savings in the first year ranging from $625,000 to $675,000 and thereafter annual savings ranging from $75,000 to $100,000. The 1999A Bonds have an interest rate of 5.5% and it is expected the new bonds will have an average interest rate of less than 4.5% (assuming bond insurance). The precise savings will not be known until the proposed bonds are sold. This is expected to occur between October 21St and October 28th Bonds The proposed refunding bonds will be issued by the Authority and the repayment is by way of tax increment from Redevelopment Project Areas No. 1 and 2. The savings from the refinancing of the 1999A Bonds would be apportioned equally to the Redevelopment Project Areas. The bonds have been structured to have level debt service payments after the first year. The final maturity date has not been extended. The Financing Team has requested a rating from Standard & Poor's and has applied for bond insurance. Both are expected prior to the sale of the Bonds. The financing is dependent upon receiving the bond insurance commitment. The final rating on the Bonds is expected to be AAA with the purchase of bond Insurance. The Bonds will be sized in an amount necessary only to refinance the Authority 1999A Bonds. Because of the uncertainty of interest rates, it is recommended that the City and Agency authorize the issuance of the Bonds in an amount not to exceed $31,000,000. This higher par amount allows for some flexibility in the final pricing of the bonds. Documents To Be Approved Approval of the attached Resolutions will authorize the execution of the following documents: 1. Indenture of Trust. 2. Loan Agreements 3. Preliminary Official Statement. 4. Continuing Disclosure 5. Bond Purchase Contract. Due to the volume of the documents comprising the Bond Issuance, the City Council, Authority and Agency Boards will be provided with a copy separately from the Agenda. Page 2 of 8 Resolutions Re Redevelopment Agency Refunding Bonds October 12, 2010 Page 3 A copy of all documents are on file in the City Clerk's office and will also be available to any member of the public upon request. Fiscal Impact No negative fiscal impact. Issuance of the Bonds will have a beneficial impact on the Agency because after taking into account costs of issuing the 2010 Series' Bonds interest costs will be reduced. All costs associated with the issuance of the Bonds including legal counsel, fiscal and financial consultant, and underwriter fees will be paid from Bond proceeds. Public Notice Process The item has been noticed through the regular Agenda notification process. Legal Review Bond Counsel has reviewed the related financing documents and approved them as to form. Recommendation City: Adopt the attached City resolution authorizing issuance of bonds and authorize bond documents RDA Adopt the attached Agency resolution authorizing issuance of bonds and authorize bond documents PFA Adopt the attached PFA resolution authorizing issuance of bonds and authorize bond documents Prepared by: James R. Ril Director of Adm- ist ative Services Approved by: Robert A. Brady . City Manager/Executive Director Page 3 of 8 RESOLUTION NO. 2010-05 PFA A RESOLUTION OF THE BOARD OF DIRECTORS OF THE LAKE ELSINORE PUBLIC FINANCING AUTHORITY APPROVING THE ISSUANCE OF LAKE ELSINORE PUBLIC FINANCING AUTHORITY TAX ALLOCATION REVENUE BONDS (1999 SERIES A REFUNDING), 2010 SERIES C IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $31,000,000; APPROVING AN INDENTURE OF TRUST, A BOND PURCHASE CONTRACT, LOAN AGREEMENTS AND A PRELIMINARY OFFICIAL STATEMENT; AND AUTHORIZING THE TAKING OF CERTAIN OTHER ACTIONS RELATED THERETO WHEREAS, the Lake Elsinore Public Financing Authority (the "Authority") is a joint exercise of powers authority duly organized and existing under and pursuant to that certain Joint Exercise Powers Agreement by and between the City of Lake Elsinore and the Redevelopment Agency of the City of Lake Elsinore (the "Agency"), under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act'), and is authorized pursuant to Article 4 of the Act to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations to provide financing and refinancing for capital improvements of member entities of the Authority; and WHEREAS, the Authority has previously issued its Tax Allocation Revenue Bonds, 1999 Series A (the "1999A Bonds") and used the proceeds thereof to make loans to the Agency; and WHEREAS, for the purpose of refunding the 1999A Bonds, the Authority has determined to issue its Tax Allocation Revenue Bonds (1999 Series A Refunding), 2010 Series C (the "Bonds"); and WHEREAS, the proceeds of the Bonds will be loaned to the Agency pursuant to a Project Area No. I Loan Agreement (the "PA No. I Loan Agreement") to be repaid from certain tax increment revenues of the Agency derived from Project Area No. I, and a Project Area No. II Loan Agreement (the "PA No. II Loan Agreement," and together with the PA No. I Loan Agreement, the "Loan Agreements") to be repaid from certain tax increment revenues of the Agency derived from Project Area No. ll; and NOW, THEREFORE, the Board of Directors of the Lake Elsinore Public Financing Authority does hereby resolve as follows: Section 1. The foregoing recitals are true and correct and the Authority hereby so finds and determines Page 5 of 8 Resolution No. 2010-05 PFA Page 2 of 4 Section 2. The Authority hereby approves the issuance of the Bonds in the aggregate principal amount not to exceed $31,000,000 pursuant to the Indenture of Trust, in substantially the form on file with the Secretary of the Authority and presented to the Board at this meeting. Any one of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Indenture of Trust, with such insertions and changes as may be approved by the Authorized Officer executing the same, subject to the provisions of this Resolution, such approval to be conclusively evidenced by such execution and delivery. An Authorized Officer shall include any member of the Board of Directors, the Chairman, the Executive Director, the Treasurer, the Secretary, or any officer of the Authority designated by the Chairman or the Executive Director as an Authorized Officer. Section 3. The Authority hereby authorizes the sale of the Bo nds to the Underwriter pursuant to and in accordance with the Bond Purchase Contract, in substantially the form on file with the Secretary of the Authority and presented to the Board at this meeting. Any one of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Bond Purchase Contract, with such insertions and changes as may be approved by the Authorized Officer executing the same, subject to the provisions of this Resolution, such approval to be conclusively evidenced by such execution and delivery. The underwriter's discount for the Bonds specified in the Bond Purchase Contract shall not exceed 1.25%, exclusive of original issue discount. The Bonds shall bear interest at a rate or rates not to exceed 5.50% per annum. Section 4. The Authority hereby approves the form of the Preliminary Official Statement, in substantially the forms on file with the Secretary of the Authority, with such changes and modifications as shall be necessary or appropriate for completion to the satisfaction of the Executive Director of the Authority, and approval by Fulbright & Jaworski L.L.P., the Authority's Disclosure Counsel. The Executive Director is authorized and directed, on behalf of the Authority to deem the Preliminary Official Statement "final" pursuant to Rule 15c2-12 under the Securities and Exchange Act of 1934. The Authority further approves distribution of the Preliminary Official Statement by the Underwriter to persons who may be interested in purchasing the Bonds. The Board hereby approves the final Official Statement describing the Bonds. Distribution of the final Official Statement by the Underwriter is hereby approved. The Executive Director, subject to approval by the Authority's Disclosure Counsel, is hereby authorized and directed to approve any changes in or additions to the final form of the Official Statement to conform to the requirements of the Bond Purchase Contract and the Indenture of Trust, as applicable. Section 5. The Authority hereby approves the Loan Agreements in substantially the forms on file with the Secretary of the Authority and presented to the Board at this meeting. Any one of the Authorized Officers is hereby authorized and Page 6 of 8 Resolution No. 2010-05 PFA Page 3 of 4 directed, for and in the name and on behalf of the Authority, to execute and deliver the Loan Agreements, with such insertions and changes as may be approved by the Authorized Officer executing the same, subject to the provisions of this Resolution, such approval to be conclusively evidenced by such execution and delivery. Section 6. Any one of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the Authority, to evaluate and select one or more municipal bond insurers for all or any portion of the Bonds and to execute and deliver such contracts and agreements with such bond insurers as may be approved by the Authorized Officer executing the same, subject to the provisions of this Resolution, such approval to be conclusively evidenced by such execution and delivery. Section 7. The Authorized Officers, the other officers and employees of the Authority, the members of the Authority's Board of Directors, Bond Counsel, Disclosure Counsel and the other consultants to and agents of the Authority, are each hereby authorized and directed to do all things and take all actions necessary or desirable to effectuate the transactions contemplated by this Resolution, and to execute such other assignments, agreements, certificates, receipts, endorsements, orders, opinions and other documents in connection with such transactions, including, without limitation, closing documents in connection with the issuance of the Bonds, and all actions heretofore taken by the officers, employees and agents of the Authority in connection with the issuance of the Bonds are hereby ratified, approved and confirmed in every respect. Section 8. This Resolution shall become effective immediately upon adoption. PASSED, APPROVED AND ADOPTED at a regular meeting of the Board of Directors of the Lake Elsinore Public Financing Authority this 12th day of October, 2010. DARYL HICKMAN CHAIRMAN ATTEST: CAROL COWLEY, CMC SECRETARY Page 7 of 8 Resolution No. 2010-05 PFA Page 4 of 4 APPROVED AS TO FORM: BARBARA ZEID LEIBOLD AUTHORITY COUNSEL STATE OF CALIFORNIA COUNTY OF RIVERSIDE SS CITY OF LAKE ELSINORE I, CAROL COWLEY, Secretary of the Lake Elsinore Public Financing Authority, hereby certify that Resolution No. 2010-05 PFA was adopted by the Board of Directors of the Lake Elsinore Public Financing Authority, at a regular meeting held on the 12th day of October, 2010, and that the same was adopted by the following vote: AYES: NOES: ABSENT: ABSTAIN: CAROL COWLEY, CMC SECRETARY Page 8 of 8