Loading...
RA2005/06/14 ANAHEIM, CALIFORNIA ANAHEIM REDEVELOPMENT AGENCY MEETING JUNE 14, 2005 The Anaheim Redevelopment Agency met in regular session in the Chambers of the Anaheim City Hall located at 200 South Anaheim Boulevard. Present: Chairman Curt Pringle, Agency Members: Richard Chavez, Lorri Galloway, Bob Hernandez, and Harry Sidhu Staff Present: City Manager David Morgan, City Attorney Jack White, and Secretary Sheryll Schroeder A copy of the agenda for the meeting of the Anaheim Redevelopment Agency was posted on June 10, 2005 at the City Hall outside bulletin board. At 5:38 P.M., Chairman Pringle called the regular meeting of the Anaheim Redevelopment Agency to order in a joint session with Anaheim City Council and Anaheim Public Financing Authority. ADDITIONSIDELETIONS TO THE AGENDA: A clarification to Item 1 noted the $50,000 for underwriting services related to legal counsel fees, while the remaining fees were identified in the staff report. Item 2 was withdrawn from the agenda by staff to be resubmitted at a future date. PUBLIC COMMENTS: No remarks offered during the joint Agency/Council/Public Financing Authority public comment session related to the Anaheim Redevelopment Agency. At 5:54 P.M., the Public Financing Authority and Council meetings were recessed to consider the Agency Consent Calendar. CONSENT CALENDAR ITEMS 1 - 2: Agency Member Chavez moved to approve the balance of the consent calendar, seconded by Agency Member Galloway. Roll Call vote: Ayes - 5; Chairman Pringle, Agency Members: Chavez, Galloway, Hernandez, and Sidhu. Noes - O. Motion carried. ANAHEIM REDEVELOPMENT AGENCY MINUTES June 14, 2005 Page 2 1. Approve and authorize the Executive Director to execute an Underwriter's 1547 Agreement with Stone & Youngberg LLC, in an amount not to exceed $50,000 for underwriting services. 2. Approve and authorize the Executive Director to execute the Cooperation 3518 Agreement dated June 1, 2005 between the City of Anaheim, City of Yorba Linda and the Redevelopment Agency for the Savi RanchlWeir Canyon Traffic Improvements (related to Council Item #23; continued from the Agency meeting of June 7, 2005, Item #4.1). Staff removed Item 2 from the agenda to be resubmitted on future agenda. END OF CONSENT CALENDAR: 3. RESOLUTION NO. RESOLUTION OF THE ANAHEIM API REDEVELOPMENT AGENCY authorizing the issuance and sale of not to exceed $29,000,000 2005 taxable subordinate housing tax allocation refunding bonds (Anaheim Merged Project Area); approving documents and authorizing official actions related thereto; and authorizing certain other actions (related to Public Financing Authority Item #4 and Council Item #33). Elisa Stipkovich, Director of Community Development, indicated Item 3 on the Agency agenda and the companion item on the Public Financing Authority agenda were related. The Agency would authorize the issuance of the tax allocation bonds which was a refinancing of existing debt and the Public Financing Authority would issue the bonds. She advised the refinancing for taxable bonds were at a lower interest rate than when the bonds were issued and the Agency would also take advantage of the Merged Project Area in pushing the bond debt service out further. The net result of the refinancing would be a $1.4 million savings in current dollars. In addition, staff was requesting to pull out an additional $1 million of new monies, while keeping the debt service lower than it currently was. Chairman Pringle queried if the Agency elected to take action to extend the life of the redevelopment plans as had been discussed in prior meetings, what impact would that have on these bonds. Ms. Stipkovich indicated the Agency could consider an additional refunding as taxable bonds had no restrictions in place for refinancing. She pointed out the debt which expired in 2018, would be stretched to 2035, and could be pushed out further, if it appeared efficient to do so in 2007. Mayor Pringle asked when was the earliest the Agency could take action on the redevelopment plan extension and the response was given staff should be able to have the process before Council in December 2005 which would then take effect in fiscal year 2006/07. She commented the process included an environmental impact report and the end of this year was the soonest staff could provide the documentation. Chairman Pringle asked what the savings would be to refinance and what the cost of reissuance was. Ms. Stipkovich reported in today's dollars, the savings would be $1.4 million and the cost of reissuance would be approximately $250,000, including bank and insurance costs. She pointed out the Agency had a large ANAHEIM REDEVELOPMENT AGENCY MINUTES June 14, 2005 Page 3 amount of tax exempt debt she also hoped to refinance in 2007 as those bonds were not callable until that time. Agency Member Sidhu inquired when the bonds would expire, what was the proposed expiration date for the refinanced bonds and if there were any prepayment penalties associated with the refinancing. Ms. Stipkovich advised the current bonds expired 2018, the new bond expiration date would be 2035, with call dates in 2007 and 2011 during which the bonds could be called without an advance refunding and that there was no prepayment penalty. Curt Yeager, refinancing bond counsel, stated the final call provisions for the new bonds had not been finally determined, but it would typically be between 7 to 10 years from the issuance dates or 2012 to 2015 and as they were taxable, they could be refunded earlier than that if the Agency could fund an escrow to pay the bonds through that later call date. Agency Member Sidhu questioned prepayment costs and Mr. Yeager stated there was an early call premium for the current debt that was outstanding of one percent that was factored into the present value of savings numbers presented by staff. Ms. Stipkovich emphasized with all the costs factored in, there would still be $1.4 million in saving. Agency Member Sidhu remarked he could see no benefit in refinancing when the City would pay more interest over a longer debt term. Bob Cornwell, refinancing financial advisor, explained the term of the refunding was longer than the refunded bonds and there were savings. He pointed out the reason the refinancing was contemplated was to reduce the stress on the Agency's cash flow which would be tightest in the next few years and by both achieving a lower borrowing cost and stretching out the debt, the annual cost would be lowered and a savings would be achieved. He remarked even though there were some costs, the cost of issuance, the underwriter's discount and the one percent premium, there were still significant savings. Agency Member Sidhu asked for a breakdown of refinancing costs and Mr. Yeager indicated $225,000 was the cost of issuance, the underwriter's discount was approximately $98,000, bond insurance was $320,000 and a three percent surety which gets rid of the need for reserve funds cost $53,000. He remarked those were the actual costs being paid and the one percent identified earlier was being paid in the way the escrow was structured. Chairman Pringle remarked those figures exceeded the $250,000 amount given earlier and asked how the monthly or annualized payments would be reduced. Ms. Stipkovich noted there were big savings in the cash flow although there would not be much difference in the next couple of years; however, in 2008/09 the City would have a savings of almost $700,000 a year in those payments. She pointed out this debt was structured when the Alpha project area was going to drop off in 2008 and debt service would be $4 million a year at that time and would drop down to $700,000 for approximately 10 years. Chairman Pringle asked if bonds could be refinanced in 2007/08 without paying additional fees. Mr. Yeager replied that in 2008, the one percent premium would drop, but other reissuance fees would still apply. Chairman Pringle asked if there was no cash flow advantage until that time, why should the Agency lock in an additional 17 years when the Agency was considering various options to extend the redevelopment plans during that time frame. Ms. Stipkovich remarked one of the key issues was to take advantage of today's lowered interest rate rather than to risk the interest rate in two years. ANAHEIM REDEVELOPMENT AGENCY MINUTES June 14, 2005 Page 4 Agency Member Sidhu believed the cost of refinancing to be about $980,000 with the net present value of savings about $1.4 million and he did not see the merit in refinancing. Chairman Pringle indicated he was not prepared to vote today as he did not see the value in the additional cost to refinance and extending the life of the Agency obligation by 17 years and suggested a fuller staff presentation be given. Agency Member Galloway moved to remove Item NO.3 from the agenda to a date uncertain, seconded by Agency Member Sidhu. Roll Call vote: Ayes - 5; Chairman Pringle, Agency Members: Chavez, Galloway, Hernandez and Sidhu. Noes - O. Motion carried. ADJOURNMENT: There being no further business, Chairman Pringle adjourned the Anaheim Redevelopment Agency meeting at 6:16 P.M. ,Ika;a J-L4-':~~ Sheryll Schroeder, MMC Secretary, Anaheim Redevelopment Agency