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Resolution Authorizing the Refunding of 2003 A & B and 2011 Tax Allocation Bonds July 17, 2018 Page 2 responsibility for repayment of the former RDA debt service including the 2003A & B and 2011A Bonds. The State introduced additional legislation, AB 1484, which allowed existing successor agencies to refund existing bonds, with approval of the Oversight Board and the State Department of Finance, for the purpose of generating debt service savings. CURRENT MARKET ANALYSIS Currently, interest rates are at 3.49%. Refinancing the 2003A & B and 2011A Bonds through the issuance of a refunding bond issue (the "2018 Bonds") is expected to generate a total debt service savings of approximately $19.9 million, without extending the current maturity date of the bonds. In order to maximize the savings amount, the Agency will contribute the existing cash funded reserve account (approx. $6.7 million) and unexpended proceeds (approx. $5.8 million) from the 2011A Bonds, to the refunding escrow for the 2018 Bonds. The former RDA was prohibited from entering into new agreements for the use of the 2011 bond proceeds upon enactment of AB X1 26, shortly after the issuance of the 2011 Bonds. As such, the $5.8 million remain unexpended and is available to be used in this refunding transaction. The final savings amount will depend on the market interest rates in effect at the time the 2018 Bonds are priced, which is anticipated to be during the first week of October 2018. Based on the redevelopment dissolution laws, the estimated annual savings amount (approximately $1.97 million per year through 2028 and then $100,000 from 2029 to 2031) would be allocated towards enforceable obligations, or shared among taxing entities as residual revenues. FUTURE ACTIONS Upon approval by the Successor Agency, the Oversight Board Resolution will be sent to the State Department of Finance ("DOF") for review. The DOF has up to 60 days to review the Oversight Board Resolution and the issuance of the 2018 Bonds by the Successor Agency. Upon DOF approval, staff will evaluate the market conditions and determine if the rates are still favorable for a refunding. If the rates are still favorable, staff will present the financing team agreements for Agency consideration. Based on the timing of the DOF review period, it is anticipated that the Successor Agency will be pricing the 2018 Bonds in the first week of October 2018, with bond closing scheduled for the third week of October 2018. Upon bond closing, the 2003A & B bonds will be defeased. The net bond proceeds necessary to redeem the outstanding 2011 A Bonds will be placed into an escrow account with the Escrow Agent, to be used to pay remaining principal and interest payments on the 2011A Bonds through the first call date of March 1, 2021, at which time the remaining escrow balance will be used to redeem all outstanding 2011A Bonds. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's effort to meet Goal #4 — City Financial Stability, Objective #2 — (Provide a reliable five-year financial forecast that ensures financial stability in accordance with the strategic_ plan), Strategy D (Conduct an assessment of the City's debt and refinancing options to achieve savings). SA -3-2