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APFA1992/02/04Anaheim Civic Center, ANAHEIM PUBLIC FINANCE AUTHORITY February 4, 1992, 5:00 P.M. PRESENT: BOARD MEMBERS: Simpson, Ehrle, Pickler, Daly and Hunter ABSENT: BOARD MEMBERS: None PRESENT: CITY MANAGER: James Ruth CITY ATTORNEY: Jack White SECRETARY: Leonora N. Sohl EXECUTIVE DIRECTOR OF COMMUNITY DEVELOPMENT: Lisa Stipkovich FINANCE DIRECTOR: George Ferrone A complete copy of the agenda for the meeting of the Anaheim Public Finance Authority was posted at 3:10 p.m. on January 31, 1992 at the Civic Center kiosk, containing all items as shown herein. Chairman Hunter called the special meeting of the Anaheim Public Finance Authority to order at 5:42 p.m. Secretary, Leonora N. Sohl stated at the outset since this is the first meeting of the Authority, there are no previous minutes to present to the Authority and no financial demands against the Authority at this time. PUBLIC COMMENTS - AGENDA ITEMS: There were no public comments on the Anaheim Finance Authority agenda items. ITEMS OF PUBLIC INTEREST: No items of public interest were addressed. CONSENT CALENDAR ITEMS: On motion by Board Member Hunter, seconded by Board Member Ehrle, the following actions were authorized in accordance with the reports and recommendations furnished each Board Member and as listed on the Consent Calendar Agenda: 1. 123: REDEVELOPMENT AGENCY FINANCING - AGREEMENT FOR UNDERWRITER SERVICES: Approving an Agreement with Stone & Youngberg and Merrill Lynch & Co., for underwriter services with regard to Redevelopment Agency refinancing. Submitted was report dated January 27, 1992, from Lisa Stipkovich, Executive Director of Community Development recommending that the Authority approve the subject agreement. Authority Member Hunter moved to approve an Agreement with Stone & Youngberg and Merrill Lynch & Co., for underwriter services with regard to Redevelopment Agency refinancing. Before there was a second to the motion, Board Member Pickler moved to continue the subject item for one week. Board Member Daly seconded the motion for purposes of discussion. Chairman Hunter asked to hear from staff relative to the fact that time is of the essence since interest rates are low at this time. It is his understanding that refinancing should take place this month and a one week continuance may have some effect. Lisa Stipkovich, Executive Director of Community Development. Staff would prefer to have a vote tonight in order to proceed because of interest rates and they would like to take advantage of the market place. It is necessary to act quickly. They would prefer to try and close the transaction by the end of the month which would be helpful in terms of cash flow when their next debt service payment is due March 1, 1992. George Ferrone, Finance Director. He agrees. Two weeks ago, they sold the Convention Center issue at an all time low for the past 13 years. The market has moved away since then about 11 points. If there is a delay of a week, it could move them into March and cost quite a bit. 92 -1 Anaheim Civic Center, ANAHEIM PUBLIC FINANCE AUTHORITY February 4, 1992, 5 :00 P.M. Board Member Pickler. There will be a meeting next week and if approved at that time, they could still proceed. Nothing can happen before the end of the month. He would like another week to further analyze the situation and look at it more in- depth. He does not see the urgency. Chairman Hunter. He disagrees. There is a strong recommendation from staff to move forward. They would be remiss not to proceed at this time. Board Member Daly. He would rather not continue the item either but his concern is the way the recommendation comes to the Authority. It is a negotiated sale rather than a thorough competitive process. Staff has done a good faith job but he has expressed his concern in the past that the bulk of the City's business in public financing is going to the same companies over and over. Chairman Hunter. He recalls the last refinancing was done by Goldman Sachs and not by the proposed firms. Board Member Daly. He is not sure there has been a refinancing for the Redevelopment Agency but the last public financings the City has done have all gone to the same company. He reiterated his concern is that all of the City's business on its public money is going to the same firms. He has voted against previous packages and is going to vote against this one. He agrees that time is of the essence but he does not think it is the appropriate package. A vote was then taken on the motion by Board Member Pickler, seconded by Board Member Daly to continue the item for one week to Tuesday, February 11, 1992 and failed to carry by the following vote: AYES: Daly, Pickler NOES: Simpson, Ehrle and Hunter. MOTION: Board Member Hunter again moved to approve an agreement with Stone & Youngberg and Merrill Lynch & Company for underwriter services with regard to Redevelopment Agency financing as recommended in staff report dated January 27, 1992. Board Member Ehrle seconded the motion for purposes of discussion. George Ferrone, Finance Director. Answering Council Member Ehrle, the issue --. being refinanced was sold in 1988 by Goldman Sachs. He does not believe they have ever used the two subject firms in cooperation before on a bond issue. He has no recollection of using them as co- managers on a project in the City's history. They are the two largest issuers in the State of California. Board Member Daly. They have been used time and again but never as a team. Merrill Lynch has gotten the last two or three major public financings for the City - the Arena and Convention Center at a minimum. Chairman Hunter. The issue is what is the best underwriting firm for this particular issue at this time. Staff has told them that five members graded the underwriting services and all have come up with Stone & Youngberg and Merrill Lynch & Company - the issue is who is the best for this particular issue based upon a whole set of criteria. Staff has come up 5 -0 saying it is a good firm at this time for this issue and not who was used in the past. They come highly recommended. Board Member Pickler. His concern is not that this is not the best team. He feels he would like additional time to be able to analyze the situation further. Lisa Stipkovich. Her only concern is that they try to do the issue by the end of the month. She typically would always want to give ample opportunity for review; however, she is looking at a time line that is critical in terms of 92 -2 Anaheim Civic Center, ANAHEIM PUBLIC FINANCE AUTHORITY February 4. 1992, 5:00 P.M. cash flow which would help in making the debt payment on March 1, 1992. It comes down to whether or not the underwriter would consider continuing on the documents without having a contract. That is the only way she could possibly see this coming to the Authority next week. They have already done some work without a contract. She cannot speak for them, but they would be taking that risk continuing the document preparation in order for them to meet the agenda next week without having a contract. She does not feel they can delay to the very last week in February because they could not sell the issue within that time frame. They can lapse over to March but it would hurt in terms of cash flow and may impact them on interest rates. Board Member Ehrle. He appreciates Board Member Daly's concern but he ( Ehrle) believes staff has reviewed the matter in great detail. There was a five- member committee who evaluated ten or twelve firms who submitted proposals. The staff report overwhelmingly recommends the subject team. Interest rates are starting to rise and if they wait two, three or four weeks, there could be a substantial difference in this type of offering. Board Member Pickler. His concern is they started out with Request For Qualification but those RFQ's were replaced by a Joint Power Agreement. Lisa Stipkovich. That is not the case and she does not want to leave that impression. The whole purpose of forming the Joint Powers Authority (JPA) was so that they could go with a negotiated process. The purpose of issuing the RFQ was solely to select that negotiating underwriter firm. The fact that they went through what she felt was a fair and thorough process of issuing a request for qualification and having the bond team review those qualifications, they are making the recommendation as to which underwriting firm, and in this case two firms, would be the best qualified to specifically do the negotiated sale. They definitely could not do a true competitive bid process with the product they want to have which gets a lower interest rate. Perhaps that was not clear before. Board Member Daly. His concern is City staff is directing the bulk of the . City's financing business to the same companies over and over again. He considers it bad public policy and, therefore, he has to vote against the proposal. A vote was then taken on the foregoing motion by Board Member Hunter, seconded by Board Member Ehrle to approve the subject agreement and carried by the following vote: AYES: Simpson, Ehrle and Hunter NOES: Daly and Pickler End of Consent Calendar. MOTION CARRIED. ADJOURNMENT: Board Member Hunter moved to adjourn, Board Member Pickler seconded the motion. MOTION CARRIED. (5:59 p.m.) LEONORA N. SOHL, SECRETARY 92 -3