HomeMy WebLinkAbout3 - PURCHASE DEBT SRVC BOND
REQUEST FOR
FINANCING
AUTHORITY ACTION
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FINANCING AUTHORITY MEETING DATE:
CLERK OF COUNCIL USE ONLY:
DECEMBER 20, 2004
TITLE:
APPROVED
D As Recommended
D As Amended
D Ordinance on 1 sl Reading
D Ordinance on 2nd Reading
D Implementing Resolution
D Set Public Hearing For
PURCHASE OF DEBT SERVICE
SURETY BOND FOR POLICE
ADMINISTRATION AND HOLDING
FACILITIES LEASE REVENUE
:ONDS, S¡¿;¿~a
CITY MANAGER
CONTINUED TO
FILE NUMBER
RECOMMENDED ACTION
1. Authorize the execution of documents and related actions necessary
for the purchase of a debt service surety bond to be used as a
replacement for one half of the cash funded debt service reserve of
the Police Administration and Holding Facility Lease Revenue Bonds,
Series 1994A.
2. Approve a. financing team composed of financial advisor Northcross,
Hill & Ach, and bond counsel Orrick, Herrington & Sutcliffe LLP.
DISCUSSION
On February 22, 1994, the City Council and the Santa Ana Financing
Authority (the "Authority") adopted resolutions approving a ground lease,
Lease and Purchase Contract, as well as other actions in connection with
the financing for the Police Administration and Holding Facility. On
March 23, 1994, the Authority issued Police Administration and Holding
Facility Lease Revenue Bonds, Series 1994A in the amount of $107,399,439
to fund the construction and equipping of this facility. The lease-
financing mechanism proposed for the debt issuance of the bonds required
that the Authority issue bonds, with the City covenanting to make annual
lease paYments from the general fund equal to the debt service on the
bonds. On February 26, 2004, as a result of favorable interest rates, the
Authority refinanced $38,845,000 of these bonds, resulting in a one-time
advance savings to the City of $3,250,000.
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Purchase of Debt Service Surety Bond
For Police Revenue Bonds Series 1994A
December 20, 2004
The terms of the issuance required that bond proceeds in the amount of
$9,227,812 be retained by the Trustee bank and held in a debt service
reserve fund. The Authority is now able to replace one half of the cash
in this debt service reserve fund with a surety bond. The proposed
actions will secure the purchase of this surety bond from MBIA Insurance
Corporation, resulting in a release of $4,613,906 of the existing amount
held by the Trustee. This proposed surety bond will be issued by MBIA
Insurance Corporation at a cost of $219,000.
Additionally, staff recommends that Northcross, Hill, & Ach be retained as
financial advisor and Orrick Herrington & Sutcliffe LLP be retained as
bond counsel. These firms served on the financing team for the original
issue in 1994 and for the refinancing issue in 2004, as well as for other
City, Authority and Community Redevelopment Agency financings. Financial
advisor fees will not exceed $20,000 and bond counsel fees will not exceed
$5,000.
FISCAL IMPACT
After deducting the surety bond and closing
result in $4,369,906 of revenue to the City.
been anticipated in the revenue assumptions
budget.
costs, this transaction will
A portion of these funds had
for the current fiscal year
0 a
Executive irector
Finance & Management Services Agency
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