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HomeMy WebLinkAboutSR - CDF-06-1 - SPECIAL TAX BONDS� pP 0 °wi ,ate AGENDA ITEM February 10, 2015 TO: Honorable Mayor and Members of the City Council THRU: John W. Sibley City Manager FROM: William M. Kolbow Finance Directory f ,A W � ReviewedNe 'lied By: City Manager Finance Dire for To Be Prese ed : Will Kolbow Cons Calendar _ City Mgr Rpts Council Reports _ Legal Affairs Boards /Crates _ Public Hrgs X Admin Reports Plan/Environ 1. SUBJECT Resolution No. 10842 — A Resolution of the City Council of the City of Orange authorizing the issuance of Special Tax Bonds of the City for and on behalf of City of Orange Community Facilities District No. 06 -1 (Del Rio Public Improvements), and approving related documents and actions. 2. SUMMARY Community Facilities District No. 06 -1 (the "CFD" or the "District ") was formed in December 2006, to finance the public improvements for the Del Rio project, now known as Riverbend. Special tax bonds in the amount of $24,975,000 were authorized by the City Council and issued in August 2010, to finance the construction of the public improvements (the "Prior Bonds "). The City of Orange Community Facilities District No. 06 -1 (Del Rio Public Improvements) Special Tax Refunding Bonds Series 2015, if approved, will be issued to refund the 2010 Bonds, to fund a reserve fund, and to pay the costs related to the issuance of the Bonds. 3. RECOMMENDED ACTIONS It is recommended that the City Council adopt Resolution No. 10842. 4. FISCAL IMPACT There will be no direct fiscal impact to the City. The indirect impacts include lower annual assessments to property owners within the CFD. 5. STRATEGIC PLAN GO 2. Be a fiscally health community. a. Expend fiscal resources responsibly. ITEM 'I - 0 1 2/10/2015 6. AUTHORIZATION /GUIDELINES The Bonds are authorized to be issued pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of California). The terms and provisions of the Bonds and the related documents meet the policy guidelines regulating the use of public financing adopted by the City Council on February 24, 1998. 7. GENERAL PLAN IMPLEMENTATION Not applicable. 8. DISCUSSION and BACKGROUND In August 2010, the City issued $24,975,000 Special Tax Bonds for the Del Rio Public Improvements (CFD 06 -1). These bonds were issued to fund improvements within the project area, which includes Ambriz Park, streets, roads, water and sewer improvements, and other necessary public infrastructure. The development is 100% built out and contains 597 single family homes. Property owners within this CFD currently pay an annual special tax for debt service of approximately $1,800 - $3,550 per parcel, depending on housing square footage (Special Tax A). In addition, property owners currently also pay an annual special tax of approximately $72 - $138 per parcel for maintenance (Special Tax B). Special Tax B covers the cost of maintaining the community's bioswale and other water quality features. The refunding can only occur on stated interest payment dates, which are April and October of each year. Thus our next opportunity to refund these bonds is April 1, 2015. It is necessary to approve the attached legal documents in order to complete the refunding of the 2010 outstanding bonds. It is anticipated that these new bonds will be sold in early March 2015. The maturity for the new bonds will remain the same as the existing bonds; i.e., all bonds will be paid off in 2040. No additional capital funding will be raised. However, a 3% premium will need to be paid to current bondholders in order refund the bonds now. This increases the cost of the refunding but savings are net of all costs. It is anticipated that these new bonds will have an underlying rating of "A" and possibly be insured with a "AAA" credit rating if the benefit of insuring this issue will outweigh the cost of the insurance. The special tax is subject to a 2% annual escalation, therefore the increase in Special Tax A, without a refunding, would be $40 - $65 per parcel for Fiscal Year 2015 -16. With the refunding, Special Tax A will decrease $320 - $635, therefore there will be a savings from $360 to $700 per year per parcel, depending on the square footage of the dwelling. Currently, Special Tax B is covering approximately 55% of the annual maintenance costs of the bioswale. To this point, accumulated fund balance has been available to cover the shortfall and, therefore, the B tax has not been fully levied. However, the fund balance is to a point that revenues must start to come into balance with expenditures. As such, it is necessary to increase Special Tax B by $70 - $135 per parcel. This increase will be more than offset by the savings in Special Tax A, resulting in an overall savings from approximately $290 to $565 per parcel compared to the current year combined A & B special taxes. ITEM 2 2/10/2015 8. ATTACHMENTS Resolution No. 10842; Preliminary Official Statement; and Fiscal Agent Agreement with US Bank; Escrow Agreement with US Bank; Bond Purchase Agreement; Attorney Services Agreement with Richards, Watson & Gershon, and; Continuing Disclosure Certificate. ITEM 3 2/10/2015 RESOLUTION NO. 10842 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ORANGE AUTHORIZING THE ISSUANCE OF SPECIAL TAX REFUNDING BONDS OF THE CITY FOR AND ON BEHALF OF CITY OF ORANGE COMMUNITY FACILITIES DISTRICT NO. 06 -1 (DEL RIO PUBLIC IMPROVEMENTS), AND APPROVING RELATED DOCUMENTS AND ACTIONS WHEREAS, the City Council of the City of Orange (the "City ") has conducted proceedings under and pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (the "Act "), to form the City of Orange Community Facilities District No. 06 -1 (Del Rio Public Improvements) (the "District "), to authorize the levy of special taxes upon the land within the District, and to issue bonds secured by said special taxes to finance certain facilities; and WHEREAS, on August 11, 2010, the City issued for the District $24,975,000 initial principal amount of its City of Orange Community Facilities District No. 06 -1 (Del Rio Public Improvements) 2010 Special Tax Bonds (the "Prior Bonds "); and WHEREAS, the City Council has determined that due to favorable interest rates, it is in the best interests of the City and the District that the Prior Bonds now be refunded; and WHEREAS, there has been submitted to this City Council a fiscal agent agreement (the "Fiscal Agent Agreement ") providing for the issuance of special tax refunding bonds of the City for and on behalf of the District (the 'Bonds ") under the authority provided in the Act and Article 11, commencing with Section 53580, of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the "Refunding Law "), and this City Council, with the aid of City staff, has reviewed the Fiscal Agent Agreement and found it to be in proper order, and now desires to approve the Fiscal Agent Agreement and the issuance of the Bonds; and WHEREAS, there has been presented to this City Council an escrow agreement (the "Escrow Agreement ") providing for the creation of an escrow fund which will be used to defease and refund the Prior Bonds, and this City Council now desires to approve such agreement in connection with the refunding of the Prior Bonds; and WHEREAS, the City proposes to sell the Bonds to Stifel, Nicolaus & Company, Incorporated (the "Underwriter ") pursuant to the terms of a bond purchase agreement (the "Bond Purchase Agreement ") by and between the City, for and on behalf of the District, and the Underwriter, and the Underwriter proposes to offer the Bonds to the investing public by means of a preliminary official statement (the "Preliminary Official Statement "); and WHEREAS, it appears that each of said documents and instruments which are now before this meeting is in appropriate form and is an appropriate document or instrument to be executed and delivered for the purpose intended; and WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the Bonds as contemplated by this Resolution and the documents referred to herein exist, have happened and have been performed in due time, form and manner as required by the laws of the State of California, including the Act and the Refunding Law.