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2016 07 06 OBSepf�Gl�LrGv OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY AGENDA La Quinta City Council Chambers 78-495 Calle Tampico, La Quinta, CA Special Meeting on Wednesday, July 6, 2016 at 2:00 p.m. CALL TO ORDER Roll Call: Board Members: Henderson, Howell, Marshall, Maysels, Nelson, Novak, Chair Osborne PLEDGE 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 WRITTEN COMMUNICATIONS - NONE CONSENT ITEMS 1. MINUTES OF SEPTEMBER 16, 2015 AND JANUARY 20, 2016 BUSINESS ITEMS 1. ADOPT A RESOLUTION APPROVING A BOND EXPENDITURE AGREEMENT WITH THE CITY OF LA QUINTA, THE LA QUINTA HOUSING AUTHORITY, AND THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY TO FACILITATE THE EXPENDITURE OF EXCESS BOND PROCEEDS (Resolution No. OB 2016-004) 2. ADOPT A RESOLUTION FOR ISSUANCE AND SALE OF SUBORDINATE TAX ALLOCATION REFUNDING BONDS (Resolution No. OB 2016-005) STUDY SESSION - NONE REPORTS AND INFORMATIONAL ITEMS - NONE CHAIR AND BOARD MEMBERS' ITEMS EXECUTIVE DIRECTOR ITEMS 1�/�:7:T_1�11��7e����7►��1AL�lx.�►��7:7_Tel�►[�l'�u1e��l�:T.1 ADJOURNMENT The next regular meeting of the Oversight Board will be held on an as needed basis 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 do hereby declare that the foregoing Agenda for the Oversight Board for Successor Agency to La Quinta Redevelopment Agency meeting of July 6, 2016 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 July 1, 2016 Dated: July 1, 2016 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. 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 is requested 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 Quinta, CA 92253, during normal business hours. Consent Calendar Item No. 1 OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY MINUTES WEDNESDAY, SEPTEMBER 16, 2015 A meeting of the Oversight Board of the Successor Agency to the La Quinta Redevelopment Agency was called to order at 2:01 p.m. by Chair Osborne. PRESENT: Board Members Henderson, Howell, Marshall, Novak, Chair Osborne ABSENT: Board Members Maysels, Nelson STAFF PRESENT: William Ihrke, City Attorney, Frank J. Spevacek, Executive Director of the Successor Agency PUBLIC COMMENT - None CONFIRMATION OF AGENDA - Confirmed PRESENTATIONS - None APPROVAL OF MINUTES Motion - A motion was made by Board Members Henderson/Howell to approve the Oversight Board Minutes of February 18, 2015, as submitted. Motion passed. BUSINESS SESSION 1. ADOPT RESOLUTION APPROVING THE RECOGNIZED OBLIGATION PAYMENT SCHEDULE FOR THE PERIOD OF JANUARY 1 THROUGH JUNE 30, 2016 (Resolution No. OB 2015-003 ) RESOLUTION NO. OB 2015 - 003 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY ADOPTING RECOGNIZED OBLIGATION PAYMENT SCHEDULE 15-16B FOR THE PERIOD OF JANUARY 1, 2016 THROUGH JUNE 30, 2016 MOTION - A motion was made by Board Members Henderson/Marshall to adopt Resolution No. OB 2015-003. Motion passed 5 ayes, 0 noes, 2 absent. 2. ADOPT RESOLUTION APPROVING SUCCESSOR AGENCY ADMINISTRATIVE BUDGET FOR JANUARY 1 THROUGH JUNE 30, 2016 (Resolution No. OB 2015-004 ) RESOLUTION NO. OB. 2015-004 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY APPROVING THE SUCCESSOR AGENCY ADMINISTRATIVE BUDGET FOR THE PERIOD OF JANUARY 1, 2016 THROUGH JUNE 30, 2016. MOTION - A motion was made by Board Members Novak/Howell to adopt Resolution No. OB 2015-004. Motion passed 5 ayes, 0 noes, 2 absent. REPORTS AND INFORMATION ITEMS - None EXECUTIVE DIRECTOR ITEMS City Attorney William Ihrke gave a report on Senate Bill 107 and the effects it will have on the City of La Quinta if signed. ADJOURNMENT There being no further business, it was moved by Board Members Henderson/Howell to adjourn the meeting at 2:34 p.m. Motion passed unanimously. Respectfully submitted, Pam Nieto Oversight Board Secretary OVERSIGHT BOARD MEETING 2 September 16, 2015 OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY MINUTES WEDNESDAY, JANUARY 20, 2016 A meeting of the Oversight Board of the Successor Agency to the La Quinta Redevelopment Agency was called to order at 2:01 p.m. by Vice Chair Nelson. PRESENT: Board Members Henderson, Marshall, Maysels, Vice Chair Nelson ABSENT: Board Members Howell, Novak, Chairperson Osborne STAFF PRESENT: William Ihrke, City Attorney, Frank J. Spevacek, Executive Director of the Successor Agency, Rita Conrad, City Finance Director PUBLIC COMMENT - None CONFIRMATION OF AGENDA - Confirmed PRESENTATIONS - None APPROVAL OF MINUTES There was not a quorum of members present who were in attendance at the September 16, 2015 meeting to approve those minutes. BUSINESS SESSION 1. ADOPT RESOLUTION APPROVING THE RECOGNIZED OBLIGATION PAYMENT SCHEDULE FOR THE PERIOD OF JULY 1, 2016 THROUGH JUNE 30, 2017. RESOLUTION NO.OB 2016 - 001 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY ADOPTING RECOGNIZED OBLIGATION PAYMENT SCHEDULE 16-17 FOR THE PERIOD OF JULY 17 2016 THROUGH JUNE 30, 2017 MOTION - A motion was made and seconded by Board Members Maysels/Marshall to adopt Resolution No. OB 2016-001. Motion passed 4 ayes, 0 noes, 3 absent. 2. ADOPT RESOLUTION APPROVING SUCCESSOR AGENCY ADMINISTRATIVE BUDGET FOR THE PERIOD OF JULY 1, 2016 THROUGH JUNE 30, 2017. RESOLUTION NO. OB. 2016-002 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY APPROVING THE SUCCESSOR AGENCY ADMINISTRATIVE BUDGET FOR THE PERIOD OF JULY 1, 2016 THROUGH JUNE 30, 2017 MOTION - A motion was made and seconded by Board Members Henderson/Marshall to adopt Resolution No. OB 2016-002. Motion passed 4 ayes, 0 noes, 3 absent. 3. ADOPT RESOLUTION REDUCING THE FREQUENCY OF OVERSIGHT BOARD MEEITNGS. 1:7 *91ILI] 119P►I'll,NX ] -WIJ 10W1I:1 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY REDUCING THE FREQUENCY OF OVERSIGHT BOARD MEETINGS MOTION - A motion was made and seconded by Board Members Marshall/ Henderson to adopt Resolution No. OB 2016-003. Motion passed 4 ayes, 0 noes, 3 absent. STUDY SESSION - None REPORTS AND INFORMATIONAL ITEMS - None CHAIR AND BOARD MEMBERS' ITEMS - None EXECUTIVE DIRECTOR ITEMS - None ADJOURNMENT - There being no further business, it was moved by Board Members Maysels/Marshall to adjourn the meeting at 2:24 p.m. Motion passed 4 ayes, 0 noes, 3 absent. Respectfully submitted, Teresa Thompson for Pam Nieto Oversight Board Secretary OVERSIGHT BOARD MEETING 2 JANUARY 20, 2016 BUSINESS ITEM 1 City of La Quinta OVERSIGHT BOARD MEETING. July 5, 2016 STAFF REPORT AGENDA TITLE° ADOPT A RESOLUTION APPROVING A BOND EXPENDITURE AGREEMENT WITH THE CITY OF LA QUINTA, THE LA QUINTA HOUSING AUTHORITY, AND THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY TO FACILITATE THE EXPENDITURE OF EXCESS BOND PROCEEDS RECOMMENDATION Adopt a Resolution approving a Bond Expenditure Agreement by and between the City of La Quinta, the La Quinta Housing Authority, and the Successor Agency to the La Quinta Redevelopment Agency. EXECUTIVE SUMMARY • The Successor Agency to the La Quinta Redevelopment Agency (Successor Agency) received its finding of completion from the California Department of Finance (DOF) on November 6, 2013. • The Dissolution Act allows a Successor Agency that has received a finding of completion to enter into agreements with City or Housing Authority as appropriate to expend excess bond proceeds in a manner consistent with the original bond covenants. • The Oversight Board is required to approve the expenditure agreement prior to submitting to DOF for final approval. • The expenditure agreement will be included as an enforceable obligation on Recognized Obligation Payments Schedule (ROPS) 2017/18 and will enable the Successor Agency to proceed with its submittal of a last and final ROP's. FISCAL IMPACT This agreement will facilitate the expenditure of bond proceeds for their originally intended purpose. BACKGROUND/ANALYSIS The Successor Agency received its finding of completion from DOF on November 6, 2013. In September of 2015, Senate Bill 107 was enacted that allows for the expenditure of 100% of 2011 Housing Bond Proceeds and a portion of the 2011 Non -Housing Bond Proceeds. The Dissolution Act allows Successor Agencies that received a finding of completion to enter into bond proceeds agreements to expend excess proceeds in a manner consistent with the original bond covenants. Housing Bond Proceeds totaling $27,761,073 would be transferred to the Housing Authority as follows: • Project Areas No. 1 and 2 Refunding Bonds, 2014 Series A (used for refinancing 2004 Tax Allocation Housing Bonds) in the approximate amount of $2,200,000 • La Quinta Financing Authority Local Agency Subordinate Taxable Revenue Bonds, 2011 Series A (2011 Housing Bonds) in the amount of $25,561,073. Non -Housing Bond Proceeds totaling $6,696,805 would be transferred to the City as follows: • Project Areas No. 1 and 2 Refunding Bonds, 2013 Series A (used for refinancing 2002 Tax Allocation Bonds) in the amount of $6,575,791.87 • La Quinta Redevelopment Agency Project Area No. 2 Subordinate Taxable Tax Allocation Bonds, Series 2011 (2011 Non -Housing Bonds). Currently 5% of the $2,420,268.52 in proceeds or $121,014.33 may be expended. This percentage could increase by $500,000 after DOF reviews and approves the Successor Agency's Last and Final ROPS. The Housing Authority and City respectively have the responsibility to spend the proceeds consistent with the bond covenants and on projects identified within a bond spending plan. Currently the Washington Street Apartments Projects is identified as a housing project and the construction of Silverrock Way is a non -housing project. Both the City and Housing Authority can amend their respective spending plan as deemed necessary and at their sole discretion provided the expenditures remain consistent with the applicable bond covenants. Approving this agreement will facilitate the expenditure of excess bond proceeds for their originally intended purpose and enable a submittal of a Last and Final ROP's to the Department of Finance. ALTERNATIVES The recommended action will allow the City and Housing Authority to expend bond proceeds in accordance with bond covenants and the redevelopment dissolution law. Both the City and Housing Authority have commitments to invest these funds in various projects that improve the community. Staff does not have an alternative. Prepared by: Gil Villalpando, Management Specialist Approved by: Frank J. Spevacek, City Manager Attachments: 1. Bond Expenditure Agreement RESOLUTION NO.OB 2016 - A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY APPROVING A BOND EXPENDITURE AGREEMENT WHEREAS, the Successor Agency to the La Quinta Redevelopment Agency (Successor Agency) received its Finding of Completion under Health and Safety Code Section 34179.7 from the California Department of Finance on November 6, 2013; and WHEREAS, Health and Safety Code Section 34191.4(c) allows a successor agency that has received a finding of completion to use bond proceeds from "non -housing" bonds issued prior to 2011, and a prescribed percentage of "non -housing" bond proceeds for bonds issued between January 1, 2011 and June 28, 2011, for purposes for which the bonds were sold, provided that such proceeds in excess of amounts needed to satisfy approved enforceable obligations shall be expended in a manner consistent with the original bond covenants, and further provides that such expenditures shall constitute "excess bond proceeds obligations" that shall be listed separately on the successor agency's Recognized Obligation Payment Schedule ("ROPS"); and WHEREAS, Health and Safety Code section 34176(g) allows the a housing successor to use 100% excess bond proceeds secured by the former La Quinta Redevelopment Agency's Low and Moderate Income Housing Fund ("LMIHF"), as long as the "housing" bonds were issued prior to June 28, 2011; and WHEREAS, the Successor Agency will have so-called "excess bond proceeds," i.e., tax allocation bond proceeds, from both "non -housing" and "housing" bonds, that are not otherwise obligated for a project or other enforceable obligation. The Successor Agency wishes to use such proceeds for redevelopment and affordable housing purposes consistent with applicable bond covenants; and WHEREAS, the California Community Redevelopment Law (Health and Safety Code Section 33000, et seq.) provides for a cooperative relationship between cities and their redevelopment agencies, as well as their successor agencies who have assumed the duties and obligations of the former redevelopment agencies. Under Health and Safety Code Section 33220, a city may aid and cooperate in the planning, undertaking, construction, or operation of redevelopment projects. Health and Safety Code Section 33220(e) specifically authorizes a city to enter into an agreement with its redevelopment agency or any other public entity to further redevelopment purposes. Health and Safety Code Section 34176(g)(1)(A) [for housing bond proceeds] and Resolution No. OB 2015- Bond Expenditure Agreement Adopted: July 6, 2016 Page 2 Sections 34191.4(c)(1)(A) and 34191.4(c)(2) [for non -housing bond proceeds] allow a housing successor, successor agency, and sponsoring city to enter into agreements with the approval of the oversight board; and WHEREAS, the Successor Agency desires to provide "non -housing" excess bond proceeds to the City of La Quinta (City) to enable the City to use such funds in a manner consistent with the original "non -housing" bonds' covenants, and the Successor Agency desires to provide "housing" excess bond proceeds to the La Quinta Housing Authority (Housing Authority) to enable the Housing Authority to use such funds in a manner consistent with the original housing bonds' covenants; and WHEREAS, in order to facilitate the use of excess bond proceeds consistent with the bond covenants, the Successor Agency, City, and Housing Authority have negotiated an agreement requiring the transfer of current and future excess bond proceeds by the Successor Agency to the City and Housing Authority, respectively, and the use of such excess bond proceeds consistent with applicable bond covenants. If approved by the Oversight Board for the La Quinta Successor Agency (Oversight Board), the Successor Agency will list the agreement, and the requirement to transfer excess bond proceeds herein on a ROPS as an obligation to be funded with excess bond proceeds. NOW, THEREFORE, BE IT RESOLVED by the Oversight Board of Successor Agency to the La Quinta Redevelopment Agency, California, as follows: SECTION 1. The foregoing recitals are true and correct and are incorporated into the approval of this Resolution. SECTION 2. The Oversight Board hereby approves the Bond Expenditure Agreement substantially in the form attached as Exhibit A. SECTION 3. The City Manager shall have the authority to execute the Agreement on behalf of the City, the Housing Authority's Executive Directors shall have the authority to execute the Agreement on behalf of the Housing Authority, and the Successor Agency's Executive Directors shall have the authority to execute the Agreement on behalf of the Successor Agency. The City Manager or designee shall have the authority to take any and all implementing actions to effectuate the terms and conditions of this Agreement. SECTION 4. The Bond Expenditure Agreement and ROPS on which the Bond Expenditure Agreement is listed shall become effective when the California Department of Finance renders any approvals as required by the dissolution law, Health and Safety Code Section 34170 et seq. Resolution No. OB 2015- Bond Expenditure Agreement Adopted: July 6, 2016 Page 3 PASSED, APPROVED, and ADOPTED at a regular meeting of the Oversight Board of Successor Agency to the La Quinta Redevelopment Agency held on this 6th day of July, 2016, by the following vote: AYES: NOES: ABSENT: ABSTAIN: LEE OSBORNE, Chairperson Oversight Board of the Successor Agency to the La Quinta Redevelopment Agency ATTEST: Pam Nieto Oversight Board Secretary Attachment 1 BOND EXPENDITURE AGREEMENT (La Quinta Housing & Non -Housing Tax Allocation Bonds) This Bond Expenditure Agreement (the "Agreement") is entered into and effective , 2016, by and between the City of La Quinta, a California municipal corporation (the "City"), the La Quinta Housing Authority, in its capacity as the housing successor pursuant to Health and Safety Code Section 34176(a)(3) ("Housing Authority"), and the Successor Agency to the La Quinta Redevelopment Agency, a public agency, corporate and politic, pursuant to Health and Safety Code Section 34173 ("Successor Agency"). Recitals: A. The Successor Agency received its Finding of Completion under Health and Safety Code Section 34179.7 from the California Department of Finance on November 6, 2013. B. Health and Safety Code Section 34191.4(c) allows a successor agency that has received a finding of completion to use bond proceeds from "non -housing" bonds issued prior to 2011, and a prescribed percentage of non -housing bond proceeds for bonds issued between January 1, 2011 and June 28, 2011, for purposes for which the bonds were sold, provided that such proceeds in excess of amounts needed to satisfy approved enforceable obligations shall be expended in a manner consistent with the original bond covenants, and further provides that such expenditures shall constitute "excess bond proceeds obligations" that shall be listed separately on the successor agency's Recognized Obligation Payment Schedule ("ROPS"). C. Health and Safety Code section 34176(g) allows a housing successor to use 100% excess bond proceeds secured by the former La Quinta Redevelopment Agency's Low and Moderate Income Housing Fund ("LMIHF"), as long as the "housing" bonds were issued prior to June 28, 2011. D. The Successor Agency will have so-called "excess bond proceeds," i.e., tax allocation bond proceeds, from both "non -housing" and "housing" bonds, that are not otherwise obligated for a project or other enforceable obligation. The Successor Agency wishes to use such proceeds for redevelopment and affordable housing purposes consistent with applicable bond covenants. E. The California Community Redevelopment Law (Health and Safety Code Section 33000, et seq.) provides for a cooperative relationship between cities and their redevelopment agencies, as well as their successor agencies who have assumed the duties and obligations of the former redevelopment agencies. Under Health and Safety Code Section 33220, a city may aid and cooperate in the planning, undertaking, construction, or operation of redevelopment projects. Health and Safety Code Section 33220(e) specifically authorizes a city to enter into an agreement with its redevelopment agency or any other public entity to further redevelopment purposes. Health and Safety Code Section 34176(g)(1)(A) [for 698/099999-6000 9804274.2 a06/29/16 housing bond proceeds] and Sections 34191.4(c)(1)(A) and 34191.4(c)(2) [for non -housing bond proceeds] allow a housing successor, successor agency, and sponsoring city to enter into agreements with the approval of the oversight board. F. The Successor Agency desires to provide "non -housing" excess bond proceeds to the City to enable the City to use such funds in a manner consistent with the original "non - housing" bonds' covenants, and the Successor Agency desires to provide "housing" excess bond proceeds to the Housing Authority (if not already provided) to enable the Housing Authority to use such funds in a manner consistent with the original housing bonds' covenants. The non - housing and housing bonds' covenants are summarized in the Official Statements for the "Bonds," identified below in this Agreement, and the Official Statements and all bond documents governing the authorized spending of the "Bond Proceeds," as defined below in this Agreement, are incorporated by reference and generally referred to as the "Bond Spending Plan." The Bond Spending Plan is intended to advance the City's community development goals and Housing Authority's affordable housing goals, while maximizing fiscal and social benefits flowing to the taxing entities from successful development. The La Quinta Successor Agency's Oversight Board ("Oversight Board") has determined that the expenditure of excess bond proceeds in accordance with this Agreement will benefit the affected taxing entities, and has approved the execution of this Agreement and the provision of excess bond proceeds to the City and Housing Authority for the purposes described herein. G. In order to facilitate the use of excess bond proceeds consistent with the bond covenants, the Successor Agency, City, and Housing Authority have negotiated this Agreement requiring the transfer of current and future excess bond proceeds by the Successor Agency to the City and Housing Authority, respectively, and the use of such excess bond proceeds consistent with applicable bond covenants. The parties intend that this Agreement shall constitute an excess bond proceeds obligation within the meaning of Health and Safety Code Sections 34176(g)(1)(A) and 34191.4(c) to be paid from excess bond proceeds. With Oversight Board approval, the Successor Agency has listed or will list this Agreement, and the requirement to transfer excess bond proceeds herein, on its Recognized Obligation Payment Schedule ("ROPS") as an obligation to be funded with excess bond proceeds. NOW, THEREFORE, the parties hereto do mutually agree as follows: 1. RECITALS. The recitals above are an integral part of this Agreement and set forth the intentions of the parties and the premises on which the parties have decided to enter into this Agreement. 2. DEFINITIONS. For purposes of this Agreement, the following terms shall have the indicated meaning: "Bonds" means all of the following bond issuances: • Successor Agency to the La Quinta Redevelopment Agency La Quinta Redevelopment Agency Project Areas No. 1 and 2 Refunding Bonds, 2014 Series A (used for refinancing 2004 Tax Allocation Housing Bonds), and 698/099999-6000 9804274.2 a06/29/16 -2- any refinancing or refunding thereof authorized by the Dissolution Law (referred to in this Agreement as the "2004 Housing Bonds"). • Successor Agency to the La Quinta Redevelopment Agency La Quinta Redevelopment Project Areas No. 1 and 2 Subordinate Tax Allocation Refunding Bonds, 2013 Series A (used for refinancing 2002 Tax Allocation Bonds), and any refinancing or refunding thereof authorized by the Dissolution Law (referred to in this Agreement as the "2002 Non - Housing Bonds"). • La Quinta Financing Authority Local Agency Subordinate Taxable Revenue Bonds, 2011 Series A, and any refinancing or refunding thereof authorized by the Dissolution Law (referred to in this Agreement as the "2011 Housing Bonds"). • La Quinta Redevelopment Agency Project Area No. 2 Subordinate Taxable Tax Allocation Bonds, Series 2011, and any refinancing or refunding thereof authorized by the Dissolution Law (referred to in this Agreement as the "2011 Non -Housing Bonds"). "Bond Proceeds" means (1) proceeds remaining from the Bonds secured by a pledge of the Redevelopment Agency's tax increment, (2) rents, sale proceeds and other revenues generated by properties acquired and/or improved with proceeds from the Bonds, (3) interest and principal paid on loans funded by proceeds from the Bonds, and (4) other income or revenues generated from assets acquired or funded with proceeds from the Bonds. As of the date of this Agreement, the Bond Proceeds remaining from the Bonds described in clause (1) are approximately: $2,200,000 from the 2004 Housing Bonds; $6,600,000 from the 2002 Non - Housing Bonds; $25,500,000 from the 2011 Housing Bonds; and $2,400,000 from the 2011 Non -Housing Bonds, with the exact amounts of Bond Proceeds remaining set forth in the spreadsheet entitled "City of La Quinta — Bond Proceeds" attached to this Agreement as Exhibit A and incorporated herein by reference (collectively, the "Remaining Bond Proceeds"). "Bond Spending Plan" is defined in Recital F. In further explanation and not limitation of the definition in Recital F, the "Bond Spending Plan" includes but is not limited to the following projects that would use the following Excess Bond Proceeds: • Use of Housing Excess Bond Proceeds from the 2004 Housing Bonds for that certain affordable housing project known as the "Washington Street Apartments" project located at 42-800 Washington Street in the City; and • Use of Non -Housing Excess Bond Proceeds from the 2002 Non -Housing Bonds for the construction of SilverRock Way. "Dissolution Law" means Parts 1.8 and 1.85 of Division 24 of the California Health and Safety Code, commencing with Section 34170, and other statutes governing the dissolution of redevelopment agencies and the wind -down of redevelopment activities. 698/099999-6000 9804274.2 a06/29/16 -3- "Enforceable Obligations" mean enforceable obligations, other than Excess Bond Proceeds obligations, as defined under the Dissolution Law. "Excess Bond Proceeds" means Bond Proceeds that are not needed to satisfy Enforceable Obligations (other than this Agreement) approved on a ROPS. As of the date of this Agreement, the Remaining Bond Proceeds qualify as Excess Bond Proceeds. "Housing Excess Bond Proceeds" mean Excess Bond Proceeds tied to the 2004 Housing Bonds or 2011 Housing Bonds, or both. "Non -Housing Excess Bond Proceeds" mean Excess Bond Proceeds tied to the 2002 Non -Housing Bonds or 2011 Non -Housing Bonds, or both; provided, however, that "Non - Housing Excess Bond Proceeds" from the 2011 Non -Housing Bonds may not exceed the percentage of the Remaining Bond Proceeds from the 2011 Non -Housing Bonds authorized to be expended pursuant to Health and Safety Code section 34191.4(c)(2) (or successor statute). At the time of this Agreement, 5% of the Remaining Bond Proceeds from the 2011 Non -Housing Bonds may be expended without a Last and Final ROPS, as the 2011 Non -Housing Bonds were issued June 14, 2011. If the percentage of allowable expenditure from the Remaining Bond Proceeds of the 2011 Non -Housing Bonds increases after the date of this Agreement, then any Remaining Bond Proceeds from the 2011 Non -Housing Bonds that may be expended under an amendment to the Dissolution Law shall be deemed Non -Housing Excess Bond Proceeds and will be governed by the terms and conditions of this Agreement without need for further amendment of this Agreement. "ROPS" means Recognized Obligation Payment Schedule as defined in the Dissolution Law. For purposes of this Agreement, ROPS includes the Last and Final ROPS (and any allowable amendments thereto) pursuant to the Dissolution Law. 3. SUCCESSOR AGENCY'S OBLIGATIONS. The Successor Agency shall have the following obligations under this Agreement: 3.1 CURRENT NON -HOUSING EXCESS BOND PROCEEDS. The Successor Agency shall transfer to the City, no later than 30 days after the approval of this Agreement (or Oversight Board Resolution approving this Agreement) by the California Department of Finance ("DOF"), Non -Housing Excess Bond Proceeds currently held by the Successor Agency. 3.2 CURRENT HOUSING EXCESS BOND PROCEEDS. The Successor Agency shall transfer to the Housing Authority, no later than 30 days after the approval of this Agreement (or Oversight Board Resolution approving this Agreement) by the DOF, Housing Excess Bond Proceeds currently held by the Successor Agency. 3.3 FUTURE EXCESS BOND PROCEEDS. The Successor Agency shall transfer to the City all future Non -Housing Excess Bond Proceeds held or received by the Successor Agency, and the Successor Agency shall transfer to the Housing Authority all future Housing Excess Bond Proceeds held or received by the Successor Agency. Such future Excess Bond Proceeds shall include, without limitation, (1) Bond Proceeds previously obligated to a project or other Enforceable Obligation that become unobligated for any reason, (2) Bond Proceeds that 698/099999-6000 9804274.2 a06/29/16 -4- become available in the form of rents, sale proceeds, loan repayments, or other revenues that are generated by properties or other assets acquired and/or improved with Bond Proceeds and that are not otherwise obligated to a project or other Enforceable Obligation, and (3) any other funds held by the Successor Agency that qualify as Excess Bond Proceeds under this Agreement. The parties intend that payments of future Non -Housing Excess Bond Proceeds be made to the City and payments of future Housing Excess Bond Proceeds be made to the Housing Authority, as soon as possible after such Excess Bond Proceeds become available. The transfer of future Excess Bond Proceeds shall be made pursuant to an approved ROPS within 30 days of the commencement of the relevant ROPS period, or within 30 days of the future Excess Bond Proceeds becoming available to the Successor Agency after this Agreement has been approved by DOF on an operative ROPS, whichever date is applicable. The Successor Agency shall be responsible for ensuring that payments of future Excess Bond Proceeds, as such funds become available, are included on a ROPS by identifying this Agreement. 3.4 PROJECTS FUNDED BY NON -HOUSING EXCESS BOND PROCEEDS. The Successor Agency assigns to the City all responsibilities in relation to the administration of any projects or programs funded by Non -Housing Excess Bond Proceeds. The Successor Agency assigns to the City all contracts entered into by the Successor Agency or the former La Quinta Redevelopment Agency ("Redevelopment Agency") related to activities to be funded by Non - Housing Excess Bond Proceeds, with the exception of those contracts retained by the Successor Agency relating to Enforceable Obligations. 3.5 PROJECTS FUNDED BY HOUSING EXCESS BOND PROCEEDS. The Successor Agency assigns to the Housing Authority all responsibilities in relation to the administration of any projects or programs funded by Housing Excess Bond Proceeds. The Successor Agency assigns to the Housing Authority all contracts entered into by the Successor Agency or the Redevelopment Agency related to activities to be funded by Housing Excess Bond Proceeds, with the exception of those contracts retained by the Successor Agency relating to Enforceable Obligations. 4. CITY' S OBLIGATIONS. The City shall have the following obligations under this Agreement: 4.1 RETENTION OF NON -HOUSING EXCESS BOND PROCEEDS. The City shall accept, hold, and disburse Non -Housing Excess Bond Proceeds transferred to the City by the Successor Agency under this Agreement, including current Non -Housing Excess Bond Proceeds and future Non -Housing Excess Bond Proceeds. The City shall retain any Non - Housing Excess Bond Proceeds that it receives, such as revenue generated from properties acquired or improved with Non -Housing Excess Bond Proceeds or payments on loans funded from Non -Housing Excess Bond Proceeds, without any obligation to return such funds to the Successor Agency, and shall use such funds for uses consistent with applicable bond covenants. 4.2 USE OF NON -HOUSING EXCESS BOND PROCEEDS. The City may spend Non -Housing Excess Bond Proceeds received or retained under this Agreement on any project, program, or activity authorized under the Bond Spending Plan. The City must spend Non- 698/099999-6000 9804274.2 a06/29/16 -5- Housing Excess Bond Proceeds consistent with the original bond covenants applicable to the Non -Housing Excess Bond Proceeds, and must comply with all requirements of federal tax law and all applicable requirements of the California Community Redevelopment Law as to the use of such funds. The City shall be solely responsible for ensuring that Non -Housing Excess Bond Proceeds are maintained and spent in accordance with bond covenants and other applicable laws. The City may transfer funds between approved projects, programs and activities, as long as the transfer is within a single project area if applicable bond covenants restrict such funds to a particular project area. The City assumes all contracts entered into by the Successor Agency or the former Redevelopment Agency related to activities to be funded by Non -Housing Excess Bond Proceeds, with the exception of those contracts retained by the Successor Agency relating to Enforceable Obligations. The City shall perform its obligations hereunder, and under such assumed contracts, in accordance with the applicable provisions of federal, state and local laws, and shall timely complete the work required for each project. 4.3 BOND SPENDING PLAN. The City shall be solely responsible for maintaining and implementing the Bond Spending Plan with respect to Non -Housing Excess Bond Proceeds. The City may amend the Bond Spending Plan, with respect to use of Non -Housing Excess Bond Proceeds, as the City deems necessary in its sole discretion. Any amendments to the adopted Bond Spending Plan shall consider uses that advance the City's community development goals while maximizing fiscal and social benefits flowing to the taxing entities from successful development. The Bond Spending Plan shall conform to applicable bond covenants and all applicable requirements of federal tax law and the California Community Redevelopment Law. Notwithstanding any contrary provision hereof, unless the City expressly agrees otherwise, the City shall not be obligated to provide funding for any program or project in an amount exceeding the Non -Housing Excess Bond Proceeds provided to the City pursuant to this Agreement. 5. HOUSING AUTHORITY'S OBLIGATIONS. The Housing Authority shall have the following obligations under this Agreement: 5.1 RETENTION OF HOUSING EXCESS BOND PROCEEDS. The Housing Authority shall accept, hold, and disburse Housing Excess Bond Proceeds transferred to the Housing Authority by the Successor Agency under this Agreement, including current Housing Excess Bond Proceeds and future Housing Excess Bond Proceeds. The Housing Authority shall retain any Housing Excess Bond Proceeds that it receives, such as revenue generated from properties acquired or improved with Housing Excess Bond Proceeds or payments on loans funded from Housing Excess Bond Proceeds, without any obligation to return such funds to the Successor Agency, and shall use such funds for uses consistent with applicable bond covenants. 5.2 USE OF HOUSING EXCESS BOND PROCEEDS. The Housing Authority may spend Housing Excess Bond Proceeds received or retained under this Agreement on any project, program, or activity authorized under the Bond Spending Plan. The Housing Authority must spend Housing Excess Bond Proceeds consistent with the original bond covenants applicable to the Housing Excess Bond Proceeds, and must comply with all requirements of federal tax law and all applicable requirements of the California Community Redevelopment Law as to the use 698/099999-6000 9804274.2 a06/29/16 -6- of such funds. The Housing Authority shall be solely responsible for ensuring that Housing Excess Bond Proceeds are maintained and spent in accordance with bond covenants and other applicable laws. The Housing Authority may transfer funds between approved projects, programs and activities, as long as the transfer is within a single project area if applicable bond covenants restrict such funds to a particular project area. The Housing Authority assumes all contracts entered into by the Successor Agency or the former Redevelopment Agency related to activities to be funded by Housing Excess Bond Proceeds, with the exception of those contracts retained by the Successor Agency relating to Enforceable Obligations. The Housing Authority shall perform its obligations hereunder, and under such assumed contracts, in accordance with the applicable provisions of federal, state and local laws, and shall timely complete the work required for each project. 5.3 BOND SPENDING PLAN. The Housing Authority shall be solely responsible for maintaining and implementing the Bond Spending Plan with respect to Housing Excess Bond Proceeds. The Housing Authority may amend the Bond Spending Plan, with respect to use of Housing Excess Bond Proceeds, as the Housing Authority deems necessary in its sole discretion. Any amendments to the adopted Bond Spending Plan shall consider uses that advance the Housing Authority's affordable housing goals while maximizing fiscal and social benefits flowing to the taxing entities from successful development. The Bond Spending Plan shall conform to applicable bond covenants and all applicable requirements of federal tax law and the California Community Redevelopment Law. Notwithstanding any contrary provision hereof, unless the Housing Authority expressly agrees otherwise, the Housing Authority shall not be obligated to provide funding for any program or project in an amount exceeding the Housing Excess Bond Proceeds provided to the Housing Authority pursuant to this Agreement. 6. ENTIRE AGREEMENT; WAIVERS; AND AMENDMENTS. 6.1 This Agreement constitutes the entire understanding and agreement of the parties with respect to the transfer and use of Excess Bond Proceeds. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to the subject matter of this Agreement. 6.2 This Agreement intended solely for the benefit of the City, Housing Authority, and the Successor Agency. Notwithstanding any reference in this Agreement to persons or entities other than the City, Housing Authority and the Successor Agency, there shall be no third party beneficiaries under this Agreement, except the La Quinta Financing Authority, a public agency, corporate and politic. 6.3 All waivers of the provisions of this Agreement and all amendments to this Agreement must be in writing and signed by the authorized representatives of the parties. 7. SEVERABILITY. If any term, provisions, covenant or condition of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation, voiding or unenforceability. In addition, the 698/099999-6000 9804274.2 a06/29/16 -7- parties shall cooperate in good faith in an effort to amend or modify this Agreement in a manner such that the purpose of any invalidated or voided provision, covenant, or condition can be accomplished to the maximum extent legally permissible. 8. DEFAULT. If either party fails to perform or adequately perform an obligation required by this Agreement within thirty (30) calendar days of receiving written notice from the non -defaulting party, the party failing to perform shall be in default hereunder. In the event of default, the non - defaulting party will have all the rights and remedies available to it at law or in equity to enforce the provisions of this contract, including without limitation the right to sue for damages for breach of contract or to seek specific performance. The rights and remedies of the non - defaulting party enumerated in this paragraph are cumulative and shall not limit the non - defaulting party's rights under any other provision of this Agreement, or otherwise waive or deny any right or remedy, at law or in equity, existing as of the date of the Agreement or hereinafter enacted or established, that may be available to the non -defaulting party against the defaulting party. 9. BINDING ON SUCCESSORS. This Agreement shall be binding on and shall inure to the benefit of all successors and assigns of the parties, whether by agreement or operation of law. 10. FURTHER ASSURANCES. Each parry agrees to execute, acknowledge and deliver all additional documents and instruments, and to take such other actions as may be reasonably necessary to carry out the intent of this Agreement. 11. CITY MANAGER DELEGATED AUTHORITY TO IMPLEMENT. The City Manager shall have the authority to execute this Agreement on behalf of the City, the Housing Authority's Executive Directors shall have the authority to execute this Agreement on behalf of the Housing Authority, and the Successor Agency's Executive Directors shall have the authority to execute this Agreement on behalf of the Successor Agency. The City Manager or designee shall have the authority to take any and all implementing actions to effectuate the terms and conditions of this Agreement. [SIGNATURES ON NEXT PAGE] 698/099999-6000 9804274.2 a06/29/16 -g- In witness whereof, the undersigned parties have executed this Bond Expenditure Agreement effective as of the date first above written. "CITY" "HOUSING AUTHORITY" THE CITY OF LA QUINTA, LA QUINTA HOUSING AUTHORITY, a municipal corporation in its capacity as the housing successor pursuant to Health and Safety Code Section 34176 By: City Manager Attest: By: City Clerk Approved as to form: By: City Attorney "SUCCESSOR AGENCY" THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY, a public agency, corporate and politic, pursuant to Health and Safety Code section 34173 Bv: Executive Director Attest: By: City Clerk Approved as to form: Lo Agency Counsel Bv: Executive Director Attest: By: Agency Secretary Approved as to form: Agency Counsel 698/099999-6000 9804274.2 a06/29/16 -9- City of La Quinta - Bond Proceeds 5/31/16 Balance Bonds Issued on or Issued on or Issue G/L Account Name before 12/31/10 after 1/1/11 2004 248-0000-10110 Claim on Pooled Cash 2,195,379.38 2011 Housing 249-0000-10273 2011 Bond Proceeds fiscal agent 25,561,073.51 2002 405-0000-10110 Claim on Pooled Cash 6,575,791.87 2011A-PA2 417-0000-10273 2011 Bond Proceeds fiscal agent 2,420,286.52 Total 8,771,171.25 27,981,360.03 BUSINESS ITEM 2: City of La Quinta OVERSIGHT BOARD MEETING: July 5, 2016 STAFF REPORT AGENDA TITLES ADOPT A RESOLUTION FOR ISSUANCE AND SALE OF SUBORDINATE TAX ALLOCATION REFUNDING BONDS RECOMMENDATION Adopt a 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 $35,280,000, 2016 Series A Bonds, and authorizing certain actions in connection therewith. EXECUTIVE SUMMARY • In 2011, the La Quinta Redevelopment Agency issued $6,000,000 of Tax Allocation Bonds of which $5,850,000 are currently outstanding and the La Quinta Financing Authority issued $28,850,000 Taxable Revenue Bonds of which $27,225,000 are currently outstanding (together the "2011 Bonds"). • Current bond interest rates are at historically low levels and refinancing the 2011 Bonds will reduce annual bond payments, allowing additional property tax revenue distribution to the City and taxing agencies. • The Successor Agency has approximately $2.3 million of unspent 2011 Bond proceeds on deposit with the Trustee, which will be used to pay down the principal amount of the 2016 Bonds. • The 2011 Bonds are not subject to optional call and redemption until September 1, 2020 so the bond proceeds would be deposited in an escrow fund held by an escrow bank, and used to pay regularly scheduled principal and interest payments on the 2011 Bonds until September 1, 2020 (an advanced refunding). • Refinancing the 2011 Bonds will require State Department of Finance approval, which may take up to 60 days. FISCAL IMPACT Lower bond interest costs with yield lower annual debt service savings of approximately $614,000 or $12.82 million over the twenty-three year term of these bonds. BACKGROUND/ANALYSIS Starting in 1985, the La Quinta Redevelopment Agency (RDA) issued tax allocation bonds to raise capital for infrastructure, public facility, economic development, and affordable housing investment. Bond debt service payments are funded by property tax revenue. When the RDA was eliminated in February 2012, the Successor Agency assumed the responsibility to ensure that bond debt service payments are made. These payments are classified as enforceable obligations and are tracked on the Recognized Obligation Payment Schedule (ROPS). The Successor Agency may refinance outstanding bonds and other obligations of the RDA. The City's financial advisors determined that today's lower bond interest rates would yield cost savings; all bond refinancing must be first approved by the Oversight Board and the DOF. In December 2013, the Successor Agency issued $97,190,000 2013 Series A and $23,055,000 2013 Taxable Series B refinancing bonds. These bonds refinanced the former RDA's 1998 PA 1 Bonds, 1998 PA 2 Bonds, 2001 Bonds, 2002 Bonds and 2003 Bonds. The 2013 refunding bond program resulted in annual debt service savings of more than $555,000 per year with an overall savings of $10,650,000. In July 2014, the Successor Agency again successfully refinanced $65,600,000 of additional former RDA bonds resulting in annual debt service savings of more than $680,000 per year with an overall savings of $13,700,000. In the current bond market, an opportunity exists to further reduce annual debt service by refinancing the 2011 Bonds. Interest rates for the 2016 refunding bonds are estimated at 3% to 5% with yield potentials 0.50% to 4.50%, on a taxable basis. The 2011 Bonds have interest rates ranging from 5.375% to 8.15% on a taxable basis. By refinancing bonds, debt service payments will be reduced by $12.8 million over 23 years This would free property tax revenue for distribution to other taxing agencies and the City, with approximately $8 million to schools districts, $2.8 million to Riverside County, $922,000 to the Coachella Valley Water District, $634,000 to the City, and $225,000 to parks and recreation over the 23 year period. ALTERNATIVE; As refinancing would result in an annual savings on bond debt service, staff does not have an alternative. Prepared by: Gilbert Villalpando, Management Specialist Approved by: Frank J. Spevacek, City Manager Attachments: 1. Summary of 2016 Refinancing RESOLUTION NO.OB 2016 - A RESOLUTION OF THE OVERSIGHT BOARD OF 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 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 $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, 2004 and a Second Supplemental Indenture, dated as of March 1, 2011 (the "2011 Loan Obligation"); and Resolution No. OB 2016- Issuance And Sale Of Subordinate Tax Allocation Refunding Bonds Adopted: July 6, 2016 Page 2 of 5 WHEREAS, Assembly Bill AB X1 26, effective June 29, 2011, together with Assembly Bill 1484 ("AB 1484") (collectively, the "Dissolution Act") resulted in the La Quinta Redevelopment Agency being dissolved as of February 1, 2012; and WHEREAS, the authority, rights, powers, assets, duties and obligations of the Prior Agency were transferred on February 1, 2012 to the Successor Agency; and WHEREAS, AB1484 specifically authorizes the issuance of refunding bonds by the Successor Agency to refund the bonds or other indebtedness of the Prior Agency to provide savings to the Successor Agency, provided that (A) the total interest cost to maturity on the refunding bonds plus the principal amount of the refunding bonds shall not exceed the total remaining interest cost to maturity on the bonds to be refunded plus the remaining principal of the bonds to be refunded, and (B) the principal amount of the refunding bonds shall not exceed the amount required to defease the refunded bonds, to establish customary debt service reserves, and to pay related costs of issuance; and WHEREAS, the Successor Agency to the La Quinta Redevelopment Agency (the "Successor Agency") has determined that it is cost effective and efficient to refund and defease, in their entirety, the 2011 Project Area No. 2 Taxable Bonds and the Loan Obligation, (collectively, the "Refunded Bonds") on a subordinate basis to the $65,600,000 Successor Agency to the La Quinta Redevelopment Agency, La Quinta Redevelopment Project Areas No. 1 and 2, Tax Allocation Refunding Bonds, 2014 Series A (the "2014 Bonds or the "Senior Bonds") and on a parity basis with the $97,190,000 Successor Agency to the La Quinta Redevelopment Agency La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax Allocation Refunding Bonds, 2013 Series A (the "2013 Series A Bonds") and the $23,055,000 Successor Agency to the La Quinta Redevelopment Agency, La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax Allocation Refunding Bonds, 2013 Taxable Series B (the "2013 Series B Bonds") (collectively, the "2013 Series A Bonds and the 2013 Series B Bonds, the "2013 Bonds" or the "Parity Bonds"); and WHEREAS, the Successor Agency deems it necessary and proper to issue taxable tax allocation refunding bonds to refund and defease the Refunded 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 a principal amount of not to exceed Thirty -Nine million dollars ($39,000,000) (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 Resolution No. OB 2016- Issuance And Sale Of Subordinate Tax Allocation Refunding Bonds Adopted: July 6, 2016 Page 3 of 5 WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof and interest and redemption premium (if any) thereon, the Successor Agency wishes to approve the issuance of the Bonds and authorize the execution and delivery of the Second Supplemental Indenture of Trust; and WHEREAS, pursuant to Section 34179 of the Law, an oversight board (the "Oversight Board") has been established for the Successor Agency and the Successor Agency has requested that the Oversight Board approve the issuance of the Bonds by the Successor Agency, as authorized by Section 34177.5(f) of the Law; and WHEREAS, the Successor Agency has certified that all acts and proceedings required by law necessary to make the Bonds, when executed by the Successor Agency, and authenticated and delivered by the Trustee, the valid, binding and legal special obligations of the Successor Agency, and to constitute the Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done or taken; 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 the Successor Agency to the La Quinta Redevelopment Agency, as follows: SECTION 1. Each of the foregoing recitals is true and correct. SECTION 2. The issuance by the Successor Agency of the Bonds not to exceed aggregate principal amount of $39,000,000 (the "Bonds") for the purpose set forth in the recitals hereof is hereby approved. 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 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 Resolution No. OB 2016- Issuance And Sale Of Subordinate Tax Allocation Refunding Bonds Adopted: July 6, 2016 Page 4 of 5 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 Bonds may be issued as a single issue or from time to time in separate series as the Successor Agency shall determine. The approval of the issuance of the Bonds by the Successor Agency and the Oversight Board shall constitute the approval of each and every separate series of tax exempt and taxable bonds, without the need for any further approval from the Oversight Board provided, however, the maximum amount of all series of Bonds, as the case may be, shall not exceed the maximum amounts set forth in Section 2 above and each series of bonds shall satisfy the requirements of Health & Safety Code Section 34177.5(a)(1). SECTION 7. The Successor Agency is hereby authorized to recover its Costs of Issuance, as defined in the Indenture of Trust, dated as of October 1, 2013, by and between the Successor Agency and U.S., Bank National Association, as amended and supplemented, 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 to the Successor Agency to the La Quinta Redevelopment Agency held this 6th of July 2016, by the following vote: AYES: NOES ABSENT: ABSTAIN: LEE OSBORNE, Chairperson Oversight Board of the Successor Agency to the La Quinta Redevelopment Agency ATTEST: Resolution No. OB 2016- Issuance And Sale Of Subordinate Tax Allocation Refunding Bonds Adopted: July 6, 2016 Page 5 of 5 Pam Nieto Oversight Board Secretary ATTACHMENT 1 Summary of 2016 Refinancing Successor Agency to the La Quinta Redevelopment Agency/La Quinta Oversight Board In December, 2013, the Successor Agency completed the refinancing of its 1998, 2001, 2002 and 2003 Tax Allocation financings issued by the former Redevelopment Agency. Issued in a tax-exempt and a taxable series, this refinancing program resulted in annual debt service savings in excess of $555,000 and overall savings of more than $10,650,000 over the remaining life of the refinanced Bonds. In July, 2014, the Successor Agency completed the refinancing of its 2014 Tax Allocation financing issue by the Financing Authority. Issued in a tax-exempt series, this refinancing resulted in annual debt service savings in excess of $680,000 and overall savings of more than $13,700,000 over the remaining life of the refinanced Bonds. These debt service savings result in excess revenues to various taxing agencies as well as increased residual revenues to the City. There is now an opportunity to refinance the Agency's last two financings issued prior to redevelopment dissolution, for economic savings. The financings consist of $6,000,000 La Quinta Redevelopment Project Area No. 2, Subordinate Taxable Tax Allocation Bonds, Series 2011 of which $5,850,000 are currently outstanding and $28,850,000 Local Agency Subordinate Taxable Revenue Bonds, 2011 Series A of which $27,225,000 are currently outstanding. These Bonds were issued just prior to dissolution in June, 2011 and carry extremely high interest rates ranging from 5.375% to 8.15% on a taxable basis. Following the issuance of the 2016 Bonds, the Agency would have its final debt in place and is expected to be as follows: Project Areas 1 and 2 2013 Tax Exempt Bonds $ 97,190,000 $ 89,095,000 2033 3.00% to 5.00% 2013 Taxable Bonds 23,055,000 21,010,000 2032 0.76%to 5.82% 2014 Tax Exempt Bonds 65,600,000 63,875,000 2034 2.00% to 5.00% 2016 Taxable Bonds * 35,280,000 35,280,000 2039 1.50% - 4.50% * 2016Taxable Bonds assumptions are all estimates. Savings Analysis HIIItopSecurbes 2533 S. Coast Highway 101, Suite 250 • Cardiff By The Sea, CA 92007 • www.hilitopsecurities.com A Hilltop Foldings Company The 2011 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 (September 1, 2039). Refunding numbers on the 2011 Bonds show that based on current interest rates and yields, the Successor Agency can achieve annual debt service savings of approximately $614,000 from 2017 through 2035 and $285,000 from 2036 through 2039 with overall savings of $12,822,000 over the remaining life of the 2011 Bonds. At this time, the refunding of the 2011 Bonds results in present value savings of about 16.25%. The overall estimated savings are after ALL costs associated with the financing have been paid. The following sets forth the detailed annual savings: 9/1/2017 $ 18,217,372.76 9/ 1/ 2018 18, 213, 679.00 9/1/2019 18,220,271.50 9/ 1/2020 18, 218,892.76 9/1/2021 18,226,867.76 9/ 1/2022 18,220,804.00 9/1/2023 18,214,156.00 9/ 1/ 20 24 18, 214, 88 8.00 9/ 1/ 20 2 5 18, 213, 618.00 9/ 1/2026 18,217,494.00 9/1/2027 18,219,624.00 9/ 1/ 20 28 18, 212, 69 6.50 9/ 1/ 20 29 18, 209, 5 94.00 9/ 1/2030 18, 218, 324.00 9/ 1/ 2031 18, 216, 85 3.00 9/ 1/2032 18,217,2 67.00 9/1/2033 8,858,778.50 9/1/2034 8,895,858.50 9/1/2035 3,625,136.50 9/1/2036 933,397.00 9/1/2037 936,007.50 9/1/2038 935,697.50 9/1/2039 335,497.50 N 17,602,829.90 17,599,194.26 17,604,211.76 17,604,204.26 17,614,554.26 17,607,116.76 17,602,348.76 17,602,049.50 17,597,104.50 17,603,140.50 17,608,850.50 17,597,865.50 17,594,748.00 17,603,188.00 17,603,327.00 17,605,641.00 8,243,060.00 8,284,310.00 3,007,675.00 646,675.00 646,250.00 644,700.00 47,025.00 614,542.86 614,484.74 616,059.74 614,688.50 612,313.50 613,687.24 611,807.24 612,838.50 616,513.50 614,353.50 610,773.50 614,831.00 614,846.00 615,136.00 613,526.00 611,626.00 615,718.50 611,548.50 617,461.50 286,722.00 289,757.50 290,997.50 288,472.50 Since the reduced debt service after refunding will reduce the amount of property taxes deposited in the Redevelopment Property Tax Trust Fund required to be paid to the Successor Agency, there will be additional "residual" property tax that can be distributed to taxing agencies that overlap the boundaries of the Redevelopment Project Areas in accordance with their share of the general property tax levy shown below. The City may be able to use up to 50% of the additional residual HIIItopSecurbes 2533 S. Coast Highway 101, Suite 250 • Cardiff By The Sea, CA 92007 • www.hilitopsecurities.com A Hilltop Foldings Company generated by the refunding first to repay certain City advances to the former Agency, and if so, the taxing agencies will receive their percentage of the remaining residual after such payment estimated as follows. • School Districts: 62.50% • Riverside County: 22.18% • Water District: 7.21% • City of La Quinta: 5.29% • Recreation and Parks: 2.82% The following table sets forth the estimated Costs associated with the 2016 financing. Underwriter's discount estimated at 0.750%, costs of issuance estimated at 0.60%, bond insurance estimated at 0.31% and a debt service reserve surety bond fee of 0.14% for all in costs of 1.80% which is in line with the percentage of costs associated with the refunding programs. As previously mentioned, the savings discussed above are after all costs of issuance associated with the financing. Rutan &Tucker, Bond Counsel Strad IingYocca Carlson & Rauth, Disclosure Counsel Harrell & Company, Financial Advisor Standard & Poor's Ratings Group, Rating Services Grant Thornton, Verification Consultant US Bank National Association, Trustee and Escrow Bank Avia Communications, Financial Printing Miscellaneous Subtotal Costs of Issuance Underwriter's Discount Bond Insurance Provider Total Costs of Issuance $ 75, 000.00 42, 000.00 40, 000.00 30, 000.00 2,500.00 4,500.00 2,500.00 3,500.00 $ 200,000.00 264, 600.00 171, 635.00 636, 235.00 The Financing Team expects the Bonds to be rated "A+" by Standard and Poor's. Purchasing insurance will bring the bond rating up to "AA" although based on the current market, insurance will not be necessary for all maturities. The increase in rating should offset the insurance premium through reduced interest rates and yields on the refunding bonds. The Financing Team will prepare a stress test at the time the refunding bonds are marketed to determine the actual savings generated by using bond insurance. If the insurance premium isn't justified by savings, bond insurance will not be utilized. HIIItopSecurbes 2533 S. Coast Highway 101, Suite 250 • Cardiff By The Sea, CA 92007 • www.hilitopsecurities.com A Hilltop Foldings Company The Prior Agency's Bonds all carry a reserve fund surety bond in lieu of cash for the reserve funds. Using cash at this point would greatly increase the amount of refunding bonds required to be issued in order to cash fund the new reserve funds. The use of a reserve fund surety bond will be required in order to achieve the reported savings. Underwriter's Discount will be based in part on the rating of the refunding bonds. If bond insurance is utilized the underwriter's discount would be reduced over a standalone rating only. This is predominately due to the amount of takedown (commission) necessary to pay salespeople to sell the bonds. The higher the rating, the less takedown required. Cash Contributions As part of the 2016 Bonds refunding program, the Financing Team has included approximately $2,800,000 of unspent proceeds remaining with US Bank as Trustee for the Project Area No. 2 2011 Bonds, initially issued in the amount of $6,000,000. These moneys have been designated by DOF as available for two purposes: 1) purchasing Agency bonds on the open market or 2) reducing bonded debt amounts in a refinancing. Over the past 24 months, there has been less than $100,000 of these PA 2 Bonds available on the open market (bonds being offered for sale to the general public). It has therefore been determined that the best use of these moneys is in the refinancing process. The unspent proceeds will be transferred to the Escrow Bank and deposited in the Project No. 2 refunding escrow which in turn reduces the amount of bonds necessary to be issued for said refunding. In addition, certain cash reserves are currently on deposit with the 2011 Bonds Trustee. These moneys have also been used to reduce the principal amount of bonds necessary to be issued for the refunding. As previously discussed, the Agency will purchase a reserve surety policy to satisfy its debt service reserve requirements. 2011 Bonds Escrow Accounts Proceeds from the financing will be held in an escrow that will pay regularly scheduled principal and interest on the prior 2011 Bonds until their first optional call date of September 1, 2020. The escrow fund will also hold funds to redeem all remaining maturities on September 1, 2020. The proceeds held in the escrow will be invested in either State and Local Government Securities or Open Market Securities, whichever are more efficient. The prior 2011 Bonds will be considered fully defeased on the date the 2016 Bonds are issued. Conclusion There is no way of knowing if the municipal market will maintain current interest rates and yields long enough for the Successor Agency to complete the approval and DOF review process estimated to require 60 to 75 days. We believe your Financing Team should be able to steer the refinancing thru the approval process at little or no cost to the Successor Agency, should the refunding bonds not be economically feasible following the approval and review process. In addition, prior to the issuance of refunding bonds, the Financing Team will return to the Successor Agency Board for the HIIItopSecurbes 2533 S. Coast Highway 101, Suite 250 • Cardiff By The Sea, CA 92007 • www.hilitopsecurities.com A Hilltop Foldings Company approval of a substantially final Preliminary Official Statement and to provide an update of refunding numbers and financing costs at that time. Timeline The following is a general timeline for the proposed refinancing. This schedule will be updated based on DOF approval actions and market conditions. Successor Agency Board adopts Resolution approving Financing Documents Oversight Board adopts Resolution approving Financing Documents Submit Revised OB Resolution and Documents to DOF DOF Approval of Financing Submit Documents to Rating Agency/Insurer Receive Rating/Insurance Successor Agency Board adopts Resolution deeming Preliminary Official Statement Substantially Final Bond Sale - Successor Agency signs Purchase Contract Bond Closing May 3 May 4 July 5 July 6 July 27 August 2 August 24 September 14 HIIItopSecurbes 2533 S. Coast Highway 101, Suite 250 • Cardiff By The Sea, CA 92007 • www.hilitopsecurities.com A Hilltop Foldings Company