SA 3 - RESO - TAX ALLOCATION BONDS

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Resolution Authorizing the Refunding of 2003 Tax Allocation Bonds July 5, 2016 Page 2 Stifel, Nicolaus & Company, Inc. as underwriter's counsel with respect to this specific bond refunding. DISCUSSION In 2003, the Community Redevelopment Agency of the City of Santa Ana (the "former RDA ") issued its South Main Street Redevelopment Project, Tax Allocation Bonds, Series 2003A in the amount of $20,945,000 and Tax Allocation Refunding Bonds, Series 2003B, in the amount of $34,145,000 (the "2003 Bonds "). The Series 2003A bonds were issued to fund redevelopment activities of benefit to the South Main Street Redevelopment Project Area. The Series 20038 bonds were issued to refund the former RDA's bonds issued in 1993. Approximately $22 million of the 2003 Bonds are currently outstanding as of June 30, 2016. The 2003 Bonds consist of an interest rate ranging from 4.5% to 5% with the longest maturity (9/1/2031). Per Assembly Bill (AB) 26 and 27, the State of California ( "State ") dissolved existing redevelopment agencies, which led to the formation of the Successor Agency to the Santa Ana Community Redevelopment Agency (the "Successor Agency "). The Successor Agency inherited the responsibility for repayment of the former RDA debt service including the 2003 Bonds. The State introduced additional legislation, AB 1484, which allowed existing successor agencies to refund existing bonds, with approval of the Oversight Board and the State Department of Finance, for the purpose of generating a debt service savings. CURRENT MARKET ANALYSIS Interest rates are currently at historic lows and thus refinancing the 2003 Bonds and subsequent issuance of a refunding bond issue (the "2016 Bonds "), is expected to generate a total debt service savings of approximately $2.7 million, without extending the current maturity date of the bonds. The final savings amount will depend on the market interest rates in effect at the time the 2016 Bonds are priced, which is anticipated to be during the fourth week of September 2016. Based on the redevelopment dissolution laws, the estimated annual savings amount (approximately $300,000 per year through 2019 and $100,000 through 2020 to 2031) would be allocated towards enforceable obligations, administrative costs, or shared among taxing entities as residual revenues. Pursuant to Health & Safety Code Section 34177.5(f), the Oversight Board, on June 14, 2016, approved and authorized the Successor Agency to commence the refunding of the 2003 Bonds. The Oversight Board also authorized the Successor Agency to recover related costs in connection with the issuance of refunding bonds from proceeds of said bond, or from the Recognized Obligation Payment Schedule process. The State Department of Finance ( "DOF ") is allowed 60 days to review any actions of the Oversight Board including the approval of refunding bond issues. The DOF will have until approximately September of 2016 to review the action by the Oversight Board. Once the financing and legal documents for the 2016 Bonds are approved by the Successor Agency and the Oversight Board, the pertinent documents will be submitted to DOF for review and approval. 3 -2