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HomeMy WebLinkAboutItem No. 05 Issuance of Sale of Tax Allocation Refunding Bonds City of Lake Elsinore 130 South Main Street Lake Elsinore,CA 92530 www.lake-elsinore.org [.fII�E:�[.5lliCliil; Text File File Number: ID#17-699 Agenda Date:6/28/2018 Version: 1 Status:Approval Final In Control:Oversight Board File Type: Report Agenda Number:5) City of Lake Elsinore Page 1 Printed on 612612018 REPORT TO OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE To: Chairperson Kelley and Members of the Oversight Board From: Jason Simpson,Assistant Executive Director Date: June 28, 2018 Subject: Issuance and Sale of Tax Allocation Refunding Bonds To Refund Certain Obligations of The Redevelopment Agency of The City of Lake Elsinore and Authorizing Certain Other Actions In Connection Therewith Recommendations Adopt A RESOLUTION OF THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE APPROVING THE ISSUANCE AND SALE OF TAX ALLOCATION REFUNDING BONDS BY THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE TO REFUND CERTAIN OBLIGATIONS OF THE FORMER AGENCY AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH Background In January 2010, the Lake Elsinore Public Financing Authority issued the $15,435,000 Tax Allocation Revenue Bonds (1999 Series C Refunding) 2010 Series A (the "2010A Bonds"), of which $12,475,000 is currently outstanding. Given the relatively high interest rate environment at the time of issuance, there is an opportunity to refinance the 2010A Bonds for debt service savings in today's market. The Successor Agency of the Redevelopment Agency of the City of Lake Elsinore (the "Successor Agency") assumed responsibility of all debt management with respect to the Former Redevelopment Agency in 2012. Under AB 1484 and the California Health and Safety Code Section 34177.5(a), the Successor Agency may refinance outstanding bonds, with approval from the Oversight Board and the California Department of Finance (DOF), provided that the total interest cost, principal amount, and final maturity on the refunding bonds do not exceed that of the prior (outstanding) bonds. In other words, there must be debt service savings created by the refinancing. On Tuesday, June 26, 2018, the Successor Agency took action to authorize the issuance and sale of tax allocation refunding bonds to refinance the outstanding 2010A Bonds for debt service savings. The next step in the bond refinancing process requires the Oversight Board to approval the issuance of the refunding bonds. If the Oversight Board approves the financing the refinancing will be subject to approval by the Department of Finance (DOF) which has up to a 65-day review process, which is expected to conclude in late August or early September. Assuming both the Oversight Refunding Bonds Page 2 Board and DOF approve the financing, a Preliminary Official Statement will be submitted for the Successor Agency's consideration and approval prior to pricing the refunding bonds (sometime in August or early September, depending on the timing of DOF approval). Discussion The proposed Subordinated Tax Allocation Refunding Bonds, Series 2018 (referred to herein as the "2018 Bonds") is estimated to have a par amount of$11.41 million with a final maturity of 2033, which is the same as the final maturity as the 2010A Bonds. As proposed, the current maturities of the 2010A Bonds would not be extended and no new debt would be issued. The final interest rate structure will be determined when the 2018 Bonds are priced and sold. The pricing date would be targeted for some time in September, assuming that the refunding is still economically viable. The bond closing is expected to occur in October and the 2010A Bonds will be redeemed on September 1, 2019. Although not yet rated by Standard & Poor's, it is expected that since the 2018 Bonds will be issued on parity with the Subordinated Tax Allocation Refunding Bonds, Series 2015, they will be assigned a similar rating of"A+." An analysis of the potential savings that will accrue to the Successor Agency and to applicable taxing entities has been prepared by the Successor Agency's municipal advisor (the "Debt Service Savings Analysis") (Attachment B). Based on current market conditions, the refinancing would result in debt service savings of approximately $2 million as described in Table 1. However, the total level of savings will depend upon market conditions at the time of sale. Estimated annual savings will become available after the payment of enforceable obligations as approved on the Recognized Obligation Payment Schedule ("ROPS") and will be distributed among various taxing entities such as Riverside County, school districts, and the City. Table 1 below highlights the identified savings based on current market conditions. Summary of Savings Results for 2018 Bonds* 2018 Bonds Net Present Value Savings $ $374,347 Net Present Value Savings % of Par Value Refunded 3.0% Avg. Savings Through 2033 (Maturity of 2010A Bonds _ $133,333 Total Debt Service Savings $2 million 'Projected savings are based on current interest rates assuming the 2018 Bonds have an 'A+"underlying rating and are sold with AA" bond insurance. These rates are subject to change based on market conditions at the time of sale. Refunding Bonds Page 3 Because this is an advanced refinancing, the Successor Agency expects to issue the refunding bonds on a taxable basis. Table 2 below and Attachment B provide certain costs of the Refunding Bonds per Senate Bill 450. Table 2: Certain Costs of Refunding Bonds' Item Estimate as of 6//2018 True interest cost of the bonds 4.02% Finance charge of the bonds $318,075 plus $1,800 annual trustee fee as long as the Refunding Bonds are outstanding Bond proceeds received by the Lake Elsinore Successor Agency $11.41 Million Total payment amount $16.7 million Plus $1,800 annual trustee fee as _ long as the Refunding Bonds are outstanding_ Fiscal Impact As illustrated on the previous page, an estimated $374,347 in net present value savings and $2 million in total debt service savings would be generated by refinancing the 2010A Bonds. Savings would be distributed among various taxing entities. The level of savings will depend upon market conditions at the time of sale. The 2018 Bonds remain an obligation of the Successor Agency. Debt Service on the 2018 Bonds will be supported by tax revenues collected by the County and deposited into the Successor Agency's Redevelopment Property Tax Trust Fund. Costs (related to time spent on the refunding) of the Successor Agency can be recovered through the proceeds of the 2018 Bonds at the time of issuance. Prepared by: Jason Simpson Assistant Executive Director Approved by: Grant Yates Executive Director Attachments: A. OB Resolution No. 2018- B. Debt Service Savings Analysis 1 Interest rates will depend on market conditions at the time of pricing RESOLUTION NO. 2018- A RESOLUTION OF THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING THE ISSUANCE AND SALE OF TAX ALLOCATION REFUNDING BONDS BY THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE TO REFUND CERTAIN OBLIGATIONS OF THE FORMER AGENCY AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH Whereas, the Redevelopment Agency of the City of Lake Elsinore (the "Former Agency") was a public body, corporate and politic, duly created, established and authorized to transact business and exercise its powers under and pursuant to the provisions of the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California) (the "Law"), and the powers of the Former Agency included the power to issue bonds and incur loans for any of its corporate purposes; and, Whereas, a Redevelopment Plan for the Rancho Laguna Redevelopment Project Area No. I (the "Project Area I") of the Former Agency was adopted on September 30, 1980, pursuant to Ordinance No. 607, as subsequently amended in compliance with all requirements of the Law, and all requirements of law for and precedent to the adoption and approval of the Redevelopment Plan for Project Area I, as amended, have been duly complied with; and, Whereas, a Redevelopment Plan for the Rancho Laguna Redevelopment Project Area No. II (the "Project Area II") of the Former Agency was adopted on July 11, 1983, pursuant to Ordinance No. 671, as subsequently amended in compliance with all requirements of the Law, and all requirements of law for and precedent to the adoption and approval of the Redevelopment Plan for Project Area II, as amended, have been duly complied with; and, Whereas, a Redevelopment Plan for the Rancho Laguna Redevelopment Project Area No. III (the "Project Area III") of the Former Agency was adopted on September 8, 1987, pursuant to Ordinance No. 815, as subsequently amended in compliance with all requirements of the Law, and all requirements of law for and precedent to the adoption and approval of the Redevelopment Plan for Project Area III, as amended, have been duly complied with; and, Whereas, the Former Agency has previously incurred the obligations listed on Exhibit A hereto (collectively, the "Refunded Obligations"); and, Whereas, on June 28, 2011, the California Legislature adopted ABx1 26 (the "Dissolution Act") and ABx1 27 (the "Opt-in Bill"); and, Whereas, the California Supreme Court subsequently upheld the provisions of the Dissolution Act and invalidated the Opt-in Bill resulting in the dissolution of the Former Agency as of February 1, 2012; and, Whereas, the Former Agency, including its redevelopment powers, assets and obligations, was transferred on February 1, 2012 to the Successor Agency of the Redevelopment Agency of the City of.Lake Elsinore(the "Successor Agency'); and, A-1 Whereas, on or about June 27, 2012, AB1484 was adopted as a trailer bill in connection with the 2012-13 California Budget; and, Whereas, California Health and Safety Code Section 34177.5(a)(1) authorizes successor agencies to refund outstanding bonds or other indebtedness provided that: (i)the total interest cost to maturity on the refunding bonds or other indebtedness, plus the principal amount of the refunding bonds or other indebtedness, does not exceed the total remaining interest cost to maturity on the bonds or other indebtedness to be refunded, plus the remaining principal of the bonds or other indebtedness to be refunded; and (ii)the principal amount of the refunding bonds or other indebtedness does not exceed the amount required to defease the bonds or other indebtedness to be refunded, to establish customary debt service reserves and to pay related costs of issuance; and, Whereas, the Successor Agency has previously refinanced certain bonded indebtedness obligations of the Former Agency pursuant to its Resolution No. SA-2015-002 and that certain Indenture of Trust dated as of September 1, 2015 (the "2015 Indenture"), by and between the Successor Agency and Wilmington Trust, National Association, providing for the issuance of the Successor Agency's Successor Agency of the Redevelopment Agency of the City of Lake Elsinore Subordinated Tax Allocation Refunding Bonds, Series 2015 in the aggregate principal amount of$8,065,000; and, Whereas, the Successor Agency desires to authorize and approve the issuance of tax allocation refunding bonds (the "2018C Bonds") in an aggregate principal amount sufficient to refund all or a portion of the Refunded Obligations, and to irrevocably set aside a portion of the proceeds of such 2018C Bonds in a separate segregated trust fund which will be used to refund the outstanding Refunded Obligations being refunded, to pay costs in connection with the issuance of the 2018C Bonds and to make certain other deposits as required by the Indenture (as defined below); and, Whereas, the 2018C Bonds shall be secured by a pledge of property tax revenues authorized by California Health and Safety Code Section 34177.5(a) and (g), pursuant to the provisions of Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the "Bond Law"); and, Whereas, the 2018C Bonds shall be issued as Parity Debt under the 2015 Indenture pursuant to a First Supplemental Indenture of Trust described in the Successor Agency Resolution; and, Whereas, this Oversight Board of the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore (the "Oversight Board") desires to approve all matters relating to the issuance and sale of the 2018C Bonds as required by Sections 34177.5 (f) and 34180 of the Health and Safety Code of the State of California. NOW THEREFORE, THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE, DOES HEREBY RESOLVE AS FOLLOWS: Section 1. Each of the foregoing recitals is true and correct. Section 2. The issuance by the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore of the 2018C Bonds in an aggregate principal amount sufficient to refund all or a portion of the Refunded Obligations listed on Exhibit A for the purpose of achieving debt A-2 service savings in accordance with Health & Safety Code Section 34177.5(a)(1) and the pledge of property tax revenues to the 2018C Bonds pursuant to the Indenture approved by Section 2 of the Successor Agency Resolution (as authorized by California Health and Safety Code Section 34177.5(a) and (g)) is hereby approved. The 2018C Bonds may be issued as a single issue, or from time to time in separate series, as the Successor Agency shall determine. The approval of the issuance of the 2018C Bonds by the Successor Agency and the Oversight Board shall constitute the approval of each and every separate series of 2018C Bonds and the sale of the 2018C Bonds at a public or private sale. Section 3. The Successor Agency is authorized and directed to prepare, approve and execute such other documents, including, as necessary, a Bond Purchase Agreement, an Official Statement, a Continuing Disclosure Certificate, Escrow Agreements and/or irrevocable refunding instructions for the Refunded Obligations and any additional agreements as may be required to carry out the purposes hereof without the need for any further approval from the Oversight Board. Section 4. The Chairperson of the Oversight Board and the other officers and members of staff having responsibility for the affairs of the Oversight Board are hereby authorized and directed to execute such documents and certificates as they determine are necessary or appropriate to assist the Successor Agency in the issuance of the 2018C Bonds. Section S. Pursuant to the provisions of California Health and Safety Code Section 34177.5(f), the Successor Agency is expressly authorized to recover its related costs in connection with the transaction approved hereby, irrespective of whether the 2018C Bonds are issued. Section 6. This Resolution shall take effect in accordance with Health and Safety Code Sections 34177.5(f) and 34179(h). Passed and Adopted on this 28t' day of June, 2018. Genie Kelley, Chair Attest: Susan M. Domen, MMC Oversight Board Secretary A-3 STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF LAKE ELSINORE ) I, Susan M. Domen, MMC, Secretary of the Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore, California, hereby certify that Resolution No. 2018- was adopted by the Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore, California, at a Regular meeting held on the 26th day of June 2018, by the following vote: AYES: NOES: ABSET: ABSTAI: Susan M. Domen, MMC Oversight Board Secretary A-4 EXHIBIT A REFUNDED OBLIGATIONS 1. That certain Project Area No. I Loan Agreement by and between the Former Agency and the Lake Elsinore Public Financing Authority (the "Authority"), dated as of February 1, 2010, pursuant to which the Authority made a loan to the Former Agency in the original principal amount of$3,055,000, secured by tax increment revenues from Project Area I. 2. That certain Project Area No. II Loan Agreement by and between the Former Agency and the Authority, dated as of February 1, 2010, pursuant to which the Authority made a loan to the Former Agency in the original principal amount of $5,505,000, secured by tax increment revenues from Project Area II. 3. That certain Project Area No. III Loan Agreement by and between the Former Agency and the Authority, dated as of February 1, 2010, pursuant to which the Authority made a loan to the Former Agency in the original principal amount of$2,075,000, secured by tax increment revenues from Project Area IIII. 4. That certain Housing Fund Loan Agreement by and between the Former Agency and the Authority, dated as of February 1, 2010, pursuant to which the Authority made a loan to the Former Agency in the original principal amount of $4,800,000, secured by tax increment revenues required to be deposited into the Former Agency's Low and Moderate Income Housing Fund. A-5 ATTACHMENT B MEMORANDUM TO: City of Lake Elsinore Successor Agency Board FROM: Urban Futures, Inc. Michael Busch, CEO Doug Anderson,Director DATE: June 26, 2018 RE: Independent Municipal Advisor's Report: Debt Service Savings Analysis for City of Lake Elsinore Board,Taxable Tax Allocation Refunding Bonds, Series 2018 Background The City of Lake Elsinore Successor Agency(the "Agency") is authorized under Section 34177.5 of the State Health and Safety Code to issue refunding tax allocation bonds("TABs")for economic savings within the parameters set forth in Section 34177.5(a)(1) of the State Health and Safety Code(the"Savings Parameters").In addition, Section 34177.5 of the State Health and Safety Code provides, in relevant part, that the Agency "...shall make use of an independent financial advisor in developing financing proposals and shall make the work products of the financial advisor available to the Department of Finance at its request" (State Health & Safety Code Section 34177.5(h), effective 6/27/12). Urban Futures, Inc., has been retained by the Agency to serve as its independent municipal advisor to determine compliance with the,Savings Parameters for purposes of the issuance by the Agency of its Taxable Tax Allocation Refunding Bonds, Series 2018 ("2018 Bonds"). This report in draft form may be used in presentations to the Agency Board and Oversight Board but will be final only after the pricing of the 2018 TABS (the "2018" Bonds) and verification of final debt service savings. The 2018 Bonds will be issued to refund, on a taxable basis, the Series 2010A Subordinated Tax Allocation Refunding Bonds (the "2010A Bonds"). Plan of Refunding The Agency has selected Stifel (the"Underwriter")to structure and negotiate the refunding of the 2010A Bonds. The financing goal is to maximize economic savings by reducing total debt service. The City of Lake Elsinore's Debt Issuance and Management Policy, states that "the City will generally seek to achieve debt-service savings which, on a net present value basis, are at least 3% of the debt being refinanced...Notwithstanding the foregoing, a refunding by the City of Lake Elsinore Successor Agency shall be determined based on the requirements of Health and Safety Code Section 34177.5." Based on market conditions as of 6/12/18, the Underwriter projects the refunding of the Prior Bonds with proceeds of the 2018 Bonds will achieve a Net PV savings of approximately $374,347, or 3.0% of refunded par, as shown in Table 3. The Underwriter's estimates include the following key assumptions: (i) 2018 Bonds will refund all of the Successor Agency's currently outstanding 2010A Bonds on a taxable basis; (ii) an underlying rating of"A-" is assigned by S&P to the 2018 Bonds, and (iii) use of bond insurance and a surety. The savings generated from this refunding are anticipated to result in higher property tax distributions to the City of Cudahy and other taxing entities in the future. Refunding Results Table 1 below shows the estimated sources and uses for the 2018 TABs. Table 1:(Est.) Sources and Uses of Funds Sources: Par Amount of Bonds $11,410,000 RPTTF On-Hand 677,628 $12,087,628 Reserve Account Release $1,471,914 Total Sources of Funds $13,559,542 Uses: Refunding Escrow Deposit $13,101,774 Costs of Issuance 228,151 Underwriter's Discount 91,280 Bond Insurance 108,671 Surety Policy 29,666 Total Uses of Funds $13,559,542 Tables 2 and 3 below show estimated nominal debt service savings and Net PV savings based on market conditions as of 6/12/2018. Table 2: Estimated Debt Service Savings Bond Existing Est. New Present Value Year Payments Payments Savings Savings 2019 992,481. 471.,353 521,128 500,557 2020 993,231 451,295 541,936 499,904 2021 987,432 451,295 536,137 ; 474,627 2022 990,725 591,295 399,430 . 339,595 2023 987,662 986,857 805 i 1,502 2024 993,413 988,929 4,484 4,304 2025 994,000 989,721 . 4,279 3,939 - f- 2026 988,2751 984,247 4,028 3,56.1 2027 991,500 987,649 3,851 3,259 2028 988,150 984,522 3,628 2,945 2029 983,488 - 980,011 3,477 2,697 2030 987,512 984,072 3,440 2,535 2031 3,239,700 3,236,266 3,434 ' 2,399 2032 1,846,925 . 1,843,604 3,321 2,065 2033 1,789,250 1,787,544 1,706 1,016 Totals 18,753,7441 16,718,660 2,035,084 1,844,905 Table 3: Net PV Savings Summary PV of savings from cash flow $ 1,844,905 Less: Prior funds on hand $ - 1,471,914 Plus: Refunding funds on hand $ 1,356 Net PV Savings $ 374,347 Net PV Savings as%of Refunded Par 3.00% Proposed Refunding Complies With State Law Based on the 2018 Bonds proposed structure and the projected debt service savings according to numbers prepared by the Underwriter, Urban Futures,Inc. concludes that the 2018 Bonds comply with the Savings Parameters as described below. A. Total debt service(principal and interest)on the refunding bonds is less than total debt service on the refunded bonds (sec. 34177.5(a)(1)(A)): Section 34177.5(a)(1)(A) requires that the total interest cost to maturity on the refunding bonds or other indebtedness plus the principal amount of the refunding bonds or other indebtedness shall not exceed the total remaining interest cost to maturity on the bonds or other indebtedness to be refunded plus the remaining principal of the bonds or other indebtedness to be refunded. Table 2 shows projected total nominal debt service savings from the refunding of the Prior Bonds of$2 million, calculated as (i)total debt service on the Prior Bonds, net of receipts from the investment of the Reserve Funds, minus (ii) total debt service on the 2018 Bonds.Net PV savings is projected to be $435,000 or 3.5% of total refunded par,which is well above the minimum City guideline of 3%of refunded par. B. Refunding bonds principal shall be used only for refunding purposes, not for new-money (sec. 34177.5(a) (1)(B)): Section 34177.5(a)(1)(B) requires that the principal amount of the refunding bonds or other indebtedness shall not exceed the amount required to defease the refunded bonds or other indebtedness, to establish customary debt service reserves, and to pay related costs of issuance. Table 1 is the projected sources and uses of funds for the 2018 Bonds, showing that all proceeds are used only for purposes associated with refunding the Prior Bonds and to pay related costs of issuance. No proceeds of the 2018 Bonds will be used for any other purposes, including new-money purposes. C.Agency shall make diligent efforts to ensure lowest long-term cost financing is obtained, to structure refunding that does not provide for any bullets or spikes or variable rates, and shall hire an independentfinancial advisor(sea 34177.5(h)):Section 34177.5(h)requires the Agency to make diligent efforts to ensure that the lowest long-term cost financing is obtained and that the financing not provide for any bullets or spikes or use variable rates. The Agency has retained Urban Futures, Inc., an independent financial advisor registered with the SEC and MSRB, to monitor the pricing of the 2018 Bonds. In order to achieve the lowest long-term cost of financing, the financing team is pursuing a surety to satisfy the Reserve Requirement and releasing funds from the Prior Reserve Funds to lower the issuance amount of the 2018 Bonds. In accordance with Section 34177.5(h),the proposed refunding structure does not provide for any bullet principal maturities, debt service spikes or variable rate debt. ATTACHMENT B GOOD FAITH ESTIMATES The good faith estimates set forth herein are provided with respect to the 2018 Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the Successor Agency by Urban Futures, Inc., the Successor Agency's Municipal Advisor (the "Municipal Advisor") in consultation with Stifel (the "Original Purchaser"). Principal Amount. The Municipal Advisor has informed the Successor Agency that, based on the Successor Agency's financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the 2018 Bonds to be sold is $11.41 million (the "Estimated Principal Amounts"). True Interest Cost of the Refunding Bonds. The Municipal Advisor has informed the Successor Agency that, assuming that the respective Estimated Principal Amounts of the Refunding Bonds is sold and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the 2018 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the 2018 Bonds, is 4.02%. Finance Charge of the Refunding Bonds. The Municipal Advisor has informed the Successor Agency that, assuming that the Estimated Principal Amounts of the Refunding Bonds is sold and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the 2018 Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the 2018 Bonds), is $318,075. Additionally, there will be an annual Trustee fee of $1,800 for as long as the 2018 Bonds are outstanding. Amount of Proceeds to be Received. The Municipal Advisor has informed the Successor Agency that, assuming the Estimated Principal Amounts of the Refunding Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the Successor Agency for sale of the 2018 Bonds, less the finance charge of the 2018 Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the 2018 Bonds, is $11.41 million. Total Payment Amount. The Municipal Advisor has informed the Successor Agency that, assuming that the Estimated Principal Amounts of the 2018 Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the Successor Agency will make to pay debt service on the 2018 Bonds, plus the finance charge for the 2018 Bonds, as described above, not paid with the respective proceeds of the 2018 Bonds, calculated to the final maturity of the 2018 Bonds, is $16.7 million. Additionally, there will be an annual Trustee fee of$1,800 for as long as the 2018 Bonds are outstanding. The foregoing estimates constitute good faith estimates only and are based on market conditions prevailing at the time of preparation of such estimates. The actual principal amount of the 2018 Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the 2018 Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of 2018 Bonds sold being different from the respective Estimated Principal Amounts, (c) the actual amortization of the 2018 Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the 2018 Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the Successor Agency's financing plan, or a combination of such factors. The actual date of sale of the 2018 Bonds and the actual principal amount of 2018 Bonds sold will be determined by the Successor Agency based on various factors. The actual interest rates borne by the 2018 Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the 2018 Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the Successor Agency.