 |
AGENDA ITEM NO. 12.
CITY OF HAWTHORNE Successor Agency AGENDA BILL For the meeting of 03/11/2025 Originating Department: City Attorney |
Exec. Director:
Legal Counsel:
SUBJECT:
RESOLUTION NO. 2025-01 OF THE SUCCESSOR AGENCY TO THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF HAWTHORNE AUTHORIZING THE ISSUANCE AND SALE BY THE SUCCESSOR AGENCY OF TAX ALLOCATION REFUNDING BONDS AND TAKING RELATED ACTIONS.
RECOMMENDED MOTION:
Staff Recommends that the Board of Directors of the Successor Agency to the Community Redevelopment Agency of the City of Hawthorne Adopt Resolution No. 2025-01 Authorizing the Issuance and Sale by the Successor Agency of Tax Allocation Refunding Bonds and Taking Related Actions.
DISCUSSION:
OBJECTIVE: To refund (refinance) certain outstanding tax allocation bonds at lower interest rates, for debt service savings
BACKGROUND: In 2016, the Successor Agency to the Community Redevelopment Agency of the City of Hawthorne (the “Agency”) issued its $29,785,000 Subordinate Tax Allocation Refunding Bonds, Series 2016 (the “2016 Bonds”). The current outstanding amount of the 2016 Bonds is $15,625,000. The interest rate on the outstanding 2016 Bonds is 5.00% with the longest maturity being September 1, 2036.
Due to the dissolution of redevelopment agencies, the Successor Agency to the Community Redevelopment Agency of the City of Hawthorne (the “Successor Agency”) has responsibility for payment of the outstanding Bonds. Per AB 1484, the Successor Agency may refund existing bonds, with approval of the Los Angeles County Second District Consolidated Oversight Board (the “Oversight Board”) and the State Department of Finance (“DOF”), for the purpose of generating a debt service savings.
Based on current market interest rates, the Successor Agency can generate a total debt service savings of approximately $1,416,433 by refunding the outstanding 2016 Bonds from the proceeds of new 2025 refunding bonds, without extending the term of such bonds.
ANALYSIS: By issuing its Tax Allocation Refunding Bonds, Series 2025 (the “2025 Bonds") to refinance the outstanding 2016 Bonds, the Successor Agency can generate total debt service savings of approximately $1,416,433 of which approximately $159,986 will go to the City’s general fund, pursuant to tax-sharing formulas affected by Redevelopment Dissolution Law.
Pursuant to Health & Safety Code Section 34177.5(f), before the 2025 Bonds can be issued, the Oversight Board must approve the issuance by the Successor Agency of the 2025 Bonds. The State Department of Finance (“DOF”) will then review such Oversight Board action. The DOF is allowed 60 days to review any actions of the Oversight Board to approve refunding bonds.
An estimated Debt Service Savings Analysis, demonstrating conformance with the requirements of the Dissolution Act, has been prepared by the Successor Agency’s Municipal Advisor (CSG Advisors Incorporated), and is attached hereto.
BACKGROUND: In 2016, the Successor Agency to the Community Redevelopment Agency of the City of Hawthorne (the “Agency”) issued its $29,785,000 Subordinate Tax Allocation Refunding Bonds, Series 2016 (the “2016 Bonds”). The current outstanding amount of the 2016 Bonds is $15,625,000. The interest rate on the outstanding 2016 Bonds is 5.00% with the longest maturity being September 1, 2036.
Due to the dissolution of redevelopment agencies, the Successor Agency to the Community Redevelopment Agency of the City of Hawthorne (the “Successor Agency”) has responsibility for payment of the outstanding Bonds. Per AB 1484, the Successor Agency may refund existing bonds, with approval of the Los Angeles County Second District Consolidated Oversight Board (the “Oversight Board”) and the State Department of Finance (“DOF”), for the purpose of generating a debt service savings.
Based on current market interest rates, the Successor Agency can generate a total debt service savings of approximately $1,416,433 by refunding the outstanding 2016 Bonds from the proceeds of new 2025 refunding bonds, without extending the term of such bonds.
ANALYSIS: By issuing its Tax Allocation Refunding Bonds, Series 2025 (the “2025 Bonds") to refinance the outstanding 2016 Bonds, the Successor Agency can generate total debt service savings of approximately $1,416,433 of which approximately $159,986 will go to the City’s general fund, pursuant to tax-sharing formulas affected by Redevelopment Dissolution Law.
Pursuant to Health & Safety Code Section 34177.5(f), before the 2025 Bonds can be issued, the Oversight Board must approve the issuance by the Successor Agency of the 2025 Bonds. The State Department of Finance (“DOF”) will then review such Oversight Board action. The DOF is allowed 60 days to review any actions of the Oversight Board to approve refunding bonds.
An estimated Debt Service Savings Analysis, demonstrating conformance with the requirements of the Dissolution Act, has been prepared by the Successor Agency’s Municipal Advisor (CSG Advisors Incorporated), and is attached hereto.
ECONOMIC DEVELOPMENT STRATEGIC PLAN:
N/A
FISCAL IMPACT:
The total debt service savings amount that will be generated by refunding the outstanding 2016 Bonds is estimated to be $1,416,433. The City general fund share of the estimated total debt service savings is estimated to be approximately $159,986.
Pursuant to the requirements contained in Government Code Section 5852.1, estimated financial information relative to the issuance of the 2025 Bonds is shown in the table below:
__________
(1) Amounts indicated below are subject to changes in market conditions and other factors.
(2) Excludes premiums for bond insurance or bond reserve surety, funded only in the event that the savings produced by such premiums exceed their actual costs.
The repayment of principal and interest on the 2025 Bonds will be secured solely by the pledged tax revenues, which are tax increment revenues from the (former) redevelopment project area, net of certain administrative and pass through payments. The 2025 Bonds will not be a debt of the City’s general fund. All costs associated with the issuance of the 2025 Bonds will be paid from bond proceeds.
Pursuant to the requirements contained in Government Code Section 5852.1, estimated financial information relative to the issuance of the 2025 Bonds is shown in the table below:
| Item | Estimates as of February 3, 2025(1) |
| True interest cost | 3.18% |
| Finance charge | $302,000(2) |
| Net Bond Proceeds (to refund the outstanding 2016 Bonds) |
$14,502,000 |
| Total payment amount | $17,978,000 (Total principal and interest payments) |
(1) Amounts indicated below are subject to changes in market conditions and other factors.
(2) Excludes premiums for bond insurance or bond reserve surety, funded only in the event that the savings produced by such premiums exceed their actual costs.
The repayment of principal and interest on the 2025 Bonds will be secured solely by the pledged tax revenues, which are tax increment revenues from the (former) redevelopment project area, net of certain administrative and pass through payments. The 2025 Bonds will not be a debt of the City’s general fund. All costs associated with the issuance of the 2025 Bonds will be paid from bond proceeds.
NOTICING PROCEDURE:
72 hours posted notice pursuant to the Ralph M. Brown Act.