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Home My WebLink AboutMINUTES - 10282008 - C.98 ,oma TO: BOARD OF SUPERVISORS Contra FROM: David Twa, County Administrator - Costa DATE: October 28, 2008 oo a �s'�ko County-- C -- SUBJECT: Subordination of Redevelopment Pass-Through Revenues for City of Pittsburg SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION(S) APPROVE attached Agreement Authorizing the Subordination of Revenues Related to Tax Allocation Bonds and Amendment of Fiscal Agreement and AUTHORIZE execution of Agreement by Chair, Board of Supervisors. FISCAL IMPACT It is expected that passthrough of revenues will continue as originally agreed.. The subordination agreement provides the Redevelopment Agency with added assurances for bond holders that agency debt will be replaced. CONTINUED ON ATTACHMENT: X YES SIGNATUR V<�� RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OARD COMMITTEE ❑ )<APPROVE ❑ OTHE SIIGvGNATURE(S):,. ACTION OF BOARD ON ❑ APPROVED AS RECOMMENDED ❑ OTHER VOTE OF SUPERVISORS: I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND Y UNANIMOUS(ABSENT ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. AYES: _NOES: _ ABSENT: ABSTAIN: ATTESTED: D a� Contact: Rich Seithel(335-1024) DAVID TWA,CLERK OF THE BOARD OF cc: SUPERVISORS AND COUNTY ADMINISTRATOR County Administrator's Office Auditor-Controller County Counsel By: Deputy Redevelopment Agency,City of Pittsburg 4 Page 2 RDA subordination, City of Pittsburg BACKGROUND In 1993, Contra Costa County ("County") entered into a Fiscal Agreement with the Pittsburg Redevelopment Agency ("Agency") outlining the terms under which the Agency would share tax increment revenues with the County. Primarily, the Agreement created a senior/subordinate relationship between the Agency' s bondholders and the County, wherein the Agency' s bondholders have a first priority claim on Agency tax increment revenues. In the Agreement, the Agency agreed that it will only issue bonds in such manner to ensure that sufficient tax increment revenues are available to pay its bonds without any need to use the County' s portion, while giving Agency' s bondholders a priority claim to the County' s portion. This allows the Agency to obtain lower borrowing rates for its capital program financing. If at any time, the Agency is required to use the County' s portion of tax increment revenues to pay its bonds, the Agreement provides that the Agency must repay the County for such tax increment revenues as soon as it is able to do so. Since 1993, the Agency has issued several series of bonds, and on each occasion has provided the County Administrator and the Auditor- Controller with substantial evidence of the sufficiency of projected tax increment revenues, as required by the Agreement. In the fourth calendar quarter of 2008, the Agency plans to issue up to $150 million in bonds to refinance a portion of its existing variable rate bonds, in connection with increased debt service costs caused by the current financial market dislocation and industry crisis. The attached Agreement Authorizing the Subordination of Revenues and Amendment of Fiscal Agreement amends the Agreement to provide for subordination of the County' s portion of tax increment revenues to the debt service on the Agency' s refunding bonds. The Auditor-Controller and County Administrator' s staff has reviewed the Agency' s calculation of revenues and debt service projections and feel that it is appropriate for the County, per Health and Safety Code Section 33607 . 5, to subordinate its payments to the Redevelopment Agency of the City of Pittsburg. AGREEMENT AUTHORIZING THE SUBORDINATION OF REVENUES RELATED TO TAX ALLOCATION BONDS AND AMENDMENT OF FISCAL AGREEMENT Effective / o 1�2?, 2008 )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, December 14, 2004 and November 14, 2006 (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 Refunding Bonds, in one or more series, in an aggregate principal amount not to exceed $150,000,000 (the "Bonds"), to refinance 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 July 12, 2008, 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 OHS West:2604701623 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-Tenn 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-Tenn 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 $150,000„000. (b) The Agency shall issue the bonds on or before December 31, 2008. 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:260470162.3 2 #► `ei COUNTY: AGENCY: COUNTY OF CONTRA COSTA REDEVELOPMENT AGENCY OF CONTRA COSTA COUNTY THE CITY OFERKTSBURG LIBRARY DISTRICT CONTRA COSTA COUNTY CONSOLIDATED FIRE Executive Director PROTECTION DISTRICT FLOOD CONTROL DISTRICT By: hair, Board of Supervisors i ATTEST: CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR By: 6w, Deputy Clerk Approved as to Form: COUNTY COUNSEL By: K(&� Deputy 0 OHS West260470362.3 3