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HomeMy WebLinkAbout05 ADOPT RESO. NO. 15-51 AUTH. COMM. OF REFINANCING OF FAC. DIST. NO. 07-1Agenda 0 AGENDA REPORT Reviewed:m 5 City Manager Finance Director MEETING DATE: AUGUST 18, 2015 TO: JEFFREY C. PARKER, CITY MANAGER FROM: PAMELA ARENDS-KING, FINANCE DIRECTOR/CITY TREASURER SUBJECT: ADOPT RESOLUTION NO.15-51 AUTHORIZING COMMENCEMENT OF PROCEEDINGS AND DESIGNATING CONSULTANTS IN CONNECTION WITH THE PROPOSED REFINANCING OF THE COMMUNITY FACILITIES DISTRICT No. 07-1 (TUSTIN LEGACY/RETAIL CENTER) SPECIAL TAX BONDS, SERIES 2015 SUMMARY: The City is considering the issuance of special tax refunding bonds to refinance Community Facilities District No. 07-1 (Tustin Legacy/Retail Center) Special Tax Bonds, Series 2007 to take advantage of the favorable interest rates and lower the annual debt service obligations. Resolution No.15-51 authorizes City Staff to proceed with the preparation of the documents needed for the refinancing, and designates consultants to assist with the proposed issuance of special tax refunding bonds. RECOMMENDATION: It is recommended that the City Council adopt Resolution No. 15-51 authorizing the commencement of proceedings and designating consultants in connection with the proposed issuance of special tax refunding bonds. FISCAL IMPACT: Any obligation of the City to pay the designated consultants' fees will be contingent upon the sale and issuance of the refunding bonds and all of such fees will be paid from the proceeds of the refunding bonds or by means of a discount on the purchase of the refunding bonds. If for any reason the refunding bonds are not issued, the City will have no financial obligation to pay any of these consultants for their work related to the refunding bonds. The fee of the financial advisor, Fieldman, Rolapp & Associates, for financial services performed in connection with the issuance of the refunding bonds is not to exceed $40,500. Underwriter, First Southwest, average takedown fee is expected to be approximately $8.00 per $1,000 bond and their expenses are expected to be approximately $25,000. Therefore, if the City issues up to $14.0 million of bonds, their fee is expected to be approximately $137,000. The fee of bond counsel, Quint & Thimmig LLP, for a $14.0 million bond issue is approximately $60,000. The firm's fee for disclosure counsel services is $30,000. ADOPT RESOLUTION NO. 15-51 DESIGNATING CONSULTANTS IN CONNECTION WITH THE PROPOSED ISSUANCE OF SPECIAL TAX REFUNDING BONDS AUGUST 18, 2015 PAGE 2 BACKGROUND: The City issued $13.680 million Special Tax Bonds in 2007 to fund infrastructure for the Tustin Legacy/Retail Project. The final maturity of the 2007 bonds is September 1, 2037. From now until the final maturity date, the interest rates on the various maturities of the 2007 bonds go from 5.00% to 6.00%. The proposed refunding bonds will mature in 2037 and are expected to have an initial principal amount of $13.990 million. The refunding bonds will require a reserve fund and the estimated interest rates for the various maturities of the refunding bonds are estimated to range from 2.00% to 5.00%. The average annual savings on debt service payments until the bonds mature is approximately $70,000. These savings total over $1.5 million over the remaining twenty-two years of the bonds. The savings will be applied towards reducing property owners' special tax payments starting in FY 2016- 2017 and is estimated to save property owners approximately $8,000 per parcel per year. These are estimates based on current market conditions and are subject to change based on actual conditions at the time of pricing. Staff recommends that the City Council adopt a resolution: (a) directing Staff to proceed with the preparation of documentation necessary to provide for the issuance of the refunding bonds relating to the refinancing of the 2007 special tax bonds, with the primary legal documents subject to the approval of the City Council at a future City Council meeting; (b) designating the professionals necessary to assist Staff with the issuance of the refunding bonds, including Fieldman, Rolapp & Associates as financial advisor, Quint & Thimmig LLP as bond counsel and disclosure counsel, and First Southwest, as bond underwriter; and (c) authorizing the City Manager or the Finance Director/City Treasurer to execute agreements with Fieldman, Rolapp & Associates and Quint & Thimmig LLP for their services related to the refunding bonds in form acceptable to the City Manager, the Finance Director/City Treasurer and the City Attorney. All compensation payable to the financial advisor, bond counsel, and disclosure counsel will be contingent upon the sale and issuance of the refunding bonds, and it is expected that all of the consultants will be paid from bond proceeds (or, in the case of the underwriter, by means of a discount on the purchase of the refunding bonds). It is anticipated that the refunding bonds will be sold on or about November 17, 2015, with an anticipated closing date of December 15, 2015. The bond documents for City Council approval are expected to be on the agenda for the November 3, 2015 City Council meeting. �� 4- - Pamela Arends-King Finance Director/City Treasurer Attachment: Resolution No. 15-51 RESOLUTION NO. 15-51 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, AUTHORIZING THE COMMENCEMENT OF PROCEEDINGS FOR THE ISSUANCE OF SPECIAL TAX REFUNDING BONDS, DESIGNATING CONSULTANTS AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO — COMMUNITY FACILITIES DISTRICT NO. 07-1 The City Council of the City of Tustin does hereby resolve as follows WHEREAS, on June 19, 2007, the City Council adopted Resolution No. 07-44 forming the City of Tustin Community Facilities District No. 07-1 (Tustin Legacy/Retail Center) (the "District") in order to finance various public improvements (the "Facilities"); WHEREAS, the City is authorized, under the proceedings to form the District, to levy a special tax on property in the District (the "Special Taxes') to pay the debt service on bonds issued for the District and the administrative expenses of the District; WHEREAS, on September 11, 2007, $13,680,000 principal amount of City of Tustin Community Facilities District No. 07-1 (Tustin Legacy/Retail Center) Special Tax Bonds, Series 2007 (the "2007 Bonds") were issued for the District to provide funds to finance the Facilities; WHEREAS, the City has determined that, due to prevailing financial market conditions, it is in the best interests of the City and the taxpayers in the District paying the Special Taxes to refund the outstanding 2007 Bonds by means of the issuance of refunding bonds (the "Refunding Bonds') as permitted under the Mello -Roos Community Facilities Act of 1982, as amended; and WHEREAS, it is appropriate that the City formally authorize the commencement of proceedings to issue the Refunding Bonds and to appoint a financial advisor, a bond and disclosure counsel and an underwriter in connection therewith. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Tustin authorizes staff to implement the provisions of this Resolution as follows: SECTION 1. Officers and officials of the City are hereby authorized to proceed with the preparation of documents necessary to provide for the issuance and sale of the Refunding Bonds. All primary legal documents to which the City will be a party related to the Refunding Bonds shall be subject to the final approval thereof by the City Council at a subsequent meeting of the City Council. SECTION 2. Fieldman, Rolapp & Associates is hereby designated as financial advisor to the City and Quint & Thimmig LLP is hereby designated as bond counsel and as disclosure counsel to the City in connection with the issuance and sale of the Refunding Bonds. The City Manager or the Finance Director/City Treasurer is hereby authorized and directed to execute agreements with such firms for their services with respect to the Refunding Bonds, in forms acceptable to the City Manager, the Finance Director/City Treasurer and the City Attorney; provided that any and all compensation payable to such firms shall be contingent upon the sale and issuance of the Refunding Bonds. Resolution 15-51 Page 1 of 2 SECTION 3. First Southwest Company, LLC, is hereby designated as underwriter to the City in connection with the issuance and sale of the Refunding Bonds. SECTION 4. The Mayor, the City Manager, the Finance Director/City Treasurer, the City Attorney, the City Clerk and all other appropriate officials of the City are hereby authorized and directed to execute such other agreements, documents and certificates as may be necessary to effect the purposes of this Resolution and the financing herein authorized. SECTION 5. This Resolution shall take effect upon its adoption. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Tustin held on the 18th day of August, 2015. CHARLES E. PUCKETT Mayor ATTEST: JEFFREY C. PARKER City Clerk STATE OF CALIFORNIA) COUNTY OF ORANGE ) CITY OF TUSTIN ) I, Jeffrey C. Parker, City Clerk and ex -officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is five; and that the above and foregoing Resolution No. 15-51 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 18th day of August, 2015 by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: JEFFREY C. PARKER City Clerk Resolution 15-51 Page 2 of 2