The URL can be used to link to this page

Home My WebLink About6/20/2001 - STAFF REPORTS DATE: June 20, 2001 TO: City Council/Financing Authority FROM: Director of Finance &Treasurer RE: Refinancing of 1991 Convention Center Bonds RECOMMENDATION: It is recommended that the Palm Springs Financing Authority approve the refinancing of the 1991 Convention Center Bonds, utilizing one of the following three options: Option 1: Keep the same term (6/30/22) as the existing bonds. The average annual savings would be about$296,000. Option 2: Keep the same annual debt service (about$3.9 million) and same term. The additional cash provided by this option is about $3,752,000. Option 3: Keep the same annual debt service and extend the term four years to 6/30/26. The additional cash provided is about $6,763,000. SUMMARY: This action would call the existing bonds at their first optional call date of December 1, 2001, using the proceeds from the refinancing. The average interest rate would decrease from 6.72% to somewhere between 4.8% and 5%. The present value of the savings under any of the three options is about$3.8 million. BACKGROUND: There have been several financings and refinancings of the Convention Center and its later expansion. The total bond indebtedness on the Convention Center will be $45,118,000 as of June 30, 2001. The proposed refinancing affects the 1991 issue, of which about $28.7 million remains. Because of lower interest rates, there is an opportunity to realize significant savings in debt service, either through reduced annual payments, or through receiving the additional bond proceeds in cash. The additional proceeds could be used only for capital projects and must be expended within three years. The attached resolution and the companion resolution and ordinance for the City Council would authorize an issuance not to exceed $40,000,000. The Financial Advisor's estimate of the necessary size of the issue is $30.8 million for Option 1; $34.6 million for Option 2, and $38.5 million for Option 3. Excerpts from the Financial Advisors May 23`d Study Session presentation is attached. The complete set of bond documents prepared by the City Attorney is on file with the City Clerk. Submitted by: Approved: Thomas M. Kanarr David H. Ready Director of Finance &Treasurer City Manager/Executive Director ATTACHMENTS: May 23`d Study Session report excerpts Resolution Ordinance �� / MRY.22.2001 3:18PM HRRRELL & CO. M0.502 P.13i15 CITY OF PALM SPRINGS CONVENTION CENTER REFINANCING THREE.s9LTERNATIVE STRATEGIES ➢ Refinance for annual savings over the same term (2021) ➢ Refinance over the same team with the same payment to raise new money ➢ Refinance over 25 year term with the same payment to raise new money Existing Debt Service ToW Combined Debt Service After Refinancing Fi5cal Outstanding Outstanding Outstanding Option Option2 Option Year 1991 Bonds 1997 Bonds Total Same Term Same Term Extend Terns EndingDebt Service Debt ice Debt Service rot Annual Saving, Same Debt Service Level Debt Service 6/30/2002 21920,210 966,283 3,886,493 3A93,651 3,872,134 3,876AS 6/30/2003 2,925,925 966,268 $,892,193 3,529,990 3,890,451 3,884AS0 6/30/2004 2,925,595 965,435 3,B91,028 3,525,693 3,889,198 8,888,170 6/30/2005 2,926,400 968,573 3,889,975 3,524,400 3,885,330 3,839,980 6/30/2006 Z926AOD 965,545 3,891,945 5,528,090 $,890,955 3,891,953 6/80/2007 2,931,400 966,203 3,897,603 %535,185 3,894,483 3,697,610 6/80/2008 2,,93100 965,733 3,897,153 3,530,963 3,896,073 3,897,140 6/30/2009 3,0067100 964,105 3,970,505 3,600,488 3,965,673 3,970,315 6/30/2010 3,011,175 969,755 3,976,930 3,605,570 3,974,865 3,837,383 6/30/2021 3,012,519 965,443 3,97,961 3,608,510 3,976,328 3,835,845 6/80/2012 $,012,281 963,568 3,973,849 3,605/108 3,971,243 3,8$9,145 6/30/2013 7,221,600 964,593 3,186,193 3,640,095 3,181,923 3,836,528 6/30/2014 2,216,925 963,355 3,180,280 3,636,830 3,179,030 3,S32,713 6/30/2015 3,127,506 96SAII 4,092,918 3,709,799 4,088,999 3,832,909 6/50/2016 3,130,713 965,120 4,095,833 3,712,690 4,094,180 3,831,113 6/30/2017 3,129,638 •962,455 4,092,093 3,706,668 4,089,455 3,831,798 6/30/2016 3,128,775 962,765 4,091,540 3,710,423 4,088,453 3,829,068 6/30/2019 %127ASO 965,780 4,093,250 31M91198 4,091,418 3,828,215 6/30/2020 31129,819 961,500 4,091,319 3,709,685 4,090,203 3,925,478 6/30/2021 3,130,030 964,790 4,094,828 3,711,368 4,094,290 3,925,465 6/30/2022 3,132,263 965,380 4,091,643 3,713,720 41093,155 3,822,780 6/30/2023 - - - - 3,850,556 6/30/2024 - 3,852,500 6/30/2025 - - _ - 5,850,325 6/30/2026 - - - 3,848,4M 62,004A30 20,239,054 62,263,484 76� 048,020 821197,832 96,406,088 Page 11 MRY.22.2001 3:18PM HRRRELL & CO. NO.502 P.14i15 CITY OF PALM SPRINGS CONVENTION CENTER REFINANCING BOND STATISTICS Option 1 Option 2 Option 3 Debt Service Savings $ 6,215,464 $ 65,652 $ (14,142,604) Additional Bond Proceeds - 3,732,674 6,763,467 Par Amount of Bonds Issued $ 30,775,000 $ 34,595,000 $ 3SA55,000 Average Interest Rate 4.80% 4.80% 5,000/0 Prior Bonds Interest Rate 6,72% 6,72% 6.72% Par Amount of Bonds Refunded $ 28,650,000 $ 28,650,000 $ 28,650,000 SOURCES AND USES OF FUNDS Option 1 Option 2 Option 3 Sources of Funds: Par Amount of Bonds $ 30,775,000 $ 34,395,000 $ 38,455,000 1991 Reserve Fund 1,842,000 1,842,000 1,842,000 $ 32,617,000 $ 36,437,0D0 $ 40,297,000 Uses of Funds: Refunding Escrow $ 29,810,576 $ 29,809,453 $ 29,793,351 Debt Service Reserve Fund 1,950,000 1,950,000 2,610,000 Cost of Issuance 300,000 300,000 300,000 Underwriter's Discount 307,750 345,950 480,530 Bond Insurance 248,674 278,923 549,652 Project Funds - 3,752,674 6,763,467 $ 32,617,000 $ 36,437,000 $ 40,297,000 Page 12 FA �Q 3 RESOLUTION NO. 22 A RESOLUTION OF THE CITY OF PALM SPRINGS FINANCING AUTHORITY AUTHORIZING AND DIRECTING THE ISSUANCE OF NOT TO EXCEED $40,000,000 PRINCIPAL AMOUNT OF LEASE REVENUE REFUNDING BONDS, 2001 SERIES A (CONVENTION CENTER PROJECT), APPROVING PRELIMINARY OFFICIAL STATEMENT AND DISTRIBUTION OF PRELIMINARY OFFICIAL STATEMENT, AUTHORIZING EXECUTION AND DELIVERY OF OFFICIAL STATEMENT, SUPPLEMENTAL TRUST AGREEMENT NO. 2, SUPPLEMENTAL LEASE AGREEMENT NO. 3, BOND PURCHASE AGREEMENT, AND ESCROW DEPOSIT AGREEMENT, AUTHORIZING THE SALE OF THE BONDS ON CERTAIN TERMS AND CONDITIONS, AUTHORIZING CERTAIN OTHER OFFICIAL ACTIONS AND PROVIDING FOR OTHER MATTERS PROPERLY RELATING THERETO WHEREAS, the City of Palm Springs Financing Authority (the "Authority") is a Joint Powers Authority (a public body, corporate and politic) duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Joint Powers Law (Articles 1 through 4 of Chapter 5, Division 7, Title 1 of the California Government Code) (the "Act") and the powers of such authority include the power to issue bonds for any of its corporate purposes; and WHEREAS, $50,668,512.10 aggregate principal amount of the Authority's Lease Revenue Bonds, 1991 Series A (Convention Center Project) (the "1991 Bonds") were sold and delivered on April 22, 1991; and WHEREAS, a portion of the 1991 Bonds were advance refunded with a portion of the Authority's Lease Revenue Refunding Bonds, 1997 Series A(Convention Center Project); and WHEREAS, it is now desirable that an additional portion of the 1991 Bonds be current refunded with a portion of the proceeds of the Lease Revenue Refunding Bonds, 2001 Series A (Convention Center Project) (the "2001 Bonds"); and WHEREAS, the City of Palm Springs (the "City") has approved the issuance of the 2001 Bonds; and WHEREAS, the Authority finds and determines that it is within the authority of the Authority and is a public purpose that the Authority approve the delivery and sale of the 2001 Bonds for said purposes and that there are significant public benefits arising from the taking of such action, including, but not limited to, demonstrable savings in effective interest rate, bond FA /A Resolution No. ?? Page 2 preparation, bond underwriting and financing costs associated with the issuance of the 2001 Bonds, as contemplated by Section 6586 of the Act; and WHEREAS, in connection with the marketing of the 2001 Bonds, it is now necessary and desirable to approve the form of the Supplemental Trust Agreement No. 2, the Supplemental Lease Agreement No. 3, and the Preliminary Official Statement with respect to the 2001 Bonds, and take certain other action with regard to the marketing of the 2001 Bonds. NOW, THEREFORE, BE IT RESOLVED, by the City of Palm Springs Financing Authority, as follows: SECTION 1. The above recitals are true and correct. SECTION 2. Pursuant to the Act, the Authority hereby approves the issuance of the 2001 Bonds in an aggregate principal amount of not to exceed $40,000,000. SECTION 3. That the form of the Supplemental Lease Agreement No. 3 Relating to Convention Center Facilities, dated as of August 1, 2001, by and between the Authority and City, a copy of which is on file with the Secretary of the Authority, be and is hereby is approved in substantially the form thereof or with such changes as may be approved by the Chairperson or any Vice Chairperson or Executive Director or Treasurer of the Authority, said Chairperson's or Vice Chairperson's or Executive Director's, or Treasurer's execution thereof to constitute conclusive evidence of said officer's approval of all such changes, and the Chairperson or Vice Chairperson or Executive Director or Treasurer of the Authority be and is hereby authorized, together or alone, to execute and deliver said Agreement. SECTION 4. BNY Western Trust Company is hereby appointed as Trustee under the Supplemental Trust Agreement No. 2, described in this Resolution. SECTION 5. BNY Western Trust Company is hereby appointed as Escrow Bank under the Escrow Deposit and Trust Agreement, described in this Resolution. SECTION 6. That the form of the Supplemental Trust Agreement No. 2, dated as of August 1, 2001, by and among BNY Western Trust Company, as trustee (the "Trustee"), the Authority and the City, a copy of which is on file with the Secretary of Authority, be and is hereby approved in substantially the form thereof or with such changes as may be approved by the Chairperson or Vice Chairperson or Executive Director or Treasurer of the Authority, said Chairperson's or Vice Chairperson's or Executive Director's or Treasurer's execution thereof to constitute conclusive evidence of said officer's approval of all such changes, and the Chairperson or Vice Chairperson or Executive Director or Treasurer of the Authority be and is hereby authorized, together or alone, to execute and deliver said Agreement. SECTION T That the form of Escrow Deposit and Trust Agreement, dated as of August 1, 2001, by and between BNY Western Trust Company, as Escrow Bank, the Authority and City, a copy of which is on file with the Secretary of the Authority, be and is hereby approved in substantially the form thereof, or with such changes as may be approved by the Chairperson or IRV#12151 v1 A/1 /Sol Resolution No. 22 Page 3 Vice Chairperson or Executive Director or Treasurer of the Authority, said Chairperson's or Vice Chairperson's or Executive Director's or Treasurer's execution thereof to constitute conclusive evidence of said officer's approval of all such changes, and the Chairperson or Vice Chairperson or Executive Director or Treasurer of the Authority be and is hereby authorized, together or alone, to execute and deliver said Agreement. SECTION 8. That the form of Contract of Purchase relating to the purchase of the 2001 Bonds by Stone & Youngberg, LLC, a copy of which is on file with the Secretary of the Authority, be and is hereby approved in the form thereof, or with such changes as may be approved by the Chairperson or any Vice Chairperson or Executive Director or Treasurer of the Authority, said Chairperson's and Vice Chairperson's or Executive Director's or Treasurer's execution thereof to constitute conclusive evidence of said officer's approval of all such changes, and the Chairperson or any Vice Chairperson or Executive Director or Treasurer of the Authority be and is hereby authorized, together or alone, to execute and deliver said Agreement and to insert in each of the aforesaid Agreement the dollar amount which reflects the provisions of said Contract of Purchase. Provided, however, that (1) the aggregate principal amount of the 2001 Bonds shall not exceed $40,000,000; and (2) the Authority shall have received from Stone & Youngberg, LLC, prior to the sale of the 2001 Bonds, its written confirmation that the 2001 Bonds will have a True Interest Cost of not more than 6%, with an initial underwriter's discount of no more than 1.25%. SECTION 9. That the Preliminary Official Statement relating to the 2001 Bonds is approved for distribution by Stone & Youngberg, LLC, to municipal bond broker-dealers, to banking institutions, and to members of the general public who may be interested in purchasing the 2001 Bonds. The Executive Director or Assistant Executive Director or Treasurer is authorized to approve the amendment of the Preliminary Official Statement, from time to time, pending distribution of the Preliminary Official Statement as shall be required to cause such Preliminary Official Statement to contain any further information necessary to accurately describe the 2001 Bonds and the Authority's Executive Director or Assistant Executive Director or Treasurer is authorized to deem final the Preliminary Official Statement as of its date for the purpose of Rule 15c2-12 under the Securities Exchange Act of 1934 as amended. The final Official Statement relating to the 2001 Bonds shall be submitted to the Executive Director or the Assistant Executive Director or Treasurer of the Authority for approval. SECTION 10. The financing consultant firm of Harrell & Company Advisors, LLC, Orange, California, is hereby appointed as financial advisor to the Authority with respect to the 2001 Bonds. SECTION 11. The law firm of Burke, Williams & Sorensen, LLP, Irvine, California, is hereby appointed as Bond Counsel with respect to the 2001 Bonds. SECTION 12. The law firm of Jones Hall, San Francisco, California, is hereby appointed as Disclosure Counsel with respect to the 2001 Bonds. SECTION 13. That the Chairperson, Vice Chairperson, Secretary, Treasurer and Executive Director and other authorized officers of the Authority be and are hereby each IRv#12151 vl 3_ Fig /�l'3 Resolution No. 22 Page 4 authorized to execute and deliver such certificates, requests, statements, agreements and other documents and to take such other action as may be necessary to consummate the transactions contemplated by each aforesaid Agreement. SECTION 14. This resolution shall take effect and be enforceable immediately upon its adoption. ADOPTED THIS 20thday of June 2001. AYES: Members Hodges, Oden, Reller-Spurgin and Chairman Kleindienst NOES: Members Jones ABSENT: Members None ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By: Asst. Secretary Chairman REVIEWED & APPROVED IRV#12151 v1 �/f 1494