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HomeMy WebLinkAboutMINUTES - 12142004 - C.118 Contra TO: BEARD OF SUPERVISORS �� = A� Costa FROM: JOHN SWEETEN, � � ��' "���` County Administrator , °s County DATE: December 14, 2004 •t 1 SUBJECT: Subordination of Revenues for Pittsburg Redevelopment Agency 2004 Bond Issuance SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: APPROVE agreement subordinating revenues due to the County, Fire, Library and Flood Control Districts for tax allocation bonds, pursuant to July 20, 1993 agreement among said parties and the Redevelopment Agency of the City of Pittsburg, amended by agreements effective July 18, 1996, October 19, 1999, and March 18, 2003, regarding the pass-through of tax increment; and AUTHORIZE execution of Agreement by Board Chair. (Attachment A.) FINANCIAL. IMPACT: Based on staff analysis of the financial projections, the Pittsburg Redevelopment Agency should be able to pay its debt payments and the amounts required to be paid to the County and other affected taxing entities under the terms of pass-through agreements and AB 1290 pass-through requirements. BACKGROUND: On July 20, 1993, the County approved a redevelopment pass through agreement with the Pittsburg Redevelopment Agency. Included in the agreement is a subordination clause which essentially allows the Agency to put pass-through amounts owed to the County and other taxing agencies lower in priority than debt owed to bond holders as added security to bond holders that their investment will be returned. The County agreed to this provision based upon the commitment that the Agency would have adequate funds to pay back bond holders, thereby minimizing the real risk that subordination would be necessary, and that the City would demonstrate that they have adequate funds prior to subordination. CONTINUED ON ATTACHMENT: X YES SIGNATURE:e : 4_ . RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD OWMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BO �ONAPPROVED AS RECOMMENDED OTHER ! f3 VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF I THE BOARD OF SUPERVISORS ON THE DATE SHOWN, UNANIMOUS(ABSENT ) AYES: NOES ABSENT: ABSTAIN: Contact: Cc: CAO ATTESTED N SWEETEN,CI-ERK OF THE BOARD FSUPER ISORS BY:.. s ,. DEPUTY A , Pittsburg RDA Subordination 2003--December 14, 2004 On June 18, 1996, the County approved amendments to the 1993 agreement in order to assist the Agency in refinancing not more than $20 million in bonds at a lower cost. The amendment also increased funding to the Fire District and extended the payment period for$2 million in payments to the Health Services Department. On January 31, 2003, the County received notice that the Agency planned to issue its Series 2003 Tax Allocation Bonds in an amount not to exceed $110 million. In fact, they issued approximately $50 million in new bonds and refunded approximately $30 million. On November 12, 2004, the County received notice that the Agency intends to issue debt in amount not to exceed $122,000,000 within the next month or so. State law permits a redevelopment agency to treat the revenue sharing payments (AB 1290 pass- through) as subordinate to avoid a default on agency bonds. Within 45 days after receipt of the agency's request, the affected taxing entity "shall approve or disapprove the request for subordination." Based on a review of the revenue projections prepared by US Bancorp Piper Jaffray Inc. (attachment B), staff recommends approval of the subordination request. Using a conservative approach to revenue projection, the Pittsburg RDA should realize a surplus after debt service payments, AB 1290 pass-through payments, housing set-aside, administration costs, and the ERAF payment. The Agency's tax increment revenue should, therefore, be adequate over the term of the bonds to pay 100% of the debt service on the bands and to pay any and all of the Agency's statutory or contractual obligations, including the pass through payments to the County and County controlled agencies. In the unlikely event that subordination is required, the Agreement indicates that any reduction in payment will be treated as an advance by the Taxing Agencies and repaid by the Agency in accordance with Section 2.8 of the original Agreement. Attachment A AGREEMENT AUTHORIZING THE SUBORDINATION OF REVENUES RELATED TO TAX ALLOCATION BONDS AND AMENDMENT OF FISCAL AGREEMENT Effective Dec. 14 ,20014 WHEREAS, the Redevelopment Agency of the City of Pittsburg(the "Agency") and the County of Contra Costa, including the Contra Costa County Library District(the "County"), the Contra Costa County Consolidated Fire Protection District (formerly Riverview Fire Protection District) (the"Fire District")and the Contra.Costa County Flood Control and Water Conservation District(the "Flood Control District" and collectively with the County and the Fire District,the "Taxing Agencies")previously entered into a fiscal agreement, dated July 20, 1993, as amended by agreements among said parties effective June 18, 1996, October 19, 1999 and March 18, 2003 (the "Agreement"),regarding the pass-through of tax increment pursuant to California Health& Safety Code Section 33401, which provides for, among other matters,the allocation and payment of certain Tax Increment Revenue (as defined in the Agreement) from the Agency's Project Area(as defined in the Agreement)to the County; WHEREAS, the Agreement further contemplates that the Taxing Agencies may agree to subordinate, under certain conditions, their rights to such Tax Increment Revenue in order for the Agency to pledge such Tax Increment Revenue to Long-Term Indebtedness or Refunding Indebtedness (both as defined in the Agreement)to be incurred by the Agency and the Taxing Agencies have from time to time agreed to the subordination of their Tax Increment Revenue payments under the Agreement with respect to certain identified tax allocation bonds issued by the Agency; WHEREAS, in furtherance of the Amended Plan (as defined in the Agreement), the Agency intends to issue Long-Term Indebtedness to be known as its Los Medanos Community Development Project Tax Allocation Bonds, Series 2004, in an aggregate principal amount not to exceed $122,000,000 (the "Bonds"),to finance certain activities of the Agency , and has requested that the Taxing Agencies agree to subordinate their Tax Increment Revenue payments under the Agreement in order for the Agency to pledge such Tax Increment Revenue to the Bonds and to finance such activities and to achieve such debt service savings; and WHEREAS,pursuant to Section 2.8(b)(ii)of the Agreement, the Agency has provided the County with a report dated n_-, 17 , 2004,which includes revenue forecasts and a debt service schedule relating to the Bonds (the"Report"), showing that the Agency's anticipated ability to repay the Bonds can be made without demand being made on the aforementioned payments due to the Taxing Agencies under the Agreement. The Report shows that the aggregate of the Tax Increment Revenue payments to be subordinated are used in the cash.-flow relating to the Bonds,and are contemplated to be used by the Agency, only for additional security in the form of debt service coverage and that the Agency's Tax Increment DOCSSF1:776958.1 Revenues will be adequate, over the term of the Bonds, to pay one hundred percent(100%) of the actual debt service on the Bonds and on any other Long-Term Indebtedness or Refunding Indebtedness of the Agency and to pay the Agency's obligations under the Agreement, and any ether obligations of the Agency, whether statutory or contractual,which are or would be superior to the Agency's obligations under the Agreement. NOW, THEREFORE,the parties agree as follows: Section 1. The Taxing Agencies,pursuant to Section 2.8 of the Agreement, hereby subordinate their rights to receive tax increment revenue payments under Sections 2.8(b)(i)and(ii),respectively, of the Agreement, in order to allow the Agency to pledge such tax increment revenue to the proposed Long-Term Indebtedness to be incurred by the Agency. This agreement to subordinate relates to the following proposed Long-Term Indebtedness of the Agency, as more particularly set forth in the Report submitted to the Taxing Agencies: (a) The principal amount of the bonds to be sold shall not exceed $122,000,000. (b) The Agency shall issue the bonds on or before April 30, 2005. Section 2. In accordance with Section 2.8 of the Agreement,in the event that payments to the Taxing Agencies are reduced below the amount otherwise payable to them pursuant to the Agreement as a result of such subordination,then such reduction shall be treated as an advance by the Taxing Agencies and repaid by the Agency in accordance with the Agreement. Section 33. The Agency agrees to expend the proceeds of the bonded indebtedness in furtherance of the Amended Plan. DOCSSFI;77695$.1 2 I � c� t- I U i ! Cj� I , I d G3 t5' � O I c' U II � CL 1 i d C a I s ct� W OC-.. -C i � _ N C/1 Efi mac' L1. .� �- W v- tti OF. I .. 'gOC-. �C' N tie, Q CL <4• "`' O F. ro lea VIF6 ------------ Cl Cl a. 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Q._- Deputy DOCSSFI:776958.1 3