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City of San Leandro <br />Meeting Date: December 18, 2017 <br />Staff Report <br />Agenda Section:File Number:17-700 ACTION ITEMS <br />Agenda Number:10.A. <br />TO:City Council <br />FROM:Chris Zapata <br />City Manager <br />BY:David Baum <br />Finance Director <br />FINANCE REVIEW:David Baum <br />Finance Director <br />TITLE:Staff Report for Successor Agency Resolution Approving the Issuance of <br />Refunding Bonds in Order to Refund Certain Outstanding Bonds of the Dissolved <br />Redevelopment Agency of the City of San Leandro and Providing for Other <br />Matters Properly Relating Thereto <br />SUMMARY AND RECOMMENDATION <br />Staff recommends that City Council, acting as the governing board of the Successor Agency to <br />the Redevelopment Agency of the City of San Leandro, approve the resolution and documents <br />required to issue the Successor Agency to the Redevelopment Agency of the City of San <br />Leandro 2018 Tax Allocation Refunding Bonds (Refunding Bonds). The proposed Refunding <br />Bonds will be issued to refund $22,860,000 of currently outstanding Redevelopment Agency of <br />the City of San Leandro Alameda County-City of San Leandro Redevelopment Project Tax <br />Allocation Bonds, Series 2008 (2008 TABs). The par, or face value, of the Refunding Bonds will <br />not exceed $23 million and they will mature in 2038, which is the existing final maturity of the 2008 <br />TABs. Annual debt service on the Refunding Bonds will not exceed the annual debt service <br />currently payable on the outstanding 2008 TABs. <br />DISCUSSION <br />In July 2008, the Redevelopment Agency issued $27,530,000 of the 2008 TABs to fund certain <br />redevelopment activities of benefit to property within the project area. Major projects funded by <br />the 2008 TABs included the new Senior Center and the reconstructed Downtown Parking <br />Garage. Until the next scheduled principal payment on 9/1/18, there will be $22,860,000 of the <br />2008 TABs outstanding. The City has an opportunity to refinance the 2008 TABs now and realize <br />substantial savings in annual debt service payments. Based on municipal bond market rates <br />effective 10/31/17, staff estimates that refinancing the 2008 TABs could result in almost $8.5 <br />million total nominal savings over the life of the 2008 TABs. The present value (PV) of these future <br />savings, discounting the nominal savings by the estimated arbitrage yield of 2.86%, is $4.5 <br />million. This results in net present value (NPV) savings of about 19.7% when taken as a <br />percentage of the par value of the 2008 TABs to be refunded. The general rule of thumb is that the <br />Page 1 City of San Leandro Printed on 12/12/2017 <br />408