|
Resolutions -Tax Allocation Bonds
<br />December 6, 2010
<br />Page 3
<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 exceptiori 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
<br />5-3
<br />
|