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HomeMy WebLinkAbout55A - RESO - INTENT TO ISSUE BONDS - DOWNTOWN PARKINGREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: AUGUST 2, 2010 TITLE: A RESOLUTION OF INTENT TO ISSUE BONDS - DOWNTOWN PARKING FACILITIES f f dITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ? As Recommended ? As Amended ? Ordinance on I" Reading ? Ordinance on 2nd Reading ? Implementing Resolution ? Set Public Hearing For CONTINUED TO FILE NUMBER Adopt a resolution of the City of Santa Ana regarding its intention to issue tax-exempt obligations and to reimburse the Agency and City from proceeds of such obligations for costs incurred prior to issuance for the Downtown Parking Facilities. DISCUSSION The American Recovery and Reinvestment Act (ARRA) of 2009 created new provisions to the Internal Revenue Code allowing public agencies to designate "Recovery Zones" for the purpose of issuing public and private bonds. Recovery Zone bonds allow for the issuance of debt with lower borrowing costs for local governments and private entities to promote job creation and economic recovery within adopted Recovery Zone boundaries. On August 17, 2009, the City Council approved the designation of the Santa Ana Recovery Zone. The zone is comprised of the entire City of Santa Ana, which includes the Redevelopment Agency's Merged Redevelopment Project Area. The City has received an allocation of $5,872,000 for tax exempt Recovery Zone Economic Development Bonds. Recovery Zone Economic Development Bonds allow the City to finance public infrastructure and public facilities. The Federal Government will remit to the City 45% of the annual interest, resulting in a considerable cost savings to the issuer. Capital improvements, including 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 Economic Development Bond Program. It was anticipated that CDBG funds would be used for these repairs; however, HUD has not issued the needed clearances for funding. Further, the City does not have adequate cash reserves to directly fund these repairs. 55A-1 Resolution of Intent to Issue Bonds - Downtown Parking Facilities August 2, 2010 Page 2 The resolution allows for a tax exempt financing (Recovery Zone and/or other forms of tax exempt bonds) up to $7 million, including reimbursement of expenses that may be incurred prior to actual issuance of the bonds. This approach will allow us flexibility while pricing the bonds in the marketplace prior to issuance. The Bonds need to be closed by December 31, 2010, if issued as Recovery Zone Bonds; therefore, the underwriter selection process previously conducted for the Agency's proposed tax allocation bonds will be utilized for this transaction. Based on the size of this transaction, only Stone & Youngberg, as Senior Manager, is proposed to underwrite this borrowing. The balance of the financing team will include CSG Advisors as financial advisor, and Quint & Thimmig LLP as bond counsel. The team has been involved in several similar Recovery Zone bond financings. FISCAL IMPACT There is no fiscal impact associated with this action. Cynthia J. Nelson Deputy City Manager for Development Services Community Development Agency CJN/NTE/mlr Exhibit: 1. Resolution 55A-2 JF 720/10 RESOLUTION NO. 2010-XXX RESOLUTION AUTHORIZING THE COMMENCEMENT OF PROCEEDINGS IN CONNECTION WITH THE PROPOSED FINANCING OF PUBLIC PARKING FACILITY IMPROVEMENTS, EXPRESSING OFFICIAL INTENT REGARDING CERTAIN CAPITAL EXPENDITURES TO BE REIMBURSED WITH PROCEEDS OF OBLIGATIONS AND RETAINING A FINANCIAL ADVISOR, AN UNDERWRITER, BOND COUNSEL AND DISCLOSURE COUNSEL BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. The City, or another entity of the City, proposes to issue obligations, which may be in the form of Recovery Zone Economic Development Bonds authorized by the American Recovery and Reinvestment Act pursuant to which the City has received an allocation of $5,872,000 (the "Obligations"), to finance improvements to various public parking facilities owned by the City (the "Project"); B. Capital expenditures relating to the Project (the "Expenditures") have been paid not more than 60 days prior to the adoption of this Resolution or will be paid on or after the adoption of this Resolution but prior to the issuance of the Obligations; C. The City or such other entity of the City reasonably expects to reimburse itself for the Expenditures with the proceeds of the Obligations; and D. it is appropriate that the Council formally authorize the commence of proceedings to finance the Project and to appoint a financial advisor, an underwriter, bond counsel and disclosure counsel in connection with the Obligations; Section 2. The Council authorizes City staff to commence proceeding for the issuance of the Obligations. Section 3. The City or such other entity of the City reasonably expects to reimburse all or a portion of the Expenditures with the proceeds of the Obligations. 55A-3 Resolution No. 2010-XXX Page 1 of 3 Section 4. The maximum principal amount of the Obligations is $6,000,000. Section 5. This Resolution is a declaration of official intent to reimburse expenditures pursuant to Treasury Regulations Section 1.150-2. Section 5. CSG Advisors, Incorporated, San Francisco, is hereby designated as financial advisor in connection with the issuance of the Obligations. Section 6. Stone & Youngberg LLC, San Francisco, California, is hereby designated as underwriter in connection with issuance of the Obligations. Section 7. Quint & Thimmig LLP, San Francisco, California, is hereby designated as bond counsel and disclosure counsel in connection with issuance of the Obligations. Section 8. All actions of the officers, agents and employees of the City that are in conformity with the purposes and intent of this Resolution taken before the adoption hereof are hereby ratified, confirmed and adopted. Section 9. Adoption of this resolution does not constitute a final approval of the Obligations. Such approval shall require subsequent action by the Council or by the governing board of such other City entity issuing the Obligations, including a review and approval of any financing documents prepared in connection therewith. Section 10. Appropriate officers and officials of the City are hereby authorized and directed to take such action and to execute such documents as may be necessary or desirable to effectuate the intent of this resolution. Section 11. This Resolution shall be in full force and effect immediately upon its adoption. Section 12. This Resolution shall take effect immediately upon its adoption by the City Council, and the Clerk of the Council shall attest to and certify the vote adopting this Resolution. ADOPTED this day of .2010. Miguel A. Pulido Mayor Resolution No. 2010-XXX Page 2 of 2 55A-4 APPROVED AS TO FORM: Joseph W. Fletcher City Attorney AYES: NOES: ABSTAIN: NOT PRESENT Councilmembers Councilmembers Councilmembers Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUISAR, Clerk of the Council, Resolution No. 2010-XXX to be the original City of Santa Ana on Date: do hereby attest to and certify the attached resolution adopted by the City Council of the Clerk of the Council City of Santa Ana 55A-5 Resolution No. 2010-XXX Page 3 of 3