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HomeMy WebLinkAbout4/7/2004 - STAFF REPORTS (22) DATE: April 7, 2004 MEMO TO: City Council/Palm Springs Financing Authority FROM: Director of Finance & Treasurer RE: Convention Center Expansion Phase II RECOMMENDATION: It is recommended that the City Council and the Palm Springs Financing Authority, following a public hearing on the matter, approve the bond documents for the Convention Center Expansion Phase II and the refinancing of the 1997 Convention Center bonds, not to exceed $65,000,000 SUMMARY: The proposed bond issue would finance the 93,000 square foot expansion of the Convention Center (from 157,000 to 250,000 square feet) and refinance the remaining 1997 bonds (approximately $11 million). The actual project cost will be about $44.9 million. The balance of the $65 million is for the Debt Service Reserve ($2.7 M), Capitalized Interest ($4.2 M), Bond Insurance ($1 M), and Cost of Issuance ($1 M). The net interest cost is currently estimated at 4.4%. The bonds will be repaid from the additional Transient Occupancy Tax (TOT) resulting from the rate increases which went into effect on January 1, 2002 and January 1, 2004. BACKGROUND: The Convention Center was opened on December 31, 1987 and was expanded in 1992. The recently completed Phase I project converted the Springs Theatre into meeting rooms, remodeled and expanded the kitchen and upgraded storage facilities. The cost of Phase I has been paid for by the additional TOT collections from the first rate increase. Starting about 3 years ago, it became apparent that the Convention Center's competition was increasingly large hotels with large meeting facilities. The hotels could afford to give away the meeting rooms for free, since they could make it up on hotel room sales. The Convention Center is obviously not in that position. In addition, the Center had become too small for a number of its best clients, who loved Palm Springs as a venue, but had no choice but to look for larger accommodations. The Palm Springs' hoteliers understood the problem, and recommended that the TOT be increased to fund an expansion. An initial review by the Convention Center General Manager and the City's Director of Finance indicated that the project was feasible, and the City commissioned formal market and financial analyses by Economic Research Associates (ERA). The studies confirmed our initial conclusion that the expansion was financially feasible, as long as the debt service was covered by the increased TOT. The TOT rate increases were approved by the voters in November, 2001 and November, 2003 elections. Page 2 The annual debt service for the new issue plus the existing bonds will be about $5.6 M. Of this, about $3.1 M is coming from TOT that was dedicated to pay for the existing bonds. The savings from refinancing the 1997 bonds represent about $115,000 per year, and the interest earnings from the reserve fund about $100,000 annually. The remaining amount of about $2.3 M per year should be covered by the additional TOT from the rate increases. The City's projections do not take into account the TOT, sales tax, or direct facility rental from the additional business generated by the expanded Convention Center. To the extent the revenue is increased (and not offset by increased operating expenses), this will be "profit" to the City. Of course, the overriding reason for expanding the Convention Center is to improve the revenue figures for the City's hotels, restaurants, retail stores, and other businesses. We believe the expansion of the Convention Center will achieve those goals, and recommend approval of the attached resolutions and ordinance. Submitted by: Approved: Thomas M. Kanarr David H. Ready Director of Finance &Treasurer City Manager Attachments: TEFRA Hearing Notice Schedule of Funding Sources & Uses of Funds Resolution (City Council) Resolution (Financing Authority) Ordinance Schedule of Actions As of 3/25/2004 CITY OF PALM SPRINGS FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS,2004 SERIES A (CONVENTION CENTER EXPANSION PROJECT) Schedule of Actions Scheduled to be Completed Date to Complete Financial Advisor distributes draft Preliminary OS February 18 Bond Counsel distributes draft Legal Documents February 20 City opens Construction bids March 24 Agenda Deadline March 26 Comments received on 2°d draft.Preliminary OS March 30 Submit Documents for Rating/Insurance March 31 City Council Awards Construction bids April 7 City Council/Authority Board Adopt Ordinance approving Financing Documents April 7 MBIA Presentation Apffi 8 Bond Insurance Commitment April 16 2°d Reading of Ordinance approving Financing Documents April 21 Obtain BIA Consent By May 7 Print Preliminary Official Statement May 14 Ordinance Effective Date May 20 Sign Purchase Contract May 25 Bond Counsel distributes Closing Documents June 1 Financial Advisor delivers Final OS to Printer June 2 Bond Preclosing June 9 Bond Closing June 10 /fA3 CITY OF PALM SPRINGS CONVENTION CENTER EXPANSION FUNDING wt i if f : • • e Y 'Y �• s • •• -• Y 11/1/2004 1,210,000 972,263 1,281,200 3,463463 (683,632) 1,737,077 (1,039,846) 3,477,062 13,599 11/1/2005 1,210,000 974,883 1,281,200 3,466:083 (974,883) 3,212,108 (2,325,123) 3,378,185 (87,898) 11/1/2006 1,215,000 976,208 1,281,200 3,472,408 (976,208) 6,013,508 (1,215,561) 7,294,146 3,821,739 5,090,000 11/1/2007 1,215,000 976,198 1,281,200 3,472,398 (976,198) 3,142,508 (106,600) 5,532,108 2,059,710 2,300,000 11/1/2008 1,290,000 975,268 1,281,200 3,546,468 (975,268) 3,139,508 (106,600) 5,604,108 2,057,640 2,300,000 11/1/2009 - - 977,943 2,141,200 3,119,143 (977,943) 3,410,908 (106,600) 5,445,508 2,326,365 2,300,000 11/1/2010 - 978,568 2,141,800 3,120,368 (978,568) 3,411,933 (106,600) 5,447,133 2,326,765 2,300,000 11/1/2011 - 977,318 2,146,000 3,123,318 (977,318) 3,407,433 (106,600) 5,446,833 2,323,515 2,300,000 11/1/2012 - 979,818 2,143,600 3,123,418 (979,818) 3,411,183 (106,600) 5,448,183 2,324,765 2,300,000 11/1/2013 - 979,368 2,164,800 3,144,168 (979,368) 3,387,683 (106,600) 5,445,883 2,301,715 2,300,000 11/1/2014 - 982,343 2,133,450 3,-115,793 (982,343) 3,418,183 (106,600) 5,445,033 2,329,240 2,300,000 11/1/2015 983,48T. 2,158,588 3,142,068= '(983,480) 3,394,933 (106,600) 5,446,920 2,304,853 2,300,000 11/1/2016 981,760= 2,164,525 - 3,146,285 (981,760) 3,390,433 (106,600) 5,448,358 2,302,073 2,300,000 11/1/2017 983,150' 2,162,050 3,145,200 (983,150) 3,393,683 (106,600) 5,449,133 2,303,933 2,300,000 1111/2018-`- -- 987,3807--.- -=2;161,425 . -3,148,805 (987;380) - .- 3,389,183;- (106,600) 5,444,008 2,295,203, 2,300,000 11/1/2019 984,180 2,167,388 3,151,568 (984,180) 3,387,183 (106,600) 5,447,970 2,296,403 2,300,000 11/1/2020 988,820 2,164',413 3,153,233 (988,820)- 3,389-,383- (106,600) 5,447,195 2,293,963 2,300,000 '11/1/2021 --990,760'= '-2,166;413 31157,173-= ' °(990,760) 3,38&960---- (106,600) 5,448,773 2,291,600 2,300,000 1//112022 3,159,663 -3,159,663- 2.395,865 - (106,600) 5,448,928 2,289,265 2,300,000 11/1/2023 3,159,413 3,159,413 2,3B1,133 (106,600) 5,443,945 2,284,533 2,300,000 11/1/2024 3,164,500 3,164,500 2,390,620 (106,600) 5,448,520 2,284,020 2,300,000 11/1/2025 3,171,000 3,171,000 - 2,384,090" (106,600) 5,448,490 2,277,490 2,300,000 11/1/2026 - - - 5,551,930 (106,600) 5,445,330 5,445,330 5,300,000 11/1/2027 - 5,552,843 (106,600) 5,446,243 5,446,243 5,300,000 11/1/202 - 5,551,635 (106,600) 5,445,035 5,445,035 5,300,000 "- 11/11202: - 5,551,135 (106,600) 5,444,535 5,444,535 5,300,000 11/1/2030 - 5,552,760 (106,600) 5,446,160 5,446,160 5,300,000 11/1/2031 - 5,551,060 (106,600) 5,444,460 5,444,460 5,300,000 11/1/2032 - 5,550,810 (106,600) 5,444,210 5,444,210 5,300,000 11/112033 - 5,551,560 (106,600) 5,444,960 5,444,960 5,300,000 11/1/2034 - 5,552,860 (106,600) 5,446,260 5,446,260 5,300,000 11/1/2035 - 5,554,260 (106,600) 5,447,660 5,447,660 5,300,000 6,140,000 17,649,703 47,076,225 70,865,928 (17,361,072) 126,508,342 (7,671,930) 172,341,268 (3) TOT figure for 2006 represents cumulative collections generated from Rate Increases during construction period Starting in 2026, includes$3,000,000 that was previously used to pay debt service on 2001 Bonds Revised 3/23 1 it SOURCES AND USES OF FUNDS City of Palm Springs Financing Authority Lease Revenue Bonds, Series 2004 Dated Date 05/20/2004 Delivery Date 05/20/2004 Sources: Bond Proceeds: Paz Amount 63,505,000.00 Premium 1,369,532.00 64,874,532.00 Uses: Project Fund Deposits: Project Fund 40,367,866.03 Project Fund Increase 4,412,376.56 44,780,242.59 S Refunding Escrow Deposits: Cash Deposit 0.28 SLG Purchases 11,289,259.00 11,289,259.28 Other Fund Deposits: Debt Service Reserve Fund 2,665,000.00 Capitalized Interest Fund 4,216,776.80 6,881,776.80 Delivery Date Expenses: Cost of Issuance 450,000.00 Underwriter's Discount 520,741.00 Bond Insurance 948,812.57 1,919,553.57 Other Uses of Funds: Additional Proceeds 3,699.76 64,874,532.00 1 Prepared by Harrell&Company Advisors,LLC Page 1 CITY OF PALM SPRINGS NOTICE OF PUBLIC HEARING Section 6586.5 of the California Government Code NOTICE IS HEREBY GIVEN that at 7 p.m. on April 7, 2004, or as soon thereafter as practicable, at the Council Chamber of the City of Palm Springs, 3200 Tahquitz Canyon Way, Palm Springs, California, 92262, the City Council of the City of Palm Springs will hold a public hearing regarding the proposed issuance of not to exceed $65,000,000 aggregate principal amount of City of Palm Springs Financing Authority Lease Revenue Bonds, 2004 Series A (Convention Center Expansion Project) (the 'Bonds"). The proceeds of the Bonds will be used to refinance certain outstanding bonds related to the Convention Center and to finance the construction of an expansion to the Convention Center facilities. At the hearing, the testimony of all interested persons will be heard. Written comments may be submitted prior to April 7, 2004 to the City Clerk at the above address. Dated: March 31, 2004 CITY OF PALM SPRINGS /s/ Patricia A. Sanders Patricia A. Sanders, City Clerk 1 no RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, APPROVING AND AUTHORIZING THE EXECUTION OF A SUPPLEMENTAL TRUST AGREEMENT NO. 3 AND OTHER LEGAL DOCUMENTS WITH RESPECT TO THE CITY OF PALM SPRINGS FINANCING AUTHORITY LEASE REVENUE BONDS, 2004 SERIES A (CONVENTION CENTER EXPANSION PROJECT) WHEREAS, on November 5, 1984, the City Council (the "City Council') of the City of Palm Springs (the "City") adopted a Resolution entitled "RESOLUTION AUTHORIZING DELIVERY OF THE CITY OF PALM SPRINGS CERTIFICATES OF PARTICIPATION (CONVENTION CENTER PROJECT) FOR THE PURPOSE OF FINANCING THE ACQUISITION AND DEVELOPMENT OF A CONVENTION CENTER FACILITY (THE "PROJECT") AND AUTHORIZING THE EXECUTION AND DELIVERY OF VARIOUS DOCUMENTS PERTAINING TO THE PROJECT'; and WHEREAS, $36,670,000 aggregate principal amount of Certificates of Participation (Convention Center Project) (the "Certificates of Participation") were sold and delivered on November 5, 1984; and WHEREAS, on December 31, 1984, the City Council adopted a Resolution entitled, "RESOLUTION APPROVING THE FORM OF AN AMENDED AND RESTATED TRUST AGREEMENT, DATED AS OF NOVEMBER 1, 1984, BY AND AMONG FIRST INTERSTATE BANK OF CALIFORNIA, THE CITY OF PALM SPRINGS AND SENCA PALM SPRINGS, INC; AUTHORIZING THE EXECUTION THEREOF; AMENDING A CERTAIN RESOLUTION OF THE CITY OF PALM SPRINGS ADOPTED ON NOVEMBER 1, 1984; AND PROVIDING AN EFFECTIVE DATE"; and WHEREAS, on March 28, 1985, the City Council adopted a Resolution entitled, "RESOLUTION APPROVING THE FORM OF A SECOND AMENDED AND RESTATED TRUST AGREEMENT, DATED AS OF NOVEMBER 1, 1984, BY AND AMONG FIRST INTERSTATE BANK OF CALIFORNIA, THE CITY OF PALM SPRINGS AND SENCA PALM SPRINGS, INC.; APPROVING THE FORM OF AN AMENDED AND RESTATED INSTALLMENT SALE AGREEMENT, DATED AS OF NOVEMBER 1, 1984, BY AND BETWEEN SENCA PALM SPRINGS, INC. AND THE CITY OF PALM SPRINGS; AUTHORIZING THE EXECUTION THEREOF; APPROVING THE FORM OF AN AMENDED AND RESTATED DEVELOPMENT AGREEMENT, DATED AS OF DECEMBER 31, 1985, BY AND BETWEEN THE CITY OF PALM SPRINGS AND EACH OF ELEVEN LIMITED PARTNERSHIPS; AMENDING A CERTAIN RESOLUTION OF THE CITY OF PALM SPRINGS ADOPTED ON DECEMBER 31, 1984; APPROVING THE OFFICIAL STATEMENT AND RATIFYING THE USE OF THE PRELIMINARY OFFICIAL STATEMENT RELATING TO THE REMARKETING OF THE CERTIFICATES OF PARTICIPATION (CONVENTION CENTER PROJECT); APPOINTING A PAYING AGENT Resolution No. Page 2 WITH RESPECT TO SAID CERTIFICATES; AUTHORIZING THE REMARKETING OF SAID CERTIFICATES; ACCEPTING THE RESIGNATION OF A REMARKETING AGENT AND WAIVING A THIRTY DAY NOTICE PERIOD IN CONNECTION THEREWITH, AUTHORIZING OFFICIALS OF THE CITY TO TAKE ANY AND ALL ACTION NECESSARY IN CONNECTION WITH THE REMARKETING OF SAID CERTIFICATES; RATIFYING, CONFIRMING AND APPROVING ALL ACTIONS HERETOFORE TAKEN IN CONNECTION WITH SAID CERTIFICATES, AND PROVIDING AN EFFECTIVE DATE;" and WHEREAS, the aforementioned Certificates of Participation were redeemed on December 31, 1985 in accordance with the terms of the Second Amended and Restated Trust Agreement; and WHEREAS, on December 18, 1985 the City Council adopted a Resolution, entitled "A RESOLUTION OF THE CITY OF PALM SPRINGS APPROVING AND AUTHORIZING THE EXECUTION OF SUBLEASE AGREEMENT RELATING TO CONVENTION CENTER FACILITIES AND OTHER LEGAL DOCUMENTS WITH RESPECT THERETO", pursuant to which the 1985 Certificates of Participation (Convention Center Project) (the "1985 Certificates") were issued in an aggregate principal amount of $35,000,000, the proceeds of which were used to replace the proceeds of the Certificates of Participation authorized, sold and delivered on November 5, 1984, which were not expended on the Project for which such Certificates of Participation were issued; and WHEREAS, the City Council approved the refunding by the City of Palm Springs Financing Authority (the "Authority") of the 1985 Certificates through the issuance of the City of City of Palm Springs Financing Authority Lease Revenue Bonds, 1991 Series A ("1991 Bonds") in the aggregate amount of$50,668,512.10 pursuant to the Joint Powers Law (Articles 1 through 4 of Chapter 5, Division 7, Title I of the California Government Code) (the"Act"); and WHEREAS, the City advance refunded a portion of the 1991 Bonds through the issuance of the City of Palm Springs Financing Authority Lease Revenue Refunding Bonds, 1997 Series B (Convention Center Project) (the"1997 Bonds"); and WHEREAS, the City currently refunded an additional portion of the 1991 Bonds with a portion of the Lease Revenue Refunding Bonds, 2001 Series A(Convention Center Project) (the "2001 Bonds"); and WHEREAS, $2,125,539.90 initial principal amount of the 1991 Bonds, $11,205,000 aggregate principal amount of the 1997 Bonds and $26,230,000 aggregate principal amount of the 2001 Bonds remain outstanding; and WHEREAS, it is now desirable to currently refund the 1997 Bonds with a portion of the Lease Revenue Bonds, 2004 Series A (Convention Center Expansion Project) (the "2004 Bonds"); and Resolution No. Page 3 i WHEREAS, the City also desire to expand the Convention Center with a portion of the 2004 Bonds; and WHEREAS, the City finds and determines that it is a public purpose that the City approve and that the Authority deliver and sell the 2004 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 preparation, bond underwriting and financing costs associated with the issuance of the 2004 Bonds. In addition, the expansion of the Convention Center will provide employment benefits and more efficient services for residential and commercial development as contemplated by Section 6586 of the Act. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Palm Springs that: SECTION 1. The above recitals are true and correct. SECTION 2. Pursuant to the Act, the City hereby approves the issuance of the 2004 Bonds in an aggregate principal amount not to exceed $65,000,000. SECTION 3. The form of the Supplemental Trust Agreement No. 3 ("Supplemental Trust Agreement No. 3"), dated as of April 1, 2004, by and among BNY Western Trust Company, as Trustee (the "Trustee"), the City and the Authority, a copy of which is on file with the City Clerk, be and is hereby approved and the Mayor or City Manager or Finance Director and other appropriate officials of City are hereby authorized and directed to execute, acknowledge and deliver, in the name and on behalf of City, Supplement Trust Agreement No. 3, with such changes therein not inconsistent with this resolution as may be permitted under the laws of the State and approved by the Mayor or City Manager or Finance Director or any other officers executing the same on behalf of City. The approval of such changes by said Mayor or City Manager or Finance Director or other officers shall be conclusively evidenced by their execution of such Supplemental Trust Agreement No. 3. SECTION 4. The form of the Supplemental Lease Agreement No. 4 ("Supplemental Lease Agreement No. 4"), dated as of April 1, 2004, by and between the City and the Authority, a copy of which is on file with the City Clerk, be and is hereby approved and the Mayor or City Manager or Finance Director and other appropriate officials of City are hereby authorized and directed to execute, acknowledge and deliver, in the name and on behalf of City, the Supplemental Lease Agreement No. 4, with such changes therein not inconsistent with this resolution as may be permitted under the laws of the State and approved by the Mayor or City Manager or Finance Director or any other officers executing the same on behalf of City. The approval of such changes by said Mayor or City Manager or Finance Director or other officers shall be conclusively evidenced by their execution of such Supplemental Lease Agreement No. 4. SECTION 5. The form of Escrow Deposit Agreement, dated as of April 1, 2004 (the "Escrow Agreement"), by and between BNY Western Trust Company as Escrow Agent, the Authority and City, a copy of which is on file with the City Clerk, be and is hereby approved in /ST Resolution No. Page 4 substantially the form thereof, or with such changes as may be approved by the Mayor or City Manager or Finance Director of any other officers executing the same, said officer's execution thereof to constitute conclusive evidence of said officer's approval of all such changes, and each of said officers be and is hereby authorized to execute and deliver the Escrow Agreement. SECTION 6. That the Preliminary Official, Statement relating to the 2004 Bonds (the "Preliminary Official Statement"), a copy of which is on file with the City Clerk, 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 2004 Bonds, The Mayor or City Manager or Finance Director 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 2004 Bonds and the Mayor or City Manager or Finance Director 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 2004 Bonds shall be submitted to the Mayor or the City Manager or Finance Director for approval. SECTION 7. The Mayor or City Manager or Finance Director or any other appropriate officers of City are further authorized and directed to execute such certifications, financing statements, bond purchase agreements, assignments, the official statements and instruments as are, in the opinion of Aleshire & Wynder, LLP, Bond Counsel, necessary or appropriate to perfect the assignments set forth in the Supplemental Trust Agreement No. 3 and Supplemental Lease Agreement No. 4 and to consummate the transactions contemplated by this Resolution and provided for in the aforementioned documents. SECTION 8. It is found and determined' that all formal actions of City concerning and relating to the adoption of this Resolution were adopted in an open meeting of the City Council subsequent to the holding of a public hearing pursuant to Section 6586.5 of the Act, and that all deliberations of the City Council and of any of its committees that resulting in these formal actions, were in meetings open to the public in compliance with all legal requirements. SECTION 9. All actions heretofore taken by City or any of its officials, officers or employees in connection with the sale and delivery of remarketing of the 2004 Bonds are hereby ratified, confirmed and approved. SECTION 10. Any resolutions of the City Council adopted prior to this resolution are, to the extent they are in consistent or conflict with this resolution, hereby repealed and rescinded. SECTION 11. This resolution shall take effect and be enforceable immediately upon its adoption. / STY Resolution No. Page 5 ADOPTED THIS _day of 12004. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By: City Clerk City Manager REVIEWED AND APPROVED BY: ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AND AUTHORIZING THE EXECUTION OF SUPPLEMENTAL LEASE AGREEMENT NO. 4 RELATING TO THE CITY OF PALM SPRINGS FINANCING AUTHORITY LEASE REVENUE BONDS, 2004 SERIES A (CONVENTION CENTER EXPANSION PROJECT) THE CITY COUNCIL OF THE CITY OF PALM SPRINGS ORDAINS AS FOLLOWS: SECTION 1. The form of the Supplemental Lease Agreement No. 4 Relating to Convention Center Facilities, dated as of April 1, 2001, by and between the City of Palm Springs Financing Authority, as Lessor, and the City of Palm Springs (the "City"), as Lessee (the "Lease Agreement"), a copy of which is on file with the City Clerk, be and is hereby approved and the Mayor or City Manager or Finance Director and other appropriate officials of City are hereby authorized and directed to execute, acknowledge and deliver, in the name and on behalf of the City, the Lease Agreement, with such changes therein not inconsistent with this ordinance and not substantially adverse to the City as may be permitted under the laws of the State of California ("State") and approved by the Mayor or City Manager or Finance Director or any other officers executing the same on behalf of the City. The approval of such changes by said Mayor or City Manager or Finance Director or other officers shall be,conclusively evidenced by their execution of such Lease Agreement. SECTION 2. This Ordinance is subject to the referendum provisions contained in the Charter of the City and State law otherwise applicable to the City. SECTION 3. The City Clerk is hereby authorized and directed to certify to the passage of this Ordinance, and to cause the same or a summary thereof to be published at least once in a newspaper of general circulation in the City, within fifteen days after its adoption. Ordinance No. Page 2 ADOPTED THIS day of 2004. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By: City Clerk Mayor REVIEWED AND APPROVED BY: I HEREBY CERTIFY that the foregoing Ordinance was duly adopted by the City Council of the City of Palm Springs, California, in a meeting held on the day of 2004, and that same was published in the DESERT SUN, a newspaper of general circulation, on PATRICIA A. SANDERS City Clerk I