 |
AGENDA ITEM NO. 11.
CITY OF HAWTHORNE Successor Agency AGENDA BILL For the meeting of 05/27/2025 Originating Department: City Attorney |
Exec. Director:
Legal Counsel:
SUBJECT:
RESOLUTION NO. 2025-03 OF THE SUCCESSOR AGENCY TO THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF HAWTHORNE APPROVING AN OFFICIAL STATEMENT, BOND PURCHASE AGREEMENT, CONTINUING DISCLOSURE CERTIFICATE, AND AUTHORIZING CERTAIN RELATED ACTIONS IN CONNECTION WITH THE SUCCESSOR AGENCY’S TAX ALLOCATION REFUNDING BONDS, SERIES 2025.
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. 2025-03 Approving An Official Statement, Bond Purchase Agreement, Continuing Disclosure Certificate, And Authorizing Certain Related Actions In Connection With The Successor Agency’s Tax Allocation Refunding Bonds, Series 2025.
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.
By issuing its Tax Allocation Refunding Bonds, Series 2025 (the “2025 Bonds") to refinance the outstanding 2016 Bonds at current market interest rates, the Successor Agency can generate total debt service savings of approximately $1,175,611 of which approximately $132,785 will go to the City’s general fund, pursuant to tax-sharing formulas affected by Redevelopment Dissolution Law. The savings estimate is inclusive of costs to issue the 2025 Bonds. Actual savings will be determined when the 2025 Bonds are priced in June. City staff intends to issue the 2025 Bonds so long as the net present value savings are at least greater than 5% of the amount of the bonds to be refunded. This target would exceed the City’s Debt Policy minimum of 3% net present value savings.
On March 11, 2025, the Successor Agency adopted Resolution No 2025-01, approving the issuance of the 2025 Bonds. On March 17, 2025, in accordance with the Dissolution Act, the Oversight Board approved the Successor Agency’s issuance of the 2025 Bonds pursuant to its Resolution OB2025-1. The State Department of Finance (“DOF”) then has approximately 60 days to review any actions of the Oversight Board to approve refunding bonds, which the DOF approved on May 16, 2025..
The Successor Agency must now approve the forms of the Preliminary Official Statement, the Bond Purchase Agreement and the Continuing Disclosure Certificate related to the 2025 Bonds.
The Preliminary Official Statement is provided to potential investors and describes the terms of the Bonds, the Indenture, the Redevelopment Project Areas and the security for the payment of debt service on the Bonds.
The Bond Purchase Agreement is between the Successor Agency and the Underwriter and described the terms pursuant to which the Underwriter will purchase the 2025 Bonds from the Successor Agency, including certain closing conditions, as well as the interest rate and purchase price of the 2025 Bonds.
The Continuing Disclosure Certificate is required pursuant to the securities laws and requires the Successor Agency to provide annual disclosure reports for the term of the 2025 Bonds.
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.
By issuing its Tax Allocation Refunding Bonds, Series 2025 (the “2025 Bonds") to refinance the outstanding 2016 Bonds at current market interest rates, the Successor Agency can generate total debt service savings of approximately $1,175,611 of which approximately $132,785 will go to the City’s general fund, pursuant to tax-sharing formulas affected by Redevelopment Dissolution Law. The savings estimate is inclusive of costs to issue the 2025 Bonds. Actual savings will be determined when the 2025 Bonds are priced in June. City staff intends to issue the 2025 Bonds so long as the net present value savings are at least greater than 5% of the amount of the bonds to be refunded. This target would exceed the City’s Debt Policy minimum of 3% net present value savings.
On March 11, 2025, the Successor Agency adopted Resolution No 2025-01, approving the issuance of the 2025 Bonds. On March 17, 2025, in accordance with the Dissolution Act, the Oversight Board approved the Successor Agency’s issuance of the 2025 Bonds pursuant to its Resolution OB2025-1. The State Department of Finance (“DOF”) then has approximately 60 days to review any actions of the Oversight Board to approve refunding bonds, which the DOF approved on May 16, 2025..
The Successor Agency must now approve the forms of the Preliminary Official Statement, the Bond Purchase Agreement and the Continuing Disclosure Certificate related to the 2025 Bonds.
The Preliminary Official Statement is provided to potential investors and describes the terms of the Bonds, the Indenture, the Redevelopment Project Areas and the security for the payment of debt service on the Bonds.
The Bond Purchase Agreement is between the Successor Agency and the Underwriter and described the terms pursuant to which the Underwriter will purchase the 2025 Bonds from the Successor Agency, including certain closing conditions, as well as the interest rate and purchase price of the 2025 Bonds.
The Continuing Disclosure Certificate is required pursuant to the securities laws and requires the Successor Agency to provide annual disclosure reports for the term of the 2025 Bonds.
ECONOMIC DEVELOPMENT STRATEGIC PLAN:
n/a
FISCAL IMPACT:
At current market interest rates, the total debt service savings amount that will be generated by refunding the outstanding 2016 Bonds is estimated to be $1,175,611. The City general fund share of the estimated total debt service savings is estimated to be approximately $132,785. The savings estimate is inclusive of costs to issue the 2025 Bonds. Actual savings will be determined when the 2025 Bonds are priced in June. City staff intends to issue the 2025 Bonds so long as the net present value savings are at least greater than 5% of the amount of the bonds to be refunded. This target would exceed the City’s Debt Policy minimum of 3% net present value savings.
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.
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.
Attachments
- Resolution No. 2025-03
- Preliminary Official Statement ("POS") with Continuing Disclosure Agreement (Appendix F)
- Bond Purchase Agreement
- Resolution No. 2025-01 (March 11, 2025)