PREPARED BY: arturo e. castillo DATE OF MEETING: 09/3/2024
SUBJECT:
TITLE
CONSIDER ADOPTING RESOLUTION OF THE LOCAL SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN PABLO AUTHORIZING THE ISSUANCE OF TAX ALLOCATION REFUNDING BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A SECOND SUPPLEMENTAL INDENTURE AND BOND PURCHASE AGREEMENT; APPROVING AN OFFICIAL STATEMENT; AND AUTHORIZING RELATED DOCUMENTS AND ACTIONS
CEQA: This proposed action is not a project as defined by CEQA.
Label
RECOMMENDATION
Recommendation
Adopt Resolution
Body
Compliance statements
This item is not directly related to a specific policy within the FY 2023-25 City Council Priority Workplan adopted May 1, 2023, but is necessary or desirable in connection with ongoing City operations.
CEQA Compliance Statement
This proposed action is not a project as defined by CEQA.
BACKGROUND
In June 2014, the Local Successor Agency to the Redevelopment Agency of the City of San Pablo (the “Successor Agency”) issued $47,595,000 of tax allocation refunding bonds (the “Series 2014A Bonds”), for the purpose of refinancing at lower interest rates, certain outstanding bonds that were previously issued by the Redevelopment Agency of the City of San Pablo (the “Redevelopment Agency”) in 1999, 2001, 2004 and 2006.
Currently, $24,150,000 of the Series 2014A Bonds remain outstanding.
An opportunity now exists for the Successor Agency to refinance the outstanding 2014A Bonds at lower interest rates, and in so doing realize significant debt service savings. Such a refinancing, which is similar to refinancing a home mortgage, is accomplished via the issuance of Refunding Bonds by the Successor Agency. Proceeds from the Refunding Bonds will then be used to prepay all of the outstanding Series 2014A Bonds.
The attached “Preliminary Debt Service Savings Analysis” provides an estimate of the debt service savings to be achieved by this refinancing, based on interest rates as of August 5, 2024.
It is anticipated that the Refunding Bonds will be issued in late October, 2024, after all of the procedural requirements that are necessary to issue the bonds have been completed.
No assurance can be given that interest rates will remain at ‘favorable’ levels when the Refunding Bonds are scheduled to be issued. If interest rates increase such that the Refunding Bonds no longer achieve sufficient debt service savings, then the issuance of the Refunding Bonds may be postponed or cancelled, at the discretion of the City.
FISCAL IMPACT
In accordance with Government Code Section 5852.1, the information shown below is required to be disclosed to the public in conjunction with the approval of the Refunding Bonds by the Successor Agency:
i. The estimated true interest cost of the Bonds (being the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds) is 2.80%,
ii. The estimated finance charge of the Bonds (being the sum of all fees and charges paid to third parties) is $300,000,
iii. The estimated proceeds of the Bonds expected to be received, net of proceeds for finance charges in (ii) above to paid from the principal amount of the Bonds and any reserves or capitalized interest paid or funded with Bonds, is $24,150,000, and
iv. The estimated total payment amount of the Bonds (being the sum of debt service plus finance charges in (ii) above not paid from proceeds of the Bonds) is $26,725,000.
The foregoing constitute good faith estimates only, and the final results of any sale of the Bonds may materially differ due to a variety of factors outside the control of the Successor Agency.
ATTACHEMENTS:
Att A - Resolution of the Successor Agency
Att B - Preliminary Debt Service Savings Analysis
Att C - Preliminary Official Statement including form of Continuing Disclosure Certificate
Att D - Second Supplemental Indenture
Att E - Bond Purchase Agreement
Att F - Financing Schedule