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Home My WebLink About SAFA_FULL PACKET_2014-07-15MINUTES OF THE SPECIAL MEETING OF THE SANTA ANA FINANCING AUTHORITY SANTA ANA, CALIFORNIA JUNE 3, 2014 CALLED TO ORDER COUNCIL CHAMBER 22 CIVIC CENTER PLAZA SANTA ANA, CA 8:10 P.M. ATTENDANCE AUTHORITY MEMBERS Present: MIGUEL PULIDO, Chair SAL TINAJERO, Chair Pro Tern ANGELICA AMEZCUA P. DAVID BENAVIDES ROMAN REYNA AUTHORITY MEMBERS Absent: MICHELE MARTINEZ VINCENT F. SARMIENTO STAFF Present: DAVID CAVAZOS, City Manager SONIA R. CARVALHO, Authority Counsel MARIA D. HUIZAR, Authority Secretary PUBLIC COMMENTS - None CONSENT CALENDAR ITEMS MOTION: Approve staff recommendations on the following Consent Calendar items. MOTION: Amezcua SECOND: Tinajero VOTE: AYES: Amezcua, Benavides, Pulido, Reyna, Tinajero (5) NOES: None (0) ABSTAIN: None (0) ABSENT: Martinez, Sarmiento (2) SANTA ANA FINANCING AUTHORITY MINUTES 1 -1 1 JUNE 3, 2014 MOTION: Adopt resolutions. SAFA RESOLUTION NO. 2014-02 - A RESOLUTION OF THE SANTA ANA FINANCING AUTHORITY APPROVING THE FORM AND AUTHORIZING THE EXECUTION OF CERTAIN LEASE FINANCING DOCUMENTS IN CONNECTION WITH THE DEFEASANCE OF A PORTION OF THE SANTA ANA FINANCING AUTHORITY POLICE ADMINISTRATION AND HOLDING FACILITY LEASE REVENUE BONDS, SERIES 1994A, AND THE DEFEASANCE AND REFUNDING OF THE OUTSTANDING CITY OF SANTA ANA CERTIFICATES OF PARTICIPATION (1998 CITY HALL EXPANSION PROJECT) AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO SAFA RESOLUTION NO. 2014-03 - A RESOLUTION OF THE SANTA ANA FINANCING AUTHORITY APPROVING AN AMENDMENT TO THE LEASE AGREEMENT RELATING TO THE FINANCING AND REFINANCING OF THE PARKING STRUCTURE ADJACENT TO THE STATE APPELLATE COURT BUILDING IN SANTA ANA, CALIFORNIA, APPROVING FORM AND AUTHORIZING EXECUTION OF RELATED DOCUMENTS AND APPROVING OFFICIAL ACTIONS MOTION: Tinajero SECOND: Benavides VOTE: AYES: Amezcua, Benavides, Pulido, Reyna, Tinajero (5) NOES: None (0) ABSTAIN: None (0) ABSENT: Martinez, Sarmiento (2) COMMENTS 5. SANTA ANA FINANCING AUTHORITY MEMBER COMMENTS — None ADJOURNED — 8:10 P.M. Maria Huizar, Authority Secretary SANTA ANA FINANCING AUTHORITY MINUTES 1 -2 3 JUNE 3, 2014 REQUEST FOR COUNCIL /SANTA ANA FINANCING AUTHORITY ACTION CITY COUNCIL MEETING DATE: JULY 15, 2014 TITLE: RESOLUTIONS EXECUTING AGREEMENTS AND FINANCING DOCUMENTS RELATED TO REFINANCING THE 2004 WATER SYSTEM BONDS <-��' /-C,� CITY MANAG RECOMMENDED ACTION CITY COUNCIL ACTION CLERK OF COUNCIL USE ONLY: •c• o, ❑ As Recommended ❑ As Amended ❑ Ordinance on 11" Reading ❑ Ordinance on 2nd Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Adopt a resolution authorizing the execution of financing documents and related actions necessary for the refinancing of the 2004 Water System Bonds in an aggregate amount not to exceed $17 million. SANTA ANA FINANCING AUTHORITY ACTION Adopt a resolution authorizing the execution of financing documents and related actions necessary for the refinancing of the 2004 Water System Bonds in an aggregate amount not to exceed $17 million. DISCUSSION The City of Santa Ana Mayor and City Council unanimously adopted the City's 5 -year Strategic Plan which includes a goal to ensure financial stability. Under goal number four, two strategies are outlined: 2d) Conduct an assessment of the City's debt and refinancing options to achieve savings; and 3c) Implement a plan to achieve a General Fund reserve balance of 20 percent. In an effort to implement these strategies, on January 21, 2014, the City Council approved the use of four financial advisory firms to assist staff in reviewing existing debt, identify opportunities for potential savings, or to assist in financing future projects. On April 1, 2014, the team comprised of Urban Futures, Inc. (financial advisor), Stifel /De La Rosa & Co. (underwriters) and Best, Best & Krieger LLP (bond counsel), was selected to review the 2004 Water Revenue Bonds. The 2004 Water Revenue Bonds were issued to refinance the original 1994 Bonds which were used to finance capital projects relating to the City's water system. More specifically, the funds were used for the Garthe Reservoir Project, the South Reservoir Booster Station, as well as 3 -1 Reso to Refinancing of 2004 Water System Bonds July 15, 2014 Page 2 various water main replacement projects throughout the City. The 2004 Bonds are currently outstanding in the amount of $12,785,000 with interest rates ranging from 3.5% to 5.0 %. The final term of the 2004 Bonds is September 1, 2024. With interest rates on US Treasury Bonds having decreased from 3.0% to 2.5% since the beginning of the year, the municipal bond market has followed suit and has correlated into increased attention in the municipal bond market by investors. In order to benefit from this opportunity, staff is recommending several actions. The item before the City Council relates specifically to refinancing the 2004 Water System Bonds and the financing of an additional $5.8 million for capital related improvements. By taking advantage of low interest rates currently available in the market, staff worked with Urban Futures Inc. (financial advisors) and Stifel /De La Rosa & Co. (underwriters) to develop a financing model whereby long term savings could still be achieved while obtaining additional capital financing for immediate water system needs. The recommended proposal balances those two objectives. As a result, the City will issue approximately $16 million of 2014 Water Revenue Refunding Bonds. Of the $16 million, approximately $12 million will be allocated to the refunding of the 2004 Bonds and approximately $5.8 million will be allocated to finance capital improvements related to the City's water system. The balance of funds will be gained through an estimated premium to be received as a result of the issuance as well as current payment reserves. The recommended action provides for a bond authorizing resolution of a not -to- exceed issuance amount of $17 million, which provides additional cushion in case of unforeseen market fluctuations as well as structuring flexibility to achieve the lowest interest rates possible. The City will save approximately $1.5 million over the life of the bonds which equates to 10% in present value savings of the refinanced bond amount. The recommended action does not increase the term of the current bonds. Like the 2004 Bonds, the 2014 Bonds will be secured by net system revenues of the City's water system less maintenance and operation costs. To date, City staff has been working with the project team and bond counsel to prepare and develop the Preliminary Official statement and all related documents for release. Upon approval, staff will direct the Stifel /De La Rosa & Co. to distribute the official statement and conduct the offering and sale of the 2014 Water System Bonds. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's effort to meet Goal #4 City Financial Stability, Objective #2 (provide a reliable five -year financial forecast that ensures financial stability in accordance with the strategic plan), Strategy D (conduct an assessment of the City's debt and refinancing options to achieve savings). 3 -2 Reso to Refinancing of 2004 Water System Bonds July 15, 2014 Page 3 FISCAL IMPACT Total savings are estimated at approximately $1.5 million during the term of the Water System Bonds. In addition, $5.8 million will be received as bond proceeds for water related capital projects. Upon closing of the bond issuance, staff will present the City Council an appropriation adjustment to authorize the allocation of proceeds for the water system projects. ar 2t . Francisco Gutierrez Executive Director Finance and Management Services Agency l 3 -3 PLEASE SEE JULY 15, 2014 CITY COUNCIL AGENDA ITEM 80A FOR ALL EXHIBITS 3 -4