HomeMy WebLinkAbout11/3/2004 - STAFF REPORTS (8) DATE: November 3, 2004
MEMO TO: City Council
FROM: Director of Finance & Treasurer
RE: Refinancing of 1992 Airport Bond Issue — TEFRA Hearing
RECOMMENDATION:
It is recommended that the City Council hold a public hearing on the refinancing of the 1992 Airport
Bonds, and upon close of the hearing, approve the issuance of new bonds in an amount not to
exceed $13,500,000.
SUMMARY:
The 1992 Airport Revenue Bonds were issued to finance Phase 1A of the terminal expansion
Federal law required a TEFRA (Tax Equity and Fiscal Responsibility Act) public hearing before the
1992 bonds can be refinanced. The expected refinancing will be for an amount not to exceed $13.5
million, with an underwriters discount not to exceed 2%, and an interest rate not to exceed 7%. It is
expected that all of those numbers will be substantially lower when the actual bonds are issued
Because we have not yet received the FAA's final comments on the bond documents, only the
TEFRA resolution is being presented for action.
BACKGROUND:
The 1992 General Airport Revenue Bonds (GARB'S) and the 1998 General Airport Revenue Bonds
each contain a provision that net revenue must be at least equal to the debt service. If that test is
not met annually, the City is required to disclose that information. Both GARB's anticipated that if the
revenue test was not met, the Airport would increase its rates and charges to airlines. However, in
the aftermath of September 11th, that policy would be counterproductive, and result in reduced, not
increased revenue. The Airport has never had a problem meeting its debt obligations because the
Passenger Facility Charge, a $4.50 fee per airplane passenger authorized by the FAA, has been
more than sufficient to cover the majority of debt service payments. However, since PFC revenues
are not includable in the GARB's definition of"net revenues", they cannot be counted towards
meeting the rate covenant.
The proposed refinancing would remove the 1992 GARBS from the rate covenant, making them
payable solely from Passenger Facility Charges and would allow 30% of PFC revenue to be included
in net revenues for the purpose of the rate covenant (which would still apply to the 1998 GARBs)
This will solve the problem of the City having to report technical defaults on a bond issue The
refinancing will also extend the term of the issue by 6 years, from 2022 to 2028. This will improve
the Airport's cash flow by $200,000 per year. The Net Present Value cost of this refinancing is
$360,000.
As noted earlier, the complete set of bond documents will be submitted for City Council approval as
soon as the FAA has completed its review.
P
Page 2
Submitted by
C
a- -
Thomas M. Kanarr Richard Walsh
Director of Finance & Treasurer Director of Aviation
Approved
i
David H. Ready
City Manager '
Attachments: Resolution
PROOF OF PUBLICATION yn;s is space for County Clerk's Fling Stamp
(2015.5.C.C.P)
STATE OF CALIFORNIA
County of Riverside
---------------—------__--'---------------__
t
I am a citizen of the United States and a resident of Proof of Publication of
the County aforesaid;I am over the age of eighteen ------------ ------
years,and not a party to or interested in the No.9984
CITY OF PALM SPRINGS
above-entitled matter.I am the principal clerk of a NOTICE OF PUBLIC HEARING
printer of the,DESERT SUN PUBLISHING NOTICE IS HEREBY GIVEN that, at its regular
COMPANY a newspaper of general circulation, meeting to be held at 7:00 p.m.(or as soon there-
after as the matter may be heard) on November
printed and published in the city of Palm Springs, 3,2004,in Council Chambers at 3200 E.Tphqultz
Canyon Way, Palm Springs, California, the City
County of Riverside,and which newspaper has been Council being the duly elected representative of
the City of Palm Springs, California (the "City")
adjudged a newspaper of general circulation by the will conduct aCounty147(f) of the Internal Revenue
public hearing
e pursuant
Section of 1 86, a
Superior Court Of the Conn Of Riverside,State Of amended, and section 6586.5 of the California
Government Code at which it will hear and can-
California under the date of March 24i h the
Case Sider information ccmcem[n whether it shoulgd -
Number 191236;that the notice,of which the @pploverc t glss me(a then p f Palm authorSprin s
annexed is a printed copy(set in type not smaller formed by the City and the Community Redevel-
than non ariel,has been published in each regular opment Agency oP the city of Palm sp ingS) (the
P P Authority) of revenue bonds in the maximum .J ➢
and entire issue of said newspaper and not in any a gregate face amount of S13,500,o00 (the
Bonds'). The proceeds from the sale of the
supplement thereof on the following dates,to wit: Bonds pf they are issued)are intended to (a) refi-
nance the outstanding City of Palm Springs Fl-
nan air
g Authority(Palm Springs Regional Airport)
October 190. Alrpart Revenue Bands, Serles 1 92, the pro-
- ceeds of which were used to constructimprove-
---------—---- _------___ -merits-(knawn as the Phase IA Terminal Expan-
-- —' smn Improvements) at the Palm Springs Interna-
tional Aii Port(PSP) the "F sell ") located at 3400
hqu E Tartz Canyon ay, all Sprin s,California
—--------—----—--------------------------------- 92262, (bl in a reserve fund and(c�pay certain
All in the year 2004 costs of issuance in connection witch the Bonds.
y The owner of the Facility is the Cityy of-Palm-
Springs.ALL PERSONS HAVING ANY INFORMA-
TION RELEVANT 1'0 THE PROPOSED ISSUANCE
I certify(or declare)under penalty of perjury that the OF BONDS ARE HEREBY INVITED TO APPEAR
TIMEPCE
foregoing is true and correct. TO TP ES NTA UND CHLA INFORMATION MENTIONEDTOBOVE THE
CITY COUNCIL OR MAY, PRIOR TO THE TIMC
Or OF
TO LIC HEARING,
ASS WALISH,WRITTEN
Dated at Palm Springs,California this--10 —day
TOR, PALM .TAHOSPRINGS INTERNATIONAL AIR-
PORT,PALM
E.RINGS TZ CANNON WAN,SUITE
CFO, PALM SPRINGS CALIFORNIA, 92262-6966,
of-----
��^N//o/ve�mber----,2004 PHONE (760) 318-3800
_- CALIFORNIA
APatricia A. Sanders
CITY CLERK OF THE CITY OF PALM SPRINGS,
PUB: October 19, 2004
Signature -- - - -- -- --
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that, at its regular meeting to be held at 7:00 p.m.
(or as soon thereafter as the matter may be heard) on November 3, 2004, in Council
Chambers at 3200 E. Tahquitz Canyon Way, Palm Springs, California, the City Council
being the duly elected representative of the City of Palm Springs, California (the "City")
will conduct a public hearing pursuant to Section 147(f) of the Internal Revenue Code of
1986, as amended, and Section 6586.5 of the California Government Code at which it
will hear and consider information concerning whether it should approve the issuance
by the City of Palm Springs Financing Authority (a joint powers authority formed by the
City and the Community Redevelopment Agency of the City of Palm Springs) (the
"Authority") of revenue bonds in the maximum aggregate face amount of $13,500,000
(the "Bonds"). The proceeds from the sale of the Bonds (if they are issued) are
intended to (a) refinance the outstanding City of Palm Springs Financing Authority
(Palm Springs Regional Airport) Airport Revenue Bonds, Series 1992, the proceeds of
which were used to construct improvements (known as the Phase IA Terminal
Expansion Improvements) at the Palm Springs International Airport (PSP) (the "Facility")
located at 3400 E. Tahquitz Canyon Way, Palm Springs, California 92262, (b) fund a
reserve fund and (c) pay certain costs of issuance in connection with the Bonds. The
owner of the Facility is the City of Palm Springs. ALL PERSONS HAVING ANY
INFORMATION RELEVANT TO THE PROPOSED ISSUANCE OF BONDS ARE
HEREBY INVITED TO APPEAR AT THE TIME AND PLACE MENTIONED ABOVE TO
PRESENT SUCH INFORMATION TO THE CITY COUNCIL OR MAY, PRIOR TO THE
TIME OF THE PUBLIC HEARING, SUBMIT WRITTEN COMMENTS TO RICHARD S.
WALSH, DIRECTOR, PALM SPRINGS INTERNATIONAL AIRPORT, 3400 E.
TAHQUITZ CANYON WAY, SUITE OFC, PALM SPRINGS CALIFORNIA, 92262-6966,
PHONE (760) 318-3800.
/s/ Patricia A. Sanders
CITY CLERK OF THE CITY OF PALM SPRINGS,
CALIFORNIA
ninnammm�tnvn m
RESOLUTION NO. /d
OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS,
CALIFORNIA APPROVING THE ISSUANCE, SALE AND
DELIVERY OF THE CITY OF PALM SPRINGS FINANCING
AUTHORITY AIRPORT PASSENGER FACILITY CHARGE
SUBORDINATE REVENUE BONDS, SERIES 2004 (PALM
SPRINGS INTERNATIONAL AIRPORT) BY THE CITY OF PALM
SPRINGS FINANCING AUTHORITY FOR THE PURPOSE OF
REFUNDING CERTAIN OUTSTANDING BONDS OF THE
AUTHORITY WHICH WERE USED TO CONSTRUCT
IMPROVEMENTS TO THE PALM SPRINGS INTERNATIONAL
AIRPORT
WHEREAS, the City of Palm Springs (the "City") has previously authorized the issuance
by the City of Palm Springs Financing Authority (the "Authority") of the City of Palm Springs
Financing Authority (Palm Springs Regional Airport) Airport Revenue Bonds, 1992 Series (the
"1992 Bonds") to fund certain improvements (known as the Terminal IA Expansion
Improvements) at the Palm Springs International Airport (the "Project); and
WHEREAS, the City now desires to approve the issuance by the Authority of not to
exceed $13,035,000 aggregate principal amount of the City of Palm Springs Financing Authority
Airport Passenger Facilities Charge Subordinate Revenue Bonds, Series 2004 (Palm Springs
International Airport) (the `Bonds"); and
WHEREAS, the proceeds of the Bonds will be used to refund the 1992 Bonds; and
WHEREAS, the Authority may issue the Bonds pursuant to the Marks-Roos Local Bond
Pooling Act of 1985 (constituting Sections 6584 et seq. of the California Government Code) (the
"Act") to refund the 1992 Bonds which were used to finance the Project; and
WHEREAS, pursuant to Section 147(f) of the Internal Revenue code of 1986, as
amended, (the "Code"), certain bonds are required to be approved, following a public hearing,
by an elected representative of the issuer of the bonds and an elected representative of the
governmental unit having jurisdiction over the area in which the Project is located; and
WHEREAS, the City Council of the City is the elected legislative body from which the
Authority derives its authority; and
WHEREAS, the Project is located wholly within the geographic jurisdiction of the City
and within the territorial jurisdiction of the Authority; and
WHEREAS, the City Clerk has caused a notice to appear in The Desert Sun which is a
newspaper of general circulation in the City on Tuesday, October 19, 2004, to the effect that a
public hearing would be held by this City Council on November 3, 2004, regarding the issuance
of the Bonds to refinance the 1992 Bonds and the Project and the nature and location of the
Project; and
WHEREAS, the average maturity of the Bonds shall exceed the remaining average
maturity of the 1992 Bonds; and
n nnvmnAFn c1 In m
WHEREAS, this City Council held the above-described public hearing on such date, at
which time an opportunity was provided to present arguments both for and against the issuance
of the Bonds and the nature and location of the Project.
NOW, THEREFORE, the City Council of the City of Palm Springs does hereby resolve,
order and determine as follows:
Section 1. The above recitals, and each of them, are true and correct.
Section 2. Pursuant to Section 147(f) of the Code, this City Council hereby approves
the issuance of the Bonds in an amount not to exceed $13,500,000 by the
Authority to refund the 1992 Bonds and refinance the Project. It is the
purpose and intent of this City Council that this Resolution constitutes
approval of the issuance of bonds by the applicable elected
representative of the governmental unit having jurisdiction over the area
in which the Project is located and on behalf of which such bonds will be
issued in accordance with said Section 147(f).
Section 3. In accordance with Sections 6586 and 6586.5 of the Act, the City Council
hereby finds (a) that the issuance of the 1992 Bonds to finance the
Project resulted in increases in employment with respect to undertaking
the Project in a timely manner, and more efficient delivery of the City's
airport services to residential and commercial development and (b) that
the issuance of the Bonds to refinance the Project will result in significant
reductions in effective user charges levied by a local agency.
Section 4. This Resolution shall take effect immediately upon its adoption.
ADOPTED this day of
AYES:
NOES:
ABSENT:
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
By:
Chief Deputy City Clerk City Manager
For
City Clerk
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