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HomeMy WebLinkAboutMINUTES - 10052004 - C45 Centra TO: BOARD OF SUPERVISORS CostaFROM: JOHN SWEETEN, "�:� 4 � County Administrator , s County coo � DATE: October 5, 2004 ce #5� SUBJECT: Subordination of County Water Agency AB 1290 Pass-Through Revenues for EI Cerrito Redevelopment Agency Bond Issuance SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: APPROVE the request for subordination of the County Water Agency's AB 1290 pass-through tax increment property tax revenues by the El Cerrito Redevelopment Agency for its pending 2004 bond issuance and for its previous 1997 bond issuance. FINANCIAL IMPACT: Based on staff analysis of financial projections, the El Cerrito Redevelopment Agency should be able to pay its debt payments and the amounts required to be paid to the County Water Agency and other affected taxing entities under the terms of pass-through agreements and AB 1290 pass-through requirements. BACKGROUND: This request would assist the Agency in issuing Tax Allocation Bonds (the "2004 Bonds") in the amount of$17,250,000 to fund eligible projects within the Agency's project area. The Agency has provided documents that demonstrate that the Agency will be able to meet its debt service requirements on the bonds, to be issued no later than December 31, 2004, and to pay the County Water Agency its pass-through monies. Therefore, it is appropriate to agree to the subordination request as provided for in Health and Safety Code section 33607.5(e). Any taxing entities that do not agree to subordinate pass-through payments are assumed to have a parity position to the bondholders. Usually subordination by statutory entities is automatic, if requested. However, because the El Cerrito Redevelopment Agency does not have the 1997 files showing that subordination was requested, they cannot assume that statutory pass-through payments are subordinate to 1997 or 2004 bondholder payments without this acknowledgement. CONTINUED ON ATTACHMENT: YES SIGNATURE: }" RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITT „✓` APPROVE OTHER fi- SIGNATURE S:C lz,�, ACTION OF BO PD N ;' ;v i,' ,,, 3 .�t APPROVED AS RECOMMENDED OTHER f'` f VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF UNANIMOUS(ABSENT f ) THE BOARD OF SUPERVISORS ON THE DATE SHOWN. AYES: NOES ABSENT: ABSTAIN: Contact: Cc: GAO's Office ATTESTED ' Gy� °� County Counsel JOHN SWEETEN,CLERK OF T7 BOARD 91FSUPERVISORS City of El Cerrito Jim Kennedy,Redevelopment f BY: f'' ! DEPUTY El Cerrito RDA Subordination of Water Agency Fuss-through revenues--September 24, 2004 Subordination can be explained as follows: The proposed tax allocation bondholders would be paid first in the unlikely event that there are insufficient tax revenues to pay bondholders and the taxing agencies. However, even if the RDA could not pay the agencies'full pass-through revenues in any given year, the RDA would still have that payment obligation, and the RDA would pay the taxing agencies as soon as flax revenues are available. Essentially this mechanism of subordination helps the RDA's insurance rating in the bond issuance process. This board order addresses the Water Agency's pass-through subordination specifically because staff presented a subordination agreement to the Board for the County, Library, and Flood Control District on September 21, per a fiscal agreement with those agencies. The Water Agency's pass-through is statutory; the pass-through for those other agencies is per that fiscal agreement. By law, these subordination requests for AB 1290 pass-through revenues are granted automatically unless a taxing agencies indicates its opposition within 45 days. The reason that El Cerrito is requesting formal action in this case is that the original records from the 1997 issuance requesting subordination cannot be located by the RDA. When the 1997 bonds were issued, there was a requirement that any new bonds be issued in parity to protect the 1997 bondholders from shifting to a subordinate position at a later date. Since the 2004 and 1997 bona issuances are in parity, the RDA cannot assume subordination for either issuance without an acknowledgment for both 2004 and 1997.