APFA2019/01/29 ANAHEIM PUBLIC FINANCING AUTHORITY
REGULAR MEETING OF JANUARY 29, 2019
The Anaheim Public Financing Authority regular meeting was called to order at 5:08 P.M. in the
Council Chamber in Anaheim City Hall, located at 200 S. Anaheim Blvd., in joint session with
the Anaheim City Council and Anaheim Housing Authority. The meeting notice, agenda, and
related materials were duly posted on January 25, 2019.
PRESENT: Chairman Harry Sidhu and Authority Members Lucille Kring, Denise
Barnes, Jordan Brandman, Jose F. Moreno, Stephen Faessel, and Trevor
O'Neil
STAFF PRESENT: City Manager Chris Zapata, City Attorney Robert Fabela, and Secretary
Linda Andal
ADDITIONS/DELETIONS TO THE AGENDA: None
PUBLIC COMMENTS:
No public comments offered related to the Public Financing Authority agenda.
CONSENT CALENDAR: At 7:02 P.M., Authority Member O'Neil moved to approve the consent
calendar as presented, seconded by Authority Member Faessel. ROLL CALL VOTE: AYES —
7: (Chairman Sidhu and Authority Members Kring, Barnes, Brandman, Moreno, Faessel, and
O'Neil). NOES — 0. Motion carried.
PFA187 1. Approve minutes of Public Financing Authority meeting of November 20, 2018.
END OF CONSENT CALENDAR 7:03 P.M.
2. Consider resolutions by the Public Financing Authority and City Council approving the
B137.1 issuance of not to exceed $225,000,000 aggregate principal amount of Lease Revenue
Bonds of the City of Anaheim Public Financing Authority.
Public Financing Authority Action:
2-A. RESOLUTION NO. APFA-2019-001 A RESOLUTION OF THE BOARD OF
DIRECTORS OF THE ANAHEIM PUBLIC FINANCING AUTHORITY authorizing
the issuance of Anaheim Public Financing Authority Senior Lease Revenue
Refunding Bonds (Anaheim Public Improvements Project), Series 2019 A, in an
aggregate principal amount of not to exceed $215,000,000, and Anaheim Public
Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public
Improvements Project), Series 2019 B (taxable), in an aggregate principal
amount of not to exceed $10,000,000, authorizing the execution and delivery of a
Second Supplemental Indenture of Trust, an Escrow Agreement and a Purchase
Contract, authorizing the distribution of a Preliminary Official Statement and an
Anaheim Public Financing Authority Minutes of January 29, 2019
Page 2
Official Statement in connection therewith and authorizing other matters related
thereto.
RESOLUTION NO. APFA-2019-002 A RESOLUTION OF THE BOARD
OF DIRECTORS OF THE ANAHEIM PUBLIC FINANCING AUTHORITY
authorizing the application of moneys in the Special Reserve Fund for the
Anaheim Public Financing Authority Lease Revenue Bonds (Anaheim Public
Improvements Project), authorizing the execution and delivery of Escrow
Agreements in connection therewith and authorizing other matters related
thereto.
Authority Member Moreno thanked the financing team for the briefing they provided and
explained that during the briefing process he had requested to include members of the public
but was advised against that by the City Attorney as certain information presented was
privileged and protected. He asked if the Authority and Council would consider a two-week
continuance since he was now able to speak to members of the public. Finance Director
Debbie Moreno expressed concern for the market risk now that this item had been made public.
Authority Member Moreno expressed concerns with LPMR, mitigating costs, and the inability to
pay debt off early.
Michael Berwanger, Managing Director, PFM, addressed Authority Member Moreno's concerns
and believed that what had been presented was the most cost-effective way to get out of the
debt faster. He advised that in order to abolish the LPMR, all of the 1997 and 2007 bonds must
be removed which equated to $825 million in remaining obligations. To accomplish this, $600
million of new bonds must be sold, which puts the obligation closer to $1 billion and puts the
General Fund at risk.
Mr. Berwanger felt the approach of leveling the debt, repaying the debt while continuing to
release the monies as fast as possible, and shrinking down the repayment stream was much
more beneficial for the City. He advised this would save the City debt service repayments and
any delay could increase risk to the City.
Discussion ensued regarding the potential risks from delaying the action two weeks, including
insider trading and increased volatility in the markets, while the current financing plan had been
vetted against the current situation. Authority Member Moreno confirmed if the market stayed
strong, the payoff would occur in 8-10 years, or by 2037 if things got difficult, which staff
concurred. He further inquired if the funds could be restructured to allow the City to access the
funds sooner, to which Mr. Berwanger advised it could not.
In response to Authority Member Barnes, Mr. Berwanger clarified there are 1997 and 2007
bonds because the City seized the opportunity to refinance a portion of those bonds in 2007 and
to save some interest costs. He clarified that the lease payment measure revenue (LPMR)
amounts are collected every year the City re-pays debt service and any excess over collections
are held in special reserve funds (SRFs).
Finance Director Debbie Moreno clarified that for example, in Fiscal Year 2018, the LPMR
amount remitted to the trustee was $60 million and the debt service requirement was
approximately $40 million, so $20 million was held in the SRF. Ms. Moreno further explained
that interest was paid early one, so not much interest was currently accruing in the SRF.
Anaheim Public Financing Authority Minutes of January 29, 2019
Page 3
Greg Herrington, Orrick, Herrington & Sutcliffe LLP, believed that there was an investment
contract for the SRFs entered into in 1997 and $5.5 million dollars was paid up-front by the
investment company for anticipated interest earnings. Ms. Moreno stated staff was looking at
this for future changes if it became advantageous to the city. Mr. Berwanger confirmed for
Authority Member Barnes that this was a refinancing only with no new borrowing / debt accrual.
In response to Authority Member Kring, Ms. Moreno re-introduced Michael Berwanger,
Managing Director, PFM, Greg Herrington, Partner, Public Finance, Orrick, Herrington &
Sutcliffe LLP, Ruth Pan, Goldman and Sachs and clarified their credentials.
Authority Member Moreno explained he wished to seek the public's input on this item as he did
not have an opportunity to do so previously due to legal privilege. He advised he would abstain
from this item because the process was not transparent to the public.
Authority Member Kring moved to approve Item No. 2-A, seconded by Authority Member O'Neil.
ROLL CALL VOTE: 6-0-1 (AYES: Chairman Sidhu and Authority Members Kring, Barnes,
Brandman, Faessel, and O'Neil; ABSTENTION: Authority Member Moreno). Motion carried.
City Council Action:
2-B. RESOLUTION NO. 2019-012 A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF ANAHEIM authorizing the execution and delivery of a Purchase
Contract and a Continuing Disclosure Agreement in connection with the issuance
by the Anaheim Public Financing Authority of its Anaheim Public Financing
Authority Senior Lease Revenue Refunding Bonds (Anaheim Public
Improvements Project), Series 2019 A, and Anaheim Public Financing Authority
Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements
Project), Series 2019 B (taxable), approving the issuance of said bonds and the
form of a Second Supplemental Indenture of Trust pursuant to which said bonds
are to be issued, authorizing the distribution of a Preliminary Official Statement
and an Official Statement in connection therewith and authorizing other matters
related thereto.
Mayor Pro Tern Kring moved to approve Item No. 2-B, seconded by Council Member O'Neil.
ROLL CALL VOTE: 6-0-1 (AYES: Mayor Sidhu and Council Members Kring, Barnes, Brandman,
Faessel, and O'Neil; ABSTENTION: Council Member Moreno). Motion carried.
ADJOURNMENT:
There being no further business, without objection, Chairman Sidhu adjourned the meeting of
the Anaheim Public Financing Authority at 7:42 P.M.
Respec si:J. ted,
4721.
Theresa Bass, MC
Secretary, Anaheim Public Financing Authority