SR - AGR-6160 - BOND PURCHASE AGREEMENT ESCROW AGREEMENT4. FISCAL IMPACT
By issuing the 2014A Bonds to refund the 1997A Bonds and the 2003A Bonds, the Successor
Agency would not be incurring any additional debt or extending the maturity dates. The total
principal amount of the 2014A Bonds is estimated to be $29,000,000, with a projected net
present value savings of approximately $2,900,000 over the remaining life of the bonds, based on
bond market conditions as of October 5, 2014.
5. STRATEGIC PLAN GOAL(S)
1. Provide for a safe community
a. Provide staffing and resources to deliver services that ensure public safety.
2. Be a fiscally healthy community.
a. Expend fiscal resources responsibly.
6. GENERAL PLAN IMPLEMENTATION
Not applicable.
7. DISCUSSION and BACKGROUND
Background
Pursuant to HSC Section 34177.5, the Successor Agency is authorized to issue the 2014A Bonds
to refund the 1997A Bonds and the 2003A Bonds (together, the "Refunding Bonds ") to provide
savings to the Successor Agency, provided that: (A) the total interest cost to maturity on the
2014A Bonds plus the principal amount of the 2014A Bonds shall not exceed the total remaining
interest cost to maturity on the Refunded Bonds, and (B) the principal amount of the 2014A
Bonds shall not exceed the amount required to defease the Refunded Bonds, to establish
customary debt service reserves and pay related costs of issuance.
On June 11, 2014, the Oversight Board adopted Resolution No. OB -0054 approving the issuance
of the 2014A Bonds to refund the 1997A Bonds and 2003A Bonds. On July 22, 2014, the State
Department of Finance (the "DOF ") issued its letter indicating the DOF's approval of Oversight
Board Resolution No. OB -0054.
Discussion
Due to lower interest rates, the Successor Agency has determined to issue the 2014A Bonds to
refund the 1997A Bonds and the 2003A Bonds. By refunding such bonds, the Successor Agency
would not be incurring any additional debt or extending the maturity dates.
It is currently expected that pricing terms of the 2014A Bonds (i.e., the principal amount and the
interest rates) will be finalized on or about November 12, 2014. On such pricing date, the
Successor Agency and Stifel, Nicolaus & Company, Incorporated, as the Underwriter, will
execute the Bond Purchase Agreement. Thereafter, the refunding transaction is expected to close
and the 2014A Bonds are expected to be issued during the first week of December. Upon their
issuance, proceeds from the 2014A Bonds will be used to establish an escrow fund pursuant to
SAORA ITEM 2 10/14/14
the Escrow Agreement. Because of such deposit, the 1997A Bonds and the 2003A Bonds will be
considered refunded and defeased as of the issuance date of the 2014A Bonds. The bond trustee
will be instructed to use the moneys in the escrow fund to: (i) redeem the 2003A Bonds
approximately 30 days after the issuance date of the 2014A Bonds, and (ii) redeem the 1997A
Bonds on March 1, 2015 (which is the next soonest redemption date pursuant to the governing
documents for the 1997A Bonds).
It is necessary to approve the attached Documents in order to complete the issuance for the
2014A Bonds and the refunding of the 1997A Bonds and 2003A Bonds. It is anticipated that the
2014A Bonds will have an underlying Standard and Poor's rating of "A" and possibly be insured
with a "AA" credit rating from Standard and Poor's if the benefit of insuring this issue will
outweigh the cost of the insurance.
Based on current market conditions, the proposed refunding will result in annual debt service
savings of ranging from $510,000 to $350,000 a year and a total estimated savings of
approximately $2,900,000 million over the remaining term of the bonds. The savings will
translate to additional Redevelopment Property Tax Trust Fund ( "RPTTF ") moneys available for
other enforceable obligations listed on the Recognized Obligation Payment Schedule ( "ROPS "),
subject to DOF approval. If such moneys are not needed for other ROPS enforceable obligations,
they will become available for disbursement to taxing entities, including the City of Orange.
Based on the above - described estimates, the City may receive an estimated average of $44,000 a
year from the RPTTF residual disbursements.
7. ATTACHMENTS
• Resolution NO. SAORA -017
• Preliminary Official Statement
• Continuing Disclosure Certificate
• Escrow Agreement
• Bond Purchase Agreement
NAEconomic Development Files \STAFF REPORTS\2014 \101414a_2014 Bond Refunding Agreement_SA.doc
SAORA ITEM 3 10/14/14
RESOLUTION NO. SAORA -017
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ORANGE, ACTING AS THE LEGISLATIVE BODY OF THE
SUCCESSOR AGENCY TO THE ORANGE REDEVELOPMENT
AGENCY AUTHORIZING THE EXECUTION AND DELIVERY OF AN
OFFICIAL STATEMENT FOR THE SUCCESSOR AGENCY'S TAX
ALLOCATION REFUNDING BONDS AND OTHER ACTIONS IN
CONNECTION WITH THE SALE OF SUCH BONDS
WHEREAS, the Orange Redevelopment Agency (the "Former Agency ") was a
redevelopment agency duly formed pursuant to the Community Redevelopment Law, set forth in
Part 1 of Division 24 of the Health and Safety Code of the State of California ( "HSC "); and
WHEREAS, the Former Agency previously issued multiple series of bonds to finance
and refinance redevelopment projects, including its Tustin Street Redevelopment Project 1997
Tax Allocation Parity Bonds, Series A (the "1997A Bonds "), and its Orange Merged and
Amended Redevelopment Project Area 2003 Tax Allocation Refunding Bonds, Series A (the
"2003A Bonds "); and
WHEREAS, the 1997A Bonds were issued pursuant to a Trust Indenture, dated as of
May 1, 1997, (the "Master Indenture "), by and between the Former Agency and First Trust of
California, National Association (as succeeded in interest by U.S. Bank National Association), as
trustee (the "Trustee "); and
WHEREAS, the 2003A Bonds were issued pursuant to the Master Indenture, as
amended and supplemented by a First Supplement to Indenture of Trust, dated as of September
1, 2003 (the "First Supplement "), by and between the Former Agency and the Trustee; and
WHEREAS, the Master Indenture, as amended and supplemented by the First
Supplement and two other subsequent supplemental indentures, is referred to herein as the
"Indenture "; and
WHEREAS, pursuant to AB X1 26 (enacted in June 2011) and the California Supreme
Court's decision in California Redevelopment Association, et al. v. Ana Matosantos, et al., 53
Cal. 4th 231 (2011), the Former Agency was dissolved as of February 1, 2012; the Successor
Agency to the Orange Redevelopment Agency (the "Successor Agency "), as the successor to the
Former Agency, was constituted; and an Oversight Board to the Successor Agency (the
"Oversight Board ") was established; and
WHEREAS, pursuant to HSC Section 34177.5(a), the Successor Agency is authorized to
issue bonds (the "Refunding Bonds ") to refund the 1997A Bonds and the 2003A Bonds
(together, the "Refunded Bonds "), to provide savings to the Successor Agency, provided that:
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RESOLUTION NO. SAORA -017