1994 05 03 FAing -> 10(e 2
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CITY COUNCIL CRAMBER
78-495 Calle Tampico
La Quinta, California 92253
Regular Meeting
May 3, 1994 3:00 P.M.
CALL TO ORDER BegirLning Res. No. FA 94-1
a. Roll Call
CONFIRMATION OF AGENDA
APPROVAL OF MINUTES
a. Approval of Minutes of December 15, 1993
PUBLIC COMMENT
BUSINESS SESSION
1. CONSIDERATION OF A RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY OF
A BOND PURCHASE CONTRACT BY AND AMONG THE LA QUINTA REDEVELOPMENT
AGENCY, CITY OF LA QUINTA FINANCING AUTHORITY, AND THE UNDERWRITERS NAMED
THEREIN.
A) RESOLUTION ACTION.
CONSENT CALENDAR
DEPARTMENT REPORTS
CRAIR AND BOARD MBERS' ITEMS
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ing -> 10(e PUBLIC HEARINGS None
ADJOURNMENT
DECLARATION OF PO?NG
1, SAUNDRA L. JUHOLA, Secretary of the La Quinta Financing Authority, do hereby declare that the foregoing
agenda for the La Quinta F?nancing Authority meeting of May 3, 1994 was posted on the outside entry to the
Council Chamber 78 495 Calle Tampico and on the bulletin board at the La Quinta Chamber of Conimerce on
Friday, April 29, 1994
La Quinta Financing Authority
OOO(J02
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LA QUINTA FINANCING AUTHORITY
MEETING DATE: May 3, 1994 AGENDA CATEGORY:
BUSINESS SESSION: I
ITEM TITLE: Resolution
Authorizing the Execution and CONSENT CALENDAR:
Delivery of a Bond purchase
Contract By and Among the STUDY SESSION:
La Quinta Redevelopment
Agency, La Quinta Financing PUBLIC HEARING:
Authority, and the
Underwriters Named Therein
RECOMMENDATION:
The Financing Authority adopt the attached resolution that
authorizes the execution and delivery of a bond purchase contract
to facilitate the sale of Refunding Bonds, Series 1994, in a
principal amount not to exceed $26,665,000. The purchase
contract will involve the Financing Authority, the La Quinta
Redevelopment Agency, and the bond underwriters of PaineWebber
and Sutter Securities Incorporated.
FISCAL IMPLICATIONS:
None.
BACKGROUND AND OVERVIEW:
La Quinta Redevelopment Project No. 1 currently has three
outstanding bond issues: the Series 1989 with an outstanding
principal amount of $7,075,000, the Series 1990 with an
outstanding principal amount of l8,0l5,000, and the Series 1991
with an outstanding principal amount of $8,335,000. In January
of 1994, the Agency's financial advisor reviewed these bond
issues and determined that the Agency could potentially achieve
both interest cost savings on debt service payments)and a
release of debt service reserve funds. Due to current bond
market conditions, savings can be achieved only in the refunding
of the Series 1989 and 1990 bonds. Based upon this review, the
Agency Board directed staff to proceed with bond refunding.
I?;ooo4*?
MAILING ADDRESS P.O. BOX 1504 LA QUINTA, CALIFORNIA 92253
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ing -> 10(e The La Quinta Financing Authority has been involved in the sale
of prior Redevelopment Agency and city financings. The Authority
is used when bonds and other financing instruments can be sold in
a cost effective way through a negotiated sale with bond
underwriters. The alternative would be to sell bonds through a
competitive bid process. This alternative was evaluated by the
Agency's financial advisor who determined that potentially lower
interest and discount rates that may be achieved through the
bidding process would be offset by both a greater issuance cost
and rising market interest rates(the bid process for tax
allocation bonds adds a minimum of 30 days to the sales process).
The underwriting team of PaineWebber and Sutter Securities was
selected to purchase the Agency's Series 1994 Refunding Bonds due
to their favorable pricing structure, their relationships with
both bond insurance companies and rating agencies, and their
prior performance on Agency financings. Members of both firms
were involved in the sale of outstanding Series 1989, 1990, and
1991 Project No. 1 Tax Allocation Bonds.
FINDINGS AND ALTERNATIVES:
Refunding the Series 1989 and 1990 bonds will result in lower
bond interest costs, and the release of debt service reserve
funds. True interest cost for the 1989 and 1990 bonds is 7.78%
and 7.93%, respectively; the projected corresponding interest
cost for the refunding bonds is 6.13%. This interest rate
reduction, when combined with a restructured debt service
schedule, results in a projected net present value savings at a
6.0% discount rate) of $877,648. Further, refunding both Series
will permit the Agency to obtain surety bonds for the refunding
bonds and the Series 1991 Tax Allocation Bonds which will not be
refunded but are insured by MBIA). The surety bonds will secure
the respective bond debt service reserve requirements, thus
releasing cash reserve funds held by the Bond Trustee. As a
result, the Agency's financial advisor projects that the Agency
will obtain $1.4 million in reserve fund proceeds.
000005
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ing -> 10(e The Agency's financial advisor and bond refunding team have
explored a variety of alternatives to both refunding and
structuring these bonds. The proposed course of action was
determined to be the most cost effective alternative to raise
additional capital, within the current limitations of the Project
No. 1 Redevelopment Plan, and achieve a cost savings as a result
of reduced interest costs. Additional details regarding the bond
refunding are contained in the Redevelopment Agency staff report.
Thomas P. Genovese
Interim Executive Director
La Quinta Financing Authority
Attachments:
1. Contract of Purchase
090006
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