HomeMy WebLinkAboutSRJPFA Lease Revenue Refunding Bonds June 2012Agenda Item No:
Meeting Date: June 18, 2012
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
AGENDA REPORT
Department: Finance
Prepared by: Mark Moses City Manager Approvav
Treasurer
SUBJECT: RESOLUTION AUTHORIZING THE ISSUANCE OF LEASE REVENUE
REFUNDING BONDS IN THE INITIAL AGGREGATE PRINCIPAL AMOUNT NOT
TO EXCEED $7,500,000 IN CONNECTION WITH REFINANCING CERTAIN PUBLIC
CAPITAL IMPROVEMENTS CONSISTING OF A PUBLIC PARKING GARAGE,
AUTHORIZING AND DIRECTING EXECUTION OF A FIRST AMENDMENT TO
TRUST AGREEMENT, A FIRST SUPPLEMENTAL TRUST AGREEMENT, A
SECOND AMENDMENT TO PROPERTY LEASE, A SECOND AMENDMENT TO
SITE AND FACILITY LEASE AND CERTAIN OTHER DOCUMENTS,
AUTHORIZING THE NEGOTIATION FOR THE SALE OF BONDS PURSUANT TO A
BOND PURCHASE AGREEMENT, APPROVING AN OFFICIAL STATEMENT, AND
AUTHORIZING OTHER RELATED ACTIONS
RECOMMENDATION: Adopt Resolution authorizing the execution of documents and other
actions required to refinance the Authority's outstanding 2003 lease revenue bonds (the "2003
Bonds") issued by the San Rafael Joint Powers Financing Authority (the "'Authority").
BACKGROUND: The City financed the construction of the parking structure (between 3rd and
C Street) in 2003 through the issuance of the 2003 Bonds in the original principal amount of
$7,605,000. The 2003 Bonds are structured as a general fund lease transaction, but the City first
uses the net revenues of the parking fund to make required lease payments, and only then uses
the City's general fund moneys in the event of a shortfall in annual net revenues. To date, all
prior debt service payments have been made from the parking fund and there has been no
financial impact to the City's general fund from the 2003 Bonds. The 2003 Bonds were
originally issued for 30 years and have an average coupon of 4.77% and annual debt service of
approximately $500,000.
The 2003 Bonds were structured as lease revenue bonds sold through the Authority. As part of
the financing structure, the City and Authority executed a property lease, site and facility lease,
memorandum of assignment and trust agreement. Union Bank currently serves as the trustee to
FOR CITY CLERK ONLY
File No.:
Council Meeting: L2
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SAN RAFAEL JOINT POWERS FINANCING AUTHORITY AGENDA REPORT/Paile:2
the City on the 2003 Bonds and collects the semi-annual debt service payment prior to the
October 1 and April 1 payment dates.
The 2003 Bonds were subject to optional redemption starting on April 1, 2010, and therefore can
now be redeemed on any date without any redemption premium (i.e., only outstanding principal
plus accrued interest would be paid). The City's financial advisor has worked with staff to
analyze and quantify the economic benefits of refinancing the 2003 Bonds.
ANALYSIS: City staff has worked with Jones Hall, as bond and disclosure counsel and NHA
Advisors, as financial advisor (the City's bond and disclosure counsel and financial advisor on
the original 2003 Bonds) to evaluate financial and structural options for the City to maximize the
economic benefit of a refinancing of the 2003 Bonds. Based on these discussions and analysis,
the proposed financing structure includes the amendment of the existing financing documents
(dated April 1, 2003) to provide the legal framework for a lease revenue refunding bonds, series
2012 (the "2012 Bonds"). City staff recommends retaining Union Bank as the trustee on the
2012 Bonds.
The percentage savings estimated from this refinancing is approximately 10%, and will generate
$40,000 - $45,000 per year in savings. Bond refinancings of this size that have the potential to
generate savings in excess of 5% are good candidates for refinancing. This savings is net of all
costs, including the underwriter's discount of $55,350, and costs of issuance that total $155,000.
In order to meet the requirements of the 2003 Bonds, the 2012 Bonds will refinance all but
$5,000 of the outstanding 2003 Bonds. Proceeds of the 2012 Bonds will be used to redeem
$6,440,000 (of $6,445,000 outstanding) on July 15, 2012. It is anticipated that the City will call
the remaining $5,000 bond on October 1, 2012 from City's parking revenue fund. Additional
proceeds from the 2012 Bonds will be used to fund a debt service reserve fund (anticipated to be
applied to the April 1, 2033 final maturity) and to pay related financing costs.
The 2012 Bonds are proposed to be sold through an underwriting firm to be selected by staff
based on a proposal process. Final pricing of the 2012 Bonds and funding of the escrow is
anticipated to occur in early -to -mid July.
The attached Preliminary Official Statement has been prepared by staff and the financing team.
The Preliminary Official Statement must include all facts that would be material to an investor in
the 2012 Bonds. Material information is information that there is a substantial likelihood would
have actual significance in the deliberations of the reasonable investor when deciding whether to
buy or sell the 2012 Bonds.
FISCAL IMPACT: There is no fiscal impact of this action to the Authority. This action is
recommended based on the City's opportunity to refinance the 2003 Bonds and achieve lower
interest rates which can produce lower annual debt service payments for the Parking Services
Fund. Current estimates indicate an annual savings of $40,000-$45,000 per year for a total
$720,000- in savings over the remaining 21 years.
OPTIONS:
The Board can accept, deny, or seek additional information from staff related to the Resolution
or any attachments.
SAN RAFAEL JOINT POWERS FINANCING AUTHORITY AGENDA REPORT/Page:3
RECOMMENDED ACTION: Adopt the resolution authorizing the issuance of Lease Revenue
Refunding Bonds, Series 2012, and related actions required to support this activity.
ATTACHMENTS:
• Board Resolution
• First Amendment to Trust Agreement
• First Supplemental to Trust Agreement
• Second Amendment to Site and Facility Lease
• Second Amendment to Property Lease
• Second Amendment to Memorandum of Assignment
• Draft Preliminary Official Statement
• Bond Purchase Agreement
RESOLUTION NO. FA 2012-01
RESOLUTION OF THE SAN RAFAEL JOINT POWERS FINANCING AUTHORITY
AUTHORIZING THE ISSUANCE OF LEASE REVENUE REFUNDING BONDS IN
THE INITIAL AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED
$7,500,000 IN CONNECTION WITH REFINANCING CERTAIN PUBLIC CAPITAL
IMPROVEMENTS CONSISTING OF A PUBLIC PARKING GARAGE,
AUTHORIZING AND DIRECTING EXECUTION OF A FIRST AMENDMENT TO
TRUST AGREEMENT, A FIRST SUPPLEMENTAL TRUST AGREEMENT, A
SECOND AMENDMENT TO PROPERTY LEASE, A SECOND AMENDMENT TO
SITE AND FACILITY LEASE AND CERTAIN OTHER DOCUMENTS,
AUTHORIZING THE NEGOTIATION FOR THE SALE OF BONDS PURSUANT TO
A BOND PURCHASE AGREEMENT, APPROVING AN OFFICIAL STATEMENT,
AND AUTHORIZING OTHER RELATED ACTIONS
WHEREAS, the City of San Rafael (the "City") and the San Rafael Redevelopment Agency
have heretofore entered into a Joint Exercise of Powers Agreement establishing the San Rafael
Joint Powers Financing Authority (the "Authority") for the purpose, among others, of issuing its
bonds to be used to finance the acquisition, construction and improvement of certain public capital
improvements; and
WHEREAS, for the purpose of raising funds necessary to finance public capital
improvements (consisting of a public parking garage) for the City, the Authority has heretofore
issued its San Rafael Joint Powers Financing Authority Lease Revenue Bonds, Series 2003
(Public Parking Project) (the "2003 Bonds") in the original aggregate principal amount of
$7,605,000; and
WHEREAS, the Authority has determined to issue, pursuant to Article 10 (commencing
with Section 53570) and Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of
Division 2 of title 5 of the California Government Code (collectively, the "Refunding Law") and the
Trust Agreement (as defined below), its Lease Revenue Refunding Bonds, Series 2012 (Public
Parking Project) (the "2012 Bonds") in order to refund a portion of its 2003 Bonds to achieve
interest rate savings; and
WHEREAS, the Authority desires to prepare and make available to potential investors an
official statement relating to the Bonds containing information to be used in connection with the
sale of Bonds; and
WHEREAS, the Governing Board (the "Board") of the Authority has duly considered such
transactions and wishes at this time to approve said transactions in the public interests of the
Authority;
NOW, THEREFORE, BE IT RESOLVED, by the Governing Board of the San Rafael Joint
Powers Financing Authority as follows:
Section 1. Issuance of Bonds; Approval of First Amendment to Trust Agreement and
First Supplemental Trust Agreement. The Board hereby authorizes the issuance of the 2012
Bonds in the maximum aggregate principal amount of not to exceed $7,500,000. The Bonds shall
be issued in accordance with the Trust Agreement (the "Original Trust Agreement") dated as of
April 1, 2003, by and between the Authority and Union Bank, N.A., (formerly known as Union Bank
of California, N.A.) (the "Trustee"). In order to clarify the Authority's ability to issue the 2012 Bonds
pursuant to the Original Trust Agreement, the Authority and the Trustee will enter into a First
Amendment to Trust Agreement (the "First Amendment"), which the Board hereby approves in the
form on file with the Secretary of the Authority (the "Secretary"), together with such additions
thereto and changes therein as the Chair of the Authority (the "Chair") or the Treasurer of the
Authority (the "Treasurer") or the designee of either of them shall deem necessary, desirable or
appropriate upon consultation with bond counsel, the execution of which by the Authority shall be
conclusive evidence of the approval of any such additions and changes. The terms and conditions
of the 2012 Bonds shall be as set forth in the First Supplemental Trust Agreement (the "First
Supplemental Trust Agreement" and, collectively, with the Original Trust Agreement and the First
Amendment, the "Trust Agreement"), to be entered into by the Authority and the Trustee, which
the Board hereby approves in the form on file with the Secretary, together with such additions
thereto and changes therein as the Chair or the Treasurer or the designee of either of them shall
deem necessary, desirable or appropriate upon consultation with bond counsel, the execution of
which by the Authority shall be conclusive evidence of the approval of any such additions and
changes. The Chair of the Authority and the Treasurer of the Authority (each, a "Designated
Officer"), each acting alone, are hereby authorized and directed to execute, and the Secretary is
hereby authorized and directed to attest, the final forms of the First Amendment and the First
Supplemental Trust Agreement for and in the name and on behalf of the Authority. The Board
hereby authorizes the performance by the Authority of its obligations under the Trust Agreement.
Section 3. Approval of Second Amendment to Property Lease and Second
Amendment to Site and Facility Lease. The Board hereby approves the Second Amendment to
Property Lease and Second Amendment to Site and Facility Lease by and between the Authority
and the City in the forms on file with the Secretary together with such additions thereto and
changes therein as the Treasurer shall deem necessary, desirable or appropriate upon
consultation with bond counsel, the execution of which by the Authority shall be conclusive
evidence of the approval of any such additions and changes. The Designated Officers, each
acting alone, are hereby authorized and directed to execute, and the Secretary is hereby
authorized and directed to attest, the final forms of the Second Amendment to Property Lease and
Second Amendment to Site and Facility Lease for and in the name of and on behalf of the
Authority. The Authority hereby authorizes the performance by the Authority of its obligations
under the Second Amendment to Property Lease and Second Amendment to Site and Facility
Lease.
Section 4. Sale of Bonds; Selection of Underwriter. The Authority hereby authorizes
and directs the Treasurer of the Authority to select an investment banking firm or firms to serve as
the underwriter or underwriters of the 2012 Bonds, and to sell the 2012 Bonds to such underwriter
or underwriters pursuant to the Bond Purchase Agreement, as provided below.
Section 5. Bond Purchase Agreement. The Authority hereby approves the form of the
Bond Purchase Agreement on file with the Secretary to the Authority, with such additions thereto
and changes therein as the Treasurer of the Authority or his designee shall deem necessary,
desirable or appropriate upon consultation with bond counsel, the execution of which by the
Authority shall be conclusive evidence of the approval of any such additions or changes, provided
that no such addition or change shall increase the amount of 2012 Bonds to be in excess of
$7,500,000, or shall provide for a true interest cost in excess of 4.00% or an underwriter's discount
(exclusive of any original issue discount) of greater than 1.25%. Additionally, the 2012 Bonds shall
not be sold if such sale results in net present value savings below 3% of the principal amount of
2003 Bonds refunded. When determining the net present value savings, the 2012 Bond proceeds
deposited into a reserve account for the 2012 Bonds shall be considered as an offset to the
payment of principal on the 2012 Bonds maturing on April 1, 2033. The Designated Officers, each
acting alone, are hereby authorized and directed to execute the Bond Purchase Agreement and to
take all actions necessary to fulfill the Authority's obligations thereunder.
Section 6. Official Statement. The Board hereby approves the form of Official Statement
relating to the Bonds (the "Official Statement") on file with the Secretary, together with such
changes or additions thereto as the Treasurer shall deem necessary, desirable or appropriate
upon consultation with bond and disclosure counsel, and authorizes the Designated Officers, each
acting alone, to deem final within the meaning of Rule 15c2-12 of the Securities Exchange Act of
1934 except for omissions permitted therein, the preliminary Official Statement (if required by said
Rule). Distribution of such preliminary Official Statement by the Underwriters is hereby approved.
The Designated Officers, each acting alone, are hereby authorized to execute the final form of the
Official Statement with such changes or additions as the Treasurer shall deem necessary,
desirable or appropriate upon consultation with bond and disclosure counsel, and the execution of
the final Official Statement by the Authority shall be conclusive evidence of the approval of any
such additions and changes. The Board hereby authorizes the distribution of the final Official
Statement. The final Official Statement shall be executed in the name of and on behalf of the
Authority by a Designated Officer.
Section 7. Official Actions. The Designated Officers, the Secretary and any and all other
officers of the Authority are hereby authorized and directed, for and in the name of and on behalf
of the Authority, to do any and all things and take any and all actions, including execution and
delivery of any and all documents, assignments, certificates, requisitions, agreements, notices,
consents, instruments of conveyance, warrants and documents, which they, or any of them, may
deem necessary, advisable, or appropriate upon consultation with bond and disclosure counsel, in
order to consummate the lawful issuance and sale of the Bonds and the consummation of the
transactions as described herein, including without limitation, such documents, assignments,
certificates and agreements as may be required by the Trust Agreement, the Property Lease, the
Site Lease and any and all other documents and agreement approved hereunder.
1, ESTHER C. BEIRNE, Secretary of the San Rafael Joint Powers Financing Authority,
hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a
special meeting of the San Rafael Joint Powers Financing Authority held on the 18th day of June,
2012, by the following vote, to wit:
AYES: BOARD MEMBERS: Connolly, Heller, Levine, McCullough & Mayor Phillips
ESTHER C. BEIRNE, Secretary
