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HomeMy WebLinkAbout111708 Tax Allocation Bond Financing TeamREQUEST FOR AGENCY ACTION AGENCY BOARD MEETING DATE: NOVEMBER 17, 2008 TITLE: TAX ALLOCATION BOND FINANCING TEAM EXECUTIVE DIRECTOR RECOMMENDED ACTION AGENCY SECRETARY USE ONLY: g, APPROVED 2•✓d marnve� APPROVED © As Recommended 7'd ❑ As Amended ❑ Ordinance on 1" Reading ❑ Ordinance on 2ntl Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Direct the Agency General Counsel to prepare and authorize the Executive Director and Agency Secretary to execute agreements with the financing team composed of financial advisor CSG Advisors, Incorporated, underwriters Stone and Youngberg and De La Rosa & Co., bond counsel Stradling, Yocca, Carlson & Rauth, and special disclosure counsel Quint & Thimmig, subject to non - substantive changes approved by the Executive Director and Agency General Counsel. Over the last several years, the Santa Ana Redevelopment Agency has taken steps to maximize the effectiveness of the redevelopment program by merging all Redevelopment Project Areas, and eliminating the debt incurrence time limit, pursuant to SB211. The SB211 time limit elimination, in particular, provides the Agency with the opportunity to refinance existing debt, as well as issue new debt, in an efficient and cost effective manner. In order to explore bonding alternatives and capacity, it is recommended that a financing team be selected, including a financial advisor, underwriter, and bond /disclosure counsel. After extensive evaluation, staff recommends the hiring of CSG Advisors, Incorporated (financial advisor), Stone and Youngberg and De La Rosa & Co. (underwriters), Stradling, Yocca, Carlson & Rauth (bond counsel), and Quint & Thimmig (disclosure counsel). The Agency's independent financial advisor, CSG Advisors, Incorporated, issued a Request for Proposals for Underwriter services and received 5 -19 Tax Allocation Bond Financing Team November 17, 2008 Page 2 seven responses. An evaluation panel consisting of Finance and Management Services staff, Agency staff, the Agency's financial advisor, and the Agency's legal counsel reviewed the proposals and recommended the approach summarized below. Stone and Youngberg is recommended as lead underwriter due to the depth of their California tax allocation bond transaction experience and demonstrated sophistication and creativity with regard to Agency financing opportunities and constraints. De La Rosa & Co. is recommended to assist with the marketing /sale of the bonds to broaden the buyer base and optimize the Agency's borrowing cost. Stradling, Yocca, Carlson & Rauth are recommended as Bond Counsel and will be responsible for preparing all of the transactional documents for the financing. The Agency is also requested to authorize a conflict of interest waiver for Stradling, Yocca's retention. A member of their firm, not associated with this transaction, has represented the developer of the Skyline condominium project and ethics standards require both clients to waive any potential conflict of interest. The developer has already approved Stradling's representation of the Agency. The developer's attorney will have no involvement in this transaction. Quint & Thimmig are recommended to serve as Disclosure Counsel and will be responsible for preparing the Official Statement and any other necessary disclosure documents. Upon final determination, a financing package will be brought before the Agency for review and approval. The actual final compensation for the financing team will be determined based on the size and structure of the bond issuance and market conditions at the time of the sale. The proposed compensation will be as follows: CSG Advisors, financial advisor, an amount not to exceed $85,000 plus expenses; Stradling, Yocca, Carlson & Rauth, Bond Counsel, $35,000 for each issue, plus .1 of 1 percent of the excess over $10,000,000 in par value of stock issued, plus costs not to exceed $5,000 (estimated to be between $100,000 - $150,000); Quint & Thimmig, Disclosure Counsel, an amount not to exceed $35,000. At the time that the underwriter's proposals were submitted, the proposed underwriter's discount was $2.65/$1,000 of bonds; however, it may need to be adjusted based on the actual market conditions at the time of bond sale. Separately, both recommended underwriting firms have executed an Agreement Among Underwriters stipulating each firm's share of the underwriting fees. 5 -20 Tax Allocation Bond Financing Team November 17, 2008 Page 2 FISCAL IMPACT Ali fees will be contingent upon bond closing and will be funded as part of the transaction. p,�,Nancy T. Edwards ` Assistant Director Community Development Agency CJN /NTE /mlr 100608 TaxAllocationBondFinancingTea 5 -21 THIS PAGE LEFT INTENTIONALLY BLANK 6W,404