HomeMy WebLinkAbout6/20/2001 - STAFF REPORTS (37) DATE: June 20, 2001
TO: City Council
FROM: Director of Finance & Treasurer
RE: Purchase of Assessment Districts No. 157 and 158 Bonds,
and new issue of limited obligation bonds.
RECOMMENDATION:
It is recommended that the City Council authorize purchase of the AD No. 157 and AD
No. 158 bonds via amendment of the Bond Indenture, adoption of a bond issuance
procedural ordinance (Mark Roos Act), and issuance of limited obligation revenue bonds.
SUMMARY:
This action would call the existing bonds, and the bonds would be purchased as an
investment by the City. The funds to purchase the bonds come from the proceeds of the
new issue. The average interest rate would decrease from 7.85%to 5.25%. The
assessments to property owners would remain the same, and the new issue would raise
about $272,000 in new funds. These funds would be restricted to capital projects, and
must be expended within 3 years.
BACKGROUND:
AD No. 157 was issued in April, 1992 at an original amount of$1,122,890. The district
provided street improvements in neighborhoods south of Ramon Road between El Cielo
and Gene Autry Trail. About $740,000 in principal remains, and the term of the bonds is
9/2/12.
AD No. 158 was issued in October 1990 at an original amount of$2,642,593. The
district paid for street, utilities and other infrastructure improvements for approximately
45 lots in the southeastern portion of the City. The term of AD No. 158 is 9/2/10, and the
remaining principal is $1,410,000.
The proposed new issue would provide the funds to call the existing bonds. The term of
the new issue would coincide with the term of the existing AD's (9/2/12 for AD 157 and
9/2/10 for AD 158). The Financial Advisor's estimate of the new issue if$2,390,000.
The bonds would be secured solely(as were the original AD's) by the value of the
underlying land, and no General Fund monies would be at risk. Attached are excerpts
from the Financial Advisor's May 23`a Study Session report.
The attached ordinance would authorize an issuance not to exceed $2.6 million,
incorporating portions of the Mark Roos Act. 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
ATTACHMENTS: May 23, 2001 Study Session report excerpts, Ordinance
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MRY.22.2001 3:15PM HARRELL & CO. NO.502 P.8i15
CITY OF PALM SPRINGS
ASSESSMENT DISTRICT FINANCING
BOND STATISTICS
Revenue Bonds to be issued $2,400,000 PV Savings 3.80/0
AD 157 Bonds to be Purchased 740,000
All 158 Bonds to be Purchased 2 405 00Q AD Bonds Intetest Rate 7.85%
2,145,000 Refunding Bonds Interest Pate 5.250/0
Capital Project Funds Raised $276,000
ADOPTION OF THE MARKS-ROOS ACT
There is a 2.6% difference between the existing AD Bonds interest rate and the intetest rate on the
Refunding Bonds. The Marks-Roos Local Bond Pooling Act of 1995 allows for general law tides to
keep these interest rate savings generated by up to 1%of the interest rate differential,The tetuainder
of the savings would be returned to property owners.
Because of Palm Springs' Chattet City status, the City can adopt the Marks-Roos Act, for purposes
of this financing, excluding the 1% differential litnitation, This allows the City to keep all of the
savings ftotn the refinancing, These provisions would be contained in the bond resolutions brought
fotward for adoption at a later date,
Capital Project Funds can be spent City-wide,but are subject to the restrictions for tax-exempt bond
proceeds.
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MAY.22.2001 3. 1GPM HARRELL & CO. NO.502 P.9/15
FINANCING RISKS
VALUE TO LIEN.R.ATIOS
(Based on the 2000/01 Assessed Value,not Appraised Values)
Lien Valu__ c Co Lien leg Vacant Less than 3x
AD 157 $ 770,000 14.4 to 1 113 27 16
AD 156 1,41000 3.2 to 1 37 37 22*
AD 158 Lots have recently sold for between$117,500 to$250,000
Average AD 158 Assessment is $40,000,
Average AD 158 Value to Lien at$150,000 sale ptice is 3.75 to 1
16 of 22 Lots below 3 to 1 Assessed Value are still owned by original developer.
DELINQUENCIES
The Financing Authority Revenue Bonds are solely secured from the Assessments paid,
Total payments Debt Service
AD 159 AD 157 to Financing on Authority
Debt Service Debt Service Authori Revenue Bonds Surplus
9/2/2002 224,725 103,803 328,528 325,739 2,790
9/2/2003 226,035 105,353 331,388 330,238 1,150
9/2/2004 231.435 96,503 327,938 323,950 3,988
9/2/2005 225,500 97,953 323,453 322,400 1,053
9/2/2006 229,090 98,993 328,083 325,325 2,758
9/2/2007 226,380 99,643 326,023 322,463 3.560
9/2/2008 222,850 99,898 322,748 319,075 3,673
9/2/2009 228,413 99,753 328,165 325,163 3,003
9/2/2010 227,325 99,240 326,565 325,200 1,365
9/2/2011 98,320 98,320 94,450 3,870
9/2/2012 102,030 102,080 99.988 2,043
2,041,753 1,101,485 3,143,238 3,113,998 29,250
■ If there are delinquencies, the bondholders are first paid from the Reserve Fund. The
Reserve Fund will be funded at$165,000,or 500/6 of annual debt service.
■ Bondholders can also be paid from Foteelosure Proceeds.
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MRY.22.2001 3:16PM HRRRELL & CO. NO.502 P.10i15
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MAY.22.2001 3:17PM HARRELL & CO. NO.502 P.11/15
SOURCES AND USES OF FUNDS
Assessment District No, 158 and 157
2001 Limited Obligation RePttnding Bonds
Dated Date 09/02/2001
Delivery Date 09/02/2001
Sources:
Bond Proceeds:
Par Amount 2,395,000,00
Other Sources of Funds:
AD 158 Reserve 280.731.00
AD 157 Reserve 103,428.00
384,159.00
2,779,159.00
Uses:
Refiutding Escrow Deposits:
Cash Deposit 2,209,350.00
Other Fund Deposits:
Reserve for AD 158 110,000.00
Reserve for AD 157 55,000,00
165,000,00
Delivery Date Expenses:
Cost of Issuance 85,000.00
Underwriter's Discount 43,110.00
128,110.00
Other Uses of Funds;
Additional Proceeds 276,699.00
2,779,159.00
May 22,2001 2:55 pm Prepared by Harrell&Company Advisors,LLC
MRY.22.2001 3:17PM HRRRELL & CO. NO.502 P.12i15
BOND DEBT SERVICE
Asseasment District No. 158 and 157
2001 Limited Obligation Refunding Bonds
Datcd Date 09/02/2001
Delivery Date 09/02/2001
Period
Ending Principal Coupon Interest Debt Service
09/02/2002 200,000 5.250% 125,737.50 325,737.50
09/02/2003 215,000 5.250% 115,237.50 330,237.50
09/02/2004 220,000 5,2$0% 103,950.00 325,950.00
09/02/2005 230,000 5.250% 92,400.00 322,400,00
09/02/2006 245,000 5.250% 80.325,00 325,325.00
09/02/2007 255,000 5.250% 67,462,50 322,462,50-
09/02/2008 265,000 5.230% 54,075.00 319,075.00
09/02/2009 285,000 5.250% 40,162,50 325,162.50
09/02/2010 300,000 5.250% 25,200,00 325,200.00
09/02/2011 85,000 5.250% 9,450,00 94,450.00
09/02/2012 95,000 5.230% 4,987,50 99,987.50
2,395,000 718,987,50 3,113,987.50
May 22,2001 2;55 pm Prepared by Harrell&Company Advisors,LLC
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS AUTHORIZING SUPPLEMENTS TO THE BOND
INDENTURES RELATING TO THE CITY'S ASSESSMENT
DISTRICT NO. 157 (RAMON/EVELITA) AND ASSESSMENT
DISTRICT 158 (ANDREAS HILLS); THE ADOPTION OF A BOND
ISSUANCE PROCEDURAL ORDINANCE; AND THE ISSUANCE
AND SALE OF LEASE REVENUE BONDS IN THE AGGREGATE
PRINCIPAL AMOUNT OF NOT TO EXCEED $3,000,000 FOR THE
PURPOSE OF FINANCING ACQUISITION OF ASSESSMENT
BONDS, AND APPROVING RELATED AGREEMENTS AND
ACTIONS
THE CITY COUNCIL OF THE CITY OF PALM SPRINGS ORDAINS AS FOLLOWS:
SECTION 1. The City Council (the "City Council") of the City of Palm Springs (the
"City")finds, determines and declares as follows:
A. The City has previously issued its City of Palm Springs Assessment District No.
157 (Ramon/Evelita) Limited Obligation Improvement Bonds (the "Assessment District No. 157
Bonds") pursuant to the Improvement Bond Act of 1915 (Division 10 of the California Streets and
Highways Code) (the"Bond Law")and a Bond Indenture, dated as of April 1, 1992.
B. The City has previously issued its Limited Obligation Improvement Bonds, City of
Patin Springs Assessment District No. 158 (Andreas Hills) (the "Assessment District No. 158
Bonds")pursuant to the Bond Law and a Bond Indenture, dated as of October 3, 1990.
C. The City has determined at this time to issue its City of Palm Springs 2001
Limited Obligation Revenue Bonds in the aggregate principal amount of not to exceed $3,000,000
(the `Bonds") for the purpose of providing the funds to acquire the Assessment District No. 157
Bonds and the Assessment District No. 158 Bonds (collectively, the "Assessment Bonds"), to be
secured by a pledge of and first lien on the revenues to be derived from the Assessment Bonds,
which revenues are designed to be sufficient in time and amount to pay the principal of premium, if
any, and interest on the Bonds as the same become due and payable.
D. The City is a charter city and municipal corporation organized and existing under
and by virtue of the Constitution and laws of the State of California, and as such is authorized to
issue the Bonds under and pursuant to the powers of the City with respect to municipal affairs in
accordance with Section 200 of the City Charter and Section 5 of Article XI of the California
Constitution.
E. The City Council of the City wishes at this time to authorize all proceedings
relating to the issuance of the Bonds to acquire the Assessment Bonds, and to approve the
execution and delivery of all agreements and documents relating thereto.
SECTION 2. Adoption of Authorizing Procedures. The City Council hereby authorizes
the Bonds to be issued pursuant to the powers of the City with respect to municipal affairs in
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Ordinance No. _
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accordance with Section 200 of the City Charter and Section 5 of Article XI of the California
Constitution. The Bonds shall be issued and sold in accordance with the procedures specified in
Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government
Code of the State of California, excluding therefrom the provisions of Sections 6592.5 and 6599.1
of the Government Code of the State of California, which are hereby adopted as the procedures to
be followed in the issuance and sale of the Bonds, with full force and effect as though the City were
an "Authority"under and as defined therein.
SECTION 3. Appointment of Trustee. BNY Western Trust Company is hereby
appointed as Trustee under the Indenture relating to the Bonds.
SECTION 4. Issuance of Bonds; Approval of Indenture. The Bonds shall be issued in the
maximum principal amount of$3,000,000, pursuant to an Indenture of Trust, dated as of August
1, 2001 (the "Indenture"), by and between the City and BNY Western Trust Company, as trustee
(the "Trustee"). The City Council hereby approves the Indenture in substantially the form on file
with the City Clerk, together with any changes therein or additions thereto approved by the City
Manager, City Manager, Finance Director, the City Clerk or such other official of the City as may
be designated by the Council (each an "Authorized Officer"), provided that the execution thereof
by an Authorized Officer shall be conclusive evidence of the approval of any such changes or
additions. Tire City Council hereby authorizes and directs an Authorized Officer to execute, and
the City Clerk to attest and affix the seal of the City to, the final form of the Indenture for and in
the name of the City. The City Council hereby authorizes the delivery and performance of the
Indenture. As provided in the Indenture, the proceeds of the Bonds shall be applied by the City to
purchase the Assessment Bonds.
SECTION 5. Supplemental Assessment Bond Indentures. The City Council hereby
approves the call and purchase of the Assessment Bonds pursuant to an Assessment District No.
158 (Andreas Hills) Supplemental Bond Indenture, dated as of August 1, 2001, and an Assessment
District No. 157 (Ramon/Evelita) Supplemental Bond Indenture, dated as of August 1, 2001
(collectively, the "Supplemental Assessment Bond Indentures"), each in substantially the form on
file with the City Clerk, together with any changes therein or additions thereto approved by the
City Manager, City Manager, Finance Director, the City Clerk or such other official of the City as
may be designated by the Council (each an "Authorized Officer'), provided that the execution
thereof by an Authorized Officer shall be conclusive evidence of the approval of any such changes
or additions. The City Council hereby authorizes and directs an Authorized Officer to execute, and
the City Clerk to attest and affix the seal of the City to, the final form of the Supplemental
Assessment Bond Indentures for and in the name of the City. The City Council ]Hereby authorizes
the delivery and performance of the Supplemental Assessment Bond Indentures.
SECTION 6. Sale of Bonds. The City Council hereby approves the sale of the Bonds by
negotiation with Stone &Youngberg LLC (the "Underwriter"). The Bonds shall be sold pursuant
to a Bond Purchase Agreement (the "Bond Purchase Agreement") by and between the City and the
Underwriter in the form on file with the City Clerk, together with any changes therein or additions
thereto approved by an Authorized Officer, provided that the execution thereof by an Authorized
Officer shall be conclusive evidence of the approval of any such additions and changes. The Bond
Purchase Agreement shall be executed in the name and on behalf of the City by an Authorized
Officer upon submission of a proposal by the Underwriter to purchase the Bonds; provided,
however, that such proposal is acceptable to an Authorized Officer mid is consistent with the
requirements of this Resolution. The amount of Underwriter' discount shall be not more than
1.75% of the par amount of the Bonds and the true effective rate of interest to be borne by the
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Ordinance No._
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Bonds (taking into account any original issue discount on the sale thereof) shall not exceed 7%per
annum.
SECTION 7. Official Statement. The City Council hereby approves, and hereby deems
nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, the
preliminary Official Statement describing the Bonds in substantially the form on file with the City
Clerk. An Authorized Officer is hereby authorized to execute an appropriate certificate stating the
City Council's determination that the Preliminary Official Statement has been deemed nearly final
within the meaning of such Rule. Distribution of the preliminary Official Statement in connection
with the sale of the Bonds is hereby approved. An Authorized Officer is hereby authorized and
directed to approve any changes in or additions to a final form of said Official Statement,provided
that the execution thereof by an Authorized Officer shall be conclusive evidence of the approval of
any such changes and additions. The City Council hereby authorizes the distribution of the final
Official Statement by the purchaser of the Bonds. The final Official Statement shall be executed in
the name and on behalf of the City by an Authorized Officer.
SECTION 8. Financial Advisor. Harrell & Company Advisors, LLC, Orange,
California,is hereby appointed as the financial advisor to the City with respect to the Bonds.
SECTION 9. Bond Counsel. The law firm of Burke, Williams & Sorensen, LLP,
Irvine, California, is hereby appointed as Bond Counsel with respect to the Bonds.
SECTION 10. Disclosure Counsel. The law firm of Jones Hall, San Francisco,
California, is hereby appointed Disclosure Counsel with respect to the Bonds.
SECTION 11. Official Actions. The Mayor, City Manager, City Manager, Finance
Director, City Clerk and any and all other officers of the City are hereby authorized and directed,
for and in the name and on behalf of the City, to do any and all things and take any and all actions,
including execution and delivery of any and all assignments, certificates, requisitions, agreements,
notices, consents, instruments of conveyance, warrants and other documents, which they, or any of
them, may deem necessary or advisable in order to consummate the issuance and sale of the Bonds
and any of the other transactions contemplated by the documents approved pursuant to this
Resolution. Whenever in this resolution any Authorized Officer is authorized to execute or
countersign any document or take any action, such execution, countersigning or action may be
taken on behalf of such officer by any person designated by such Authorized Officer to act on his
or her behalf in the case such officer shall be absent or unavailable.
SECTION 12. Certification; Publication. The City Clerk is hereby authorized and
directed to certify to the passage of this Ordinance, and to cause the same or a sununary thereof to
be published at least once in a newspaper of general circulation in the City, within fifteen days
after its adoption.
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Ordinance No.
Page 4
ADOPTED THIS day of June 2001.
AYES: Members
NOES: Members
ABSENT: Members
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
By:
City Clerk Mayor
REVIEWED & APPROVED
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