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Agenda Item 21.

City Council Meeting

Meeting Date:	10/17/2017
FROM:	Bill Gallardo

Subject:

Authorize the Issuance of Community Facilities District No. 2008-2 (Brea Plaza Area Public Improvements) 2017 Special Tax Refunding Bonds and Approve Related Documents and Actions

RECOMMENDATION

Adopt resolution authorizing the issuance of refunding bonds.

BACKGROUND/DISCUSSION

In December 2009, the City issued $8,145,000 in City of Brea Community Facilities District No. 2008-2 (Brea Plaza Area Public Improvements) 2009 Special Tax Bonds. The proceeds of the bonds were used to assist in the funding of the improvements within the flood control channel and the related surface parking. Currently, there are outstanding bonds available for refunding (refinancing) in the amount of $7,740,000.

The City's Local Debt Policy requires at least a 3.0% net present value savings the refunding of bonds. The proposed refunded bonds have a projected 20.5% net present value savings. It is anticipated that refunding of the 2009 Special Tax Bonds will produce an average annual reduction of bond payments of approximately $115,000 each year. The refunding bonds will be paid over the remaining term of the bonds which is 2039. This annual bond payment reduction will be used to lower the special taxes of the sole property owner in the district. The annual savings in bond payments is still subject to change when the bonds are priced (sold) within the next two weeks. The bond closing is currently scheduled for November 15, 2017.

The repayment of the refunding bonds is secured solely by the special taxes assessed in the community facilities district and the City of Brea has no obligation to use any of its resources for repayment of these bonds.

Moving forward with the issuance of these bonds requires the adoption of a resolution authorizing the issuance of City of Brea Community Facilities District No. 2008-2 (Brea Plaza Area Public Improvements) 2017 Special Tax Bonds in the amount not to exceed $9,500,000. The resolution authorizes all of the necessary actions relating to the proposed financing, including the approval of various bond documents (attached and available for review at the City Clerk's Office), hiring bond counsel and other professional services, and directing City officials to execute all of the related documents and other actions to successfully complete the transaction.

The Preliminary Official Statement (bond offering document) contains excerpts from various bond documents along with the history of the special tax revenues pledged for repayment of the bonds. It is anticipated that the bonds will be closed in November 2017.

COMMISSION/COMMITTEE RECOMMENDATION

The proposed bond financing was discussed by the Finance Committee on October 10, 2017, and recommended that it be brought forward to the City Council for approval.

FISCAL IMPACT/SUMMARY

The issuance of refunding bonds will result in the average annual reduction of $115,000 in bond payments. The repayment of the refunding bonds is secured solely by the special taxes assessed in the community facilities district. The City of Brea has no obligation to use any of its revenues for the repayment of these bonds. All costs of issuance, including City staff time, will be paid out of the proceeds from the bonds. Therefore, there is no financial impact on the City.

RESPECTFULLY SUBMITTED:

William Gallardo, City Manager
Prepared by: Lee Squire, Accounting and Auditing Manager
Concurrence: Cindy Russell, Administrative Services Director

Attachments
Resolution 2017-065
Fiscal Agent Agreement
Escrow Agreement
Bond Purchase Contract
Preliminary Official Statement