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Agenda Item 26.

City Council Meeting

Meeting Date:	04/04/2017
FROM:	City Manager

Subject:

Bond Proceeds Funding Agreement Between the City of Brea and the Successor Agency to the Brea Redevelopment Agency for the 2011A Non-Housing Bonds

RECOMMENDATION

Adopt City and Successor Agency resolutions approving the Bond Proceeds Funding Agreement.

BACKGROUND/DISCUSSION

As a result of the Dissolution Act, the Brea Redevelopment Agency was dissolved on February 1, 2012 and was replaced with the Successor Agency to the Brea Redevelopment Agency. In September 2015, Senate Bill (SB) 107 was enacted amending the Dissolution Act and thus allowing for the expenditure of bonds issued between January 2011 and June 2011. In June 2011, the former Brea Redevelopment Agency issued its 2011A Non-Housing Bonds.

The 2011A Non-Housing Bonds (2011A Bonds) generated approximately $13.4 million for public facilities. Per SB 107, a maximum of 45% of these bonds may be accessed for public facilities under this legislation. Per SB 107, the Successor Agency may spend up to 5% of these bond proceeds before Department of Finance (DOF) approval of what is called a Last and Final Recognized Obligation Schedule (LFROPS). Pursuant to a prior review by DOF, the DOF determined that the Successor Agency had previously expended the 5% portion of these bonds. The remaining 40% is subject to the approval of DOF on the LFROPS. We anticipate filing the LFROPS during Fiscal Year 2017-18. City Council has approved these proceeds toward the funding for the Downtown Parking Structure which began construction during Fiscal Year 2016-17.

Before finalizing the LFROPS process, the Successor Agency is planning to undertake proceedings to issue bonds to refund all of the outstanding 2011A Bonds to generate savings by the lowering of annual bond payments due to issuance of refunding bonds. This will cause the remaining 55% of the 2011A bond proceeds which may not be used for public facilities to be used to defease a portion of the outstanding 2011A Bonds. The 2011A Bond Proceeds Funding Agreement includes $7,351,010.40, as the amount representing the 55% portion that must be used toward defeasing bonds.

In order to access the 2011A bond proceeds, the City and Successor Agency must adopt resolutions approving the 2011A Bond Proceeds Funding Agreement. The 2011A Bond Proceeds Funding Agreement must also be approved by resolution of the Oversight Board and will be on the agenda for their April 14, 2017 meeting. Upon approval by the Oversight Board, a copy of the resolutions and the 2011A Bond Proceeds Funding Agreement will be forwarded to the DOF for approval.

COMMISSION/COMMITTEE RECOMMENDATION

The Finance Committee recommended approval at their Meeting on March 28, 2017.

FISCAL IMPACT/SUMMARY

The 2011A Non-Housing Bonds generated approximately $13.4 million in proceeds for public facilities. As a result of SB 107, the Successor Agency may use up to 45% of these bond proceeds for public projects. The Successor Agency had already spent 5% of these bond proceeds leaving the remaining 40% to be accessed by the Successor Agency upon the filing and approval by DOF of a LFROPS.

Prior to the filing of the LFROPS, the Successor Agency has one more opportunity to issue refunding bonds to refinance the outstanding balance of the 2011A Non-Housing Bonds in order to generate savings of approximately $1.475 million which results in approximately $182,570 in average annual property tax revenues to the City. Per SB 107, the remaining 55% or $7,351,010.40, of the 2011A Non-Housing Bonds that must be applied toward the refunding of the outstanding balance of the 2011A Non-Housing Bonds.

In order to access these 2011A bond proceeds, the City and Successor Agency must adopt resolutions approving the 2011A Non-Housing Bond Proceeds Funding Agreement. Upon approval by the City and Successor Agency, the 2011A Bond Proceeds Funding Agreement will be submitted to the Oversight Board and then onto the DOF for approval.

RESPECTFULLY SUBMITTED:

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

Attachments
City Resolution 2017-020
SA Resolution SA 2017-05
2011A Bond Proceeds Funding Agreement