10B Action 2009 1221 - Laserfiche WebLink

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Finance for Alameda at San Leandro Crossings 4 December 21, 2009 construction financing in time to start construction by the CTCAC deadline, the consequences to The Alameda could be severe. More specifically, BRIDGE could lose its tax credit allocation. Because tax credit equity represents the majority of financing for the project, BRIDGE would not have sufficient funding to proceed. Unfortunately, such a hard and fast deadline removes any flexibility from the RDA's bond issue process. There are two key issues. The first is the fixed closing date. Generally speaking, from the date the 9% tax credits were confirmed, staff has indicated that more time is needed for the financing process. BRIDGE had indicated that there might be some flexibility in the funding schedule, but in the fmal analyses the RDA must close on or about the date called for in the financing schedule. Unfortunately, not all elements of the financing (such as bond rating timing) are within the RDA's control, and the current schedule does not allow any time for contingencies. Secondly, the RDA may find itself considering marginal bond terms in order to meet the CTCAC deadline. It is not unusual for an issuer to reject all bids and return to the market at a later date. Under the deadline noted above, this flexibility is curtailed. To mitigate the negative impact of these two issues, staff is recommending that the City provide the RDA with up to a 90 day bridge loan, if required. The loan would be made from the Water Pollution Control Plant and the interest paid would be at the City's investment portfolio rate (which is the rate it currently earns). A review of current demands on the WPCP's cash indicates that such ashort-term loan would not negatively impact the WPCP. The attached enabling resolutions provide the City the authority to undertake an interim loan to the RDA of the necessary funds from the WPCP. Authorization for a Competitive or Negotiated Sale If Council authorizes the short-term (up to 90 days) loan as requested in staff's contingency plan, then staff will have sufficient time to market the issue in the most advantageous way. More specifically, staff would like to first offer the bonds on a competitive basis. A successful competitive sale could net the RDA 50 basis points, (0.5%) or more in interest rate savings over a "negotiated" bond sale. If the competitive sale is not successful, then the City would pursue a negotiated sale of the bonds. This two step approach, however, is dependent on having additional time. Consequently, the attached enabling resolutions provide staff with authority to sell the bonds on a competitive or negotiated basis. Staff requests that the City Council and Redevelopment Agency approve the proposed TAB financing and the Contingency Plan. Previous Redevelopment Agency Action(s) Council and RDA Joint Meeting of April 6, 2009. Authorization of loan agreement with developer and approval to pursue Tax Allocation Bond Financing.