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HomeMy WebLinkAboutMINUTES - 10012011 - C.67RECOMMENDATION(S): Acting in its capacity as the Governing Board of the Contra Costa County Redevelopment Agency, ADOPT Resolution No. 2011/417 to APPROVE and AUTHORIZE (1) the execution of supplements to loan agreements with the County of Contra Costa Public Financing Authority related to the redemption, purchase, and defeasance of certain Authority bonds; (2) related bond redemption documents and actions; and (3) the filing of a validation action in connection with the execution of the loan agreement supplements. FISCAL IMPACT: None to the General Fund. All costs to prepare the documents and agreements, file the validation action and implement the Authority Bond Redemption, Purchase and Defeasance Program will be paid by the Agency and the Department of Conservation and Development. BACKGROUND: The County of Contra Costa Public Financing Authority (the Authority) has issued several series of tax allocation revenue bonds (Bonds) to finance certain public improvements APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 10/04/2011 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Gayle B. Uilkema, District II Supervisor Mary N. Piepho, District III Supervisor Karen Mitchoff, District IV Supervisor ABSENT:Federal D. Glover, District V Supervisor Contact: Steven Goetz 925-335-1240 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: October 4, 2011 David Twa, County Administrator and Clerk of the Board of Supervisors By: June McHuen, Deputy cc: C.67 To: From:Steve Goetz, Redevelopment Deputy Director Date:October 4, 2011 Contra Costa County Subject:Resolution 2011/417 approving and authorizing various actions for a Bond Redemption, Purchase and Defeasance Program BACKGROUND: (CONT'D) and housing projects of the Contra Costa County Redevelopment Agency (Agency) within or of benefit to the redevelopment project areas. The Authority loaned the Bond proceeds to the Agency through five separate loan agreements, one for each project area. The Agency has pledged tax increment revenue from the project areas as the source of revenue to repay the loans, and the amounts paid by the Agency on the loans is the source of revenue to repay the Bonds. Due to recent economic developments beyond the control of the Agency and the Authority, the Agency has not been able to expend the proceeds from the loans on public improvements and housing projects as expected when the Bonds were issued, and tax increment revenue allocated to the Agency from several of the project areas have decreased substantially from the tax increment revenue projected to be received from these project areas when the Bonds were issued. In order to reduce the outstanding balances of some of the loans, and thereby improve the security and prospects for timely payment of the Bonds, the Authority expects to engage in a debt service reduction program (Authority Bond Redemption, Purchase and Defeasance Program) that will involve using certain unspent proceeds of the loans (a) to optionally redeem certain bonds, (b) to purchase and retire certain other bonds, and (c) to defease certain bonds that are not subject to optional redemption and that cannot be otherwise purchased and retired, with amounts due on the related loans reduced concomitant with the redemption, retirement or defeasance of the Bonds, the proceeds of which Bonds were used to fund the respective loans. To implement the Authority Bond Redemption, Purchase and Defeasance Program, the loan agreements need to be amended, various disclosure and other bond tender documents need to be produced and disseminated, and certain bond defeasance documents need to be executed and delivered. Adoption of Resolution 2011/417 by the Agency approves and authorizes the various documents and actions to which the Agency will be a party that are needed to implement the Authority Bond Redemption, Purchase and Defeasance Program. As you know, the State has recently enacted Assembly Bill (AB) 1X-26 adding various sections to the Community Redevelopment Law of the State, including provisions that prohibit redevelopment agencies from entering into certain contracts, or from amending or modifying existing agreements and obligations, but also adding provisions requiring that redevelopment agencies take all reasonable measures to avoid triggering an event of default under certain enforceable obligations, such as the loan agreements. This law has been challenged and the California Supreme Court has agreed to review this challenge and ordered that specific portions of AB 1X-26 and the related AB 1X-27 be stayed pending the completion of the Supreme Court action. In light of these uncertainties, and to not delay implementation of the Authority Bond Redemption, Purchase and Defeasance Program, adoption of Resolution 2011/417 is recommended to authorize filing of a validation action in Superior Court in Contra Costa. The purpose of the lawsuit is to obtain a court order ("Validation Judgment") that will validate (authorize) the execution of the loan agreement supplements and other bond documents that are needed to implement the Authority Bond Redemption, Purchase and Defeasance Program. A detailed descripition of the documents and actions approved and authorized by Resolution 2011/417 follows. Resolution 2011/417 approves five supplements to the loan agreements, one for each project area, each between the Agency and the Authority. This resolution authorizes staff , contingent upon the rendering of the Validation Judgment, to execute and deliver the supplements, together with such additions or changes to the supplements as may be determined to be necessary by staff. This resolution also finds and determines that the supplements do not materially adversely affect the owners of the Bonds. Resolution 2011/417 approves an escrow deposit and trust agreement for the Bonds among the Authority, the Agency and the bond trustee. This resolution authorizes staff, contingent upon the rendering of the Validation Judgment, to execute and deliver the agreement, together with such additions or changes to the agreement as may be determined to be necessary by staff. Resolution 2011/417 authorizes and directs staff to assist the Authority and its consultants with the preparation and dissemination of disclosure documents that are necessary or desirable to conduct an efficient tender and purchase program for outstanding Bonds. This resolution further authorizes staff to certify the accuracy of any information in such disclosure documents regarding the Agency and the project areas as may be required. Resolution 2011/417 authorizes County Counsel, for and in the name of the Agency, to file and prosecute a validation action under Section 860 of the California Code of Civil Procedure to validate the execution of the loan agreement supplement and other bond documents. Finally, Resolution 2011/417 approves all actions taken by the Agency to implement the Authority Bond Redemption, Purchase and Defeasance Program, and directs and authorizes staff to take any and all actions in the future which they may deem necessary or advisable in order to implement the Authority Bond Redemption, Purchase and Defeasance Program in accordance with the resolution. CONSEQUENCE OF NEGATIVE ACTION: Without adopting Resolution 2011/417 the Authority will not be able to implement the Without adopting Resolution 2011/417 the Authority will not be able to implement the Bond Redemption, Purchase and Defeasance Program and it will become more difficult for some project areas to meet debt service payments or other enforceable obligations. CHILDREN'S IMPACT STATEMENT: Not applicable. ATTACHMENTS Resolution No. 2011/417