CC - Item 5A - Refunding of 2006 Series A & Series B Tax Allocation Bonds E M
O
° ROSEMEAD SUCCESSOR
"` '� AGENCY STAFF REPORT
- �59
TO: THE HONORABLE CHAIR AND BOARD MEMBERS
FROM: BILL R. MANIS, CITY MANAGER 1
1 '
DATE: July 12, 2016
SUBJECT: REFUNDING OF 2006 SERIES A & SERIES B TAX ALLOCATION
BONDS
SUMMARY
The Rosemead Community Development Commission (the "Original Agency") issued
$14.005 million of Series A and $24.230 million of Series B Tax Allocation Bonds in
2006 (the "2006 Bonds"), of which approximately $24.475 million, in aggregate, are
currently outstanding and are callable on October 1, 2016, at par. These 2006 Bonds
have interest rates ranging from 3.75% to 5.00% with the longest maturity period being
October 1, 2033.
Due to the dissolution of redevelopment agencies, the Successor Agency to the
Rosemead Community Development Commission (the "Successor Agency") now has
responsibility for payment of the 2006 Bonds. Per AB 1484, the Successor Agency may
refund existing bonds, with approval of the Oversight Board and the State Department
of Finance ("DOF"), for the purpose of generating a debt service savings.
Staff Recommendation for Successor Agency Action
Staff recommends that the Successor Agency Board direct staff to move forward with
the refinancing of the Rosemead Community Development Commission Series 2006
Series A and Series B Bonds for interest rates savings; and
Authorize staff to engage the recommended qualified underwriter, and bond council/
disclosure counsel firm based on the fee proposal evaluations to provide refinancing
services to the refunding of the Rosemond Community Development Commission
Series A and Series B Bonds.
DISCUSSION
Interest rates are currently at historic lows. By issuing refunding bonds (the "2016
Bonds") to refinance the outstanding 2006 Bonds, debt service savings of approximately
$3.8 million can be generated, without extending the current maturity date of the bonds.
The final savings amount will depend on the market interest rates in effect at the time
ITEM NO. 5.A
Rosemead Successor Agency Meeting
July 12, 2016
Page 2 of 4
the 2016 Bonds are priced, which is anticipated to be during the month of November
2016. Based on the redevelopment dissolution laws, the estimated annual savings
amount (approximately $190,000 per year through 2018 and $285,000 through 2033)
would be allocated towards enforceable obligations, administrative costs or shared
among taxing entities as residual revenues.
Pursuant to Health & Safety Code Section 34177.5(f), the Oversight Board may direct
the Successor Agency to commence the issuance of the 2016 Bonds. The State DOF
will then review such Oversight Board action. Once the Oversight Board directs the
Successor Agency to commence the issuance of the 2016 Bonds, the Successor
Agency may recover its related costs through either the 2016 Bond Proceeds if issued,
or if not, through the Recognized Obligation Payments process.
The State DOF is allowed 60 days to review any actions of the Oversight Board to
approve refunding bond issues. So assuming approval by the Oversight Board in
August 2016, the DOF would have until approximately October 2016, to review the
action by the Oversight Board. Once the financing and legal documents for the 2016
Bonds are approved by the Successor Agency and the Oversight Board, those
documents will be sent to DOF for review and approval.
Request for Proposals
At the request of City staff, Urban Futures requested proposals from underwriting and
bond/disclosure firms wishing to provide services in connection with the proposed
refunding of the Rosemead Community Development Commission 2006 Series A and
Series B Tax Allocation Bonds. Proposals were received by Urban Futures Inc., on
Friday, June 17, 2016. Proposals were received from the following firms:
Underwriters Bond / Disclosure Counsel Firms
Stifel Nicolaus Stradling
Mesirow Financial Best Best & Krieger
Raymond James Norton Fulbright Rose
BOSC Orrick, Herrington & Sutcliffe
Ramirez Jones Hall
In developing a response, proposers were asked to provide experience with tax
allocation bonds post AB 1484, the staff assigned to the engagement and a fee
proposal for services. Listed below on the following page is a summary of the
proposals.
Rosemead Successor Agency Meeting
July 12,2016
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Underwriter Pro•osals
Proposed Amount of Amount of
Years of TABs Issued Number
Under- Discount based Proposed Team Ex eri- Notes
Underwriter writing on$25M Par p in CA since of Issues
ence 2011
Discount Amount
Marc Hughes,Managing Director 25
$3.00 per Mike Frigo,Vice President 6 $113.08 3 Proposes leaving the
Mesirow $75,000 Jay Murphy,Senior Underwriter 34
$1,000 million 2006A Bonds outstanding.
Bryan McCoy,Sr.Managing Director 22
Peter Bianchini,Sr.Municipal Strategist 25
Wing-See Fox,Vice President
Rob Larkins,Managing Director Proposes to include
$3.95 per Emily Giles,Vice President $641.49
Raymond Jame $98,860 l� 11 advance refunding of
$1,000 Tyler Kastelberg,Analyst million Series 2010A for savings.
Parker Colvin,Managing Director
Marie Autphenne,Managing Director
John Kim,Managing Director 19 Extensive post-dissolution
$4.35 per Tom Jacob,Vice President 9 $3.7 106 TAB experience,and
Stifel $108,750
$1,000 Kory Griffin,Analyst 3 billion(2) extensive experience with
Ben Stern,Managing Director 24 Rosemead.
Vien Le,Vice President 15 Proposes to conduct a
Michael Mejia,Vice President 7 comparable peer review
$4.50 per Fernando Guerra,Senior VP 25 $36.5 1 independent of S&P's
Ramirez $112,509
$1,000 John Young,Managing Director 30 million 131 analysis to see if the
Patty McGrorry,Managing Director 14 downgraded rating was
Peter Block,Managing Director 23 warranted.
BOSC $4.98 per $124,525 -_- Nonresponsive
$1,000
(1)Co-managed 7 transactions totaling$521.25 million
(2)Transactions since August 2012
(3)Co-managed 1 transaction totaling$36.5 million
Bond/ Disclosure Counsel Pro osals
Disclosure Counsel Key Personnel Successor/Redevelopment A enc Experience
Firm Bond Counsel Fee Fee y Agency p
David Fama Since 2011,the firm has served as Bond or
Jones Hall $35,000 $20,000 David Walton Disclosure Counsel on 86 transactions for
Juan Galvan successor agencies or redevelopment agencies.
Kim A.Byrens Since 2015,the firm has served as Bond,
Best Best&Krieger $45,000 $35,000 John R.Rottschaefer Underwriter or Disclosure Counsel on 17
successor agency transactions.
Danny Kim Since 2013,the firm has served as Bond,
Norton Rose $57,500.00 $40,000.00
Underwriter or Disclosure Counsel on 41
Fulbright
Bond and Disclosure Services:$80,000 successor agency transactions.
Bill Bothwell Since 2011,the firm has served as Bond,
Orrick $50,000 $35,000 Kevin Hale Underwriter or Disclosure Counsel on 21
Larry Sobel successor agency transactions.
StradlingYocca $65,000.00 $45,000.00
Brian Forbath Since 2011,the firm has served as Bond or
Carol Lew Disclosure Counsel on 55 transactions for
Carlson&Rauth
Bond and Disclosure Services:$90,000 Vanessa Locklin redevelopment agencies or successor agencies.
Rosemead Successor Agency Meeting
July 12, 2016
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After reviewing the fee proposals and the evaluation of each proposed team, Urban
Futures Inc., and City of Rosemead staff recommend the Successor Agency engage
Stifel Nicolaus as underwriter, Orrick Herrington & Sutcliffe as disclosure counsel and
Jones Hall as bond counsel. While Stifel Nicolaus didn't propose the lowest fee, they
are the most experienced firm in the area of post AB 1484 tax allocation bond refunding
transactions and have the best knowledge of the City of Rosemead debt issuances from
the former Redevelopment Agency. Orrick, Herrington & Sutcliffe, as well as Jones
Hall, represent the lowest cost of the experienced firms available for bond and
disclosure counsel services. For this reason, Urban Futures Inc., and City of Rosemead
staff recommended these firms for this transaction.
The fee breakdown is as follows:
Underwriter: $4.35 per bond
Bond Counsel: $35,000 (Plus $2,000 for Expenses)
Disclosure Counsel:$35,000
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
FISCAL IMPACT
The proposed 2016 Bonds will generate an estimated total debt service savings of $4
million net of all costs of issuance; equal to $190,000 annually through 2019 and
$285,000 through 2033, of which roughly $400,000 will flow into the City's General Fund
with the balance going to the local school districts and Los Angeles County. The term
of the 2016 Bonds will not exceed the term of the 2006 Bonds being refunded. The
source of repayment of the 2016 Bonds would be limited to tax revenues (in amounts
equivalent to the former tax increment revenues) and deposited by the County into the
Successor Agency's Redevelopment Property Tax Trust Fund, and the 2016 Bonds
would not be a debt of the City. Related costs of the Successor Agency will either be
recovered through the 2016 Bond Proceeds if issued, or if not, through the ROPs
process.
Prepared by:
Bill R. Manis, City Manager