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Resolutions - Tax Allocation Bonds December 6, 2010 Page 2 $470,000), bond counsel Quint & Thimmig (up to $110,000 plus expenses), and special disclosure counsel Stradling, Yocca, Carlson & Rauth (up to $90,000 plus expenses), subject to non-substantive changes approved by the Executive Director and Agency General Counsel. FINANCING AUTHORITY ACTION Adopt a resolution authorizing the purchase and sale of tax allocation bonds of the Community Redevelopment Agency of the City of Santa Ana issued to finance redevelopment activities within or for the benefit of the Agency's Merged Project Area and approving related documents and actions. DISCUSSION The proposed actions will facilitate a refinancing of existing Agency debt, as well as allow for the issuance of approximately $6 million in new debt to finance improvements to the public parking structures in the Downtown. The City received an allocation of $5,872,000 for Recovery Zone Economic Development Bonds (RZEDB) which allow for the construction of public infrastructure facilities. Capital improvements, including security enhancements, structural repairs, architectural enhancements and energy- efficient improvements to the Downtown parking facilities are proposed to be funded with the proceeds of the Recovery Zone Bonds. The federal government will provide a subsidy equal to 45% of the interest cost over the life of the bonds to the City, resulting in a considerable cost savings. Over the last several years, the Redevelopment Agency has taken a number of steps to maximize the effectiveness of the Redevelopment program, including merging all six Project areas, eliminating the dates in the Redevelopment Plans to incur debt, planning time limits and exploring bond refinancing opportunities. In 1998, the Santa Ana Financing Authority issued bonds which refunded (refinanced) prior Agency 1989 bonds and obligations. In 2008, the Agency initiated an effort to refund the 1998 bonds, but the market deteriorated significantly, thereby raising the Agency's borrowing costs to unacceptable levels. Recently, financial conditions stabilized and interest rates have been more favorable. When we initiated the refunding analysis over 60 days ago, the Agency's borrowing rate had decreased below 5%. However, due to recent volatility in the bond market and the high volume of bonds slated to be issued by year's end, the market conditions may change and impact interest rates. Even with these uncertain borrowing conditions, the restructuring of the Agency's existing debt can improve net cash flow by approximately $3 to $4 million per year through 2018 so that funds are available to repay other existing obligations, including those created by State ERAF and SERAF 4-2