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2013 06 05 OBOVERSIGHT BOARD OF SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY AGENDA La Quinta City Council Chambers 78-495 Calle Tampico, La Quinta, California REGULAR MEETING Wednesday, June 5, 2013 at 2:00 p.m. Beginning Resolution No. 2013-006 CALL TO ORDER Roll Call: Board Members Ellis, Marshall, Maysels, McDaniel, Nelson, Osborne, Chairperson Pena PLEGE OF ALLEGIANCE PUBLIC COMMENT This is the time set aside for public comment on any matter not listed on the agenda. Please complete a "Request to Speak" form and limit your comments to three minutes. When addressing the Oversight Board, please state your name and address. CONFIRMATION OF AGENDA PRESENTATIONS - NONE APPROVAL OF MINUTES 1. MINUTES OF MARCH 13, 2013 WRITTEN COMMUNICATIONS - NONE CONSENT ITEMS - NONE BUSINESS ITEMS 1. RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY APPROVING THE ISSUANCE AND SALE OF SUBORDINATE TAX ALLOCATION REFUNDING BONDS BY THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH STUDY SESSION -NONE REPORTS AND INFORMATIONAL ITEMS - NONE CHAIR AND BOARD MEMBERS' ITEMS ADJOURNMENT The next regular meeting of the Oversight Board will be held on June 19, 2013, commencing at 2:00 p.m. at the La Quinta City Hall Council Chambers, 78-495 Calle Tampico, La Quinta, CA 92253, DECLARATION OF POSTING I, Pam Nieto, Oversight Board Secretary, of the City of La Quinta, do hereby declare that the foregoing Agenda for the Oversight Board for Successor Agency to La Quinta Redevelopment Agency meeting of June 5, 2013, was posted on the outside entry to the Council Chamber at 78-495 Calle Tampico, and the bulletin boards at the Stater Brothers Supermarket at 78-630 Highway 111, and the La Quinta Cove Post Office at 51-321 Avenida Bermudas, on May 30, 2013. ated: May 30, 2013 PAM NIETO Oversight Board Secretary Public Notices The La Quinta City Hall Council Chambers is handicapped accessible. If special equipment is needed for the hearing impaired, please call the City Clerk's office at (760)777-7103, twenty- four (24) hours in advance of the meeting and accommodations will be made. If special electronic equipment is needed to make presentations to the Oversight Board, arrangements should be made in advance by contacting the City Clerk's office at (760) 777- 7103. A one (1) week notice is required. 2 If background material is to be presented to the Oversight Board during a meeting, please be advised the ten (10) copies of all documents, exhibits, etc., must be supplied to the Oversight Board Secretary for distribution. It isrequested that this take place prior to the beginning of the meeting. Any writings or documents provided to a majority of the Oversight Board regarding any item on this agenda will be made available for public inspection at the City Clerk's counter at City Hall located at 78-495 Calle Tampico, La Ouinta, CA 92253, during normal business hours. . 3 OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MINUTES SPECIAL MEETING ON WEDNESDAY, MARCH 13, 2013 A special meeting of the Oversight Board of the Successor Agency to La Quinta Redevelopment Agency was called to order at 2:02 p.m. by Chairperson Pena. PRESENT: Board Members Ellis, Marshall, Maysels, Osborne, Chair Pena ABSENT: Board Member Nelson STAFF PRESENT: Frank J. Spevacek, Executive Director of the Successor Agency, Kathy Jenson, City Attorney and Robbeyn Bird, Finance Director PUBLIC COMMENT - None CONFIRMATION OF AGENDA - Confirmed APPROVAL OF MINUTES Motion - A motion was made by Board Members Maysels/Osborne to approve the Oversight Board Minutes of February 20, 2013, as submitted. Motion passed 4 ayes, 2 abstain (Board Members Ellis and McDaniel abstained due to their absence at the February 20, 2013 meeting►, 1 absent. BUSINESS SESSION 1. Resolution directing the Successor Agency to transfer to the City of La Quinta, certain governmental use properties; Resolution ratifying and approving the sale of certain properties; Resolution ratifying the use of redevelopment funds for the Highway 111 median island improvements RESOLUTION NO. OB 2013-003 A RESOLUTION OF THE OVERSIGHT BOARD OF THE CITY AS SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY DIRECTING THE SUCCESSOR AGENCY TO TRANSFER TO THE CITY OF LA QUINTA CERTAIN GOVERNMENTAL USE PROPERTIES PURSUANT TO HEALTH AND SAFETY CODE SECTION 34181 MOTION — A motion was made by Board Members Maysels/Ellis to adopt Resolution No. OB 2013-003. Motion passed 6 ayes, 0 noes, 1 absent, RESOLUTION NO. OB 2013-004 A RESOLUTION OF THE OVERSIGHT BOARD OF THE CITY AS SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY RATIFYING AND APPROVING THE SALE BY THE FORMER LA QUINTA REDEVELOPMENT AGENCY TO THE CITY OF LA QUINTA OF CERTAIN PROPERTIES PURSUANT TO HEALTH AND SAFETY CODE SECTION 34181 MOTION — A motion was made by Board Members Maysels/Osborne to adopt Resolution No. OB 2013-004. Motion passed 6 ayes, 0 noes, 1 absent. RESOLUTION NO. OB 2013-005 A RESOLUTION OF THE OVERSIGHT BOARD OF THE CITY AS SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY RATIFYING AND APPROVING THE PAYMENT BY THE FORMER LA QUINTA REDEVELOPMENT AGENCY FOR CERTAIN HIGHWAY 111 MEDIAN ISLAND IMPROVEMENTS MOTION — A motion was made by Board Members Maysels/Osborne to adopt Resolution No. OB 2013-005. Motion passed 6 ayes, 0 noes, 1 absent. REPORTS AND INFORMATION ITEMS Frank Spevacek, City Manager updated Finance due diligence review. the Board on the State Department of ADJOURNMENT There being no further business, it was moved by Board Members Osborne/Maysels to adjourn this meeting at 2:20 p.m. Motion passed unanimously. Respectfully submitted, Vianka Orrantia Oversight Board Secretary OVERSIGHT BOARD SPECIAL MEETING 2 March 13, 2013 War 4 4 a"Rej OVERSIGHT BOARD MEETING DATE: June 5, 2013 ITEM TITLE: RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY APPROVING THE ISSUANCE AND SALE OF SUBORDINATE TAX ALLOCATION REFUNDING BONDS BY THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH RECOMMENDED ACTION: AGENDA CATEGORY: BUSINESS SESSION: 1 CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: Adopt the attached Resolution authorizing the issuance of Subordinate Tax Allocation Refunding Bonds by the Successor Agency to the La Quinta Redevelopment Agency in the approximate amount of $197,575,000 to be issued as 2013 Series A Bonds and 2013 Taxable Series B Bonds and authorizing certain actions in connection therewith. FISCAL IMPACT: The overall estimated debt service savings of approximately $1.2 million annually or U2,000,000 over twenty years is calculated after all costs associated with the issuance of the refunding bonds have been paid. These costs have been conservatively estimated at $4.3 million, which includes bond insurance, surety bond fee, and legal and consultant costs. EXECUTIVE SUMMARY: The former Le Quints Redevelopment Agency (RDA) issued tax allocation bonds in order to advance fund public facility, infrastructure, economic development and affordable housing initiatives.. While the RDA no longer exists, the Successor Agency is responsible to fund bond debt service payments until all bonds are repaid (the final payment for the current bonds occurs in 2034). The current low interest rate environment affords the Successor Agency the opportunity to refinance the former RDA's 1998, 2001, 2002, 2003 and 2004- bonds. The resulting interest cost savings would reduce annual debt service by $1,200,000. The total cost savings would be $22,000,000 over the next 20 years. The bond payment date and final maturity date (2034) will stay the same; the outstanding bond principal amount will be reduced by approximately $5 million. • The school districts, County, City and other taxing agencies would benefit from this cost savings by receiving the property tax revenue that would otherwise be used for bond debt service. • Refinancing all of these bonds at one time reduces issuance costs, which also increases the property tax revenue distributed to the taxing agencies. BACKGROUND AND OVERVIEW Starting in 1985, the former RDA issued tax allocation bonds to raise capital to invest in infrastructure, public facility, economic development and affordable housing initiatives. Projects included the Cove retention basin and flood control improvements, Cove curb, gutter, street and water/sewer improvements, Whitewater Channel improvements, and Highway 111 improvements. Tax allocation bond proceeds were also used to fund SilverRock property acquisition and development, affordable housing development and economic development initiatives. Bond debt service payments are funded by property tax revenue. When the former RDA was eliminated in February 2012, the Successor Agency to the RDA assumed responsibility to ensure these debt service payments are made. These payments are classified as enforceable obligations and are tracked on the Recognized Obligation Payment Schedule (BOPS), with payments authorized twice annually. California Health and Safety Code (HSC) authorizes the Successor Agency to undertake proceedings for the refinancing of outstanding bonds and other obligations of the RDA, subject to the conditions contained in HSC §34177.5. Upon review, it has been determined that refinancing is in the best interest of the Successor Agency and that the statutory prerequisites can be met if the refinancing is approved. Additionally, the costs related to refunding proceedings can be recovered as authorized by HSC §34177.5(f). Final approval authority resides with the Oversight Board and the Department of Finance. The tax 'allocation bonds being considered for refinancing include those issued in 1998, 2001, 2002, 2003, and 2004. These bonds were used for a variety of projects, with $120 million allocated to finance capital projects in RDA Project Areas 1 and 2, and the remaining $78 million used to finance projects benefitting low and moderate income housing. The current economic environment provides the Successor Agency with an opportunity to lower the costs of annual debt service, which would result in an increase in property tax revenue allocations to all taxing agencies. It is anticipated that the refinancing will be split into two series of bonds. The 2013 Series A Bonds will be issued as Federally tax-exempt debt and the 2013 Series B Bonds will be 2 issued as Federally taxable debt. The tax status on the bonds is determined by how the proceeds of the previous bonds were spent, Federal Tax law and the number of prior refinancings. Interest rates on the bonds are conservatively estimated to range from 2% to 5% with the resulting yields ranging from 0.9% to 4.22% on the tax-exempt series. Current interest rates on the impacted bonds range from 4.5% - 6.44%. Taxable rates are estimated to range from 1.108% to 4.69% with yields the same. As an added benefit, the strategy put forth will result in two financings being issued to replace six that are currently outstanding, which will simplify the obligation schedule. The remaining 2011 issues will remain untouched leaving four issues outstanding when all is said and done. The bonds to be refinanced will be payable on the same dates (March 1 and September 1) and will mature on their regularly scheduled date without extension. In summary, refinancing these bonds will create a surplus that would bring the City some relief in repayment of recognized obligations, if needed. The $22 million projected savings over 20 years, if unencumbered by recognized obligations, will benefit the taxing agencies with approximately $14 million going to schools, $5 million to Riverside County, $1.6 million to the water district, $1.2 million to the City, and $600,000 to recreation and parks. ACTIONS: Oversight Board Resolution: Resolution of the Oversight Board to the Successor Agency to the La Quinta Redevelopment Agency approving the issuance and sale of Subordinate Tax Allocation Refunding Bonds by the Successor Agency to the La Quinta Redevelopment Agency and Authorizing Certain other actions in connection therewith. The attached Oversight Board Resolution provides for the following: 1) Approves the issuance by the Successor Agency of 2013 Series A Bonds and 2013 Taxable Series B Bonds; and 2) Authorizes the Chair of the Oversight Board and the officers of the City and Successor Agency as well as the members of the Governing Bodies and Staff to take such actions and execute documents necessary to facilitate the completion of the financings. ALTERNATIVES: The alternative to refinancing would be to leave the bonds as they stand. The obligation would remain at the existing higher costs of financing and savings will not be realized. Report prepared by: Amy McCormick, Business Analyst Report approved for submission by: Frank J. Spevacek, Executive Director Attachment: 1. Combined Bond Documents RESOLUTION NO. OB 2013- A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY APPROVING THE ISSUANCE AND SALE OF SUBORDINATE TAX ALLOCATION REFUNDING BONDS BY THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the La Quinta Redevelopment Agency (the "Prior Agency") was a public body, corporate and politic, duly created, established and authorized to transact business and exercise its powers under and pursuant to the provisions of the Community Redevelopment Law (Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California) (the 'Law"), and the powers of the La Quinta Redevelopment Agency included the power to issue Bonds for any of its corporate purposes; and WHEREAS, a Redevelopment Plan for a redevelopment project known and designated as the "La Quinta Redevelopment Project Area No. 1 " has been adopted and approved by Ordinance No. 43 of the City of La Quinta on November 29, 1983, and all requirements of the Law for and precedent to the adoption and approval of the Project Area No. 1 Redevelopment Plan, as amended, have been duly complied with; and WHEREAS, a Redevelopment Plan for a redevelopment project known and designated as the "La Quinta Redevelopment Project Area No. 2" has been adopted and approved by Ordinance No. 139 of the City of La Quinta on May 16, 1989, and all requirements of .the Law for and precedent to the adoption and approval of the Project Area No. 2 Redevelopment Plan, as amended, have been duly•complied with; and WHEREAS, the Prior Agency has previously issued $15;760;000 aggregate principal amount of the La Quinta Redevelopment Agency, La Quinta Redevelopment Project Area No. 1, Tax Allocation Refunding Bonds, Series 1998 (the "1998 Project Area No. 1 Bonds"); and WHEREAS, the Prior Agency has previously issued $6,750,000 aggregate principal amount of the La Quinta Redevelopment Agency, La Quinta Redevelopment Project Area No. 2, Tax Allocation Refunding Bonds, Issue of 1998 (the "1998 Project Area No. 2 Bonds"); and Resolution No. FA 2013-00 Adopted:1 Page 2 . WHEREAS, the Prior Agency has previously issued $48,000,000 La Quinta Redevelopment Agency, La Quinta Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2001 (the "2001 Project Area No. 1 Bonds"); and WHEREAS, the Prior Agency has previously issued $40,000,000 La Quinta Redevelopment Agency, La Quinta Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2002 (the "2002 Project Area No. 1 Bonds"); and WHEREAS, the Prior Agency has previously issued $26,400,000 La Quinta Redevelopment Agency, La Quinta Redevelopment Project Area No. 1, Tax Allocation Bonds, Taxable Series 2003 (the "2003 Project Area No. 1 Taxable Bonds"); and WHEREAS, the La Quinta Financing Authority (the "Authority') on behalf of the Prior Agency has previously issued $90,000,000 La Quinta Financing Authority, Local Agency Revenue Bonds, 2004 Series A (the "2004 Housing Bonds") and loaned the proceeds to the Prior Agency pursuant to the terms of a Loan Agreement dated February 3, 2004, as supplemented by a First Supplemental Loan Agreement, dated as of June 1, 2004 (the "Loan Obligation"); and WHEREAS, the Prior Agency has previously issued $6,000,000 La Quinta Redevelopment Agency, La Quinta Redevelopment Project Area No. 2 Subordinate Taxable Tax Allocation Bonds, Series 2011 (the "2011 Project Area No. 2 Taxable Bonds"); and WHEREAS, the Authority on behalf of the Prior Agency has previously issued $28,850,000 La Quinta Financing Authority, Local Agency Subordinate Taxable Revenue Bonds, 2011 Series A (the "2011 Taxable Housing Bonds") and loaned the proceeds to the Prior Agency pursuant to the terms of a loan agreement dated February 3, 2011 and a Second Supplemental Loan Agreement, dated as of March 1, 2011 (the "2011 Loan Obligation"); and WHEREAS, the Successor Agency has determined that it is cost effective and efficient to refund and defease, in their entirety, the 1998 Project Area No. 1 Bonds, the 1998 Project Area No. 2 Bonds, the 2001 Project Area No. 1 Bonds, the 2002 Project Area No. 1 Bonds, the 2003 Project Area No. f Taxable Bonds, and the Loan Obligation in connection with the 2004 Housing Bonds (collectively,. the "Refunded Bonds") on a subordinate basis to the 2011 Project Area No. 2 Taxable Bonds and the 2011 Loan Obligation (collectively, the 2011 Project Area No. 2 Taxable Bonds and the 2011 Loan Obligation, the "Senior Bonds'); and WHEREAS, the Successor Agency deems it necessary and proper to issue tax exempt tax allocation bonds for the purpose of refunding and defeasing the Resolution No. FA 2013-00 Adopted:1 Page 3 1998 Project Area No. 1 Bonds, the 1998 Project Area No. 2 Bonds, the 2001 Project Area No. 1 Bonds, the 2002 Project Area No. 1 Bonds, and approximately seventy-five percent (75%) of the Loan Obligation in connection with the 2004 Housing Bonds (the "Refunded Tax Exempt Bonds") all on a basis subordinate to the Senior Bonds; and WHEREAS, the Successor Agency deems it necessary and proper to also issue taxable tax allocation refunding bonds to refund and defease the 2003 Project Area No. 1 Taxable Bonds and the remaining approximate twenty-five percent (25%) of the Loan Obligation in connection with the 2004 Housing Bonds (the "Refunded Taxable Bonds") all on a basis subordinate to the Senior Bonds; and WHEREAS, for the corporate purposes of the Successor Agency, the Successor Agency deems it necessary to issue at this time tax allocation refunding bonds in two series in a total approximate principal amount of approximately one hundred ninety seven million, five hundred seventy five thousand dollars ($197,575,000) (the "Bonds"), and to irrevocably set aside a portion of the proceeds of such Bonds in a separate segregated trust fund which will be used to refund the outstanding Refunded Bonds of the Prior Agency, to pay costs in connection with the issuance of the Bonds, and to make certain other deposits as required by the Indenture (defined herein); and WHEREAS, the Successor Agency has approved all matters relating to the issuance and sale of the Bonds; and WHEREAS, the Oversight Board desires to approve all matters relating to the issuance and sale of the Bonds as required by Sections 34177.5 (f) and 34180 of the Health and Safety Code of the State of California. NOW THEREFORE, BE IT RESOLVED, by the Oversight Board of Successor Agency to La Quinta Redevelopment Agency, does hereby resolve as follows: Section 1. Each of the foregoing recitals is true and correct. Section 2. The issuance by the Successor Agency to the La Quinta Redevelopment Agency of the Bonds in a tax exempt series of approximately $154,625,000 but not to exceed, along with Series B Bonds, two hundred million dollars ($200,000,000) ("Series A Bonds") and a taxable series of approximately $42,950,000 but not to exceed, along with Series A Bonds, two hundred million dollars ($200,000,000) ("Series B Bonds") in an aggregate principal amount of approximately one hundred ninety seven million, five hundred seventy five Resolution No. FA 2013-00 Adopted;1 Page 4 thousand dollars ($197,575,000) (collectively, the 'Bonds") for the purpose set forth in the recitals hereof. Section 3. The issuance of the Bonds is in the best interest of the Successor Agency and the affected taxing agencies. Section 4. The Chair of the Oversight Board and the other officers and members of staff having responsibility for the affairs of the Successor Agency to the La Quinta Redevelopment Agency are hereby authorized to execute such agreements, documents, and certificates necessary to assist the Successor Agency in the issuance of the Bonds. Section 5. The application of the proceeds of the Bonds by the Successor Agency to the refunding of the Refunded Bonds, as well as the payment by the Successor Agency of the Costs of Issuance of the Bonds, as provided in the Indenture, shall be implemented by the Successor. Agency promptly upon delivery of the Bonds, notwithstanding Section 34177.3 of the Law or any other provision of law to the contrary, without the approval of the Oversight Board, the California Department of Finance, the Riverside County Auditor -Controller or any other person or entity other than the Successor Agency. Section 6. The Successor Agency shall enter the amounts of the final debt service determined upon sale and delivery of the Bonds into the Indenture and the amounts so entered shall be final and conclusive upon the Oversight Board, the California Department of Finance and all other interested persons and entities and the debt service schedule shall not be amended except as provided in the Indenture. Section 7. The Successor Agency is hereby authorized to recover its Costs of Issuance, as defined in the Indenture of Trust, dated as of June 1, 2013, by and between the Successor Agency and U.S., Bank National Association, including, without limitation, staff time, staff costs and bond insurance premiums. Section 8. This Resolution shall take effect immediately upon its adoption. PASSED, APPROVED, AND ADOPTED at the meeting of the Oversight Board of the Successor Agency to La Quinta Redevelopment Agency held this 5th day of June, 2013, by the following vote, to wit: AYES: NOES: Resolution No. FA 2013-00 Adopted:1 Page 5 ABSENT: ABSTAIN: JOHN PENA, Chairperson Oversight Board of the Successor Agency to La Quinta Redevelopment Agency ATTEST: PAM NIETO Oversight Board Secretary