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<br />
<br />
<br /> Resolutions - Tax Allocation Bonds
<br /> December 6, 2010
<br /> Page 3
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<br /> payments. The Agency has been required to pay to the State just under $39 million beginning in
<br /> FY 1992_ This includes the most recent payment of $17.9 million in FY 2009-10, and another $3.7
<br /> million due in May 2011. State "take aways" have resulted in the elimination of funding for needed
<br /> capital projects in the various project areas, reduction in staff, and borrowing over $10 million from
<br /> the Low and Moderate Housing Fund, and $6.3 million from the South Main Corridor Fund. With
<br /> the current economic downturn, the Agency's tax increment revenues have diminished, thereby
<br /> affecting its cash flow. Without this refunding, it will be very difficult for the Agency to repay the two
<br /> borrowings within the required time limits and impact its ability to facilitate development activities in
<br /> the City.
<br /> The proposed action authorizes the issuance of up to $75 million in tax allocation and Recovery
<br /> Zone bonds assuming favorable market conditions at the time of bond pricing in mid-December. If
<br /> market conditions have deteriorated at pricing, the resolution authorizes the Executive Director of
<br /> the Community Redevelopment Agency to postpone the financing until early 2011. This will allow
<br /> the greatest flexibility in order to time the sale and issuance of the bonds to the Agency's best
<br /> advantage. Under the federal legislation, any issuance of RZEDBs must be closed by December
<br /> 31, 2010. If the Agency elects not to issue by December 31, 2010, thereby losing the RZEBD
<br /> allocation, the Agency can still issue an additional $6 million of tax allocation bonds in early 2011
<br /> to finance the required improvements to the downtown parking structures as traditional tax exempt
<br /> bonds. Under the terms of the 1998 bonds, the refunding must close no later than March 1, 2011,
<br /> or else it will need to be delayed until after June 1, 2011.
<br /> When the Agency first initiated refunding of the 1998 Bonds in 2008, a competitive Request for
<br /> Proposal process resulted in the Agency's selection of Stone & Youngberg as lead bond
<br /> underwriter, with De La Rosa & Co. assisting in marketing of the bonds for purchase. The firm of
<br /> Quint & Thimmig LLP is serving as bond counsel; CSG Advisors as financial advisor; and Stradling
<br /> Yocca Carlson & Rauth as disclosure counsel. The firm of Keyser Marston Associates, Inc. is
<br /> serving as fiscal consultant and Jones Hall as underwriter counsel. All costs associated with this
<br /> transaction will be paid at closing with bond proceeds, with the exception of the Standard and
<br /> Poors and Fitch Ratings credit rating fees (up to $27,000 and $30,000 respectively), and Keyser
<br /> Marston's fiscal consultant fees (up to $35,000), which will need to be paid even if the transaction
<br /> is postponed until 2011. The final compensation for the financing team will be determined based
<br /> on the size and structure of the bond issuance and market conditions at the time of the sale. The
<br /> proposed compensation will be as follows: CSG Advisors, financial advisor, an amount not to
<br /> exceed $85,000 plus expenses; Quint & Thimmig, bond counsel's compensation will be as follows:
<br /> 1% of the first $1,000,000, .5% of the next $5,000,000, .25% of the next $15,000,000, and _125%
<br /> of the remaining principal, not to exceed $110,000, plus out-of-pocket costs not to exceed $5,000;
<br /> Stradling, Yocca, Carlson & Rauth, disclosure counsel, an amount not to exceed $90,000 plus out-
<br /> of-pocket expenses not to exceed $1,500. The proposed underwriter's discount is $6.00 -
<br /> $6.25/$1,000 of bonds, approximately $470,000; however, due to current market conditions, the
<br /> underwriter's discount may need to be adjusted at the time of bond sale. Separately, both
<br /> underwriting firms have executed an Agreement Among Underwriters stipulating each firm's share
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