10.01 Bond Purchase Agreement1. SUBJECT
Resolution No. SAORA -030 — A Resolution of the Governing Board of the Successor Agency to
the Orange Redevelopment Agency authorizing the execution and delivery of a Bond Purchase
Agreement, an Official Statement, an Escrow Agreement and other documents for the Successor
Agency's Tax Allocation Refunding Bonds and taking related actions.
2. SUMMARY
Due to lower interest rates, the Successor Agency has determined to issue its Orange Merged and
Amended Redevelopment Project Area 2018 Tax Allocation Refunding Bonds, Series A (the
"2018A Bonds ") to refund the Orange Merged and Amended Redevelopment Project Area 2008
Tax Allocation Refunding Bonds, Series A (the "2008A Bonds ") previously issued by the former
Orange Redevelopment Agency. By refunding the 2008A Bonds, the Successor Agency would
not be incurring any additional debt or extending the final maturity date.
3. RECOMMENDATION
Adopt Resolution No. SAORA -030.
4. FISCAL IMPACT
By issuing the 2018A Bonds to refund the 2008A Bonds, the Successor Agency would not be
incurring any additional debt or extending the final maturity date. Based on updates provided by
Urban Futures, Inc., as the Municipal Advisor, and Morgan Stanley & Co. LLC, as the
Underwriter, per bond market conditions as of May 24, 2018, the total principal amount of the
2018A Bonds is estimated to be $20.77 million. This results in projected net present value savings
of approximately $2.5 million over the remaining life of the 2018A Bonds.
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5. STRATEGIC PLAN GOAL(S)
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(a), the Successor Agency is authorized to issue the 2018A Bonds
to refund the 2008A Bonds to provide savings to the Successor Agency, provided that: (A) the
total interest cost to maturity on the 2018A Bonds, plus the principal amount of the2018A Bonds,
shall not exceed the total remaining interest cost to maturity on the refunded 2008A Bonds, plus
the remaining principal amount of the 2008A Bonds, and (B) the principal amount of the 2018A
Bonds shall not exceed the amount required to defease the refunded 2008A Bonds, to establish
customary debt service reserves and pay related costs of issuance.
Previously, the Successor Agency Board adopted Resolution SAORA -029, on April 10, 2018, and
the Oversight Board adopted Resolution No. OB -0077, on April 19, 2018, each approving the
issuance of the 2018A Bonds. On May 31, 2018, the State Department of Finance (the "DOF ")
issued its letter indicating the DOF's approval of Oversight Board Resolution No. OB -0077.
Discussion
Due to lower interest rates, the Successor Agency has determined to issue the 2018A Bonds to
refund the 2008A Bonds. By refunding the 2008A Bonds, the Successor Agency would not be
incurring any additional debt or extending the final maturity date. Instead, it is currently
anticipated that the refunding will shorten the final maturity by one year. It is necessary to approve
the attached documents in order to complete the issuance of the 2018A Bonds.
A draft Preliminary Official Statement ( "POS ") is presented for the Board's approval. The POS
provides material information to investors with respect to the terms and the security of the 2018A
Bonds. The POS contains descriptions of the legal and financial aspects of the 2018A Bonds,
except for certain information which will be determined upon the pricing of the 2018A Bonds
(e.g., the final principal amounts, the interest rates and the redemption dates). The Underwriter
will use the POS for marketing purposes. Once the 2018A Bonds are priced, the final pricing
information will be inserted, thereby converting the POS to the final Official Statement. The
Underwriter will then distribute the Official Statement to the individuals and institutions that
purchased the 2018A Bonds.
It is expected that the pricing terms of the 2018A Bonds (i.e., the principal amount and the interest
rates) will be finalized on or about June 21, 2018. On such pricing date, the Successor Agency
SAORA ITEM 2 6/12/18
and the Underwriter will execute the Bond Purchase Agreement. The refunding transaction is
expected to close during the week of July 9. Upon their issuance, proceeds from the 2018A Bonds,
together with certain other available moneys released from funds related to the 2008A Bonds and
other funds on hand, will be used to establish an escrow fund (that will be invested in Treasury
Securities — State and Local Government Series) pursuant to the Escrow Agreement. Because of
such deposit, the 2008A Bonds will be considered refunded and defeased as of the issuance date
of the 2018A Bonds. The bond trustee will be instructed to use the moneys in the escrow fund to
pay and redeem the 2008A Bonds on September 1, 2018 (i.e., the next soonest redemption date
pursuant to the governing documents for the 2008A Bonds).
The Successor Agency's outstanding bonds currently have an underlying S &P rating of "A +." It
is expected that the 2018A Bonds will have the same (or higher) rating. If the benefit of insuring
this issue will outweigh the cost of the insurance, a bond insurance policy will be purchased for
some or all of the bonds.
Based on market conditions as of May 24, 2018, the proposed refunding is expected to result in
annual debt service savings of over $700,000 per year from 2019 through 2023, and from
approximately $26,500 to $29,900 from 2024 through 2036. It is also expected that the final
maturity date of the 2018A Bonds will be September 1, 2036 (a year before the final maturity date
of the 2008A 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, which will receive approximately 14 percent of the RPTTF
residual disbursements).
8. ATTACHMENTS
• Resolution No. SAORA -030
The following attachments are available digitally and for review in the office of the City of
Orange City Clerk:
Preliminary Official Statement
Escrow Agreement
Bond Purchase Agreement
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RESOLUTION NO. SAORA -030
A RESOLUTION OF THE GOVERNING BOARD OF THE SUCCESSOR
AGENCY TO THE ORANGE REDEVELOPMENT AGENCY
AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND
PURCHASE AGREEMENT, AN OFFICIAL STATEMENT, AN ESCROW
AGREEMENT AND OTHER DOCUMENTS IN CONNECTION WITH
THE SUCCESSOR AGENCY'S ISSUANCE OF TAX ALLOCATION
REFUNDING BONDS AND TAKING RELATED ACTIONS
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, pursuant to AB X 1 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 ") was constituted as the successor
to the Former Agency; and an Oversight Board to the Successor Agency (the "Oversight Board ")
was established; and
WHEREAS, pursuant to HSC Section 34173, the City Council of the City of Orange (the
"City ") adopted Resolution No. 10625 on January 10, 2012, electing for the City to serve as the
Successor Agency (provided, pursuant to HSC Section 34173(g), the City and the Successor
Agency are separate public entities and the two entities do not merge); and
WHEREAS, the City Council serves as the Governing Board of the Successor Agency;
and
WHEREAS, the Former Agency and, after the Former Agency's dissolution, the
Successor Agency have issued multiple series of bonds under a Trust Indenture, dated as of May
1, 1997 (the "Master Indenture "), as amended and supplemented by: (i) a First Supplement to
Indenture of Trust, dated as of September 1, 2003, (ii) a Second Supplement to Indenture of Trust,
dated as of May 1, 2008, (iii) a Third Supplement to Indenture of Trust, dated as of May 1, 2008,
and (iv) a Fourth Supplement to Indenture of Trust, dated as of December 1, 2014 (the Master
Indenture, as so amended and supplemented, being referred to herein as the "Indenture "); and
WHEREAS, such bonds issued under the Indenture include the Former Agency's Orange
Merged and Amended Redevelopment Project Area 2008 Tax Allocation Bonds, Series A (the
"2008A Bonds "); and
WHEREAS, the Successor Agency desires to refund the outstanding 2008A Bonds; and
WHEREAS, pursuant to HSC Section 34177.5(a), the Successor Agency is authorized to
issue bonds (the "Refunding Bonds ") to refund all or a portion of the 2008A Bonds (the
"Refunded Bonds "), to provide savings to the Successor Agency, provided that: