AHPIA-2015/09/15 ANAHEIM HOUSING AND PUBLIC IMPROVEMENT AUTHORITY
REGULAR MEETING OF SEPTEMER 15, 2015
The Anaheim Housing and Public Improvement Authority regular meeting was called to order on
September 15, 2015 at 5:20 P.M. in City Council Chambers located at 200 S. Anaheim Blvd. for a
joint public comment session with the Anaheim City Council and the Anaheim Public Finance
Authority. The meeting notice, agenda and related materials were duly posted on September 11,
2015.
PRESENT: Chairman Tait and Authority Members: Jordan Brandman, Lucille Kring, Kris
Murray and James Vanderbilt
STAFF: City Manager Paul Emery, City Attorney Michael Houston and Secretary Linda
Andal
ADDITIONS/DELETIONS TO AGENDA: None
PUBLIC COMMENTS: No public comments related to the agenda.
JOINT PUBLIC FINANCING AUTHORITY/ HOUSING AND PUBLIC IMPROVEMENT
AUTHORITY/AND CITY COUNCIL AGENDA ITEM:
This was a joint meeting amongst the Public Financing Authority, Housing and Public Improvement
Authority and City Council agenda item. The staff report was applicable to and heard by each
agency. Each agency would separately take action to consider a resolution approving a response
to the Orange County Grand Jury report titled, "Joint Powers Authorities: Issues of Viability, Control,
Transparency, and Solvency"and direct the Anaheim Housing and Public Improvement Authority
Executive Director to execute a letter on behalf of the Authority and forward the response to the
Presiding Judge of the Orange County Court and the Orange County Grand Jury.
1. HOUSING AND PUBLIC IMPROVEMENT AUTHORITY ACTION:
0144.6 Approve the response to the Orange County Grand Jury report titled, "Joint Powers
Authorities: Issues of Viability, Control, Transparency, and Solvency" and direct the
Anaheim Public Financing Authority Executive Director to execute a letter on behalf of the
Authority and forward the response to the Presiding Judge of the Orange County Court and
the Orange County Grand Jury
At 9:13 P.M., Debbie Moreno, Finance Director, provided a staff report to each agency on the
2014/15 Orange County's Grand Jury review of joint powers authorities (JPA's), indicating there
were 71 JPA's currently in the County of Orange. She indicated the grand jury had four concerns
with regard to JPA's, as listed:
• the first was the viability of the JPA's with Redevelopment Agencies (RDA) as members since
RDA's were eliminated in 2012;
• the use of JPA's by government organizations to be controlled by a single government entity;
• the lack of true disclosure and transparency of the organization and financial information to
taxpayers and;
• the extreme debt to revenue ratio's from JPA's which brought into question their solvency.
Anaheim Housing& Public Improvement Authority Minutes of September 15, 2015
Page 2 of 4
Ms. Moreno stated that the California Penal Code required responses from each local government
agency within 90 days of the grand jury's report issuance. She added that specifically, the Orange
County Grand Jury had a total of ten findings and eight recommendations countide with Anaheim
and its financing authority JPA required to respond to four of the findings and three of the
recommendations.
GRAND JURY FINDINGS: She indicated the Grand Jury found that JPA's created by a city with a
redevelopment agency that no longer existed served no public benefit and had the potential for
misuse or obfuscation of public funds and recommended the termination of these JPA's. Staff did
not agree with this finding as the Successor Agency replaced the Redevelopment Agency as
members of the JPA and that this recommendation was contrary to purposes of state law and would
place an enormous financial burden on the city and its residents and taxpayers.
The Grand Jury also found that the Anaheim Public Financing Authority (APFA) had excessive debt
and recommended an aggressive plan to reduce the APFA public debt with staff disagreeing with
this finding and recommendation as well. Ms. Moreno reported the city and the APFA had cost-
effective financing arrangements for critical infrastructures such as water, electric power and sexver,
and revenue producing assets such as the Anaheim Resort and Anaheim Convention Center, Ms.
Moreno stressed that implementation of the recommendation would require the early retirement of
the APFA's debt. She explained that early retirement of authority obligations would be
uneconomical and given the long-term nature of the financial oeoeto, unfair to the city's current
residents, businesses, and taxpayers.
Countywide, the grand jury also found that JPA's had the potential to obfuscate taxpayer visibility
and lead to a general lack of transparency. Ms. Moreno pointed out that staff did not believe there
was a potential issue with the misuse of public funds related to the debt issued by the city's JPA's
since funds were deposited with corporate trustees and all actions were taken at noticed public
hearings following public input. All public funds were accounted for in the audited financial
statements which were then made available to the public on the city's website. She also noted that
the City and its JPA's solely operated for the benefit of the public and continued to seek ways to
increase transparency to the public as evidenced by the city's current FY 2015/16 budget and
pointed out the long-term debt section that listed each outstanding issue with a payment funding
nmun:e, the issuing muthOrity, date imnued, the maturity date, and interest rates at time of issuance.
The Department also included outstanding balances as of July 1, 2015 and the total amount due for
each of the next five fiscal years followed by a debt service scheduled for each issue by fiscal year
through maturity. She added that staff would continue to look for ways to improve transparency and
understandability.
Ms. Moreno ended the report indicating that responses were required from each of the governing
entities, the Anaheim Public Financing Authority, the Anaheim Housing and Public Improvement
Authority and the City Council in accordance with California Penal Code Sections.
Chairman Tait stated he would not be signing these responses as he agreed with the findings of the
Grand Jury and understood that the Finance Director Debbie Moreno would sign those response
letters if the item was approved by a vote of the Authority. As background, he explained, that he
opposed using a JPA to borrow $200 million to expand the Convention Center as the City Charter
stated that to borrow more than $50,000, the voters would have to approve the bonds, which
resulted in bypassing the charter and state law.
Anaheim Housing& Public Improvement Authority Minutes of September 15, 2015
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Authority Member Vanderbilt remarked the Grand Jury took issue with a process used by many
cities while Anaheim, in particular, had been tested via a lawsuit by a private organization with the
city prevailing, asking if that had any bearing on the Grand Jury's report. City Attorney Houston
replied the bond transaction referenced in the Grand Jury report was a bond transaction between
the APFA, the city and bond investors, and a reverse validation action was filed, with the city
prevailing. He added that action was above reproach regarding legality and was supported by
Supreme Court case law which authorized transactions of that type. He added that the grand jury
weighed in from a policy perspective and their report had no legal bearing on the actual transaction,
they were voicing an opinion. Authority Member Murray asked if there was an appeal filed to the
Supreme Court's ruling with Mr. Houston responding an appeal had been filed and dismissed. She
then inquired whether the City Attorney supported staff's responses to the Grand Jury findings with
Mr. Houston explaining that he had participated in the drafting of this report and believed it was
legal, ethical, and appropriate based on the city's protocols and processes used for many years.
Mr. Vanderbilt remarked the Grand Jury looked at both general law and charter cities and did not
appear to make any exception to charter cities. Mr. Houston responded the city charter did not
prevent the bond transaction from occurring based on binding California Supreme Court case law,
adding that the Grand Jury expressed an opinion and the City was disagreeing with that opinion.
Chairman Tait responded that it might have been legal because of Supreme Court decisions,
however, the Grand Jury was stating cities should not do it.
MOTION: Chairman Tait then moved to deny staff's Grand Jury Response, seconded by Authority
Member Vanderbilt for purposes of discussion.
DISCUSSION: Authority Member Murray understood the discussion was centered about the
Convention Center bonds, asking if these joint powers authorities also approved infrastructure
bonds, including public utilities and basic infrastructure for the residents. Ms. Moreno responded
that a large portion of the outstanding debt for the APFA was for the benefit of water and electric
utilities; and that just to provide basic infrastructure to residents, it would require scheduling two
years in advance to put it on a ballot versus being able to move forward to take advantage of lower
interest rates when they occurred. Ms. Murray responded this was not just about investments that
had an economic benefit, it was about the general infrastructure of the city that used this process
for decades and had been upheld in the courts, and was why she would not support the denial.
Authority Member Vanderbilt suggested requiring a 4/5 vote or some other element as part of the
Authority's consideration, wondering if there was some language that could be included in the
response letter so the Chairman could support. Authority Member Kring remarked she would be
supporting the response letters drafted by staff and had no interest in making it more difficult to
pass bonds in the future with a 4/5 vote.
ROLL CALL VOTE: AYES — 1: Chairman Tait. NOES —4: (Authority Members Brandman, Kring,
Murray and Vanderbilt). Motion to deny Grand Jury responses failed.
MOTION: Authority Member Kring then moved to approve staff's response to the grand jury,
seconded by Authority Member Murray.
DISCUSSION: Authority Member Vanderbilt remarked other safeguards could be added to the
letters, asking if Authority Member Kring would consider modifications. Authority Member Kring
remarked this motion was to support the responses to the Grand Jury and she did not want to
complicate them at this point in time.
Anaheim Housing&Public Improvement Authority Minutes of September 15,2015
Page 4 of 4
ROLL CALL VOTE: AYES - 3: (Authority Members Brandman, Kring and Murray). NOES—2:
Chairman Tait and Authority Member Vanderbilt. Item No. 1 was approved as presented. Motion
carried.
ADJOURNMENT: There being no further business, Chairman Tait adjourned the meeting of the
Anaheim Housing and Public Financing Authority at 9:51 P.M.
Re sec ully submitted,
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Linda N. Andal, CMC
Secretary, Anaheim Public Financing Authority