Item No. 3.
| MEETING DATE: July 20, 2020 |
|
| TO: | HONORABLE MAYOR AND COUNCILMEMBERS |
| FROM: | JIM SADRO, CITY MANAGER By: Mel Shannon, Finance Director |
| SUBJECT: | CONSIDER INITIATION OF PROCEEDINGS TO REFINANCE THE OUTSTANDING CITY OF LA HABRA 2010 REFUNDING CERTIFICATES OF PARTICIPATION, SERIES A (PARK LA HABRA AND VIEWPARK REFINANCING PROJECT) |
RECOMMENDATION:
That the City Council:
APPROVE AND ADOPT RESOLUTION NO. ______ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA APPROVING THE INITIATION OF PROCEEDINGS TO REFINANCE THE OUTSTANDING 2010 REFUNDING CERTIFICATES OF PARTICIPATION, SERIES A, (PARK LA HABRA AND VIEWPARK REFINANCING PROJECT), AUTHORIZING THE ENGAGEMENT OF PROFESSIONAL SERVICES AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH.
APPROVE AND ADOPT RESOLUTION NO. ______ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA APPROVING THE INITIATION OF PROCEEDINGS TO REFINANCE THE OUTSTANDING 2010 REFUNDING CERTIFICATES OF PARTICIPATION, SERIES A, (PARK LA HABRA AND VIEWPARK REFINANCING PROJECT), AUTHORIZING THE ENGAGEMENT OF PROFESSIONAL SERVICES AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH.
DISCUSSION:
In March 2010 the City issued the 2010 Refunding Certificates of Participation, Series A (Park La Habra and Viewpark Refinancing Project) (2010 Certificates) in the amount of $15,910,000 to refund, on a current basis, the outstanding 1998 Refunding Certificates of Participation, Series A (Park La Habra and Viewpark Refinancing Project), of which $13,105,000 in principal remains outstanding. In consultation with the City's financial advisor at Fieldman, Rolapp & Associates, Inc. (Municipal Advisor), staff has determined that current bond market conditions are very favorable for the issuance of refunding certificates (Refunding Certificates) to refund the outstanding 2010 Certificates on a current tax-exempt basis. The estimated average annual debt service savings, based on current market conditions, is approximately $240,000 per fiscal year and the term of the refunding certificates will not exceed the term of the current 2010 Certificates.
Refunding Process and Next Steps:
If approved by Council, it is anticipated that the refunding will take approximately three months to complete. Key steps of the proposed refunding include the following:
Refunding Process and Next Steps:
If approved by Council, it is anticipated that the refunding will take approximately three months to complete. Key steps of the proposed refunding include the following:
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- City Council approves the initiation of proceedings to refund outstanding 2010 Certificates and approve the engagement of professionals (July 20, 2020)
- Secure an underlying credit rating (mid-August 2020)
- City Council considers approval of the Preliminary Official Statement and remaining financing documents and legal documents (August 17, 2020)
- Negotiated sale of the Refunding Certificates (late August 2020)
- Closing (September 2020)
- 2010 Certificates Called (October 2020)
FISCAL IMPACT/SOURCE OF FUNDING:
Based on current market conditions, the refunding of the outstanding 2010 Certificates is projected to generate gross savings of approximately $4,800,000 over the remaining life of the indebtedness. The average annual savings are projected to be approximately $240,000, with the final maturity in September 2040, which is the same maturity of the current certificates. Projected savings are net of the estimated $275,000 cost to refund the outstanding certificates, which will be incorporated into the issuance cost of the Refunding Certificates.
GENERAL PLAN RELEVANCE:
ED 9.1 Balanced Fiscal Practices