That the City Council and La Habra Housing Authority:
A. APPROVE AND ADOPT RESOLUTION NO. ______ ENTITLED:  A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA AUTHORIZING DELIVERY AND SALE OF NOT TO EXCEED $13,000,000 PRINCIPAL AMOUNT, OF REFUNDING CERTIFICATES OF PARTICIPATION TO REFINANCE THE 2010 CERTIFICATES OF PARTICIPATION RELATING TO CERTAIN MOBILE HOME PARK PROJECTS, AND APPROVING RELATED DOCUMENTS AND MATTERS; and,

B. APPROVE AND ADOPT RESOLUTION NO. ______ ENTITLED:  A RESOLUTION OF THE LA HABRA HOUSING AUTHORITY AUTHORIZING THE DELIVERY OF REFUNDING CERTIFICATES OF PARTICIPATION IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $13,000,000 TO REFINANCE 2010 CERTIFICATES OF PARTICIPATION RELATING TO CERTAIN MOBILE HOME PARK PROJECTS, AND APPROVING RELATED DOCUMENTS AND MATTERS.

In March 2010, in order to refund the City’s 1998 Certificates of Participation, the City of La Habra issued $15,910,000 of 2010 Refunding Certificates of Participation, Series A (Park La Habra and Viewpark Refinancing Project) (the “2010 Certificates”), of which $12,740,000 principal amount currently remains outstanding.  The 2010 Certificates are optionally callable on September 1, 2020 at par.

In consultation with the City's municipal financial advisor, Fieldman, Rolapp & Associates, Inc., City staff has determined that current market conditions are very favorable for the issuance of refunding certificates to refund the outstanding 2010 Certificates. The City has determined to sell and issue the 2020 Refunding Certificates of Participation, Series A (Park La Habra and Viewpark Refinancing Project) (the “2020 Certificates”) in order to refund the 2010 Certificates.  The City has initiated the process to obtain an underlying credit rating for the 2020 Certificates from Standard & Poor’s.  It is anticipated that the credit rating issued by Standard & Poor’s will help the City obtain the best possible interest rates if this transaction is approved by the City Council/Housing Authority.

The attached resolutions authorize the issuance of the 2020 Certificates and execution of all related financing documents, including the following:

• Trust Agreement: The Trust Agreement is a contract by and between the City, the Authority, and Bank of New York Mellon Trust Company, N.A., acting as trustee (the “Trustee”). The Trust Agreement specifies the Trustee, dated date, maturity date or dates, interest rate or rates, interest payment dates, denominations, forms, registration privileges, manner of execution, place or places of payment, terms of redemption and other terms of the 2020 Certificates.
• Amended and Restated Lease Agreement: The Amended and Restated Lease Agreement is an agreement by and between the City and the Authority that leases the pledged mobile home parks to the City.
• Assignment Agreement: The Assignment Agreement is an agreement by and between the City and the Authority whereby the Authority assigns its right to receive lease payments from the City under the Lease Agreement to the Trustee for the benefit of the Certificate owners.
• Escrow Agreement: The Escrow Agreement is the agreement by and between the City, the Authority, and the Trustee for the 2020 Certificates that documents the deposit, investment, and application of funds to refinance the 2010 Certificates.
• Certificate Purchase Agreement: The Certificate Purchase Agreement is a contract by and between the City, the Authority, and Piper Sandler & Co., acting as underwriter (the “Underwriter”), whereby the City agrees to sell the 2020 Certificates to the Underwriter and the Underwriter agrees to buy the 2020 Certificates from the City for resale to the public.
• Preliminary Official Statement: The Preliminary Official Statement is the offering statement used by the Underwriter to inform the marketplace of the terms of the 2020 Certificates and contains all relevant information for the investor to decide whether to purchase the 2020 Certificates.

Next Steps:

• Price 2020 Certificates:  Late August 2020
• Close 2020 Certificates: Mid September 2020
• 2010 Certificates called: Late September 2020

Based on current market conditions, the refunding of the outstanding 2010 Certificates is projected to generate total gross debt service savings of just over $6 million over the remaining life of the indebtedness. The average annual savings are projected to be approximately $300,000, with final maturity in October 2040. These estimated savings are net of the costs to execute the refunding of the 2010 Certificates.  The issuance costs for this transaction will be funded from the proceeds of the 2020 certificates.

ED 9.1 Balanced Fiscal Practices