HomeMy WebLinkAboutMINUTES - 11142006 - C.136 ,��.EE_ r, _ Contra
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�TO: BOARD OF SUPERVISORS .,:_-� �=�•.,.
FROM: JOHN CULLEN, `'s Costa
County Administrator
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DATE: November 14, 2006 9-------- County
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C. 13 c
SUBJECT: Subordination of Tax Increment Revenues for Pittsburg Redevelopment Agency
Bond Issuance 2006
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION:
APPROVE and AUTHORIZE the Chair, Board of Supervisors to execute the Subordination
Agreement (Attachment A), dated November 14, 2006, subordinating revenues due to the County,
Fire, Library and Flood Control Districts (Taxing Agencies) for tax allocation bonds, pursuant to July
20, 1993 agreement among said parties and the Redevelopment Agency of the City of Pittsburg, for
the subordination of additional tax increment revenue payments to the Taxing Agencies, in order for
the Pittsburg Redevelopment Agency to pledge such tax increment revenue to the Los Medanos
Community Development Project Subordinate Tax Allocation Bonds, Series 2006 (Taxable) and
Series 2006 (Tax-Exempt) and Los Medanos Community Development Project Subordinate Tax
Allocation Refunding Bonds, Series 2006.
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 a pass-through agreement.
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:
'Z_Z__'�;,/k,--__
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD CO E
_1G APPROVE OTHER
SIGNATURE(S):9F/,___?_4Z_.e�
ACTION OF BO D N /Y Ll,,
Z5yJJZ1- y , �)/l�j APPROVED AS RECOMMENDED �- O ER
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT
COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF
THE BOARD OF SUPERVISORS ON THE DATE SHOWN.
UNANIMOUS(ABSENT
AYES: NOES:
ABSENT: ABSTAIN:
Contact: John Gregory,335-1089
Cc: CAO,Attn:John Gregory ATTESTED
Auditor-Controller,Attn:Elizabeth Verigin JOHN CULLEN,CLERK OF THE BOARD OFSUPERV SORS
County Counsel,Attn:Sharon Anderson
City of Pittsburg,Attn:Marc Grisham _
CCC Redevelopment,Attn:Jim Kennedy BY: _ — DEPUTY
Pittsburg Redevelopment,Attn: Randy Starbuck
-Such,-a subordination has previously been granted in connection with tax allocation bond issuances of
the Agency in connection with tax allocation bond issuances of the agency.
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 March 18, 2003, the County approved an amendment to the Project area so that the Agency
could issue Series 2003 Tax Allocation Bonds in an amount not to exceed $110 million.
On December 14, 2004, the County approved an amendment to the Project area so that the Agency
could issue Series 2004 Tax Allocation Bonds in an amount not to exceed $122 million.
The County has previously approved subordination to this Agency's obligations on over $300 million
of bonds.
The Agency now intends to incur additional long-term indebtedness in an aggregate principal amount
not to exceed $180 million. The Agency has provided the County with a report (Attachment B) that
includes revenue forecasts and a debt service schedule relating to all of the Agency's current
outstanding bonds and bonds to be issued. The report shows that the Agency's anticipated ability to
repay such bonds can be made without demand 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
contemplated to be used only for additional security (debt service coverage) and that the Agency's
tax increment revenues will be adequate, over the term of such bonds, to pay one hundred percent
(100%) of the actual debt service thereon and to pay the Agency's obligations under the Agreement,
and any other obligations of the Agency, whether statutory or contractual, which are or would be
superior to the Agency's obligations under the Agreement or the statutory pass-through.
Based on a review of the projected revenues above all obligations prepared by De La Rosa & Co.
(attachment C), staff of the County Redevelopment Agency and the County Administrator's Office
recommend approval of the subordination request.
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.
AGREEMENT AUTHORIZING THE
SUBORDINATION OF REVENUES
RELATED TO TAX ALLOCATION BONDS AND
AMENDMENT OF FISCAL AGREEMENT
Effective , 2006
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, March 18, 2003 and December 14, 2004 (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 Subordinate Tax Allocation Bonds, Series 2006 (Taxable) and
Series 2006 (Tax-Exempt) and Los Medanos Community Development Project Subordinate Tax
Allocation Refunding Bonds, Series 2006, in an aggregate principal amount not to exceed
$180,000,000 (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,
including scheduled payments with respect to any related agreements such as credit enhancement
instruments (e.g. liquidity facilities or letters of credit), interest rate hedging agreements and
similar arrangements, for purpose of financing such activities and achieving 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 as of November 1, 2006, which includes revenue
forecasts and a debt service schedule relating to the Bonds (the "Report"), showing that the
OHS WEST:260094496.1
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
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, including scheduled payments with respect to any related
agreements such as credit enhancement instruments (e.g. liquidity facilities or letters of credit),
interest rate hedging agreements and similar arrangements and to pay the Agency's obligations
under the Agreement, and any other 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,
including scheduled payments with respect to any related agreements such as credit enhancement
instruments (e.g. liquidity facilities or letters of credit), interest rate hedging agreements and
similar arrangements.
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
$180,000,000.
(b) The Agency shall issue the bonds on or before March 31, 2007.
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 3. The Agency agrees to expend the proceeds of the bonded
indebtedness in furtherance of the Amended Plan.
OHS WEST:260094496.1 2
COUNTY: AGENCY:
COUNTY OF CONTRA COSTA REDEVELOPMENT AGENCY OF
CONTRA COSTA COUNTY THE CITY OF PITTSBUR
LIBRARY DISTRICT
CONTRA COSTA COUNTY By ,
CONSOLIDATED FIRE . Executive Director
PROTECTION DISTRICT
FLOOD NTR L DISTRICT
By:
h r, Board of Supervisors
ATTEST:
CLERK OF THE BOARD OF SUPERVISORS
AND COUNTY ADMINISTRATOR
By:-
Deputy Clerk
Approved as to Form:
COUNTY COUNSEL
By:
Deputy
OHS WEST:260094496.1 3
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