07/01/1980 - Laserfiche WebLink

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'. In order to minimize this loss resulting from the different yields, and to make the bond issue work from a revenue standpoint, the underwriters have: . 1. divided the original issue into two phases, so that the Series A bonds will finance Phase One of the development and Series B bonds will finance Phase Two. 2. cut the period during which mortgages can be originated from three years to one year! 3. arranged for the Developer to deposit a letter of credit for $750,000 to cover any loss of revenue due to non-placement of mortgages! 4. provided for a penalty to be paid by the Developer for placement of mortgages later than the scheduled takedown. Mr. Luxembourger pointed out that the money was to be for Phase One but that the authorization was for both Phase One and Two! he then asked if there were guidelines available for Phase Two. Mr. Whipple advised that guidelines would be worked out later and that, if the Agency found them to be unsuitable, then the agreement between participating partners would have to be renegotiated and it would then be presented to Standard and Poors for a rating. It The Executive Director suggested that it might be helpful to the Agency to hear the comments of Mr. Andrew Hall on this point. Chairman Ward invited Mr. Hall to address the Agency. Mr. Hall advised the Agency that there was only one reference in all of the documentation to the full amount needed to finance both phases. He added that, at this time, the Agency is issuing the first phase. When the second phase is issued, the entire process will have to be repeated. It was thought prudent to mention the second phase in this authorization due to the political climate in Washington as a result of the Ullman Bill. Mr. Hall further assured the Agency that the reference to Phase Two did not commit the Agency to the issuance of those bonds. In response to a question from Chairman Ward, the City Attorney affirmed that the documents under review by the Agency were for Phase One only. Mr. Markel said what was being that he wanted record as voting . that he wondered if anyone in the audience understood said regarding this Phase One and Phase Two. He added no portion of this redevelopment and wanted to go on "no". Mr. Serrato noted that Mr. Whipple represented Miller and Schroeder Municipals, who has a vested interest to make as high a rate of profit as possible. He then asked who was representing the City's interests as to whether this was a fair offer. Mr. Whipple replied that, as professionals, Miller and Schroeder, being interested in maintaining their reputation for ethical behavior in the field of redevelopment both in Santa Ana and elsewhere, would not jeopardize their long term prospects by taking a short term unfair profit. He stated further that the Developers involved were substantial and, because of the burden being placed upon them, would most certainly check this agreement with other underwriters. He added that, in addition to securing the opinion of an independent financial consultant, the Agency staff had reviewed the agreement thoroughly. In response to a question from Mr. Griset, Mr. Whipple said that the reason the rating on the bonds was not higher was that Standard and poors felt there should be a minimum of 300 units (the Town Square Project has only 158 units)in order to receive a higher rating than the . B+ which was given. Mr. Griset asked if the combined number of units for both phases (318) would qualify for a higher rating. Mr. Whipple stated that Miller and Schroeder had wanted to make the Resolution an open-end one in order commingle but that Standard and poors had stated that because of the present unstable economic situation, this would lower the rating. 2. 16