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HomeMy WebLinkAbout14-348 Approving an Implementing ResolutionREPORT TO CITY COUNCIL TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: GRANT YATES CITY MANAGER DATE: NOVEMBER 12, 2014 SUBJECT: APPROVING AND IMPLEMENTING RESOLUTION REGARDING THE REFUNDING OF CERTAIN OUTSTANDING BONDS OF SUCH COMMUNITY FACILITIES DISTRICTS AND APPOINTING THE FINANCING TEAM IN CONNECTION THEREWITH Recommendation 1. Adopt the Authorizing Resolution directing staff and the proposed finance team to pursue the refinancing of the following outstanding community facilities district (CFD) special tax bonds for savings and /or completion of improvements: 1) CFD No. 2004 -3 (Rosetta Canyon) Improvement Area No. 1, 2005 Series A 2) CFD No. 2005 -2 (Alberhill Ranch) Improvement Area A, 2005 Series A 3) CFD No. 2005 -1 (Serenity) 2006 Series A 4) CFD No. 2005 -6 (City Center Townhomes) 2006 Series A 5) CFD No. 2006 -2 (Viscaya) 2006 Series A 6) CFD No. 2003 -2 (Canyon Hills) Improvement Area B, 2006 Series A 7) CFD No. 2004 -3 (Rosetta Canyon) Improvement Area No. 2, 2006 Series A 2. Appoint financing team members to assist staff in consummating the transactions and draft all necessary documents in connection with the proposed bond issue as described herein. Background On August 18, 2005, Improvement Area No. 1 of the Communities Facilities District No. 2004 -3 (Rosetta Canyon) issued the $22,635,000 aggregate principal amount of Special Tax Bonds, 2005 Series A (the "CFD 2004 -3 IA -1 2005 Bonds "). The CFD 2004 -3 IA -1 2005 Bonds were issued with a 5.20% average coupon and will be callable on September 1, 2015 at a price of 102 %. Refunding of Outstanding CFD Bonds November 12, 2014 Rage 2 On December 20, 2005, Improvement Area A of the Communities Facilities District No. 2005 -2 (Alberhill Ranch) issued the $24,680,000 aggregate principal amount of Special Tax Bonds, 2005 Series A (the "CFD 2005 -2 IA -A 2005 Bonds "). The CFD 2005 -2 IA -A 2005 Bonds were issued with a 5.44% average coupon and are currently callable on any date at a price of 100 %. On February 7, 2006, Communities Facilities District No. 2005 -1 (Serenity) issued the $9,180,000 aggregate principal amount of Special Tax Bonds, 2006 Series A (the "CFD 2005 -1 Bonds "). The CFD 2005 -1 Bonds were issued with a 5.24% average coupon and are currently callable on any date_ at a__ price of 100%. On May 4, 2006, Communities Facilities District No. 2005 -6 (City Center Townhomes) issued the $3,525,000 aggregate principal amount of Special Tax Bonds, 2006 Series A /+ i�!"'Ci1 nnnc %` ®s.. -...I s.»1 TL. .. /�Ci°l �1nnG !_� f7.. ......1.9 -1 'il_ r nAn/ `l! e let D 20053-63 Bonds"). The \CFD 21005-63 Donds were Issued with a .7..'S 1 %0 average coupon and are currently callable on any date at a price of 100 %. i n .Ii dw 19 ii �i F, i :nmmi initiac Pni- iiitiac i oicirir,t loin �t i� �F_ riiicr��;�l iooi iaA 4h© ,� ' -, ' ­­ ,�v,,,,.,�.,m, ,i., t> 1v5 > — -U U- v l v ivvuy ca/ iJJiA-U U iL $7,290,000 aggregate principal amount of Special Tax Bonds, 2006 Series A (the "CFD 2006 -2 Bonds "). The CFD 2006 -2 Bonds were issued with a 5.37% average coupon and are currently callable on any date at a price of 100 %. On September 7, 2006, Improvement Area B of the Communities Facilities District No. 2003 -2 (Canyon Hills) issued the $20,570,000 aggregate principal amount of Special Tax Bonds, 2006 Series A (the "CFD 2003 -2 IA -B 2006 Bonds "). The CFD 2003 -2 IA-13 2006 Bonds were issued with a 5.10% average coupon and are currently callable on any date at a price of 100% On September 19, 2006, Improvement Area No. 2 of the Communities Facilities District No. 2004 -3 (Rosetta Canyon) issued the $23,460,000 aggregate principal amount of Special Tax Bonds (Improvement Area No. 2), 2006 Series A (the "CFD 2004 -3 IA -2 2006 Bonds "). The CFD 2004 -3 IA -2 2006 Bonds were issued with a 5.22% average coupon and are currently callable on any date at a price of 100 %. Discussion In July 2014, the City issued $18,210,000 of Local Agency Revenue Bonds, 2014 Series B to refinance for savings existing special tax revenue bonds for Canyon Hills Imnrrn /amant ArPA¢ A nnrt C'. "' I,,lv 2014 Refinnnninry "1 Thn liih/ 001A Rofinnnninn ...�.,. . . . - -,y .....�. ...�1i 1-1 �v�� �.J. /. i i iv v iy -v i-r i —n iui inn iy produced significant savings totaling over $2.96 million of present value savings to property owners in those areas (equal to about $204 -$223 of annual CFD tax savings per parcel). Since that time, municipal interest rates have fallen even further based on volatile stock market movements and a very low municipal bond supply. As a result, the City has a potential opportunity to refund additional outstanding special tax bonds for more savings to property owners and to complete improvements. Staff, along with the City's proposed financing team, evaluated all of the City's outstanding community facilities district Refunding of Outstanding CFD Bonds November 12, 2014 Page 3 (CFDs) bonds and determined that there is a potential to realize savings with up to seven (7) CFDs, based on current market conditions. The proposed refunding bonds, expected to be issued through a Marks -Roos pooled financing structure (i.e., Lake Elsinore Public Financing Authority), will seek to refinance up to seven (7) outstanding CFD bonds with an outstanding total of over $105 million. Based on the preliminary analysis and review, at least five (5) of the outstanding CFD bonds with an outstanding total of $75 million can be refinanced for significant savings of about $5.69 million (equal to 7.55% of the refunded bonds); average savings per parcel will be in the range of $100 to $290 depending on the specific CFD issue. The other two (2) outstanding CFD bonds with an outstanding total of $30.7 million will also be evaluated for potential savings; however certain credit characteristics (i.e. higher delinquency rates and undeveloped status) of those districts may prohibit the City from realizing significant savings. To the extent these issues can be mitigated, the City will add these two (2) CFD bonds to the final refinancing package. The proposed refunding bonds will be structured to maximize savings for property owners by pooling the refunding bonds together when possible. This pooling of issues will enable the City to reduce bond issuance costs by minimizing the number of refunding bonds issued. In addition, pooling of issues will allow a larger bond offering to be sold to investors which will attract stronger investor interest that could lead to lower rates. The City financing team anticipates drafting documents and bringing those financing documents for City Council approval at the first meeting in January 2015. The final interest rate structure will be determined when the refunding bonds are priced and sold. The pricing date would be targeted for some time in late January 2015, assuming that interest rates remain attractive. The closing is expected by mid - February 2015. The first step is for the City to approve a Resolution of Issuance for each of the CFD Districts. Directing staff to move forward does not authorize the issuance of refunding bonds. The City's financing team of Urban Futures, Inc. as financial advisor, Stradling Yocca Carlson & Rauth, a Professional Corporation, as bond counsel, Albert A. Webb Associates, as special tax consultant, Stifel, Nicolaus & Company, Incorporated, as senior managing underwriter, Brandis Tallman LLC, as co- managing underwriter, Jones Hall, a Professional Law Corporation, as disclosure counsel, and MUFG Union Bank, N.A., Los Angeles, California, as trustee, are proposed. The fees of all firms will be entirely contingent upon a completion of the financing. Fiscal Impact The CFD bond refinancing program currently anticipates generating approximately $5.69 million of present value savings (equal to 7.55% of the refunded bonds). Property owners are expected to save an estimated $100 to $290 per year in special property Refunding of Outstanding CFD Bonds November 12, 2014 Page 4 taxes depending on the specific CFD issue. The level of savings and savings for property owners are subject to market conditions at the time of pricing. Approved by: Attachments: Jason Simpson Director of Administrative Services Grant Yates City Manager Resolution RESOLUTION NO. 2014- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF CERTAIN CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICTS AUTHORIZING THE REFUNDING OF CERTAIN OUTSTANDING BONDS OF SUCH COMMUNITY FACILITIES DISTRICTS AND APPOINTING THE FINANCING TEAM IN CONNECTION THEREWITH WHEREAS, the City Council (the "Council ") of the City of Lake Elsinore (the "City ") previously established the City of Lake Elsinore Community Facilities District No. 2003 -2 (Canyon Hills), City of Lake Elsinore Community Facilities District No. 2004 -3 (Rosetta Canyon), City of Lake Elsinore Community Facilities District No. 2005 -1 (Serenity), City of Lake Elsinore Community Facilities District No. 2005 -2 (Alberhill Ranch), City of Lake Elsinore Community Facilities District No. 2005 -6 (City Center Townhomes) and City of Lake Elsinore Community Facilities District No. 2006 -2 (Viscaya) (collectively, the "Community Facilities Districts ") pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the Government Code of the State of California (the "Act ") and designated improvement areas within certain of such Community Facilities Districts; and WHEREAS, the Community Facilities Districts previously issued special tax bonds secured by special taxes levied within such Community Facilities Districts and certain improvement areas therein, as applicable ( the "Prior Bonds "); and WHEREAS, an opportunity exists to refund the Prior Bonds for the purpose of achieving debt service savings, which savings will benefit the homeowners within such Community Facilities Districts and certain improvement areas therein, as applicable, by lowering the special taxes levied on their properties; and WHEREAS, the Council desires to authorize staff to proceed with the refunding of the Prior Bonds and appoint the financing team members to assist staff in consummating the transactions as described herein, NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF THE COMMUNITY FACILITIES DISTRICTS, DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. The City Manager, the Director of Administrative Services, the City Clerk and all other officers of the City are hereby authorized and directed, for and in the name and on behalf of the City and the District, to do any and all things and take any and all other actions in connection with the issuance of refunding bonds for the purpose of refunding of the Prior Bonds. DOCSOC/1685690v2/022042 -0005 City Council Resolution No 2014 - Page 2 SECTION 2. The City Council hereby appoints urban Futures, Inc., Orange, California, as financial advisor, Stradiing Yocca Carlson & Rauth, a Professional Corporation, as bond counsel, Albert A. Webb Associates, as special tax consultant, Stifel, Nicolaus & Company, Incorporated, as senior managing underwriter, Brandis Tallman LLC, as co- managing underwriter, Jones Hall, a Professional Law Corporation, as disclosure counsel and MUFG Union Bank, N.A., Los Angeles, California, as trustee. SECTION 3. This Resolution shall take effect from and after the date of its passage and adoption. PASSED, APPROVED AND ADOPTED on this 12th day of November, 2014. Natasha Johnson, Mayor iillV U! Lit iC t'" i'141f 1()1P Virginia J Bloom, City Clerk APPROVED AS TO FORM: Barbara Zeid Leibold, City Attorney DOC SOC/ 1685690v2/022042 -0005 STATE OF CALIFORNIA COUNTY OF RIVERSIDE CITY OF LAKE ELSINORE SS I, VIRGINIA J. BLOOM, City Clerk of the City of Lake Elsinore, California, hereby certify that Resolution No. 2014- was adopted by the City Council of the City of Lake Elsinore at a regular meeting held on the 12th day of November, 2014 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Virginia J. Bloom, CMC City Clerk DOCSOC/1685690v2/022042 -0005