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HomeMy WebLinkAbout19 SECURITY AG 05-15-95AGENDA -, - NO. 19 5-15-95 ~ATE: 'lvu~y 10, 1995 inter-Com TO: FROM: SUBJECT: WI~M_ A. HUSTON, CITY MANAGER RO~ULT,~ FIN/d~ICE DIREC~OR- AUT~'O~IZE THE CITY I~AGER TO NEGOTIATE ~ EXECUTE AN ALTERNATIVE SECURITY AGREEHENT WITH THE TI~NSPORTATION AGENCY RECOMMENDATION: Authorize the City Manager to negotiate with the Transportation Corridor Agency (TCA) on an alternative security deposit and funding agreement for the City's share of the Jamboree Road, Edinger Avenue grade separation. FISCAL'IMPACT: The proposed alternative security.deposit and funding agreement will save the City approximately $86,000.00 over the next two years prior to actual construction and invoicing from the TCA. BACKGROUND: Prior action by the City Council has commented on and approved the Eastern Transportation Corridor EIR which called for the completion of the Jamboree Road/Edinger Avenue grade separation at the time the ETC opened to traffic. The City further agreed to fund their fair share of the grade separation prOject at the time the TCA lets the construction contract. DISCUSSION: The TCAwill be issuing $1.5 billion in bonds within the next sixty days to fund the eastern leg of their corridor project and their share of the grade separation. In order to facilitate a successful underwriting the TCA has been informed by their advisors that they will need to secure the Cities of Irvine and Tustin's share of the grade separation project. They have provided us with three alternatives to secure our share; initiate long-term financing for the City's share of $5.5 million; deposit $5.5 million in a custodial account with the TCA as joint custodian or provide a direct draw letter of credit naming the TCA as beneficiary. May 10, 1995 Agenda Item Attn: William A. Huston, City Manager (cont'd.) Staff studied the alternatives and ruled out long-term financing at this time as being too costly. We also ruled out a cash deposit. We did not want to tie up additional cash for 2 years in an account that the TCA has an interest. We received permission from the City Council to pursue a standby letter off. credit (LOC) with terms favorable to the City and have been negotiating with several banks over the past two weeks. Negotiations with LOC banks have recently deteriorated and staff feels that we can not successfully negotiate terms that make economic sense to the City. After reviewing our alternatives, staff approached the TCAwith a fourth alternative. We will transfer certain securities currently held by the City with maturities 20 to 24 months from now into a joint custody account with the TCA. We will continue to receive all distributed interest and cover the account expenses estimated to not exceed $2500.00 per year. we~will covenant to maintain a current market value of the securities in the account .of at least 102% of the City's share of the project. The TCA has agreed in concept, but are requiring that we provide them with a funding agreement that will secure their ability to draw from the custodial account in the event the City fails to pay an invoice once the project is under way. The City intends to pursue permanent long- term financing for its share of the project as we get closer to the' actual construction period estimated to be late 1997, early 1998. The proposed alternative gives the TcA the security they feel they need to successfully market their bonds and gives the City a very cost-effective alternativeto tying up working capital from several funds or paying for a standby letter of credit that we have no intention of allowing the TCA to draw against. - o, Bars and Taverns Smoking is allowed until 1/1/97 in · Freestanding bars and taverns · Bars or taverns located in hotels, motels, or restaurants where the consumption of lood is incidental to the service of alcohol A "bar" or "tavern' means a facility primarily devoted to the serving of alcohol, in which the serving of food is incidental. A bar within a restaurant, or other facility includes only those areas used primarily for the sale and service of alcoholic beverages.