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HomeMy WebLinkAboutMINUTES - 05121992 - 1.57 1 . 57 rev TO:` REDEVELOPMENT AGENCY Contra FROM: Phil Batchelor Costa o: , Executive DirectorCounty DATE: May 12 , 1992 SUBJECT: Sale of Bonds - Contra Costa County Redevelopment Project Areas. SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS 1. As the Board of Directors of the Contra �ilCosta County Public Financing Authority: A. Adopt a resolution authorizing . the issuance of revenue bonds to make four loans to the Contra Costa County Redevelopment Agency (Pleasant Hill BART, North Richmond, West Pittsburg, and Oakley Project Areas) ; and 'I B. Adopt a resolution as to procedural matters. 2 . As the . Contra Costa County Redevelopment Agency,, adopt a resolution .authorizing the borrowing of funds from the Contra Costa County Public Financing Authority; and 3 . As the Board of 'Supervisors, adopt a resolution approving 1) the issuance of bonds by the Contra Costa County Public Financing Authority;- 2) the borrowing of bond proceeds'by the Contra Costa County Redevelopment Agency; and 3) the refunding of the Redevelopment Agency's 1987 Tax Allocation Notes (Pleasant Hill BART Station Area) . CONTINUED ON ATTACHMENT: X YES SIGNATURE: J RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMEN ON OF AG CY COMMIT E APPROVE OTHER SIGNATURE(S) : ACTION OF AGENCY ON May 12, 1992 APPROVED AS RECOMMENDED X OTHER X IT IS BY THE AGENCY ORDERED that recommendation2is APPROVED; .and IT IS FURTHER ORDERED that it is DETERMINED to work closely with the Advisory Committees in each project area with respect to the expenditure of funds. VOTE OF COMMISSIONERS I HEREBY! CERTIFY THAT THIS IS A X UNANIMOUS (ABSENT I ) TRUE AND� CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE REDEVELOPMENT AGENCY ON THE DATE SHOWN. cc: Community Development SRA24/jb/bndsale.bos ATTESTED May 12, 1992 PHIL BATCHELOR, AGENCY SECRETARY BY AAA JA I i �Pos , DEPUTY �i . • FISCAL IMPACT i� The bonds to be issued will be secured by a pledge of redevelopment tax increments from the Pleasant Hill BART Station, North Richmond, West Pittsburg, and Oakley Redevelopment Project Areas. No General Funds are pledged to secure bonds. Sufficient annual tax increment to cover administrative costs of the Agency has been reserved. P� The Agency anticipates taking advantage of the lowest rates in the credit markets in approximately 20 years. ,Combining the four redevelopment project areas into one issuance Oflbonds through the Public Financing Authority will result in a more efficient financing. BACKGROUND/REASONS FOR RECOMMENDATIONS A. Prior Actions On April 7, 1992 the Board of Supervisors and the Redevelopment Agency approved the formation'i�iof the County of Contra Costa Public Financing Authority for the purpose of issuing bonds for four of the RedevelopmentlAgency's project areas - Pleasant Hill BART, North Richmond, West Pittsburg and Oakley. B. Sources and Uses of Funds Based on available and expected tax increment, the Authority would expect to issue approximately $30 million in bonds. The total amount of funds available for program purposes would be over $26,-500, 000 as follows: Project Area Program Proceeds Pleasant Hill BART $20', 500, 000 North Richmond 11, 000, 000 West Pittsburg 2,, 300, 000 Oakley 211700, 000 Anticipated uses of bond proceeds include infrastructure improvements, housing, and economic development. 'l� The following is a general description of use of proceeds (precise use will be determined in the Agency's budget setting process) : Pleasant Hill BART Refinance Existing Notes $ 7, 500, 000 Bancroft Extension 10,000, 000 Other Infrastructure 3 , 000, 000 Total $20,.500,000 North Richmond Brookside Drive $ 700, 000 Repayment of County Debt 100, 000 ,Housing 200, 000 Total $ 1,000,000 West Pittsburg Willow Pass Road Reconstruction $ 750, 000 Other Infrastructure 550, 600 Economic Development 500, 000 Housing 500, 600 Total $ 21,300,000 Oakley Highway 4 Improvements $ 480, 000 Other Infrastructure* 1, 120, 000 Economic Development 500, 000 Housing 600, 000 Total $ 2,700,000 *Could include additional Highway 4 improvements, drainage projects, localized improvements, including '', downtown park improvements, library improvements. • C. Escrow Bond Feature - Pleasant Hill BART A portion of the Pleasant Hill BART proceeds - $7.2 million - will be escrowed for approximately two years. Funds will be available for use when the Agency has sufficient tax increments to debt service the bonds. The Agency expects to have sufficient tax increments once the Park Regency project is fully built and reflected in its tax increments. The project is under construction and expected to be fully built out by the end of this year. Additional smaller projects/tenant improvements are also expected to increase the Agency's tax increment revenues. D. Oakley Municipal Advisory Committee Recommendation On May 4, 1992, the Oakley Municipal Advisory Committee (OMAC) voted against a staff recommendation to incur bonded indebtedness as generally outlined above for the Oakley Redevelopment Project Area. Previously GMAC members had expressed four concerns: 1. Inclusion with other County Project Areas; 2 . Funds from Oakley would go to other areas; 3 . Use of funds, and decision-making process involved; and 4 . Effect on cityhood. Staff responded to the concerns (Attachment A) . After discussion, the only remaining issueZ for GMAC was perceived effect on Oakley incorporation efforts, and a belief that the new "city" should make these decisions. GMAC voted 3-2-1 to recommend not proceeding with bonded indebtedness, and to `proceed only on a -"Pay-as-you-go" basis. Staff believes - the proposed financing would not impair incorporation efforts. Should the Oakley community incorporate, the Redevelopment function can be transferred at the request of the new city, and the consent of the County. Furthermore, - the proposed financing would obligate less than 5% of the future Oakley tax increments, leaving 95% of the funds available for "city" determination, if incorporation occurs. Staff believes the value of the proposed improvements, the historically low interest rates, and the ability to achieve economic efficiencies by combining with other project areas outweigh the concern regarding "city" control. GMAC was aware of staff's position on this matter at the time of its action. i 1 'r Y } 8 fj u 3 Excerpt form 51/4/92 memo to QMAC IV. Response to OMAC Concerns A. Inclusion of Oakley in a Plan of Finance with other County Redevelopment Project Areas Why is this proposed? This is proposed for two , reasons, ' both associated with making the financing more efficient:. 1. Economies of scale in debt issuance ' r Issuing bonds involves certain fixed costs that would be a proportionately higher percent of a small transaction than a pooled and larger transaction. For example, Table I below presents the anticipated sources and uses of funds fo"r Oakley in these two circumstances. As you can see, the net available Project Funds is larger by almost $60,000 as part of th� larges transaction. TABLE 1 . COMPARISON OF STAND-ALONE VS POOLED BOND ISSUE Oakley Oakley Pooled Stand-Alone Amount of Bonds $2,970,000 a 52,970,000 Expenses ° rt 72,640 p 160,000 Debt Service Reserve 247,360 247,360 Contingency 1,060 1,060 Capitalized Interest. 79,000 79,000 Net Project Funds $2,541,000 52,482,580, 2. Enhanced security by cross collateralizing the Oakley' Housing Fund with West Pittsburg and North Richmond. i t 6. I{ Y Y, a v 3 U s ;r The proposed transaction includes cross-collateralization of the above housing funds. This means that should additional revenues be necessary to meet debt service (recall that this is unlikely due to high Debt Service Coverage ratios) in one project area, housing funds could be loaned to the one Project Area from one or both of the others. Because this increases the security of the bonds, the bond holders will accept a lower interest.it Our bankers estimate that this savings is 25-50 basis points, or 1/4-1/2 of, 1% in interest.costs. The beneficial effect for Oakley is that the same amount of debt service requirement .will -purchase $150,000- $300,000 in capital when pooled with the other Project Areas, a sizable amount. B.` Funds would go to other areas. r Onlythe Oakley housing revenues could ever be �iverted, and then only Y 9 , on a loan basis. The bond proceeds must, be used in Oakley. .The likelihood of this occurring is small given the Debt Service Coverage ratios in the other Project Areas*, their size; and their economic diversity. C. :. Use of Proceeds - Decision-Making t OMAC is the authorized advisory body for the Redevelopment Agency. OMAC represents the community interests. V Their , advice and recommendations will be heard, although final decision-making authority does rest with the Board of Supervisors sitting as the Agency. — Of the net proceeds, approximately only 37% are programmed as of the date of issuance. The remaining 63% of the funds are for discretionary projects that will be evaluated and prioritized byIjOMAC. The already programmed funds reflect prior direction providedlby GMAC, i.e., funds for Highway 4 improvements, and for a first-time homebuyers housing program st a *Debt Service Coverage ratios in West Pittsburg are estimated ito start at 2.3/1 and climb to 2.6/1; in North Richmond to start at 1 .24/1 and climb to 3.4/1; and in Oakley to start at 2.57/1 and-climb to 3.57/1 . R 4 �1 V A 7• tN f r 3 x 7 n� Discretionary projects could include thef Mowing: aDowntown Infrastructure Improvements b. . Library ,i c.' Park Acquisition/Development d tEconomic Development Ro'ad°lm'provemen ts f. .Drainage Improvements g. Other-"improvements not- yet identified, but perhaps emerging froSpecificm downtownPlan. D. Effect on,Cityhood 'Should the City Jncorporate, and include the. entire Redevelopment Project:Area,-it.Would have the:option to assume the redevelopment . function.>::It would::assume the:assets :(revenues) and liabilities (debts, including bonded indebtedne"ss). The existence of bonded indebtedness . does not impair prospects for cityhood The proposed financing would obligate only 4%, of the maximum tax :;increments allowed.to be received by the Project Area. Similarly, only 4% of the Oakley Project Area debt cap would 6 used. Effectively, over 95% of the Oakley Project Area's financing)decisions are beyond the date of this financing. y Whether the City would be able to be more efficient in using the funds is -speculative, and limited to the issue of funding design and :construction brigineering (the cost of a facility built to same standards — would not vary). The view that the City could save money by paying less or contracting for services is offset by certain efficiencies of scale ::: achievable through a larger organization such as the County V. Staff Recommendation Staff is recommending that OMAC concurs with the inclusion of Oakley in the Redevelopment Agency's-Plan of Finance for its 1992 bonds. OMAC'would'be intimately involved in the allocation of most of the bond'i proceeds. 1 SM24(b/omacdebt.mem i 8. j i 1 14 RESOLUTION NO. RA 92-4 i A RESOLUTION OF THE CONTRA COSTA COUN'T'Y REDEVELOPMENT AGENCY AUTHORIZING THE BORROWING OF FUNDS FROM THE COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY RELATING TO THE AGENCY'S PLEASANT HILL,NORTH RICHMOND, WEST PITTSBURG AND OAKLEY REDEVELOPMENT?PROJECTS, AUTHORIZING AND DIRECTING EXECUTION OF RELATED LOAN AGREEMENTS,APPROVING SALE OF BONDS BY THE AUTHORITY AND AUTHORIZING OFFICIAL ACTIONS WHEREAS, the County of Contra Costa (the "County") 'land the Contra Costa County Redevelopment Agency (the "Agency") have heretofore entered into a Joint Exercise of Powers Agreement establishing the County of Contra Costa Public Financing Authority (the "Authority") for the purpose, among others, of issuing its bonds to be used to provide financial assistance to the Agency; and WHEREAS, the Agency is undertaking to assist the redevelopment of-its Pleasant Hill, North Richmond, West Pittsburg and Oakley Redevelopment Projects (collectively, the "Redevelopment Projects"), and the Agency has previously issued its Pleasant Hill BART Station Area Redevelopment Project 1987 Tax Allocation Notes in the initial aggregate principal amount of$7,500,000 (the "Notes"); and ii WHEREAS, the Agency has determined that due to prevailing financial market conditions it is in the best interests of the Agency to realize interest rate savings by refunding the Notes at this time, and the Agency has requested the Authority to lend it funds in an amount sufficient for such purpose and also to provide additional financing for the Redevelopment Projects, including low and moderate income housing programs of the Agency; and WHEREAS, for the purpose of raising funds necessary to provide such financial assistance to the Agency, the Authority proposes to authorize the9issuance of its revenue bonds (the "Bonds") under the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of.California (the "Act"), designated as the County of Contra Costa Public Financi"ng Authority 1992 Tax Allocation Revenue Bonds, Series A (Pleasant Hill, North Richmond, West Pittsburg and Oakley Redevelopment Project Areas); and 111 WHEREAS, the proceeds of the Bonds will be applied to make four loans (collectively the "Loans") to the,.Agency pursuant to four separate 'Loan Agreements, each dated as of May 1, 1992 (collectively, the "Loan Agreements"); and N WHEREAS, the firms of Stone & Youngberg and Artemis Capital Group, Inc. (collectively, the "Underwriters") have proposed to purchase and 1 underwrite the Bonds and have presented to the Agency a form of Purchase Agreement for the Bonds, to be entered into among the Authority, the Agency and the Underwriters (the "Purchase Agreement") and have presented the Agency with a proposed fore of official statement (the "Official Statement") describing the Bonds, to be used i'n connection with the marketing of the Bonds by the Underwriters; and WHEREAS, the Agency has duly considered such transactions and wishes at this time to approve said transactions in the public interests of the Agency. i � L NOW, THEREFORE, BE IT RESOLVED, by the Contra Costa County Redevelopment Agency as follows: Section 1. Findings and Determinations. Pursuant to the !'Act, the Agency hereby finds and determines that the issuance of the Bonds will result in savings in effective interest rates, bond underwriting costs and bond issuance costs and thereby result in significant public benefits to the members of the Authority within the contemplation of Section 6586 of the Act. Section 2. Approval of Loans from Authority;Loan Agreements. The Agency hereby authorizes and approves the borrowing by the Agency from the Authority of the proceeds of the Bonds pursuant to and in accordance with the from, of the Loan Agreements; provided that the aggregate principal amount of the Loans does not exceed $35,000,000. The Agency hereby approves the Loan Agreements in substantially the form of the Loan Agreement on file with the Secretary, together withi such additions thereto and changes therein as the Deputy Director - Redevelopment Agency shall deem necessary, desirable or appropriate, the execution of which by the Agency shall be conclusive evidence of the approval of any such additions and4, changes. The Chair, Executive Director, Assistant Executive Director, Deputy Executive Director and Deputy Director - Redevelopment (the. "Designated Officers"), each acting alone, are hereby authorized and directed to execute, and the Secretary is hereby authorized and directed to attest and affix the seal of the Agency to, the final form of each of the Loan Agreements for and in the name and on behalf of the Agency. The Agency! hereby authorizes the. delivery and performance of the Loan Agreements. Section 3. Sale of Bonds. The Agency hereby approves the sale of the Bonds by the Authority by negotiation with the Underwriters, pursuant to the Purchase Agreement in substantially the form on file with the Secretary, together with such additions thereto and changes therein as the Deputy Director - Redevelopment Agencyli shall deem necessary, desirable or appropriate, the execution of which by the Agency shall be conclusive evidence of the approval of such additions and changes. The Designated Officers, each acting alone, are hereby authorized and directed to execute the final form of the Purchase Agreement for and in the name and on behalf of the Agency upon the submission of an offer by the Underwriters to purchase the Bonds, which offer is acceptable to the Deputy Director - Redevelopment and consistent with the requirements of this Resolution. The amount of Underwriters' discount for the Bonds shall be not more than two percent (2%) of the par amount thereof(not taking into account any original issue discount on the sale thereof) and the net effective rate of interest to be represented by the Bonds shall not exceed nine percent (9%) per annum. Section 4. Official Statement. The Agency hereby approves' the preparation of, and hereby authorizes the Designated Officers, each acting alone, to deem final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934 except for permitted omissions, the preliminary form of the Official Statement ',describing.the Bonds. Distribution of such preliminary Official Statement by the Underwriters is hereby approved. The Designated Officers, each acting alone, are hereby authorized to execute the final form of the Official Statement, including as it may be modified by such additions thereto and changes therein as the Deputy Director - Redeelopment shall deem necessary, desirable or appropriate, and the execution of the final Official Statement by the Agency shall be'conclusive evidence of the approval of any such additions and changes. The Agency hereby authorizes the distribution of the final Official Statement by the Underwriters. The final Official Statement shall be executed in the name and on -2- Resolution No. RA- 92-4 behalf of the Agency by a Designated Officer. Section 5. Official Actions. The Chair, the Executive Director, the Assistant Executive Director, the Deputy Executive Director, the Deputy Director - Redevelopment, the Secretary and any and all other officers of the Agency are ,hereby authorized and directed, for and in the name and on behalf of the Agency, to do any and all things. and take any and all actions, including execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants, escrow agreements and other documents which they,'I or any of them, may deem necessary or advisable in order to consummate the lawful issuance and sale of the Bonds, the making of the Loans and the redemption of the Notes a'i