AHPIA-2014/07/22 ANAHEIM HOUSING AND PUBLIC IMPROVEMENTS AUTHORITY
REGULAR MEETING OF JULY 22, 2014
The Anaheim Housing and Public Improvements Authority regular meeting was called to
order at 5:18 P.M. for a joint public comment session with the Anaheim City Council and
the Anaheim Housing Authority. The meeting notice, agenda and related materials were
duly posted on July 18, 2014.
Present: Chairman Tom Tait and Authority Members: Jordan Brandman, Gail Eastman,
Lucille Kring and Kris Murray
Staff Present: Paul Emery, Interim City Manager, City Attorney Michael Houston and
Secretary Linda Andal
ADDITIONSIDELETIONS TO THE AGENDA: None
PUBLIC COMMENTS: The following public comments related to a joint public hearing
with the Anaheim Gity Council, Agenda Item No. 27.
Charles Lance, Yellow Cab of Greater Orange County, spoke in support of the Anaheim
Convention Center expansion/financing. He remarked without expansion Anaheim would
lose several major conventions that represented lost revenues in the hundreds of millions
of dollars. Related to Angels Baseball, Mr. Lance remarked they had brought pride and
attention to Anaheim with All Star Games and World Series wins and was necessary to
make Anaheim a world class city. He added the construction of ARTIC and the ARC
trolfey would have littfe value if the Angels were gone and if the Convention Center was
not expanded.
Jerry Alder, GardenWalk manager, spoke in support of the Convention Center expansion.
Having worked in the hospitality industry in many states, he recognized the competitive
environment of tourism and the fragility of this type of economy if it did not get due care
and support.
Cynthia Ward stated CATER would stand in support of a letter sent earlier by Cory Briggs
and would join in opposition to general fund obligations related to the Convention Center
expansion. She strongly opposed the financing mechanism and expressed her distress
with a Council that would vote to approve it. She wanted her voice to be heard and the
right to vote on bonds that she believed was an obligation of the city's general fund.
Tony Bruno, resident, commented the hospitality community was one of vitality because of
the leadership which had made tough decisions over the years resulting in a strong
economy. He urged Council to vote in support of the Convention Center expansion.
Gloria Ma'ae explained she had sat on several boards and was an invofved member of
the community, offering her full support on the Convention Center expansion for the jobs it
would create, the economy it would grow and to lift Anaheim up to a higher level. Related
to districting, she believed that every Anaheim citizen should be allowed to vote on
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Page 2 of 13
Council Members collectively and that creating separate districts would create a further
divide in the community.
Rose, in support of the Convention Center expansion, requesting those in favor to stand
up and be counted. As leaders of this community, she asked for council's help in retaining
Angels Baseball and to keep the Convention Center sustainable.
Jose Moreno remarked while Anaheim might be a world class city, not all of its residents
lived in world class conditions and the revenues brought into Anaheim were not always
distributed or shared equally among the neighborhoods. He stated in the city school
district, 89 percent of the students were living in working or abject poverty, emphasizing if
the Convention Center expansion moved forward, it should be done in a manner to bring
community benefits to be shared by all neighborhoods and agreements that offered living
wages rather than more poverty jobs. Related to Proposition 13, he pointed out the dire
effects it had on focal school funding as locaiized resources and funding went to
Sacramento rather than the local sphere. He recommended that concern included in the
proposed resolution in support of Prop 13.
With no further public comrnents, Chairman Tait recessed the Anaheim Housing and
Public Improvements Authority at 6:31 P.M. to consider the Housing Authority agenda.
At 7:04 P.M., Chairman Tait re-convened the Anaheim Housing and Public Improvements
Authority in joint session with the City Council.
HOUSING & PUBLIC FINANCING IMPROVEMENT AUTHORITY AGENDA ITEMS
HP1188 26. RESOLUTION NO. AHPIA 2014-001 A RESOLUTION OF THE
GOVERNING BOARD OF THE ANAHEIM HOUSING AND PUBLIC
IMPROVEMENTS AUTHORITY establishing the dates and time for regular
meetings of the authority for the 2014 calendar year.
Authority Member Kring moved to approve RESOLUTION NO. AHPIA 2014-001 OF THE
GOVERNING BOARD OF THE ANAHEIM HOUSING AND PUBLIC IMPROVMENTS
AUTHORITY establishing the dates and time for regular meetings of the authority for the
2014 calendar year, seconded by Authority Member Eastman. Roll Call Vote: AYES-5:
(Chairman Tait and Authority Members: Brandman, Eastman, Kring and Murray.) NOES
— 0. Motion Carried.
27. JOINT PUBLIC HEARING (Housing and Public fmprovements Authority and City
B137.1 Council)
This is a joint public hearing to consider resolutions regarding the proposed financing of
costs of certain improvements to the Anaheim Convention Center, located at 800 West
Katella Avenue and refinancing of certain capital improvements by the issuance and sale
of bonds of the Anaheim Housing and Public Improvements Authority, and the
determination of significant public benefits from taking that action, in accordance with the
criteria specified in Section 6586 of the California Government Code.
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RESOLUTION NO. AHPIA 2014-002 A RESOLUTION OF THE ANAHEIM
HOUSING AND PUBLIC IMPROVEMENTS AUTHORITY authorizing the issuance
of not to exceed $300,000,000 aggregate principal amount of its lease revenue
bonds, providing the terms and conditions for the issuance of said bonds, and other
matters relating thereto; approving, authorizing and directing the execution of certain
documents (as described and identified in this resolution) relating to the issuance of
said bonds; determining such actions are exempt from the Environmental Quality
Act (CEQA) pursuant to CEQA guidelines sections 15060(c)(3), 15378(b}(4) and
15378(b)(5); and determining that the previously-certified Final Supplemental
Environmental Impact Report No. 2008-00340 (as described in this resolution)
serves as the appropriate environmental docurrientation for the proposed actions.
Mr. Emery introduced the item remarking after considerable discussion in previous
meetings regarding the Anaheim Convention Center expansion, the financing of that
expansion was again before council with a staff recommendation to move forward. He
added staff would not be bringing this effort forward if they did not believe it made sense
and that the real risk was to do nothing.
Debbie Moreno, Finance Director, introduced Eugene Carron with Orrick, Herrington and
Sutcliff, bond counsel, Mike Berwanger of PFM, financial advisor and Tom Morton,
Convention, Sports & Entertainment Director. She reiterated this item was a financing
pfan to complete the approved expansion of the Anaheim Convention Center for the
following reasons: 1) to ensure its continued success as a meeting and convention
destination, 2) to attract high yield meeting intensive business, 3) to hold concurrent
conventions and maximize the economic impact of peaks and valleys in hotel room
occupancies and 4) to replace Car Park 1 parking structure. She indicated this expansion
has been discussed in the industry since 2008, and it became obvious, as the economy
worsened during this last recession that the city was not going to be able to do this on its
own. She stated staff had worked with the Visitors & Convention Bureau (VGB) and the
hoteliers in the resort and Platinum 7riangle to form the Anaheim Tourism Improvement
District (ATID) in September 2010. These hoteliers agreed to self-assess two percent of
the revenues they received from room sales to pay for improved marketing and
promotions of the Anaheim destination and to contribute to future transportation projects.
In return, she explained, the city would prioritize expanding the Convention Center
because it would no longer need to pay the VCB from the general fund. In 2010 the
amount that was freed up through the ATID was about $6 million which was used to pay
for the Grand Plaza expansion and could now be used for the next phase of the
convention center expansion. She added that funding for the VCB had been calculated
on a percentage of the transient occupancy tax (TOT) generated so that annual amount
fluctuated. Today, she noted, it reflected about $8 million which left $2 million to provide
services to the community.
She indicated the goals were standard with any financing in today's market; i.e. taking
advantage of historically low interest rates, creating the lowest cost options to finance the
project, maintaining level lease payments and maintaining Anaheim's credit ratings. One
important goal, she remarked, was to accomplish this without increasing the annual lease
payments the general fund made.
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Four questions were considered as a checklist to proceed with this plan: was there a
return on Resort investment, did the expansion create a net benefit, could the city afford it
and did it benefit the entire community.
Referencing the first question af whether there was a return on Resort investments, Ms.
Moreno remarked the Resort generated 50 percent of the general fund taxes coming from
transient occupancy taxes (TOT), sales and use taxes, property taxes, and business
license taxes. The portion of those revenues coming directly from the Resort was broken
down as folfows: 90 percent of TOT, 20 percent of sales taxes, 15 percent of property
taxes and 10 percent of businesses licenses, collectively bringing into the general fund
about $130 million. She stated the largest expenses for the Resort were lease payments
for the 1997 Resort expansion and several other small capital improvement projects. And,
since the city no longer paid for marketing and promotions, after these expenses were
paid, about $67 million remained to provide for general fund services such as police, fire,
parks, and libraries, a significant return on investment in the Resort.
To answer the question was there a net 6enefit from the proposed expansion, Ms. Moreno
stated Crossroads Consulting was hired to perform a marketing and economic analysis of
the expansion specifically because they were experts in the field, had never been involved
in the project with no opinion of the overalt plan, and their detailed research and
conservative estimates indicated Anaheim would gain significant new revenues totaling
$380 million. These new revenues would be made up predominantly of TOT and would
also include additional sales and use taxes. Additionally, the Convention Center would
retain existing shows and conventions in an amount of $164 million that Anaheim woufd
not otherwise retain. She remarked this amount was mainly due to TOT but also included
a large portion of operating revenues the convention center received for rentals that would
now be available to pay their day to day operations. The total new and retained revenues
would be $545 milfion. Ms. Moreno reported on the expenditure side, lease payments for
the Convention Center expansion and the replacement of Car Park 1 totaled almost $418
million, leaving an economic benefit of $127 million which meant the expansion was
estimated to return $127 million more than it cost to construct over a 30 year period. She
added taking that figure a step further and adding the estimated $450 million marketing
and promotion costs that the city would have previously paid to the VCB through year
2046, Anaheim would see a total benefit from this expansion of $577 million. Chairman
Tait asked if Ms. Moreno was referring to the ATID figure and she replied in the
affirmative, that the figure reflected the amount hoteliers were assessing themselves
which could be potentialfy lost if the ATID was dismantled as a result of not expanding.
To answer the question can we afford this, Ms. Moreno stated there was currently about
$85 milfion in existing GF lease obligations other than the 1997 resort improvements and
they would begin to mature and be paid off in 2019. By refinancing about $53 million of
that debt, those previous capital improvement obligations would be paid off sooner than
originally scheduled saving about $17 million in interest and when the new lease
payments for the proposed expansion was added in with the previous capital
improvements, it was expected that the annual lease payment would be at or lower than
$17 million per year, roughiy equal to the existing debt payment. She explained that
would mean any new incremental revenues received could be immediately used to
provide general fund services, because the total debt obligation would be no more than it
was today, and would therefore be considered affordable.
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As to whether the expansion benefitted the entire community, Ms. Moreno commented
that the best way to answer that was to look at the overall impact to the General Fund. If
the fund was better off, then it followed that the community would be better off because
the General Fund was where all core services were provided.
Ms. Moreno detailed what would happen if the Convention Center expansion did not occur
and the city did not pay off the previous capital improvement debts. A graph using the
mid-point of 15 years of a 30 year debt obligation showed the annual difference in
revenue stream from the Resort with and without the expansion; the overall Resort taxes
would be less with no expansion because there would be no new revenues and some of
the existing revenue stream was lost, $186.5 million versus $203.9 million with the
expansion. Ms. Moreno indicated under the "do nothing" scenario, the 1997 Resort lease
payments would be less which meant the fease would not be paid down as fast and other
general fund lease payments would be less, but the city still had to pay about $2.9 million
each year to replace Car Park 1. Without the expansion there was also the potential of
having to fund the marketing and promotions now being paid by ATID estimated at the
2010 level at $6 million. At the end of 15 years, she stated it was estimated that the net
Resort tax revenues would be almost $116 million with the expansion and $109 million if
no expansion. Furthermore, over a 30 year horizon, the "do nothing" scenario would drop
below zero because there would still be existing lease payments of $11.5 million, the
payment for marketing, promotions, and the parking structure, and the results of lost
revenues. The expansion scenario showed that at year 30, there would be more than $20
million availabfe to the general fund, and $10 million available much earlier. She further
stated over the course of 15 years, it was conservatively estimated that the general fund
would be better off by $115 million and $320 million over a 30 year period, therefore the
expansion would be a benefit to the entire community.
Ms. Moreno also pointed out there was risk to the general fund if revenues did not come in
as anticipated, but if the analysis was only half right, the city would still expect to be better
off in any given year and $161 million over 30 years. She emphasized a defay in the
expansion would likely only increase construction and borrowing costs that would reduce
the amount of benefit for the community and not expanding would likely result in a
reduction of convention center revenue that the general fund would have to make up and
those general fund revenues would begin to decline in the near future.
Those four questions used as a guideline to proceed had been answered and Ms. Moreno
believed that based on the information provided and the city's partnership with the hotel
industry that freed up this funding, there was much to be gained for the city by this
expansion and it was her recommendation that the City Council and the Housing and
Public Improvements Authority approve the financing plan for the Convention Center
Expansion.
Chairman Tait questioned how the Resort benefit figures were acquired with Ms. Moreno
responding there were two sources, the return on Resort benefits was based on estimates
put together in the Finance Department. Staff was able to track large tax revenues
geographically and estimated which portion came from the Resort, and used known lease
payments that supported the Resort plus other reasonable indicators for services levels in
the Resort, such as calls for service for police and fire. Chairman Tait remarked that not
all revenues from the Resort District came from convention business and that most were a
_ ..__.
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result of tourism as opposed to conventions. Ms. Moreno concurred adding there would
be a larger portion staff had specifically identified as leisure and travel but those two
pieces went together. Chairman Tait asked how many room nights resulted from
Convention Center attendees, because if those room nights were increased due to the
expansion, the assumption was those taxes could come back to the city's general fund.
Ms. Moreno stated the Crossroads Study indicated for the three year average from FY
2010 to FY 2012, the room nights generated from the Convention Center was 773,000.
Chairman Tait believed that number was closer to 400,000. He then inquired what the
increased number of room nights would be as a result of the expansion with Ms. Moreno
responding it was estimated to be between 998,000 - 1,056,000, around a 35-45 percent
increase.
Authority Member Murray inquired if there was a positive impact projected for the general
fund as a result of this financing plan with Ms. Moreno responding there would be an
increased revenue stream for the city. She then asked how many bonds had been
approved over the years and if the city had ever defaulted with Ms. Moreno replying that
over the last 20 years the city had about 40 issues of lease revenue bonds and had never
defaulted nor had any impact to the general fund as a result of not meeting expectations
with revenues. Ms. Murray emphasized the $450 million that was freed up because ATID
was in place and would be generated over the life of this financing pian more than
covered the lease payments the city was anticipating over that same period and
essentialfy privately funded the expansion. Ms. Moreno responded that was the
anticipated plan. Authority Member Murray queried the City Attorney as to whether there
was any legal or ethical reason that this action would be prohibited with Mr. Houston
responding that were no ethical or legal prohibitions to the action before the Council and
this statement also reflected the opinions of bond counsel and outside counsel who were
present this evening.
Chairman Tait opened the hearing for comments from the public.
Anthony Barron stated he worked in the trade show installers union and had enjoyed the
benefits of past convention expansions. He added there was overwhelming community
support for this project, backed by the unions, as well as successful results from past
expansions, asking the council's approval on this item.
Keith Harkey remarked on a personal fevel his father helped construct the original
convention facility in 1966 and as a building trades member, he wanted the Anaheim/OC
economy to be as successful as possible. With attractions that inspired people to visit, the
infrastructure needed to get here, and the knowfedge that this industry brought in over
$9.6 billion in 2013, he supported the expansion and the need to be competitive with San
Diego, Los Angeles and Boston, venues that were increasing their size as well.
Ernesto Medrano, Local 952, stated he and his members viewed this expansion as an
investment, not an expense and without it trade shows and the accompanying jobs would
be lost, jobs that were important to those who were less affluent. On a personal note, as
a young man he helped pull in 600 pound crates to set up exhibits, a job that was well
paid and helped pay for college and rent. He pointed out that not all were poverty wage
jobs as had been categorized earlier and urged city leaders to have the vision to invest in
the future.
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Douglas Robbins, representing Painters and the Trades, supported the expansion for the
desperately needed construction jobs it would create and because it would secure
Anaheim as a top destination for future tradeshows and keep up with the growing needs
of NAMM and Whole Foods which were quickfy outgrowing existing facilities. He asked
council to look at this as an investment in Anaheim's future and to give their approval.
Ron Miller, LA/OC Building Trades, urged council to move ahead and finance the
expansion, adding that he represented 140,000 skilled construction workers in 50 local
unions within 14 trades. In Los Angeles, he remarked, hotels were under construction, a
new expansion was in the design phase and it was a space race among cities to compete
for top trade shows. He urged council to make the difficult decision, move forward and
see it prosper.
Steve Saybrook, resident, spoke in support of the expansion, stating it would bring in
more business, retain top tradeshows and attract bigger and better shows for the future,
thus increasing future revenues for Anaheim.
Andrew Edwards, speaking on behalf of Ranch Restaurant & Saloon and Extron
Electronics, asked for Council's support for the expansion. He expfained in 2000, he was
on a board of an association booking conventions and they came to Anaheim that year,
however, his group did not return because the space was not large enough for their trade
show and were now going to Las Vegas and Orlando. He added trade shows must
commit years in advance and decisions made today were fong lasting and he urged
Council to move forward with this investment.
Glen Nolty, United Association Plumbers, Steamfitters, Welders and Apprentices,
remarked he represented hundreds of pipe trade workers that lived in Anaheim and
thousands who resided in Orange and surrounding counties. He reported San Diego
approved a$520 million expansion to their convention in 2012, increasing their floor
space by 33 percent and was scheduled to open in 2015. He believed the leadership of
this City Council would affect the community for decades to come and along with high
speed rail and ARTIC, the expansion was the last piece to a successful future.
Robert Donahue, Disneyland Resort/ VCB Board of Directors, remarked Anaheim was
fortunate to have one of the premier tourist destinations but in order to keep larger and
more profitable conventions and attract new conventions, Anaheim must continue to
invest to remain competitive. He believed the risk of not expanding was far too great and
that the loss of current and future business would have a detrimental impact on the entire
Resort area. He emphasized the hotefiers in the Resort, Garden Grove, and the Platinum
Triangle formed ATID because they understood the benefit of promoting and enhancing
the area as a whole. He encouraged Council to support this expansion.
Roy Afusia, union member, spoke in support of the expansion, remarking the people had
put their trust in the city council to make the right decisions.
Richard Licerio remarked he was a third generation union member living in the city of
Anaheim asking that Council to vote yes on the expansion.
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Shaun Robinson, Anaheim Hilton/VCB, remarked when an earlier effort to finance the
expansion of the Convention Center did not go forward due to the real estate downturn,
both Anaheim and Garden Grove hotel owners and operators assessed themselves an
additional two percent TOT, almost $6 million in 2010, to ensure Anaheim would have the
funds to expand. He stated this revenue had grown and projections for the future were
strong as long as the city followed through with the expansion and that the three month
delay of the expansion already put at risk the two biggest conventions, NAMM and Natural
Products, and potentially the American Heart Association. He emphasized if the city were
to lose just these three shows, it would cost tens of millions of dollars in economic tax
activity, millions in tax revenues and thousands of jobs, urging a unanimous vote in
support of the expansion.
Ross McCune, Chamber of Commerce, reported the Chamber of Commerce supported
moving forward to finance the Convention Center expansion because it would create good
paying construction jobs and enable the city to keep critical fast-growing tradeshows while
also giving the flexibility of stacking smaller and mid-sized shows with larger events to
meet the changing needs of the convention market. He added since 1997, successive
City Councils acted to ensure Anaheim was a top tier convention and tourism destination,
asking this City Council to reaffirm their investment and commitment to Anaheim by a vote
to approve.
John Kalinsky, Anaheim Marriott, remarked he had only been in Anaheim for 17 months
and prior to that had worked in Chicago, New York City, Washington DC and many other
tourist destinations. He added what was taking place in this Council meeting was
happening all over major cities in the country, discussions about expansions and moving
forward. He stated Anaheim was not necessarily a Tier 1 convention city today, but the
expansion would put the city back 10-15 years ago when Tier 1 status was enjoyed. He
urged the Council to be unanimous in moving this project forward.
Cynthia Ward remarked CATER was not against the Convention Center expansion, it was
against the financing mechanism being used. She was opposed to the lease revenue
bonds, stating they were in reality general obligation bonds, because all the revenues
went into the general fund and bond payments made from that fund. She felt the bond
funding program had not been adequately explained to the public and stated just because
the city had the ability to make payments today did not mean it would have the same
ability to fund a payment in the future. A question, she stated, that needed to be asked
was not whether the city ever defaulted on a bond payment; it was whether revenues had
not met expectations because either way the payments for that debt came from the
general fund. She reiterated these were general obligation funds and the public should
vote on them or the city find a source of revenue that did not touch the general fund. She
objected to staff's statement regarding potentially lost revenues from NAMM and Natural
Products if they did not return to the Convention Center, stating those calculations had not
been done by staff and the estimates offered were not reliable in her opinion. She added
that there was a way to retain those conventions since the stadium lease provided for 10
events that coufd be used to backfill overflow from the Convention Center, asking the city
to look into that option.
Jay Burress, VCB, offered the following figures on the NAMM and Natural Products
tradeshows. For NAMM, the economic impact was about $38.2 million and out of that the
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TOT reflected $3.8 milfion. Natural Products had a$25.2 million economic impact with
$2.5 million coming from TOT. American Heart Association refiected a$28 million impact
with $2.6 million coming from TOT. He explained these were special shows and that the
average trade show for the past three years yielded an economic impact of $9 million of
which $1 million came from TOT and that every month delay in financing caused problems
in selling convention space. He ended his statement asking Council to keep building the
destination that city leaders had the foresight to create. Chairman Tait inquired how those
economic figures had been calculated with Mr. Burress replying it was a result of an event
calcufator endorsed by Destination Marketing Association International. He then inquired
how many room nights NAMM would produce with the reply given that on a peak night
there could be 8,000 rooms for three nights or 24,000 rooms.
Fred, an hotelier in Anaheim, offered his personal story of his start in the Anaheim
hospitality industry 17 years ago to his current position as manager for several hotels in
the Resort area. He pointed out that the Convention Center's business had a positive
impact on all hotels even it convention attendees did not stay there because the rates
went up and the city received increased revenues from those higher rates. In his hotel, a
30-seat restaurant earned the same during the NAMM convention than it did for the entire
month of February and his servers earned tip wages that carried them for two months. He
remarked there was a bigger, positive impact that was difficult to calculate if those types of
large tradeshows were lost. In addition, there were a dozen new hotels in the pipeline in
Anaheim and several more in Garden Grove depending on that expansion, and
GardenWalk was also repositioning itself to take on new or retain existing business; he
recommended a unanimous vote to approve by the Council.
Steve Plummer, Championship Golf Services, remarked Dad Miller and Anaheim Hills
Golf Course employed 70 people and although his business was predominantly as a
recreational service and discretionary recreation for local citizens, the growth of the
Convention Center and the tourists and visitors was vital because that was the ancillary
spending that made him profitable. He was proud to be operating the two golf courses for
the city and urged Council to approve the expansion.
An unidentified male remarked a world class vision required commitment, courage and the
confidence that Anaheim was a world class destination.
With no other comments offered, Chairman Tait closed the hearing.
Authority Member Kring requested staff respond to an earlier speaker who stated the
$14.5 million payment would be coming out of the general fund for the expansion. Ms.
Moreno responded the general fund would provide the lease payments for the expansion;
it had historically been handled in that manner and today the general fund paid capital
improvements besides the 1997 Resort improvements of roughly $16.9 million. Staff
expected after the first several years of the refinancing of those previous capital
improvements and the resort bonds, the payment would be under $15 million in lease
payments out of the general fund. The theory was that the expansion was supparted by
the transient occupancy taxes of about $24 million a year in incremental revenue received
from the Convention Center and when the debt cost was offset, there would be a net
benefit each year.
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Page 10 of 13
Authority Member Murray remarked before the expansion the impact to the general fund
for lease payments was $16.9 million and after the expansion because of how existing
debt would be refinanced and rolling it in with a reduced interest rate, the cost to the city
would be $14.9 million in lease payments; Ms. Moreno concurred remarking it was
anticipated based on the current estimates that in 2021, the payment would drop to $15
million in lease payments each year. Ms. Murray remarked there was no way for those
who reviewed this data to not see this as a win/win situation for the city and that
businesses had already self-assessed themselves for years to generate income for the
expansion, an amount that totaled $417.7 million over 30 years. She added the ATID
brought in $450 million during the same time frame and it more than covered the cost for
the expansion plus there would be an additional revenue increase of $127.3 million. The
total city benefit would be $577.3 million from this expansion. Ms. Murray requested the
City Attorney address whether the finaneial agreement before Council was similar in
structure to those used by cities across the state to fund necessary public improvements
with Mr. Houston responding in the affirmative, that the city was taking an action enabled
by a statue that authorized through a Joint Powers Agreement to issue bonds as a
separate and exclusive joint powers authority independent of the authority or powers or
limitations of inembers of that authority.
Authority Member Brandman remarked Council had voted on financing the expansion on
March 11 and staff had presented data at that time with projections over the life of the
bonds that the expansion would be paid for by revenues from the ATID, asking if that
statement was correct. Ms. Moreno responded that based on their estimates, that
statement was correct. He added that it was his understanding they were conservative
estimates as well, asking staff to respond. Ms. Moreno explained in detail the process
Crossroads Consulting used to come up with those estimates, adding that she wondered
if she might regret not making it very clear what a winner this project would be. Authority
Member Brandman asked if the financial data and assumptions presented to Council for
the adoption of the FY 2014/15 budget and the resolution restoring Anaheim's police
officers by 40 in four years contained the same information as that presented today. Ms.
Moreno responded the only information that changed was the lease payment obligation
but the financial assumptions, the revenue and loss assumptions related to the
Conve�tion Center and taxes remained the same. With that affirmation, he indicated he
was as comfortable supporting the financing plan as he was on March 11th.
Authority Member Kring added that with 1,200 new hotel rooms coming on board, those
TOT numbers_would increase along with sales tax and property taxes. She recognized
how significantly revenues increased as a result of large conventions, not only for the city
but for businesses and their employees and did not want to see those shows lost as other
destinations like San Diego expanded to compete with Anaheim's tax dollars. She added
if the city had proceeded in March, there would be a new fire station under construction
and $20 million available from the refinance to be used for core services, a sad outcome
resulting from the lawsuit which delayed financing. She was supportive of the expansion
and was ready to vote in favor.
Authority Member Eastman inquired if the ATID funds were kept separate from other
revenues with Ms. Moreno responding it was kept in a special revenue account set aside
because they were restricted, and that 75 percent was to pay for marketing and
promotions and 25 percent for transportation. Ms. Eastman stated Ms. Moreno made the
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Page 11 of 13
statement that the entire bond payment was coming out of the general fund, asking how
that was tracked. Ms. Moreno responded that because the ATID was formed and 75
percent of those revenues were used for marketing and promotions for the convention
center, the city no longer needed to pay for the VCB operating costs which in 2010 were
$6 million. Staff estimated if that same agreement to provide marketing and promotions
were extended over a 30 year term ending in 2046, the city would see a savings of about
$450,000. She further explained the ATID gave the city an opportunity to give up an
operating cost with no residual value and reinvest in the convention center, an asset with
residual value.
Chairman Tait questioned the figures provided by Mr. Burress relating to NAMM and
Natural Products, asking staff if those numbers seemed correct because $3.8 million in
TOT was more than he would have expected. As an example, he stated, 24,000 total
room nights over three nights (8,000 x 3) of NAMM attendees multiplied by $200/room
and then applying a 15 percent TOT reflected $720,000. Ms. Moreno indicated she
concurred with Mr. Burress' information. Chairman Tait added that according to the
Crossroads report, for the expansion to be successful there would need to be 30 to 40
percent more room nights than today, asking how a shortFall would be covered if the
revenues did not come in as projected. Ms. Moreno responded that the obligation would
be less than the city paid for its existing debt obligation with no additional annual risk with
incremental revenue that was projected to come in that could immediately be put back into
neighborhood services. Chairman Tait remarked when he voted for bonds to renovate the
Resort District, the Convention Center was a basic facility and the amount of the bonds for
the Convention Center was about $180,000 guaranteed by Disney. Ms. Moreno remarked
it did not exactly work in that manner, and was included as part of the staff report
identified as Attachment A. The lease payments were limited to measurements against
revenues and was measured against three percent of the 15 percent TOT, 100 percent of
the incremental TOT received from Disney properties, 100 percent of the incremental
sales revenue from Disney properties and 100 percent from Disney property taxes, so the
fease payments would fluctuate but that was all the City was obligated to pay. She added
that Disney did guarantee certain series of the bonds. Chairman Tait stated that some of
those bond payments would term out around 2020 and the city was talking about
extending those payments an additional 30 years thereby increasing debt by $300 million.
As to whether or not the city should approve this plan, he did not believe the revenues
would come in as projected. He mentioned discussing this with Dr. Heywood Sanders, a
Harvard Ph.D. who studied convention centers who believed there would be no increase
from this expansion. Chairman Tait emphasized if those revenues fell short, the general
fund would bear the cost of paying that debt. For those reasons he voted against the
refinancing plan in March and he would vote against it today. In addition, he befieved the
bonds were general obligation bonds and required a vote of the public instead of
circumventing the process by using another entity to authorize bond issuance. Mr.
Houston responded that the use of a joint powers authority to issue bonds even in lieu of
the city doing so was authorized by the Joint Exercise of Powers Act and by Supreme
Court case law going back 20 years that was based on Supreme Court case law back to
the 1950's relating to lease revenue transactions. He added as the city's obligation was to
make rental payments (which is what the obligations were in this case), those did not
trigger voter approval requirements of the Charter or of the California Constitution.
Chairman Tait indicated he opposed the Convention Center expansion as being too
expensive and a risk to the general fund, but appreciated the public voicing their well-
Housing & Public Improvement Authority Minutes of July 22, 2014
Page 12 of 13
spoken comments. He would follow Charter regulations and his fiduciary responsibility to
the people of Anaheim and moved to take this matter to the vote of the peopie for
placement on the November ballot.
Authority Member Brandman remarked that once the financing plan was voted on, the
Chairman had the ability to schedule a special meeting to consider his request for a ballot
measure. He asked the Chairman to reconsider and vote on a plan that used the same
financial data that was seen in the FY 2014/15 budget adoption. Chairman Tait stated he
strongly disagreed with staff's financial assessment of the expansion financing remarking
that the one year budget adoption was a separate matter and the debt obligations from
this expansion would not start until FY 2017. Authority Member Murray commented this
could be debated all night but that she trusted the premise on which the budget was
balanced and the decades of history the city was relying on for its 7` expansion. She
chose to continue the vision of economic development and vitality and increased
revenues to the city and moved to adopt the finance plan.
Chairman Tait remarked he had made an eariier motion to place the bonds before the
vote of the people. The motion failed due to a lack of a second.
Chairman Tait then moved to direct staff to return to Council to place the bonds on the
November 2014 ballot. The motion failed due to a lack of a second.
Authority Member Kring stated these 30 year bonds could be refinanced in the future as
well as to take advantage of lower interest rates, that refinancing occurred on a regular
basis to effect a savings in interest. She reiterated her comments on the need for
expansion, remarking NAMM and Natural Products brought in 175,000 people alone, and
with a two year build schedule, the city could not risk waiting to expand. Authority Member
Eastman stated that many Anaheim residents came here to express their support, and it
was not just business representatives voicing their opinions. Regarding the issue of
putting this to the vote of the people, she felt Council was elected to make these kinds of
decisions, to sit here and listen to all speakers and make a determination. She thanked
the public for sharing their opinions adding that she shared the vision that began years
ago and was ready to vote in favor.
Chairman Tait closed the public comment portion of the hearing.
Acting as the Housing and Public Improvement Authority, Authority Member Murray
RESOLUTION NO. AHPIA 2014-002 A RESOLUTION OF THE ANAHEIM
HOUSING AND PUBLIC IMPROVEMENTS AUTHORITY authorizing the issuance of not to
exceed $300,000,000 aggregate principal amount of its lease revenue bonds, providing the
terms and conditions for the issuance of said bonds, and other matters relating thereto;
approving, authorizing and directing the execution of certain documents (as described and
identified in this resolution) relating to the issuance of said bonds; determining such actions
are exempt from the Environmental Quality Act (CEQA) pursuant to CEQA guidelines
sections 15060(c)(3), 15378(b}(4) and 15378(b)(5); and determining that the previously-
certified Final Supplemental Environmental Impact Report No. 2008-00340 (as described
in this resolution) serves as the appropriate environmental documentation for the
proposed actions, seconded by Authority Member Kring. Roll Call Vote: AYES — 4:
Housing & Public Improvement Authority Minutes of July 22, 2014
Page 13 of 13
(Authority Members Brandman, Eastman, Kring and Murray.) NOES — 1: Chairman Tait.
Motion Carried.
ADJOURNMENT:
There being no further business, Chairman Tait adjourned the meeting of the Anaheim
Housing and Public Improvements Authority at 9:23 P.M.
Linda N. Andal
Secretary, Anaheim Public Financing Authority
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