10A Action Items 2018 0402 - Laserfiche WebLink

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File Number: 18-139 $2,340,000 taxable Series B Bonds. The Series B Bonds will be issued on a taxable basis to provide greater flexibility in the operation and ownership of certain City assets financed or to be financed in whole or in part by the 2008 TABs and ensure continued compliance with federal tax law. This will marginally reduce refunding savings, because taxable municipal debt carries higher interest rates than tax-exempt debt. All interest rates have increased a bit since last December, but based on municipal bond market rates effective 3/6/18, staff estimated that refinancing the 2008 TABs could result in over $7.7 million total nominal savings over the life of the 2008 TABs. The present value (PV) of these future savings, discounting the nominal savings by the estimated arbitrage yield of 3.25%, is $3.8 million. This results in net present value (NPV) savings of about 16.7% when taken as a percentage of the par value of the 2008 TABs to be refunded. The general rule of thumb is that the minimum NPV savings should be at least 3-5% of refunded par. City staff emphasizes that these savings numbers are estimates based on the current market and other issuance assumptions such as assumed rating, and will not be certain until the Refunding Bonds are priced. Interest rates can rise or fall significantly in just a matter of weeks and there is no way to predict accurately what the municipal market will look like months from now. But if municipal yields rise by an average of 50 basis points (.50%, or one-half of 1%), total nominal savings will fall to $6.4 million, which is total PV savings of $2.6 million. This translates to NPV savings of 11.5% of refunded par, which would still be an excellent refunding result. The City will directly realize only a modest portion of the debt service savings from this refunding, because the City receives 12% of the property tax revenues from the Alameda County - City of San Leandro Redevelopment Project (Project Area), a portion of the tax increment from which will be pledged as security for the Refunding Bonds. The County receives 25% of the property tax revenues from the Project Area and therefore receives the benefits of this refunding; special districts receive 17% and school districts 46%. Resolutions The City acting as the Successor Agency must approve the following resolution to complete the issue authorization process for the Refunding Bonds. Resolution of the Successor Agency to the Redevelopment Agency of the City of San Leandro Confirming the Issuance of Refunding Bonds Pursuant to an Indenture of Trust, Approving Preliminary and Final Official Statements - This resolution confirms approval of the issuance of Refunding Bonds in both tax-exempt and taxable refunding series, as authorized on 12/18/17, and approves the POS in substantially final form on file with the City Clerk that will be finalized after pricing. The City acting as the Successor Agency, the San Leandro Public Financing Authority and the City of San Leandro Parking Authority must approve the following resolution to comply with Senate Bill 1029, which is effective this year and requires that California public agencies adopt debt management policies that meet certain criteria. Joint Resolution of the City Council of the City of San Leandro, and the City Council acting as the Board of Directors of the Successor Agency to the Redevelopment Agency of the City of San Leandro, the San Leandro Public Financing Authority and the City of San Leandro Parking Authority, Approving the Adoption of a Debt Management Policy - This resolution must be approved prior to issuing the Bonds. The Debt Management Policy Page 2 City of San Leandro Printed on 3/27/2018 89