HomeMy WebLinkAbout07 ADOPT RESO 15-68 - PROPOSED REFINANCING FOR COMMUNITY FACILITIES DIST. NO. 06-1nda
AGENDA REPORT Ree eweid m 7
City Manager
Finance Director
MEETING DATE: SEPTEMBER 15.2015
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: PAMELA ARENDS-KING, FINANCE DIRECTOR/CITY TREASURER
SUBJECT: ADOPT RESOLUTION NO. 15-68 AUTHORIZING COMMENCEMENT OF
PROCEEDINGS AND DESIGNATING CONSULTANTS IN CONNECTION
WITH THE PROPOSED REFINANCING AND ADDITIONAL BONDS OF
THE COMMUNITY FACILITIES DISTRICT NO. 06-1 (TUSTIN
LEGACY/COLUMBUS VILLAGE) 2015 SPECIAL TAX BONDS
SUMMARY:
The City is considering the issuance of special tax bonds to refinance the outstanding
City of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages)
Special Tax Bonds, Series 2007A (the "2007 Bonds") in the principal amount
outstanding of $51,795,000 and the City of Tustin Community Facilities District (CFD)
No 06-1 (Tustin Legacy/Columbus Villages) Special Tax Bonds, Series 2010 (the "2010
Bonds") in the principal amount outstanding of $1,655,000 to take advantage of the
favorable interest rates to lower the annual debt service obligations and issue additional
bonds to fund facilities not yet completed. Resolution No. 15-68 authorizes City Staff to
proceed with the preparation of the documents needed for the refinancing and
additional bonds and designates consultants to assist with the proposed issuance of
special tax bonds.
RECOMMENDATION:
It is recommended that the City Council adopt Resolution No. 15-68 authorizing the
commencement of proceedings and designating consultants in connection with the
proposed issuance of special tax bonds.
STRATEGIC PLAN CORRELATION:
The refinancing of the outstanding CFD 06-1 bonds correlates to the City's strategic
value of making fact -based financial decisions using cost/benefit and other analysis and
practicing sound stewardship of the public's assets.
FISCAL IMPACT:
Any obligation of the City to pay the designated consultants' fees will be contingent
upon the sale and issuance of the special tax bonds and all of such fees will be paid
from the proceeds of the special tax bonds or by means of a discount on the purchase
of the special tax bonds. If for any reason the special tax bonds are not issued, the City
ADOPT RESOLUTION NO. 15-68 DESIGNATING CONSULTANTS IN CONNECTION WITH THE PROPOSED ISSUANCE OF
SPECIAL TAX BONDS
SEPTEMBER 15, 2015 PAGE 2
will have no financial obligation to any of these consultants for their work related to the
special tax bonds. The fee of the financial advisor, Fieldman, Rolapp & Associates, for
financial services performed in connection with the issuance of the special tax bonds is
not to exceed $59,500. 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 $55.0 million of special
tax bonds their fee is expected to be approximately $465,000. The fee for bond
counsel, Quint & Thimmig LLP, for a $55.0 million bond issue is approximately
$100,000. The firm's fee for disclosure counsel services is $35,000.
BACKGROUND:
On July 17, 2006, the City Council adopted Resolution No. 06-89 forming the City of
Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages). The
City issued $53.570 million Special Tax Bonds in 2007 and $1.68 million in 2010 to fund
infrastructure for the Tustin Legacy/Columbus Village Project. The total bond
authorization approved was for $65.0 million, leaving an additional bonding authority of
$9.8 million. Staff is recommending the issuance of additional bonds to fund $2.0 million
to provide financing for the extension of Moffett Drive and Kensington Park Drive and
other facilities not yet completed. The final maturity of the 2007 bonds is September 1,
2036 and for the 2010 bonds it is September 1, 2039. From now until the final maturity
date the interest rates on the various maturities of the 2007 bonds go from 4.75% to
6.00% and for the 2010 bonds go from 3.38% to 5.75%.
The proposed special tax bonds will mature in 2039 and are expected to have an initial
principal amount of $54.9 million. The special tax 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 $300,000. The savings factors in the
debt service required to support the additional bonds issued to provide facilities not yet
completed. These savings total approximately $6.8 million over the remaining twenty-
four 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 $245 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
special tax bonds relating to the refinancing of the 2007 and 2010 special tax bonds and
issuance of additional bonds of $2 million to provide financing for the extension of
Moffett Drive and Kensington Park Drive and other facilities not yet completed, 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
ADOPT RESOLUTION NO. 15-68 DESIGNATING CONSULTANTS IN CONNECTION WITH THE PROPOSED ISSUANCE OF
SEPECIAL TAX BONDS
SEPTEMBER 15, 2015 PAGE 3
Director/City Treasurer to execute agreements with Fieldman, Rolapp & Associates and
Quint & Thimmig LLP for their services related to the special tax 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 special tax
bonds).
It is anticipated that the special tax 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.
Pamela Arends-King U
Finance Director/City Treasurer
Attachment: Resolution No. 15-68
RESOLUTION NO. 15-68
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN,
CALIFORNIA, AUTHORIZING THE COMMENCEMENT OF PROCEEDINGS
FOR THE ISSUANCE OF SPECIAL TAX BONDS, DESIGNATING
CONSULTANTS AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS
WITH RESPECT THERETO — COMMUNITY FACILITIES DISTRICT NO. 06-1
The City Council of the City of Tustin does hereby resolve as follows:
WHEREAS, on July 17, 2006, the City Council adopted Resolution No. 06-89 forming the City of
Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) (the "District')
in order to finance various public improvements (the "Facilities");
WHEREAS, the City is authorized, under the proceedings, to form the District, to issue up to
$65,000,000, principal amount of special tax bonds for the District to finance the Facilities, and
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 6, 2007, $53,570,000 principal amount of City of Tustin Community
Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) Special Tax Bonds, Series 2007A
(the "2007 Bonds") were issued for the District to provide funds to finance the Facilities;
WHEREAS, on November 17, 2010, $1,675,000 principal amount of City of Tustin Community
Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) Special Tax Bonds, Series 2010
(the "2010 Bonds") were issued for the District to provide additional 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 and 2010 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;
WHEREAS, the District is authorized to issue up to $65,000,000 principal amount of bonds to
finance the Facilities, and the District has to date only issued the 2007 Bonds and the 2010
Bonds in the aggregate principal amount of $55,245,000, so that the District has additional
bonding authority of $9,755,000;
WHEREAS, the City now desires to issue for the District, in addition to the Refunding Bonds, a
series of special tax bonds in order to provide financing for Facilities not yet completed (the
"Additional Bonds"); and
WHEREAS, it is appropriate that the City formally authorize the commencement of proceedings
to issue the Refunding Bonds and the Additional Bonds (collectively, the 'Bonds"), and to
appoint a financial advisor, a bond and disclosure counsel and an underwriter in connection
therewith.
Resolution 15-68
Page 1 of 3
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 Bonds. All
primary legal documents to which the City will be a party related to the 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 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 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
Bonds.
SECTION 3. First Southwest Company is hereby designated as underwriter to the City in
connection with the issuance and sale of the 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 15th day of September, 2015.
CHARLES E.PUCKETT
Mayor
ATTEST:
JEFFREY C. PARKER
City Clerk
Resolution 15-68
Page 2 of 3
STATE OF CALIFORNIA)
COUNTY OF ORANGE )
CITY OF TUSTIN )
I, Jeffrey C. Parker, City Clerk and ex -officio
California, do hereby certify that the whole n
City of Tustin is five; and that the above and
and adopted at a regular meeting of the Tustin
2015 by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
JEFFREY C. PARKER
City Clerk
Resolution 15-68
Page 3 of 3
Clerk of the City Council of the City of Tustin,
umber of the members of
foregoing Resolution No.
City Council, held on the
the City Council of the
15-68 was duly passed
15th day of September,