07/01/1980 - Laserfiche WebLink

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'.. \. . MINUTES SPECIAL MEETING COMMUNITY REDEVELOPMENT AGENCY SANTA ANA, CALIFORNIA JULY 1,1980 The Regular Meeting of the Community Redevelopment Agency of the City of Santa Ana was called to order by Chairman James Ward at 5:02 P.M. in the City Council Chambers, 22 Civic Center Plaza, Santa Ana, California. After the pledge to the Flag and the Invocation given by Mr. Luxembourger, roll was called: PRESENT ABSENT Gordon Bricken Daniel Griset (5:10 Robert Luxembourger J. Ogden Markel Al Serrato James Ward Harry Yamamoto tlbthers in attendance: P.M.) David N. Ream, Interim Executive Director Thomas E. Hammill, Agency Real Estate Officer Dan Stone, Interim City Manager Edward J. Cooper, Acting City Attorney Mellmary McNeely, Secretary Michael Whipple, Miller and Schroeder Municipals, Inc. Andy Hall, Jones, Hall, Hill & White Terry McCarty, Stone & Youngberg Municipal Financing Consultants RESIDENTIAL MORTGAGE REVENUE BONDS, ISSUE OF 1980 The Executive Director advised the Agency that the purpose of this Special Meeting was to consider a request to approve the sale of SB-99 Bonds in the amount of $11,500,000. He added that Michael Whipple, a representative of Miller and Schroeder Municipals, Inc., was present in the Chambers and wished to address the Agency regarding this request. Chairman Ward invited Mr. Whipple to address the Agency. 4IÞMr. Whipple explained that the issue size has dropped from $26,570,000 to $11,500,000 because only Phase One of the Town Square development is being financed. A second issue of bonds will be necessary to finance Phase Two of Town Square. It was necessary to cut the bond issue into two phases in order to minimize the negative arbitrage resulting from the recent drastic changes in the long term bond market and short term government market. Heretofore, residential mortgage revenue bond issues have worked from a revenue standpoint by taking advantage of. the difference in yields between the long term bond market and the short term government market. When an agency issued its bonds (say at 12%) it could invest part of the proceeds in the short term government market (say at 14.5%) during the three year period in which the mortgages were being originated. Because the short term market was yielding 2.5% to 3% higher than the bond market, an agency could realize significant arbitrage profit in order to amortize the costs of issuing its bonds. In the last two months, however, the two markets have changed drastically, the yields have reversed, and the short term market h~s fallen considerably faster and lower than the long term ~arket., ThlS 8 """i'lnf' th",t an agency offering bonds today at 9.5% must lnvest ln ~he short term market at 7.5% to 8% during the time the mortgages are belng or ig ina ted. If