CDC - Item 2 - Minutes 11-08-05MINUTES OF TIIE REGULAR MEETING
ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION
November 8, 2005
Vice-Chairman Taylor called the regular meeting of the Rosemead Community Development
Commission (recessed to 8:00 pm on 11/8/2005) to order at 8:00 p.m. in the conference room of
City Hall, 8838 E. Valley Boulevard, Rosemead, California.
Commissioner Nunez led the pledge to the flag and Commissioner Clark led the invocation.
ROLL CALL OF OFFICERS:
Present: Commissioners Clark, Nunez, Tran, Vice-Chairman Taylor,
Absent: Chairman Imperial (excused by Vice-Chairman Taylor)
I. PUBLIC COMMENT
None
2. REFINANCING OF TAX ALLOCATION BONDS, SERIES 1993A
(REDEVELOPMENT PROJECT AREA NO. 1)
A. Selection of an underwriter firm to provide investment banking services to the
Commission in connection with its proposed refunding of certain outstanding Tax
Allocation Bonds, Series 1993A.
At the October 25 meeting, the CDC authorized staff to prepare documents for the
refinancing of the CDC Tax Allocation Bonds, Series 1993A. A Request for
Qualifications was issued; six responses were received back. The purpose of this meeting
is to review those proposals,' have the commission select an underwriter, and report as to
whether the refinance will generate new money for CDC use. It was reported by City
Manager Bill Crowe that the refinance might generate approximately $5.5 million in new
money.
Mr. Curry from Public Financial Management gave an overview of the six investment
banker proposals, three of which he did not recommend. Recommended companies
include: Piper Jaffray, Stone & Youngberg, and H.J. De La Rosa Company.
City Manager Crowe clarified that if the CDC wanted to generate new money, a new
joint powers authority (JPA) would have to be created to facilitate this.
Bill Bothwell. Bond Counsel from Orrick reported that most redevelopment refinancing
that generates new money with a reason to have a negotiated sale, takes place with a
formation of a JPA to avoid the competitive sale requirement of the redevelopment law
and that 75% of all redevelopment bonds sold on a negotiated basis take place with a
JPA.
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Vice-Chairman Taylor asked why the staff recommendation was a negotiated sale vs. a
competitive sale used in the past. A negotiated sale was recommended to the commission
due to time restraints and credit issues.
Once an underwriter is selected, more detailed terms will be presented to the council on
November 22. A few years ago, the agency adopted a S13211 ordinance which creates
statutory pass-through payments which requires a subordination process, resulting in
payment of tax increment (about $59,000 in 05/06) to approximately 12 agencies). This
subordination process will add 45 days minimum to the final timeline, and because of the
December holidays, pushes the sale of bonds to January or February.
Vice-Chairman Taylor asked what the new money ($5.5 million) would be used for. City
Manager Crowe outlined a few public improvement projects for potential use:
1) Two utility under-grounding projects (one on Walnut Grove and the other on San
Gabriel), as these are both un-funded projects per the capital improvement program
budget.
2) Resurfacing Garvey
Because the term of the bond is based on the increment, and will not be project-specific,
the commission is able to decide how to use additional money at a later date.
Commissioner Clark asked if the CDC could stop the bond sale if interest rates rise too
much when the bonds are actually sold several months from now. The deal can be
authorized with a savings-thresh hold that will limit the Finance team with savings
parameters as part of the official Resolution.
Commissioner Tran called for a motion to hire Piper Jaffray as the city's underwriter for
this project with a second by Commissioner Nunez.
Vote resulted:
Aye: Clark, Nunez, Taylor and Tran
No: None
Absent: Imperial
Abstain: None
The Chairman declared said motion duly carried and so ordered
B. Commission direction on new money generation
The pros and cons of refinancing only and refinancing with new money generation were
discussed.
If the CDC authorizes a refinance only, better coverage and better odds of credit
enhancement (as CDC will have less debt) will result.
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If the CDC authorizes a refinance and new money; the cost of issuance can be spread
across the two parts of the transaction, which improves the savings on the refunding. In
addition, the CDC was advised to keep in mind the duplicated costs of issuance that
would occur in the future if the new money opportunity were not exercised at this time.
City Manager Crowe outlined cost benefits to the city with both scenarios:
Refinance only: cash flow savings of about $200,000 per year
Refinance and new money generation: uses savings listed above to get $5 million in new
money upfront.
Costs incurred by the CDC for the refinance project includes fees for:
Attorneys, bankers, consultants, trustee fees, printing costs, bond rating costs to Standard
& Poors; and a premium for the bond insurance provider. A ballpark cost for the
refinance is about $200,000.
Because of rising interest rates, consultants recommended that a refinance with new
money be undertaken at this time.
Standard & Poor's bond downgrading from A to Triple B as a result of poor Southern
California Edison performance was discussed.
Commissioner Nunez called for a motion to proceed with the refinance and new money
bond sale, with a second by Commissioner Tran.
Vote resulted
Aye: Clark, Nunez, Taylor and Tran
No: None
Absent: Imperial
Abstain: None
The Chairman declared said motion duly carried and so ordered
The JPA agreement will be presented at the next meeting.
3. ADJOURNMENT
There being no further action to be taken at this time, the meeting was adjourned at
8:41 p.m. The next meeting will take place on November 22, 2005 at 7:00 PM.
Respectfully submitted: APPROVED:
Commission Secretary
CHAIRMAN
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