HomeMy WebLinkAboutR34-Economic Development Agency
CITY OF SAN BERNARDINO
ECONOMIC DEVELOPMENT AGENCY
FROM: Emil A. Marzullo
Interim Executive Director
SUBJECT: Transfer of Bond Reserves Asset Management
Services to Citizens Trust
DATE:
December 9,2010
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Synopsis of Preyious Commission/CounciVCommittee Action(s):
On March 30, 2006, the Community Development Commission approved the issuance of 2006 20% Set Aside Tax Allocation
Bonds in the amount of $28,665,000, the bond issued by the Agency (through San Bernardino Joint Powers Financing
Authority). U. S. Bank Trust is the Bond Trustee and Bond Reserves Asset Manager.
On November 18,2010, Redevelopment Committee Members Johnson, Marquez and Brinker unanimously voted to recommend
that the Community Development Commission consider this action for approval.
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Recommended Motion(s):
(Community Development Commission)
Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing the
Redevelopment Agency of the City of San Bernardino to transfer Bond Reserves Asset Management Services to
Citizens Trust
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Project Area(s):
Supporting Data Attached:
All
Ward(s):
(909) 663-1044
All
Contact Person(s):
Emil Marzullo
Phone:
o Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter(s)
FUNDING REQUIREMENTS:
Amount: $
-0-
Source:
N/A
N/A
Budget Authority:
Signature:
Emil A. Marzullo, Interim E
Fiscal Review:
Lori P
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Commission/Council Notes:
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P:\AgendasIComm nev CommissionlCnC 2010112-20-10 Citizens Trust- Asset Management Final SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 12/20/2010
Agenda Item Number: ~"3i
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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TRANSFER OF BOND RESERVES ASSET MANAGEMENT SERVICES
TO CITIZENS TRUST
BACKGROUND:
On February 16, 2010, the Commission authorized the deposits of Agency Funds with Citizens
Business Bank and Citizens Trust to diversify investment returns and to maximize investment
earnings. Citizens Business Bank and Citizens Trust services provided more favorable rates, charges
and incentives to the Agency. Citizens Trust was identified as a financial institution that offered a
comparable risk and safety factor but with a significant increase in return for short-term deposits.
Citizens Trust also, through Citizens Business Bank, offered business development programs and
business loan programs that would complement many of the business development and assistance
programs that were being developed and implemented by the Economic Development Agency to
attract and to retain businesses in the City.
CURRENT ISSUE:
The Agency currently has eight outstanding bonds three of which were issued by the Joint Powers
Financing Authority (JPF A):
. $19,000,000 Central City 1998A Refunding Tax Allocation Bonds
. $8,590,000 Central City 1998B Refunding Tax Allocation Bonds
. $15,480,000 1999 Certificates of Participation
The following five outstanding bonds were issued by the Agency through the JPF A:
. $30,330,000 2002A Tax Allocation Bonds
. $3,635,000 Mt Vernon 2002A Tax Allocation Bonds
. $55,810,955 2005A Refunding Tax Allocation Bonds
. $21,097,470 2005B Refunding Tax Allocation Bonds
. $28,665,000 2006 20% Set Aside Tax Allocation Bonds
The Agency administers two outstanding bonds on the City of San Bernardino's behalf:
. $16,000,000 City Hall Refinance Certificates of Participation
. $10,370,000 1997 Series A Refunding Lease Revenue Bonds
In addition, on December 6, 2010, appropriate actions were taken at the Council meeting on said date
with regard to granting the authorization for the issuance of the $7,068,000 Recovery Zone Economic
Development Bonds, Series A, and the not to exceed $6,000,000 Northwest Redevelopment Project
Area Tax Allocation Bonds, Series B. The authorization to transfer bond reserve funds as contained in
this agenda item and the attached Resolution will also apply to the two (2) above referenced bond
issues as recently authorized. Such additional two (2) bond issues are expected to close on December
23,2010.
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P:lAgendas\Comm Dev Commission\CDC 2010\12-20-10 Citizens Trust - Asset Management Final SR. doc
COMMISSION MEETING AGENDA
Meeting Date: 12/20/2010
Agenda Item Number: /2:3<./
Economic Development Agency Staff Report
Transfer of Bond Reserves Asset Management to Citizens Trust
Page 2
All of the bonds issued by the Agency have mandatory reserve funds requirement for the retirement of
bonds and security/collateral to the bondholders. The amount of bond reserves varies by issues,
ranging from 10% of the outstanding debt to highest annual payment. At June 30, 2010, the amount of
bond reserves was $28,817,727. The average amount of bond reserves during fiscal year 2009-10 was
$27,111,055.
The trustee for all of the bonds issued by the Agency is U. S. Bank Trust. U. S. Bank Trust, by default
and convenience, is also the bond reserves asset manager. One of the functions of the bond reserves
asset manager is to maximize earnings within the parameters of Agency's Investment Policy, bond
indentures allowable investment instruments and schedule of debt payments. During fiscal year 2009-
2010 interest earnings from the bond reserves was $63,929, 0.2% return on investment. During the last
quarter of fiscal year 2009-2010, April 1 2010 - June 30, 2010, the interest earnings was $18,766.
In comparison, during the last quarter of fiscal year 2009-2010, Citizens Trust generated almost twice
as much as U. S. Bank Trust. Agency funds held and managed by Citizens Trust increased in value by
$35,785, from $26,784,850 to $26,820,599. The Agency's relationship with Citizens Trust began in
March 2010 with the transfer of$26.7 million from Wells Fargo Capital Management.
To maximize investment earnings and to diversify investment returns as well as to work with a
business-oriented local financial institution, Staff recommends the transfer of bond reserves asset
management services to Citizens Trust.
ENVIRONMENT AL IMPACT:
No impact under CEQA pursuant to Section 15301.
FISCAL IMP ACT:
There is no fiscal impact at this time.
RECOMMENDATION:
That the Community Development Commission adopt the attached Resolution.
'I) r; . .
K//i-cz-
Emil A. Marzullo, Interi
P:lAgend.sIComm Dev CommissionlCDC 2010112-20-10 Citizens Trust - Asset Management Final SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 12/20/2010
Agenda Item Number: fl- ~<..J
1
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5
RESOLUTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
TO TRANSFER BOND RESERVES ASSET MANAGEMENT SERVICES TO
CITIZENS TRUST
6 WHEREAS, it is the desire of the Community Development Commission of the City of San
7 Bernardino ("Commission") to have the ability to expand the number of local banking institutions
8 providing bond reserves asset management services to the Redevelopment Agency of the City of
9 San Bernardino ("Agency") and to maximize the investment earnings and to diversify investment
10 opportunities and minimize risks to the Agency; and
11 WHEREAS, it is necessary for this Commission to approve above referenced action on
12 behalf of the Agency.
13 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
14 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
15 FOLLOWS:
Section 1.
The Interim Executive Director of the Agency is hereby authorized to transfer
16
17 bond reserves asset management services to Citizens Trust. The Interim Executive Director is
18 further authorized and directed to execute such documents and standard form agreements with
19 Citizens Trust as may be necessary to implement the intent of this Resolution to accommodate the
20 transfer of bond reserves management services to Citizens Trust.
21
Section 2.
This Resolution shall take effect from and after its date of adoption by this
22 Commission.
23 /II
24 /II
25 /II
26 /II
27 /II
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P:\AgendasIResolutionslResolutions\201O\12-20-IO Transfer ofBond Reserves Asset Management Services to Trust CDC Reso.docx
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RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
TO TRANSFER BOND RESERVES ASSET MANAGEMENT SERVICES TO
CITIZENS TRUST
5 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
6 Development Commission of the City of San Bernardino at a
, 2010, by the following vote to wit:
meeting
Nays
Abstain
Absent
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18
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Approved as to Form:
Secretary
day of
,2010.
The foregoing Resolution is hereby approved this
Patrick J. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
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26 By: ~o.1Ni-k n'1~
Agency Counsel
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