Item CC/RA-1
City Council Meeting 10-26-99 Santa Monica, California
TO: Mayor and City Council
Chairperson and Redevelopment Agency
FROM: City and Redevelopment Staff
SUBJECT: Recommendation for the City Council and Redevelopment Agency to adopt Resolutions authorizing the issuance of Earthquake Recovery Redevelopment Project Area Tax Allocation Bonds and approval of documents, actions and other matters related thereto
INTRODUCTION
This staff report requests that the City Council and Redevelopment Agency adopt the attached resolutions and related documents authorizing the issuance of Redevelopment Agency of the City of Santa Monica Earthquake Recovery Redevelopment Project Area Tax Allocation Bonds, Series 1999.
BACKGROUND
To implement the goals and objectives of the Earthquake Recovery Redevelopment Project, including financing the acquisition of 11.3 acres of property adjacent to the Civic Center owned by the Rand Corporation, seismic retrofit measures for the downtown parking structures and affordable housing, the Agency wishes to issue tax-exempt, tax allocation bonds.
DISCUSSION
The 1999 tax allocation bonds will be secured by tax increment revenue generated by the Earthquake Recovery Redevelopment Project Area. The attached resolutions authorize the City (Attachment 1) and Agency (Attachment 2) to proceed with all steps necessary for issuance of the bonds. These resolutions authorize the issuance of a maximum of $69.5 million aggregate principal amount of bonds at a maximum interest rate of 7.0% for a maximum term of 30 years. They also provide approvals of all steps necessary to complete the financing, including the approval of all necessary documents and certificates and related actions.
The approximate net bond proceeds (after establishing a bond reserve fund and paying bond issuance costs) available from the bond issue will be distributed as follows:
| Land Acquisition | Seismic Retrofit | Housing | TOTAL | |
| Redevelopment Account | $42,400,000 | $1,700,000 | $2,100,000 | $46,200,000 |
| Housing Account | $10,600,000 | $ 950,000 | $11,550,000 | |
| $53,000,000 | $1,700,000 | $3,050,000 | $57,750,000 |
The resolution to be adopted by the City (Attachment 1) also mandates that the Redevelopment Agency
=s existing debt obligations to the City be made subordinate to the Agency=s pledge of tax increment to the bondholders of the tax allocation bond issue. A total of $1.1 of two promissory notes payable by the Redevelopment Agency to the City will need to be subordinated to the tax allocation bond. By subordinating these two notes, the obligations to repay the debt will remain, but the obligation for debt service payments on the tax allocation bonds will be ahead of the repayment of these notes.Attached to this staff report are copies of the following documents necessary for issuance of the bonds:
| Attachment 3 | An Indenture by and among the Redevelopment Agency of the City of Santa Monica and BNY Western Trust Co., as Trustee. |
| Attachment 4 | A Continuing Disclosure Certificate, wherein the Redevelopment Agency agrees to provide certain information annually to designated national bond information depositories; |
| Attachment 5 | A Preliminary Official Statement to be used in connection with the offering and sale of the Bonds. |
| Attachment 6 | An Official Notice Inviting Bids for use in connection with the solicitation of bids for the Bonds; and |
| Attachment 7 | A Notice of Intention to Sell to be published in The Bond Buyer or other financial publication for solicitation of bids for the Bonds. |
The attached resolutions approve these documents and authorize their execution and delivery by specified Agency officials and employees. These resolutions also approve the preparation, execution and delivery of a Final Official Statement, the execution and delivery of any additional documents and the performance of such acts as may be necessary or desirable to effect the offering, sale and issuance of the Bonds
A list of questions which various national associations and the Federal Securities and Exchange Commission recommends public officials ask when approving the issuance of bonds is provided in Attachment 8. For your convenience, staff along with the Agency
=s Financial Advisor, Fiscal Consultant, Special Counsel and Bond Counsel have provided answers to each question. Staff, Financial Advisor, Special Counsel and Bond Counsel are prepared to expand on these answers if requested by the Agency.BUDGET/FINANCIAL IMPACT
This bond financing will be structured as follows: The Agency will issue up to $69,500,000 in tax-exempt, tax allocation bonds. The estimated annual debt service on the Bonds is a maximum $ 5.5 million which will be financed from the annual tax increment revenue flow from the Earthquake Recovery Redevelopment Project Area. The trustee will receive the bond proceeds and at the discretion of the Agency deposit the appropriate amount into an escrow account for the real estate purchase. To receive and administer the bond proceeds, it is necessary to establish a revenue budget of $ 69.5 million at account number 17263.405470; and appropriate $ 69.5 million at account numbers C17080500.589000.
RECOMMENDATION
It is respectfully recommended that the City Council take the following actions:
1) Adopt the attached resolutions authorizing the execution and delivery of the documents necessary for the issuance of the Redevelopment Agency of the City of Santa Monica, Santa Monica Earthquake Recovery Redevelopment Project Tax Allocation Bonds, Series 1999.
2) Approve the budget changes set forth above.
It is respectfully recommended that the Agency take the following action:
1) Adopt the attached resolutions authorizing the execution and delivery of the documents necessary for the issuance of the Redevelopment Agency of the City of Santa Monica, Santa Monica Earthquake Recovery Redevelopment Project Tax Allocation Bonds, Series 1999.
Prepared By:
Mike Dennis, Director of Finance/Agency Treasurer
Jeff Mathieu, Director of Resource Management
Bob Moncrief, Redevelopment and Housing Manager
Tina Rodriguez, Redevelopment Administrator
Mona Miyasato, Senior Administrative Analyst-Project Coordinator Linda A. Moxon, Deputy City Attorney
ATTACHMENTS:
Attachment 1: Resolution of the City of Santa Monica
Attachment 2: Resolution of the Redevelopment Agency of the City of Santa Monica
Attachment 3: Indenture Agreement
Attachment 4: Continuing Disclosure Certificate
Attachment 5: Preliminary Official Statement
Attachment 6: Official Notice Inviting Bids
Attachment 7: Notice of Intention to Sell
Attachment 8: Questions for Public Officials to Ask Before Approving a Bond Issue.