10A Action 2008 0602 - Laserfiche WebLink

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2008 Tax Allocation Bonds 4 May 27, 2008 Tax Increment Consultant -Verifies the fmancial condition of the issuing redevelopment agency and develops comprehensive and independent forecasts of future tax increment growth. Trustee -Acts as the fiduciary agent for the benefit of the bondholders in enforcing the terms of the bond contract (Indenture of Trust). THE PLAN OF FINANCING The 2008 Bonds will be 30 year serial and term bonds having a total par value no greater than $35 million and a total interest cost estimated to be less than 6%. Debt service on the 2008 Bonds will be paid from tax increment revenues generated by the Project Area. The Project Area generates tax increment revenues, of which approximately $2.4 million in 2007/08 FY are available to make the debt service payments on the 2008 Bonds. The maximum annual debt service on the 2008 Bonds is estimated to be $2.2 million. Staff and the fmance team are anticipating that the par amount of the 2008 Bonds will be an estimated $33.255 million in order to accomplish the Agency's goal of having no less than $30 million for the Projects. However, in order to give the most flexibility legally possible to the finance team to generate these net proceeds for the Agency from the 2008 Bond proceeds, the recommendation is to limit the maximum authorization for the 2008 Bonds to $35 million. Table 3 below provides a summary of the proposed source and use of funds for the 2008 Bonds given a par value of $33.255 million. Table 3 Sources and Uses of Funds - 2008 Bonds Sources of Funcls Am©unts Bond Proceeds at Par $33,255,000 Total Sources of Funds $33,255,000 Uses of Funds Amounts Capital Project Fund $30,000,000 Debt Service Reserve Fund 2,239,307 Underwriter's Discount 332,550 Bond Insurance Premium 423,143 Cost of Issuance Fund 260,000 Total Uses of Funds $33,255,000 Proceeds of the 2008 Bonds deposited in the Redevelopment Fund ($30 million) will be held by the Agency and used to finance Projects within or of benefit to the Project Area. Bond proceeds deposited in the Reserve Fund ($2.239 million) will be held by the bond trustee in an amount required by the bond indenture. The trustee will invest Reserve Fund proceeds at the Agency's direction and in accordance with the City's adopted Investment Policy. Reserve Fund proceeds are to be used solely for debt service payments in the event there is a deficiency of available Agency funds to repay the debt. The underwriter's discount ($332,550) represents the amount of proceeds the Agency will pay to the underwriter for agreeing to take immediate ownership of the bonds at an agreed upon price determined through a competitive bid process. The underwriter is subject to market risks when it attempts to resell the bonds on the open market. The bonds are purchased by the underwriter from the Agency at a discount and sold to the public at par. 08043