HomeMy WebLinkAbout11/15/2000 - STAFF REPORTS (15) DATE: NOVEMBER 15, 2000
TO: CITY COUNCIL
FROM: REDEVELOPMENT DIRECTOR
SEEKING DIRECTION FROM COUNCIL ON WHETHER TO ASSIST DESERT AIDS
PROJECT SECURE STATE-GUARANTEED TAX EXEMPT BOND FINANCING
THROUGH THE ASSOCIATION OF BAY AREA GOVERNMENTS IN ORDER TO
FINANCE THE PURCHASE OF THEIR BUILDING AT 1675 NORTH SUNRISE WAY
RECOMMENDATION:
It is recommended that the City Council consider an application by the Desert
AIDS Project for tax-exempt bond financing for the purchase of their building at
1675 North Sunrise Way, with bonds guaranteed by the State of California and
issued by the Association of Bay Area Governments
SUMMARY:
The Desert AIDS Project (DAP) moved into their current space approximately
two years ago with an option to purchase the building at a favorable price. They
are currently looking at financing the purchase, and wish to use long-term, tax-
exempt bonds guaranteed by the State. The Association of Bay Area
Governments (ABAG) regularly issues such bonds for community organizations
such as DAP, and can issue them more quickly and with less expense than the
California Healthcare Facility Financing Agency. The City, however, would be
required to conduct the TEFRA public hearing required of all tax-exempt bonds,
and become an associate member of ABAG (at no expense) to facilitate DAP's
use of ABAG's bonding authority.
BACKGROUND:
This item is before Council as an information item only. Before committing staff
resources and asking DAP to commit financial resources to a tax-exempt bond
issue, staff felt it made sense to discuss the project with Council. The bonds
would be issued by ABAG and therefore would not have the City's name on
them; in addition, the bonds are guaranteed by the State of California.
Therefore, the City bears no financial or credit risk if DAP were to default. All
that is required of the City is to conduct the TEFRA hearing on the bond issue,
as well as become an associate member of ABAG to make DAP eligible to use
ABAG's bonding facility. DAP is considering using ABAG rather than the State
directly because ABA has the ability to float the bond issue on a more timely
basis, and its issuan costs are lower. DAP's financial consultant is from the
Bay Area and has do a several bond issues through the organization.
JOH S. RAY OND
ed elooppm t Director
APPROVED
City Manager
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