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ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
REQUEST FOR COMMISSIDNLCOllNClL ACTION
FROM: TIMOTHY C. STEINHAUS
Agency Administrator
SUBJECT:
LEASE REVENUE REFUNDING
BONDS (CITY HALL PROJECT)
SERIES 1996
FRED WILSON
Assistant City Administrator
DATE: November 27, 1996
Synopsis of Previous Commission/rollncil/Committee Action(s)..:.
N/A
Recommended Motinn{~:
(Mayor and Common Council)
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MOTION A: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO, AUTHORIZING THE LEASE OF CITY HALL FROM THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO,
AUTHORIZING THE FORM OF CERTAIN LEGAL DOCUMENTS RELATED
THERETO AND AUTHORIZING AND DIRECTING THE PREPARATION,
EXECUTION AND DELIVERY OF THE FINAL FORMS THEREOF
(Motions Continued on Next Page)
TIMOTHY C. STEINHAUS
Agency Administrator
Contact Person(s): Timothy C SteIDhausLEr.e.lLWllsOlL_________
Phone:
508]
Project Area(s):
N/A
Ward(s):
N/A
Supporting Data Attached: Staff Report; .Resolutions
FUNDING REQUIREMENTS: Amount: $ N/A
Source:
N/A
Budget Authority: None
Commis!iilion/Council Notes:
P-5/A-Res
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96- .J" fa
5-1/
COMMISSION MEETING AGENDA
MEETING DATE: 12/02/1996
Agenda Item Number: !-fi-l
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ECONOMIC DEVELOPMENT AGENCY
Request for Commission/Council Action
November 27, 1996
Page 2
Recommended Motion(s) Continued:
(Community Development Commission)
MOTION B: RESOLUTION OF THE COMMUNITY DEVELOPMENT
COMMISSION OF THE REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO AUTHORIZING THAT CERTAIN
ASSIGNMENT AND ASSUMPTION AGREEMENT AND SITE AND
FACILITY LEASE.
(.Toint Powers Financing Authority)
MOTION C: RESOLUTION OF THE SAN BERNARDINO JOINT POWERS
FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF
NOT TO EXCEED $17,000,000 LEASE REVENUE REFUNDING
BONDS (CITY HALL PROJECT) SERIES 1996, APPROVING THE
FORM OF LEGAL DOCUMENTS RELATED THERETO AND
AUTHORIZING AND DIRECTING PREPARATION, EXECUTION
AND DELIVERY OF THE FINAL FORMS THEREOF.
TCS:lmp:bonds.cdc
COMMISSION MEETING AGENDA
MEETING DATE: 12/02/1996
Agenda Item Number: {'5 -I
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
.
Rackgrollnd:
The City refinanced the City Hall in March, 1992 through the delivery of Certificates of
Participation (the "COP's") in an amount equal to $12,000,000. A portion of the proceeds of the
COP's were used to refund the previous issuance of 1973 lease revenue bonds by the Civic
Center Authority which were issued to finance the original construction of the City Hall and
Convention Center. The remaining funds from the COP's were used to make deposits into
several internal service funds of the City to replenish the balances in such funds.
The COP's were issued as variable rate demand notes with a final maturity date of March I,
2022, but the COP's were payable as to interest only until such time as the City elected to
establish the interest rate at a fixed rate of interest for the remaining term. In order for the City to
fix the interest rate, it would be required to undertake a remarketing of the COP's to new
purchasers at a fixed rate. The COP's were secured by a direct pay letter of credit issued by
Sumitomo Trust & Bank of New York and confirmed by a second letter of credit obtained from
Sumitomo Bank in Chicago. The letter of credit arrangement allowed for the variable rate COP's
to be issued as variable rate demand debt and to obtain the highest short-term municipal bond
rating available for such obligations.
. The current structure of the COP's does not provide for any mandatory principal repayment as
long as the City maintains the variable rate option. During the past four (4) fiscal years the City
has budgeted and deposited into a voluntary sinking fund an amount equal to $1,557,000. This
amount includes the deposit of $400,000 as presently budgeted for the 1996-97 fiscal year. It is
intended that this entire $1,557,000 amount will be applied for the reduction of the principal
amount of any financing obligations issued by the City to refund the COP's.
The original letter of credit had a commitment term of five (5) years from the original issuance
date. The City does have the option to seek a renewal of the term of the letter of credit, or to
obtain a replacement letter of credit, and thus continue with the payment of the variable rate
interest only payments to the bondholders. The municipal bond market interest rates are at
extremely advantageous levels at this time to warrant the City to consider the fixing of the
interest rate on the permanent financing for the City Hall at a municipal bond rating of"AAA".
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TCS:bnp:bonds.cdc
COMMISSION MEETING AGENDA
MEETING DATE: 12/02/1996
Agenda Item Number: fs ~ I
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ECONOMIC DEVELOPMENT AGENCY STAFF REPORT
Lease Revenue Refunding Bonds
November 27,1996
Page Number 2
COMPUTER ACQUISITION:
On November 4, 1996, the Council authorized request for proposals relative to the
implementation of the Information Systems Network Upgrade Plan. The anticipated cost for the
system as now proposed is $3,300,000, which amount would be expended over the next 24
months. Although the City could finance the computer acquisition with lease-purchase
agreement financing provided through the vendors of the equipment or through other leasing
institutions, a definite cost advantage will be available to the City by including the computer
acquisition within the refinancing of City Hall.
The City will be able to fmance the computer equipment for up to ten (10) years with an interest
rate based upon an "AAA" rated insured tax-exempt financing. The financing would have semi-
armual payments of interest starting on July 1, 1997, and armual principal payments commencing
on January 1, 1998, to fully amortize the computer acquisition debt within ten (10) years. The
debt service reserve fund will be used to pay a large portion of the final payment at the ten (10)
year maturity date.
. PROPOSED STRUCTURE:
.
..
The City has obtained the insurance commitment from MBIA for municipal bond insurance for
both the City Hall refinancing and the equipment purchase. MBIA has previously insured the
1988 Central City North Tax Allocation Bonds of the EDA, and MBIA has been familiar with
the City and EDA financial condition and the other factors affecting the economy within the San
Bernardino County area.
The MBIA municipal bond insurance will enable the City to have the San Bernardino Joint
Powers Public Financing Authority ("JPF A") issue the 1996 Lease Revenue Bonds in a principal
amount equal to approximately $16,300,000 as AAA rated long-term debt obligations. The City
will enter into a single Lease-Purchase Agreement for the City Hall refinancing, refurbishing of
the elevators in City Hall to make them accessible to the disabled, and the equipment acquisition.
The City Hall, currently owned in fee title by the EDA, will be the sole security for the
refinancing portion of the 1996 Lease Revenue Bonds, and it will be necessary for the EDA to
additionally secure the equipment acquisition portion with a security interest in the 5-level
parking structure. The 5-level parking structure is also currently owned by the EDA. At the end
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TCS:lmp:bonds.cdc
COMMISSION MEETING AGENDA
MEETING DATE: 12/02/1996
Agenda Item Number: es, I
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ECONOMIC DEVELOPMENT AGENCY STAFF REPORT
Lease Revenue Refunding Bonds
November 27, 1996
Page Number 3
of the term of the lO-year computer equipment acquisition financing, the 5-level parking
structure would continue to be owned by the EDA, but without any encumbrance from the 1996
Bond documents. During the term of the financing of the computer equipment, the EDA will be
able to further encumber the 5-level parking structure if authorized by the Commission through
the issuance of debt secured by the 5-level parking structure. The City would receive fee title to
the City Hall at the end of the term of the 1996 Lease Revenue Bonds on March I, 2022, or
earlier upon a prior redemption of the 1996 Lease Revenue Bonds. Title to the Convention
Center was transferred to the City without any encumbrances or other debt obligation in March,
1992, upon issuance of the COP's.
DEBT SERVICE AMOIJNTS:
The City is currently budgeting in the 1996-97 fiscal year $500,000 for the interest payments on
the COP's and another $400,000 on average for the voluntary sinking fund payment.
Additionally, the City has approved in the MIS budget a line item of $285,000 for lease
payments and $50,000 for equipment maintenance. These amounts were previously used to fund
debt service and hardware maintenance of the existing computer system. Now that the system
has been paid in full, the funds can be used for this purpose. Thus, at least $335,000 is available
in $e current budget for the payments towards the computer equipment acquisition amounts.
The first payment for both the City Hall portion and the computer equipment acquisition will not
need to be made until the 1997-98 fiscal year of the City. The City will also have made available
approximately $250,000 in budget savings for a COP's interest payment that is scheduled to be
made on March I, 1997. This payment would not be required if the issuance of the 1996 Lease
Revenue Bonds is accomplished in a timely manner.
The actual interest cost on the COP's has averaged approximately $520,000 per year with the
EDA paying an additional $85,000 for the letter of credit annual fees. The City Hall portion of
the 1996 Lease Revenue Bonds will be structured with net interest only payments for the first
five (5) years of approximately $614,000 per year commencing on July I, 1997, and then
amortized net debt service payments of combined principal and interest of $954,000 for years six
(6) through the maturity date of December I, 2022. The equipment financing portion of the 1996
Bonds will have a set net debt service payment of approximately $450,000 through December I,
2006, with the first semiannual payment to be made.
TCS:lmp:bonds.cdc
COMMISSION MEETING AGENDA
MEETING DATE: 12/02/1996
Agenda Item Number:
~5'-l
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ECONOMIC DEVELOPMENT AGENCY STAFF REPORT
Lease Revenue Refunding Bonds
November 27, 1996
Page Number 4
PROPOSED ACTIONS:
It is recommended that the attached resolutions of the Mayor and Common Council, the
Community Development Commission and the San Bernardino Joint Powers Financing
Authority be adopted to provide for the issuance of the 1996 Lease Revenue Bonds for the
refinancing of the City Hall and for the acquisition of the computer equipment for various City
department requirements.
TIMO C. STEINHAUS
Agency Administrator
TCS:lmp:bonds.cdc
COMMISSION MEETING AGENDA
MEETING DATE: 12/02/1996
Agenda Item Number: Rs ~ I
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I cJ:'l'Y or ..... HRlfI.JU)IIfO
I CITY' BALL aU'fttOCl'URXIIG
I AND CCMPU'J'D BQOXPHarl'
I
I IOn DUT SDVXCB SCIIBDULE
1
I DA.TE PRXIIC!PAL COOPOJf IHTUU'l' _AL PH
I
I 12/01/1996
I 12/01/1997 310,000.00 3.850t 1..,070.00 478,0'70.00
I 12/01/199. 320,000.00 4.100' 156,135.00 476,,135.00
I 12/01/199. 335,000.00 4.200' 143,015.00 .".,015.00
I 12/01/2000 350,000.00 4.300' 128,945.00 4".,.45.00
I 12/01/2001 31150,000.00 ....oot 113,.95.00 473,.95.00
I 12/01/2002 380,000.00 ....OOt 9.,055.00 478,055.00
I 12/01/Z003 395,000.00 ..SOOt 81,335.00 476,335.00
I 12/01/2004 415,000.00 4.750' 63,560.00 4"8,560.00
I 12/01/2005 435,000.00 4.850' 43,..7.50 4"8,..7.50
I 12/01/2006 455,000.00 5.000' 22,750.00 477,750.00
J
J _AL 3,755,000.00 1,019,C0'7.5O 4,774,607.50
.
.
D8Il
NET "EN Df.
'(18,775.00)
(18,775.00)
(18..775.00)
(18,775.00)
(18,775.00)
(18,775.00)
(18,775.00)
(18,775.00)
(18,775.00)
(394,275.00)
459,295.00
457,360.00
459,240.00
460,170.00
455,120.00
459,280.00
457,560.00
459,7.5.00
460,072.&0
.3,475.00
(563,250.00)
4,211,357.50
M!11.c A 8cbzoed.r r!nanc!.1
Pub11c I'J.Aanc. o.p~an1:.
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11/25/1996 3141 PM
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CITY or SoUl BDIIAltDZNO I
CITY IU.LL RUTRUCTURINO I
UD COMPUTEII ZQUXPMD'I' I
I
.... DD'l' SERVICE SCIIEDULE I
I
DATI: PRDfCIP.u. """""" IJlTZREft TOTAL P+I oa. .... NEW DIS I
I
12/01/1996 I
12/01/19'7 "..,330.00 45.8,330.00 (55,'94.12) 612..335.8. I
1.2/01/199. 668,330.00 668,330.00 (55,994.12) 612,335... I
12/01/199' 6"8,330.00 6"8,330.00 (55..994.12) 612,335... I
1.2/01/2000 6"8,330.00 668,330.00 (55,994.12) 612,335... I
12/01/2001 6158,330.00 6"8,330.00 (55,994.12) 612,335.8. I
12/01/2002 345,000.00 4.4oot 668,330.00 1,013,330.00 (55..9'4.12) 957,335... I
12/01/2003 360,000.00 4.500' 653,150.00 1,013,150.00 (55,9'4.12) 957,155... I
12/01/2004 375,000.00 4.600' .36,950.00 1,011,'50.00 (55,994.12) 955,955... I
12/01/2005 395,000.00 4.700' 1519,700.00 1,014,700.00 (55,994.12) 958,'705... I
12/01/2006 415,000.00 ....OOt 601,135.00 1~016~135.oo (55~'94.12) 960~140.88 I
12/01/2007 435~OOO.OO 4.900' 15.1.~215.00 1~016~215.00 (155~994.12) 960~220.8. I
12/01/200. 455~OOO.00 15.500t 55'~900.00 1~014~'tOO.00 (55~994.12) 95.~905... I
12/01/200. 4.0~OOO.00 5.500t 534~.75.oo 1~014~.75.00 (55~994.12) 95.~..0..8 I
12/01/2010 5.05 ~OOO.OO 15.500t 5O.~475.oo 1~013~475.00 (55~994.12) 957~4.0... I
12/01/2011 535~OOO.OO 5.500t 480~700.00 1~015~700.oo (55~'94.12) 95'~705... I
12/01/2012 560~OOO.00 5.500t 451~275.00 1~011~275.00 (S5~"4.12) 955~2.0... I
12/01/2013 595~OOO.OO 5.500t 420~475.00 1~015~475.00 (55~994.12) 959~480... I
12/01/2014 .25~OOO.OO 5.SOOt 3.7~750.00 1~012~750.oo (55~'94.12) 9"~755... I
12/01/2015 660~OOO.OO 5.5OOt 353~375.00 1~013~375.00 (55~994.12) 957~380... I
12/01/2016 d9S~OOO.OO 15.5OOt 317~075.00 1~O12~O'75.OO (55~"4.12) 956~0.0... I
12/01/2017 '735~OOO.OO 5. SOOt 27.~.50.00 1~O13~.50.00 (55~994.12) 95'7~.55... I
12/01/201. 7'75~OOO.OO 5.500' 23.~425.00 1~O13~425.OO (55~"4.12) 957~430... I
12/01/201' .20~OOO.OO 5.SOOt 1'5~800.00 1~O15~.00.00 (1515~994.12) 959~.05... I
12/01/2020 ..5~OOO.OO 5.500t 150~700.00 1~015~700.oo (55~994.12) 959~705... I
. 12/01/2021 910~OOO.00 5.500t 103~125.00 1~O13~125.OO (55~994.12) 957~130... I
12/01/2022 96l5~OOO.00 5.500t 53~075.00 1~01.~O75.00 (1~074~Ot:9.12) (55~994.12) I
I
_AL 12~505~OOO.OO 12~136~005.00 24~641~005.00 (2~473,922.12) 22~167~0.2... I
1U.11ez- . SChroedaC pinancia1 PJ:LB - CJ:TYAXL-cit.ycoaput.era
Pub1ic PID&nc. Dapana.n't. U/25/U96 3131 PM
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