HomeMy WebLinkAbout4/7/2004 - STAFF REPORTS (2) 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.
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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:
�✓Gp7Yr/C
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 CounciVAuthority Board Adopt Ordinance approving Financing Documents April 7
MBIA Presentation April 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 I
Financial Advisor delivers Final OS to Printer June 2
Bond Preclosing June 9
Bond Closing June 10
FAI =,,3
CITY OF PALM SPRINGS
CONVENTION CENTER EXPANSION FUNDING
. y
:r • :• • : r • • nmT-• :r s r •r - -f ♦ -
11/1/2004 1,210,000 972,263 1,281,200 3,463,463 (683,632) 1,737,077 •(1,03 1.9,846) 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/l/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 - -. 983,480 2,158,588 3,142,06& (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
11/1/2018 - 987,380'-- --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
11/112020 988,820 2,164;413 3,153,233 (988,820) " 3,389,383 (106,600) 5,447,195 2,293,963 2,300,000
-1111/2021 990,760 '_ •2,166,413 31157,173- = (990,760) - 3,388,960- (106,600) 5,448,773 2,291,600 2,300,000
11/112022 =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 - 2,391,133 (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
11/1/2028 - 5,551,635 (106,600) 5,445,035 5,445,035 5,300,000
11/1/2029 - 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
11/1/2033 - 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
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:
Par 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
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
f7e A
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Prepared by Harrell&Company Advisors,LLC Page 1
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PROOF OF PUBLICATION This is space for County Clerk's Filing Stamp
(2015.5.C.C.P)
STATE OF CALIFORNIA
County of Riverside
--------------I-----------------------------
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
above-entitled matter.I am the principal cleric of a
No. 7009
printer of the,DESERT SUN PUBLISftING clsh 0' RaihD., sPRivs"
gar sv�u,?ta; stt,aeuo;,t,
COMPANY a newspaper of general circulation, o-lgracr_soc@Ernn 35e3s oc u0ve
printed and published in the city of Palm Springs, r;,arloun.a r3evernn,,e„i Codo
Count of Riverside,and which newspaper has been Ro'l c= Is ;'lLFllsD'V C irFM that at 7 p.m. on
yApnt 7,2004,or as soon thereafter as practicable,
adjudged a newspaper of general circulation by the at the council Chamber of the any of Palm
Springs, 3200 Tahquitz Canyon Way, Palm
Superior Court of the County of Riverside,State of springs, cahtomia, 92262,tile ry e C, Council pf the
California under the date of March 24, 1988.Case cry of Palm proposed issuance issuance ofbnet to exceed
etdinn the p p
Number 191236;that the notice,of which the as.000,00o aggregate p=thol amount of Revenue
of
Palm Springs -mancin Authai n'y Lease Revenue
annexed is a printed copy(set in type not smaller ponds, zoa4 seues A convention canter Fr:pari-
5ion P�o7ect) (tne Gonds") The proceeds of tht,
than non pariel,has been published in each regular ponds win ne used to refinance certain outstana-
mg bonds wlatesl to the Canvenhon Cenlei and
and entire issue of said newspaper and not in any Igo rinaoce the construct! or an oxpans 11 to the
supplement thereof on the following dates to wit: convention cen'lar faaieties, At's vs annc, the
pp g testimony of all Inlereyysted persc ns wtled Jl he beard.
��2W4�am Inc�Cdv tCle k at the tabo nl
pn ad dress.
March 31"
004
________---—-------------------—_ ________ Dated: F PAMarc 20, 9
CITY OF PALM SPRINGS
/s/Patncla A Sanders
City Cleric
--------------------- Pub. March 31, 2004
All in the year 2004 ---
I certify(or declare)under penalty of perjury that the
foregoing is true and correct.
Dated at Palm Springs,California this---44th----day
of---------
�April
,---------------�--------1 20/04
Signature
RESOLUTION NO.
A RESOLUTION OF THE CITY OF PALM SPRINGS
FINANCING AUTHORITY AUTHORIZING AND
DIRECTING THE ISSUANCE AND SALE OF NOT TO
EXCEED $65,000,000 AGGREGATE PRINCIPAL AMOUNT
OF ITS LEASE REVENUE BONDS, 2004 SERIES A
(CONVENTION CENTER EXPANSION PROJECT),
APPROVING A PRELIMINARY OFFICIAL STATEMENT,
AUTHORIZING EXECUTION AND DELIVERY OF AN
OFFICIAL STATEMENT, SUPPLEMENTAL TRUST
AGREEMENT NO. 3, SUPPLEMENTAL LEASE
AGREEMENT NO. 4, BOND PURCHASE AGREEMENT
AND ESCROW DEPOSIT AGREEMENT 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 power, all under and pursuant to the Joint Powers Law
(Articles 1 through 4 of Chapter 5, Division 7, Title ( 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
! ti
WHEREAS, a portion of the 1991 Bonds were'advance refunded with a portion of the
Authority's Lease Revenue Refunding Bonds, 1997 Series B (Convention Center Project) (the
"1997 Bonds); and
WHEREAS, a portion of the 1991 Bonds were currently refunded with the proceeds of
the Authority 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, the City desires to currently refund the 1997 Bonds and to finance the
expansion of the Convention Center facilities with a portion of the proceeds of the Authority's
Lease Revenue Bonds, 2004 Series A(Convention Center Project) (the"2004 Bonds"); and
WHEREAS, the City of Palm Springs (the "City") has approved the issuance of the 2004
Bonds; and
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1003/064/29925.03
Resolution No.
Page 2
WHEREAS, the Authority finds and determines that it is within its authority and public
purpose that it approve the delivery and sale of 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, as contemplated by Section 6586
of the Act; and
WHEREAS, in connection with the marketing of the 2004 Bonds, it is now necessary and
desirable to approve the form of the following documents:
(a) Supplemental Trust Agreement No. 3 ("Supplemental Trust Agreement
No. 3") by and among the City, the Authority and BNY Western Trust Company, as
trustee (the "Trustee"),
(b) Supplemental Lease Agreement No. 4 Relating to Convention Center
Facilities ("Supplemental Lease Agreement No. 4") between the Authority and the City;
(c) Escrow Deposit and Trust Agreement ("Escrow Agreement"), among the
Authority, the Trustee and BNY Western Trust Company, as escrow agent and trustee
with respect to the 1997 Bonds,
(d) Bond Purchase Agreement ("Bond Purchase Agreement") between the
Authority and Stone & Youngberg, LLC (the"Underwriter"),
(e) The Preliminary Official Statement (the "Preliminary Official Statement")
relating to the sale of the Bonds, and
(f) The Third Amended Assignment Agreement (the "Assignment
Agreement") between the Authority and the Trustee.
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 of the issuance of
the 2004 Bonds in an aggregate principal amount of not to exceed $65,000,000.
SECTION 3. That the form of the Supplemental Lease Agreement No. 4 , 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 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.
Resolution No.
Page 3
SECTION 4. BNY Western Trust Company is hereby appointed as Trustee under
the Supplemental Trust Agreement No. 3.
SECTION 5. BNY Western Trust Company is hereby appointed as Escrow Bank
under the Escrow Agreement.
SECTION 6. That the form of the Supplemental Trust Agreement No. 3, a copy of
which is on file with the Secretary of the Authority; be and is hereby approved in substantially
the form thereof or which 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 7. That the form of Escrow Agreement, a copy of which is on file with
the Secretary of the Authority, be and is hereby approved in substantially the form thereof, or
which 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 8. That the form of Bond Purchase Agreement relating to the purchase of
the 2004 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 the Bond Purchase Agreement the dollar amount which reflects the provisions of said
Bond Purchase Agreement; provided, however, that,(1) the aggregate principal amount of the
2004 Bonds shall not exceed $65,000,000; and (2) the Authority shall have received from the
Underwriter, prior to the sale of the 2004 Bonds, its written confirmation that the 2004 Bonds
will have a True Interest Cost of not more than 6%, with an initial underwriter's discount
(excluding original issue discount) of no more than .82%.
SECTION 9. That the Preliminary Official Statement relating to the 2004 Bonds is
approved for distribution by the Underwriter, 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 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 2004
FA/,-a
Resolution No.
Page 4
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 2004 Bonds shall be submitted to the Executive Director or the Assistant
Executive Director or Treasurer of the Authority for approval.
SECTION 10. That the form of Assignment Agreement, a copy of which is on file
with the Secretary of the Authority, be and is hereby approved in substantially the form thereof,
or which 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 11. The financing consultant firm of Harrell & Company Advisors, LLC,
Orange, California, is hereby appointed as financial advisor to the Authority with respect to the
2004 Bonds.
SECTION 12. The law firm of Aleshire & Wynder, LLP, Irvine, California, is hereby
appointed as Bond Counsel to the Authority with respect to the 2004 Bonds.
SECTION 13. The law firm of Jones Hall, San Francisco, California, is hereby
appointed as Disclosure Counsel with respect to the 2004 Bonds.
SECTION 14. That the Chairperson, Vice Chairperson, Secretary, Treasurer and
Executive Director and other authorized officers of the Authority be and are hereby each
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 15. This resolution shall take effect and be enforceable immediately upon
its adoption.
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Resolution No.
Page 5
ADOPTED THIS day of 12004.
AYES:
NOES:
ABSENT:
ATTEST: CITY OF PALM SPRINGS, FINANCING
AUTHORITY
By:
Asst. Secretary Chairman
REVIEWED AND APPROVED BY:
I HEREBY CERTIFY that the foregoing is a true copy of Resolution No. duly adopted by
the Board of the City of Palm Springs Financing'Authority in a meeting thereof held on the
day of 1 2004 dated at Palm Springs, California, this _ day of
PATRICIA A. SANDERS
City Clerk
City of Palm Springs, California