Loading...
HomeMy WebLinkAboutMINUTES - 08132002 - C97 TO: BOARD OF SUPERVISORS Contra FROM: JOHN SWEETEN, COUNTY ADMINISTRATOR `. � � Costa [SATE: August 13, 2002 County 9 SUBJECT: Refinancing of CCCPFC 1992 COPS C-17 SPECIFIC REQUESTS}OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. ACCEPT the report of the County Administrator's Office, Capital Facilities and Debt Management, regarding the successful refinancing of the Contra Costa County Public Facilities Corporation Certificates of Participation, Series 1992. CONTINUED ON ATTACHMENT: ,_ „,x YES SIGNATUR . ECOMMENDATION OF COUNTY ADMINISTRATOR RECOMME TON OF BOA MMiTTEE APPROVE OTHER SIGNATURES) ACTION OF BOAC ON �k �"�APPROVE AS RECOMMENDED� OTHER r 4{ VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE { AND CORRECT COPY OF AN ACTION TAKEN UNANIMOUS(ABSENT � � / �"''C- AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE AYES: NOES: SHOWN. ABSENT: ABSTAIN: ATTESTED ° CONTACT: Laura f ockwomi,CAO's Office JOH#SWEETEN,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR CC: Bill Pokook,TresswerfTax COIlector Ken Corcoran,Auditor/Controller iv BY 1 Fiscal Impact The refinancing of the 1952 COPS allowed the County to take advantage of historically low interest rates, resulting in annual net debt service savings of $60,000 to $250,00 per year, which on a present value basis amounts to $1.0 million or 3.93% of the refunded principal amount of the bonds. Back„grourul The Certificates of Participation refunded were initially issued in 1992 by the Contra Costa County Public Facilities Corporation. They were issued to advance refund three earlier series of bonds sold by the County in 1986 for the acquisition of land and/or construction of facilities at: • 255 Glacier Drive, Public Works Department • 30 Douglas, DoIT • 2475 Waterbird Way, Public Works Corporation Yard and associated buildings 595 Center Ave, Health Services Department + 1560 Glacier Drive, Forensic Sciences Building, Sheriffs Department Under federal talc law, municipal bonds can only be "advance refunded" one time, but bonds can be "current refunded" anytime they are within 90 days of a call date. The 1992 COPS first call date was June 1, 2002. Given the favorable market conditions this spring, the Board of Supervisors on March 26, 2002, authorized the County Administrator to refund these certificates with lease revenue bonds sold on a competitive basis by the Contra Costa County Public Financing Authority if the overall savings that could be achieved on a present value basis exceeded 2.75%. Unfortunately, over the next two months, market conditions deteriorated such that this savings threshold could not be reached. Since that time, market conditions improved to the point that the County Administrator's office received authorization from the Beard on June 25, 2002 to move forward on this refinancing on a negotiated "forward delivery" basis. This approach allowed County staff to proceed quickly with the pricing of the bonds while market conditions were favorable, while delaying the closing of the bonds until early fall (September 5, 2002) as required under federal tax law. The selection of the underwriting team was completed through an RFP process involving a selection panel composed of representatives from the County Administrator, the TreasurerfTax Collector, and the Auditor/Controller's offices. The firms of Salomon Smith Barney, Bear Stearns and Jackson Securities were selected as underwriters. The bonds were priced on July 215t and 22nd as the U.S. stock market swooned and the bond market rallied strongly on news of Worldcom's bankruptcy filing. These unusual market conditions allowed the County to lock in historically low interest rates on its refunding bonds, which in turn generated several hundred thousand dollars in additional interest savings. The old coupons on the C©Ps ranged from 5.5% to 5.6%, while the new coupons will range from 2.0% to 4.6%. Annual net debt service savings on this transaction averages $260,000 for FY 02-03 through FY 07-08, and $60,000 thereafter through FY 2019. The savings will be allocated to those County departments who now pay the debt service on the 1992 COPs, including Public Works, Do1T, Health Services, and the Sheriffs Department.