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Home My WebLink About12/4/2013 - STAFF REPORTS - 2.F. PALM SA c V N a � d` * °rroeno` s F0R%4 CITY COUNCIL STAFF REPORT DATE: December 4, 2013 CONSENT CALENDAR SUBJECT: TRANSFER OF PASSENGER FACILITY CHARGE REVENUE FOR EARLY BOND REDEMPTION FROM: David H. Ready, City Manager BY: Department of Finance and Treasury SUMMARY The City has three outstanding series of bonds issued for the purpose of funding or refinancing the funding of the Palm Springs Airport (PSP) expansion. The PSP expansion project was authorized by the FAA to be paid for from Passenger Facility Charges, and bonds issued for that purpose are secured by the Passenger Facility Charges. The bonds are subject to early redemption in years when the City receives higher than projected Passenger Facility Charges. Due to high enplanements at PSP in 2012-13, the City collected a certain amount of Passenger Facility Charges that are to be used for such early redemption of the bonds. Some of these amounts were required by the bond indenture to be transferred to the trustee for the bonds prior to December 1, 2014. The transfer for this early bond redemption was not included in the Fiscal Year 2013-14 budget. A budget amendment was required to transfer funds from the Airport's Passenger Facility Charge Fund Balance to The Bank of New York Mellon Trust Company to be applied to an early redemption of bonds. RECOMMENDATION: 1) Ratify City Manager's approval of a budget amendment to transfer funds from the Airport's Passenger Facility Charge Fund Balance to The Bank of New York Mellon Trust Company to be applied to an early redemption of bonds on January 1, 2014 and July 1, 2014. BACKGROUND: The City has three outstanding series of bonds issued for the purpose of funding or refinancing the funding of the Palm Springs Airport (PSP) expansion. The PSP ITEM NO. City Council Staff Report December 4, 2013 -- Page 2 PFC Bonds Early Redemption expansion project was authorized by the FAA to be paid from Passenger Facility Charges (PFCs), and bonds issued for that purpose are secured by the PFCs. Due to the limitation on the total PFCs authorized to be collected by PSP, there is a possibility that the total authorized amount of PFCs could be collected prior to the maturity of the bonds due to better than forecasted enplanements. Therefore, the PFC bonds contain provisions for an annual calculation of the amount of PFCs actually collected compared to the amount forecasted to be collected, with the excess to be used to redeem a portion of the bonds prior to their maturity. The annual calculation is to be prepared by each November 15 relating to the amount of PFCs collected in the prior Fiscal Year. The City's financial advisor prepared the calculation for Fiscal Year 2012-13 and the amount of PFCs required to be remitted to the trustee by December 1, 2014 for the early redemption of the 1998 PFC Bonds on January 1, 2014 was $765,000. The amount required to be remitted to the trustee by June 1, 2014 for the early redemption of the 2006 PFC Bonds and 2008 PFC Bonds on July 1, 2014 is $211,150. In total, the amount to be transferred to the trustee for the redemptions is $976,150. An estimate of the redemption amount relating to PFCs received in Fiscal Year 2013-14 will be included in the Fiscal Year 2014-15 budget. Geoffrey S. Kiehl mes Thompson Director of Finance and Treasurer Chief of Staff/City Clerk David H. Ready City Manager Attachments: Budget Amendment Report of Independent Financial Consultant 02 CITY OF PALM SPRINGS BUDGET AMENDMENT FISCAL YEAR 2013-14 SECTION 1. ADDITIONS. Fund Activity Account Amount Fund 410 6001 49620 $765,000 Airport PFC PFC 1998 Bond Principal 6277 49620 $128,400 PFC 2006 Bond Principal 6278 49620 $82,750 PFC 2008 Bond Principal PURPOSE: To cover additional bond calls of the 1998, 2006 and 2008 bonds due to increased revenue received during fiscal year ending 6/30/13 as per Report of Independent Financial Consultant dated November 1, 2011 SECTION 2. SOURCES. Fund Activity Account Amount Fund 410 410-29301 Fund Balance $976,150 Airport PFC City Manager Budget Transfer Authorization pursuant to Section 10 of Resolution No. 23341 approved May 15, 2013 by the City Council of the City of Palm Springs. Section 10. The City Manager is hereby authorized to approve interfund transfers or transfers from fund balance to operating activity accounts for the Risk Management Funds (Fund 540) for the Fiscal Year 2013-14 as may be required from time to time. For the purpose of this resolution interfund transfers include but is not limited to internal service funds. APPROVED: November 6, 2013 David H. Ready, City er i mes Thompson, Chief of Staff/City Clerk Geoffr ' hl, Director of Finance Dou las C. Holland, City Attomey 03 COMPANYi -, November 1,2013 REPORT OF INDEPENDENT FINANCIAL CONSULTANT City of Palm Springs Financing Authority Airport Passenger Facility Charge Revenue Bonds, Series 1998 (Palm Springs Regional Airport) (the "1998 Bonds") City of Palm Springs Financing Authority 2006 Airport Passenger Facility Charge Subordinate Refunding Revenue Bonds (Palm Springs International Airport) (the "2006 Bonds") City of Palm Springs Financing Authority 2008 Airport Passenger Facility Charge Subordinate Refunding Revenue Bonds (Palm Springs International Airport) (the"2008 Bonds") This report("Report") has been prepared for the purpose of calculating special mandatory redemptions and demonstrating the future availability of sufficient PFC Revenues to pay (1) debt service on all Outstanding 1998 Bonds pursuant to the Indenture of Trust dated April 1, 1998 (the "1998 Indenture") and (2) debt service on all Outstanding 2006 Bonds and 2008 Bonds pursuant to the Indenture of Trust dated April 1,2006 as supplemented by a First Supplement to Trust Indenture dated May 1, 2008 (the "2006 Indenture"). Harrell & Company Advisors, LLC is an Independent Financial Consultant within the meaning of the 1998 Indenture and the 2006 Indenture. Harrell & Company Advisors, LLC, has read the pertinent provisions of the 1998 Indenture and the 2006 Indenture to which this report relates. We have received information regarding the passenger facility charge revenue receipts since the date of issuance of the 1998 Bonds from the City of Palm Springs. The calculations made within this report are based upon those figures. In our opinion, sufficient examination was made as is necessary to enable us to express an informed opinion with respect to the calculation of the Remaining Revenue and the Redemption Amount, as defined in the 1998 Indenture and the 2006 Indenture, and to demonstrate the availability of sufficient PFC Revenues from the passenger facility charges to pay future debt service on all Outstanding Bonds. 04 Report of Independent Financial Consultant November 1, 2013 Page 2 The Remaining Revenue as of June 30, 2013 applicable to the 1998 Bonds,based upon the calculations on Exhibit A hereto, is $767,312 and the Remaining Revenue as of June 30, 2013 applicable to the 2006 Bonds and the 2008 Bonds, based upon the calculations on Exhibit A hereto, is $211,868. The 1998 Indenture requires that, to the extent that there is any Remaining Revenue applicable to the 1998 Bonds,this Report will set forth the amount of 1998 Bonds maturing on July 1, 2028 that must be redeemed in order that sufficient Revenues will be available to timely pay future annual debt service on all Outstanding 1998 Bonds. The Redemption Amount is $765,000 and the amount of the 1998 Bonds to be redeemed on January 1,2014 pursuant to the 1998 Indenture is $765,000, with no redemption premium. In addition, $600,000 of 1998 Bonds will be redeemed on January 1, 2014 from the Redemption Amount attributable to revenues received in 2011/12 and on deposit with the trustee. The amounts to be redeemed will be allocated to Sinking Account payments in inverse order of maturity, in accordance with the 1998 Indenture. A revised debt service schedule after the special redemption of 1998 Bonds on January 1, 2014 showing a revised Sinking Account payment schedule is attached hereto as Exhibit B. The 2006 Indenture requires that, to the extent that there is any Remaining Revenue applicable to the 2006 Bonds and the 2008 Bonds, this Report will set forth the amount of 2006 Bonds and 2008 Bonds that must be redeemed in order that sufficient Revenues will be available to timely pay future annual debt service on all Outstanding 1998 Bonds, 2006 Bonds and 2008 Bonds. The Redemption Amount is $211,150 and the amount of 2006 Bonds to be redeemed on July 1, 2014 pursuant to the 2006 Indenture is $125,000 and the amount of the 2008 Bonds to be redeemed on July 1, 2014 pursuant to the 2006 Indenture is $80,000. The amounts to be redeemed will be allocated to Sinking Account payments in inverse order of maturity, in accordance with the 2006 Indenture. A revised debt service schedule after the special redemption of 2006 Bonds and 2008 Bonds on July 1, 2014 showing a revised Sinking Account payment schedule is attached hereto as Exhibits C and D. HARRELL & COMPANY ADVISORS, LLC 05 EXHIBIT A Calculation of Remaining Revenue and Redemption As of June 30, 2013 Annual PFC Revenues $ 3,417,312 Cumulative PFC Revenues through June 30, 2012 $45,731,829 Annual Cumulative Cap $44,550,000 Amount Above Annual Cumulative Cap $ 767,312 1998 PFC Bonds to be Redeemed on January 1, 2014 $ 765,000 Available Under Annual Cumulative Cap $ 2,652,312 1998 PFC Bond Debt Service $ 859,338 2006 PFC Bonds Debt Service 924,820 2008 PFC Bonds Debt Service 632,255 PFC Administrative Costs 28,000 Total Payments $ 2,444,413 Remaining Revenues Fiscal Year 2012/13 $ 207,900 Remaining Revenues Carried Forward 3,968 Remaining Revenue Balance $ 211,868 Bonds to be Redeemed on July 1, 2014: 2006 Bonds $ 125,000 2008 Bonds 80,000 205,000 Redemption Premium 6,150 Total Redemption Price $ 211,150 Remaining Revenue Balance Carried Forward $ 718 Total Remaining PFC Authorized as of July 1, 2013 $42,668,171 Total Remaining Debt Service as of July 1, 2013 $33,616,071 06 EXHIBIT B Revised 1998 Bonds Debt Service Schedule After Special Redemption on January 1,2014 Semi-Annual Annual Principal Interest Payment Payment 7/1/2014 $ $ 185,028.13 $ 185,028.13 $ 1/l/2015 415,000.00 185,028.13 600,028.13 785,056.26 7/1/2015 - 174,393.75 174,393.75 - 1/1/2016 435,000.00 174,393.75 609,393.75 783,787.50 7/1/2016 - 163,246.88 163,246.88 - 1/I/2017 455,000.00 163,246.88 618,246.88 781,493.76 7/l/2017 - 151,587.50 151,587.50 - 1/l/2018 480,000.00 151,587.50 631,587.50 783,175.00 7/l/2018 - 139,287.50 139,287.50 - 1/l/2019 505,000.00 139,287.50 644,287.50 783,575.00 7/l/2019 - 126,031.25 126,031.25 - 1/1/2020 535,000.00 126,031.25 661,031.25 787,062.50 7/l/2020 - 111,987.50 111,987.50 - 1/1/2021 565,000.00 111,987.50 676,987.50 788,975.00 7/1/2021 - 97,156.25 97,156.25 - 1/1/2022 595,000.00 97,156.25 692,156.25 789,312.50 7/1/2022 - 81,537.50 81,537.50 - 1/1/2023 625,000.00 81,537.50 706,537.50 788,075.00 7/1/2023 - 64,350.00 64,350.00 - 1/I/2024 660,000.00 64,350.00 724,350.00 788,700.00 7/1/2024 - 46,200.00 46,200.00 - 1/1/2025 700,000.00 46,200.00 746,200.00 792,400.00 7/1/2025 - 26,950.00 26,950.00 - 1/l/2026 740,000.00 26,950.00 766,950.00 793,900.00 7/l/2026 - 6,600.00 6,600.00 - 1/l/2027 240,000.00 6,600.00 246,600.00 253.200.00 $6,950,000.00 $2,748,712.52 $9,698,712.52 $9,698,712.52 r7 EXHIBIT C Revised 2006 Bonds Debt Service Schedule After Special Redemption on duly 1,2014 Semi-Annual Annual Principal Interest Payment Payment 1/1/2015 $ - $ 220,370.00 $ 220,370.00 $ 7/1/2015 455,000.00 220,370.00 675,370.00 895,740.00 1/1/2016 - 208,198.75 208,198.75 - 7/1/2016 480,000.00 208,198.75 688,198.75 896,397.50 1/1/2017 - 195,238.75 195,238.75 - 7/1/2017 505,000.00 195,238.75 700,238.75 895,477.50 1/1/2018 - 181,477.50 181,477.50 - 7/1/2018 530,000.00 181,477.50 711,477,50 892,955,00 1/1/2019 - 167,035.00 167,035,00 - 7/1/2019 560,000.00 167,035.00 727,035.00 894,070.00 1/1/2020 - 151,775.00 151,775.00 - 7/1/2020 590,000.00 151,775.00 741,775.00 893,550.00 1/1/2021 - 135,697.50 135,697.50 - 7/1/2021 625,000.00 135,697.50 760,697.50 896,395.00 1/1/2022 - 118,353.75 118,353.75 - 7/1/2022 655,000.00 118,353.75 773,353.75 891,707.50 1/1/2023 - 100,177.50 100,177.50 - 7/1/2023 695,000.00 100,177.50 795,177.50 895,355.00 1/1/2024 - 80,891.25 80,891.25 - 7/1/2024 730,000.00 80,891.25 810,891.25 891,782.50 1/1/2025 - 60,633.75 60,633.75 - 7/1/2025 775,000.00 60,633.75 835,633.75 896,267.50 1/1/2026 - 39,127.50 39,127.50 - 7/1/2026 815,000.00 39,127.50 854,127.50 893,255.00 1/1/2027 - 16,511.25 16,511.25 - 7/1/2027 595 000.00 16,511.25 611,511.25 628,022.50 $8,010,000.00 $3,350,975.00 $11,360,975.00 $11,360,975.00 EXHIBIT D Revised 2008 Bonds Debt Service Schedule After Special Redemption on July 1, 2014 Semi-Annual Annual Principal Interest Pavment Payment 1/1/2015 $ $ 159,625.00 $ 159.625.00 $ 7/1/2015 285,000.00 159,625,00 444,625.00 604,250.00 1/1/2016 - 151,075.00 151,075.00 - 7/1/2016 305,000.00 151,075.00 456,075.00 607,150.00 1/l/2017 - 141,925.00 141,925.00 - 7/l/2017 325,000.00 141,925,00 466,925.00 608,850.00 1/l/2018 - 132,175.00 132,175.00 - 7/l/2018 345,000.00 132,175.00 477,175.00 609,350.00 1/l/2019 - 121,825,00 121,825.00 - 7/l/2019 365,000.00 121,825.00 486,825.00 608,650.00 1/1/2020 - 110,145.00 110,145.00 - 7/l/2020 385,000.00 110,145.00 495,145.00 605,290.00 1/l/2021 - 97,825.00 97,825.00 - 7/1/2021 405,000.00 97,825.00 502,825.00 600,650.00 1/1/2022 - 84,865.00 84,865.00 - 7/l/2022 435,000.00 84,865.00 519,865.00 604,730.00 1/l/2023 - 70,945,00 70,945.00 - 7/1/2023 460,000.00 70,945.00 530,945.00 601,890.00 1/l/2024 - 56,225.00 56,225.00 - 7/1/2024 495,000.00 56,225.00 551,225.00 607,450.00 1/1/2025 - 40,137.50 40,137.50 - 7/1/2025 520,000.00 40,137.50 560,137.50 600,275.00 1/l/2026 - 23,237.50 23,237.50 - 7/l/2026 555,000.00 23,237.50 578,237.50 601,475.00 1/1/2027 - 5,200.00 5,200.00 - 7/l/2027 160,000.00 5,200.00 165,200.00 170,400.00 $5,040,000.00 $2,390,410.00 $7,430,410.00 $7,430,410.00 Q�