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HomeMy WebLinkAboutRDA #4 7-6-87 -- m ~ REDEVELOPMENT AGENCY DATE: JULY 1, 1987 TO: FROM: SUBJECT: WILLIAM A RUST011, EXECUI~IVE DIRECTOR TUSTIMRoiiALD ~ '' ITY REDEYELOPIqE'MT£ DIRECToRAGENCY RDA RESOLUTIO# 87-6 RECOI~IEND~I~: Adopt Resolution RDA 87-6 approving contract of purchase relating to Town Center Area Redevelopment refunding bonds and authorizing officers of the Agency to do all things necessary or advisable therefor. DISCUSSIOM: At the Regular Meeting of March 2, 1987, the Agency authorized staff to persue a refinancing of the lg82 Tax Allocation Bonds and the issuance of additional bonds for public projects. We are proceeding with the steps necessary for the issuance of new bonds and are currently on a schedule that will bring the bonds to market in the late fall or early spring, assuming that rates are reasonable. Our main efforts have been directed to the advanced refunding, of the outstanding 1982 Tax Allocation Bonds. Since the Agency authorized staff to prepare documents that would con~lete these goals, the bond market has made a significant move away from what we consider ideal rates for a refunding and has very recently come back to a level that staff and it's consultants feel warrant us to be prepared to enter the market given very short notice. Resolution RDA 87-6, allows the Agency to market it's bonds with limited notice by approving a preliminary official statement, as to its form; a purchase contract with the firm of E.F. Hutton and Co. any to act as underwriters and authorize certain officials of the Agency to execute the purchase contract; negotiate the price and interest rate for a maximum principal amount of $10 million and a net interest cost not to exceed 7.75% and that the interest will result in a present value reduction of the Agency's debt service at least $300,000 or 3% of the principal amount of the bonds. Oue to the nature of bond refinancing, the selection of an underwriter is critical to the success of the issue. While it is generally recommended to con~etitlvely bid new bond issues, refundings are more appropriately awarded as a result of negotiations. E.F. Hutton and Company was selected as underwriter based on recommendation of our consultants, primarily due to their RDA RESOLUTION 87-6 Page 2 Ronald A. Nault 3uly 1, 1987 experience wtth refundings; thetr aggressiveness and thetr recpgnttlon of the market place. In addttton to tracking ~nteres~ rates, £.F. Hutton has suggested we pursue an optton with bond insurance carrters to tnsure all or part of the $! no~ held tn reserve by the ftscal agent. If the carrier is wtlltng to accept a larger rtsk, for additional premtum of course, we maybe able to transfer or part of idle reserve funds from the ortgtnal 1982 fssue to the Capital Projects Fund of the Agency. Whtle the ortglnal issue required a reserve of the htghest years debt service, $1,040,000, the refunding tssue maybe able to substitute an ~nsurance poltcy for cash held by our fiscal agent. Nhlle the stze of the refunding issue ts larger than the original; because of the reduction tn the interest rate, ~t w~ll cost the Agency less over the tssued remaining 11re. Also, tt ts Important to note that the only source of funds that can be used by the Agency Is the actual savtngs, present value savings, from the annual debt service costs[ There wtll not and cannot be any bond proceeds that wtll pa~s dtrectly to the Agency. New montes to the Agency wtll be provtded by the ne~ tssue we hope to tnvest tn the fall or early sprtng of ftscal 87-88. RAti:ls RESOLUTION NO. RDA 87 - 6 RESOLUTION OF THE TUSTIN COM~JNITY REDEVELOPM~4T AGENCY APPROVING CONTRACT OF PURCHASE RELATING TO TOWN CENTER AREA REDEVELOPMR-NT PROJECT TAX ALLOCATION REFUNDING BONDS, S~.RIES 19~7: APPROVING OFFICIAL STATEMENT RELATING TO SAID BONDS; AND AUTHORIZING OFFICERS OF THE AGENCY TO DO ALL THINGS NECESSARY OR ADVISAB?.F. THEREFOR BE IT RESOLVED by the Tustin Community Redevelopment Agency, as follows: SECTION 1. The Agency hereby approves the Contract of Purchase relating to the sale to E.F. HUtton & Company Inc. (the "Underwriter") of the Agency's Town Center Area Redevelopment Project Tax Allocation. Refunding Bonds, Series 1987 (th~ "Bonds"), by and between the Underwriter and theAgency, in the for~ presented to this meeting with such'changes as the Treasurer of the Agency shall approve (such approval to be conclusively evidenced by his execution of such Contract). SECTION 2. The Agency hereby authorizes the Treasurer of the Agency to execute the Contract of Purchase on behalf of the Agency and to deliver the Contract of Purchase to the Underwriter. In connection with such execution and delivery, the Agency further authorizes the Treasurer to negotiate the price and the interest rat~ or rates for the'Bonds to be sold pursuant to the Contract of Purchase up to a maximum principal amount of $10,000,000, such that' (a) .the true interest cost of the Bonds shall not exceed 7.750% per .annum; (b) the aggregate Underwriter's discount shall not exceed 2.325% of the aggregate principal amount of the Bonds; (c) issuance' of the Bonds will result in a present value reduction of the Agency's debt service costs of at least $300,000 or 3.000% of the principal amount of the Bonds, whichever is greater,'after taking into account · costs of issuance paid or to be paid by the Agency with moneys derived from sources other than the proceeds of sale of the Bonds;' and (d) the Bonds shall mature (or be required to be redeemed through mandatory call) on such dates and in such amounts that the total amount of principal and interest payable on the Bonds in any fiscal year shall not exceed the total amount of principal and interest. which would have been payable in such fiscal year on the Agency's Town Center Area R~development Project Tax Allocation Bonds, Series. 1982. SECTION 3. The form of Preliminary official Statement relating to the Bonds presented to this meeting is hereby approved. The Chairman is hereby authorized to approve an Official Statement ~(the "official Statement") relating to the Bonds (such approval to be conclusively evidenced by his execution of the Official Statement~, 94691.7.1016.02:2 and the Agency hereby approves the use of the Official Statement by the Underwriter in connection with the offering and sale of the Bonds. The Agency hereby further approves the preparation by the Agency and the use by the Underwriter of any supplement or amendment to the Official Statement which is necessary so that the Official Statement does not include any' ~.ntrue statement of a material fact and does not omit to state a material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading. The Chairman is hereby 'authorized and directed to execute and deliver the Official Statement and any amend- ment or supplement-thereto,' in the name and on behalf of the Agency, and thereupon to cause the Official Statement and any such amendment or supplement to be delivered to the Underwriter for distribution to the purchasers of the Bonds. SECTION 4. The Agency hereby authorizes the appropriate officers of the Agency, for and on behalf of the Agency, to execute/~ all such documents, instruments, certificates and other papers and to'' do all such acts and things as may be necessary or desirable to car~y out the terms of the Contract of Purchase and otherwise necessary to complete the sale of the Bonds to the Underwriter and the applicatioh~ of the proceeds of sale of the Bonds as described in the Officia~ Statement. SECTION 5. This Resolution shall take effect from and after the date of its passage and adoption. 94691.7..1016.02:2 -2- (SEAL) PASSED AND ADOPTED on July 6, AYES: NOES: ''.. ABSENT: 1987, by the following vote: Chairman of the Tustin Community Redevelopment Agency Attest: Secretary of the Tustin Community Redevelopment Agency 94691.7,1016.02:2 -3-