SR-203-001-06F:\Redevelopment\Staff Reports\Bond Staff Report\TABond1026Staff Rpt.wpd
City Council Meeting 10-26-99 Santa Monica, California
TO: Mayor and City Council
Chairperson and Redevelopment Agency
FROM: City and Redevelopment Staff
SUBJECT: Recommendation for the City Council and Redevelopment Agency to
adopt Resolutions authorizing the issuance of Earthquake Recovery
Redevelopment Project Area Tax Allocation Bonds and approval of
documents, actions and other matters related thereto
INTRODUCTION
This staff report requests that the City Council and Redevelopment Agency adopt the
attached resolutions and related documents authorizing the issuance of
Redevelopment Agency of the City of Santa Monica Earthquake Recovery
Redevelopment Project Area Tax Allocation Bonds, Series 1999.
BACKGROUND
To implement the goals and objectives of the Earthquake Recovery Redevelopment
Project, including financing the acquisition of 11.3 acres of property adjacent to the
Civic Center owned by the Rand Corporation, seismic retrofit measures for the
downtown parking structures and affordable housing, the Agency wishes to issue
tax-exempt, tax allocation bonds.
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DISCUSSION
The 1999 tax allocation bonds will be secured by tax increment revenue generated by
the Earthquake Recovery Redevelopment Project Area. The attached resolutions
authorize the City (Attachment 1) and Agency (Attachment 2) to proceed with all
steps necessary for issuance of the bonds. These resolutions authorize the issuance of
a maximum of $69.5 million aggregate principal amount of bonds at a maximum interest
rate of 7.0% for a maximum term of 30 years. They also provide approvals of all steps
necessary to complete the financing, including the approval of all necessary documents
and certificates and related actions.
The approximate net bond proceeds (after establishing a bond reserve fund and paying
bond issuance costs) available from the bond issue will be distributed as follows:
Land Acquisition Seismic Housin
Retrofit
Redevelopment
Accou nt
Housing Account
$42,400,000
$10,600,000
$53,000,000
$1,700,000 $2,100,000
$1,700,000 $3,050,000
TOTAL
$46,200,000
$ 950,000
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50,000
$57,750,000
The resolution to be adopted by the City (Attachment 1) also mandates that the
Redevelopment Agency's existing debt obligations to the City be made subordinate to
the Agency's pledge of tax increment to the bondholders of the tax allocation bond
issue. A total of $1.1 of two promissory notes payable by the Redevelopment Agency
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to the City will need to be subordinated to the tax allocation bond. By subordinating
these two notes, the obligations to repay the debt will remain, but the obligation for debt
service payments on the tax allocation bonds will be ahead of the repayment of these
notes.
Attached to this staff report are copies of the following documents necessary for
issuance of the bonds:
Attachment 3An Indenture by and among the Redevelopment Agency of the City of
Santa Monica and BNY Western Trust Co., as Trustee.
Attachment 4A Continuing Disclosure Certificate, wherein the Redevelopment Agency
agrees to provide certain information annually to designated
national bond information depositories;
Attachment 5A Preliminary Official Statement to be used in connection with the offering
and sale of the Bonds.
Attachment 6An Official Notice Inviting Bids for use in connection with the solicitation of
bids for the Bonds; and
Attachment 7A Notice of Intention to Sell to be published in The Bond Buyer or other
financial publication for solicitation of bids for the Bonds.
The attached resolutions approve these documents and authorize their execution and
delivery by specified Agency officials and employees. These resolutions also approve
the preparation, execution and delivery of a Final Official Statement, the execution
and delivery of any additional documents and the performance of such acts as may be
necessary or desirable to effect the offering, sale and issuance of the Bonds
A list of questions which various national associations and the Federal Securities and
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Exchange Commission recommends public officials ask when approving the issuance
of bonds is provided in Attachment 8. For your convenience, staff along with the
Agency's Financial Advisor, Fiscal Consultant, Special Counsel and Bond Counsel
have provided answers to each question. Staff, Financial Advisor, Special Counsel and
Bond Counsel are prepared to expand on these answers if requested by the Agency.
BUDGET/FINANCIAL IMPACT
This bond financing will be structured as follows: The Agency will issue up to
$69,500,000 in tax-exempt, tax allocation bonds. The estimated annual debt service
on the Bonds is a maximum $ 5.5 million which will be financed from the annual tax
increment revenue flow from the Earthquake Recovery Redevelopment Project Area.
The trustee will receive the bond proceeds and at the discretion of the Agency deposit
the appropriate amount into an escrow account for the real estate purchase. To
receive and administer the bond proceeds, it is necessary to establish a revenue
budget of $ 69.5 million at account number 17263.405470; and appropriate $ 69.5
million at account numbers C17080500.589000.
RECOMMENDATION
It is respectfully recommended that the City Council take the following actions:
1) Adopt the attached resolutions authorizing the execution and delivery of the documents
necessary for the issuance of the Redevelopment Agency of the City of Santa Monica,
Santa Monica Earthquake Recovery Redevelopment Project Tax Allocation Bonds, Series
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1999.
2) Approve the budget changes set forth above.
It is respectfully recommended that the Agency take the following action:
1) Adopt the attached resolutions authorizing the execution and delivery of the documents
necessary for the issuance of the Redevelopment Agency of the City of Santa Monica,
Santa Monica Earthquake Recovery Redevelopment Project Tax Allocation Bonds, Series
1999.
Prepared By: Mike Dennis, Director of Finance/Agency Treasurer
Jeff Mathieu, Director of Resource Management
Bob Moncrief, Redevelopment and Housing Manager
Tina Rodriguez, Redevelopment Administrator
Mona Miyasato, Senior Administrative Analyst-Project Coordinator
Linda A. Moxon, Deputy City Attorney
ATTACH M E NTS:
Attachment 1: Resolution of the City of Santa Monica
Attachment 2: Resolution of the Redevelopment Agency of the City of Santa
Monica
Attachment 3: Indenture Agreement
Attachment 4: Continuing Disclosure Certificate
Attachment 5: Preliminary Official Statement
Attachment 6: Official Notice Inviting Bids
Attachment 7: Notice of Intention to Sell
Attachment 8: Questions for Public Officials to Ask Before Approving a Bond
Issue.
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