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STAFF REPORT OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN LEANDRO DATE: December 20, 2017 TO: Oversight Board Members FROM: David Baum, Finance Director SUBJECT: Resolution Approving the Issuance of Refunding Bonds for the 2008 Joint Project Area Tax Allocation Bonds, Making Certain Determinations with Respect to the Refunding Bonds and Providing Other Matters Relating Thereto SUMMARY AND RECOMMENDATIONS Staff recommends that the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of San Leandro (Oversight Board) approve the resolutions and documents required to issue the Successor Agency to the Redevelopment Agency of the City of San Leandro (Successor Agency) 2018 Tax Allocation Refunding Bonds (Refunding Bonds). The proposed Refunding Bonds will be issued to refund $22,860,000 of currently outstanding Redevelopment Agency of the City of San Leandro Alameda County —City of San Leandro Redevelopment Project Tax Allocation Bonds, Series 2008 (2008 TABs). The par, or face value, of the Refunding Bonds will not exceed $23 million and they will mature in 2038, which is the existing final maturity of the 2008 TABs. Annual debt service on the Refunding Bonds will not exceed the annual debt service currently payable on the outstanding 2008 TABS. DISCUSSION In July 2008 the Redevelopment Agency of the City of San Leandro issued $27,530,000 of the 2008 TABs to fund certain redevelopment activities of benefit to property within the project area. Major projects funded by the 2008 TABS included the new Senior Center and the reconstructed Downtown Parking Garage. Until the next scheduled principal payment on 9/1/18, there will be $22,860,000 of the 2008 TABS outstanding. The Successor Agency has an opportunity to refinance the 2008 TABs now and realize substantial savings in annual debt service payments. Based on municipal bond market rates effective 10/31/17, staff estimates that refinancing the 2008 TABs could result in almost $8.5 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 2.86%, is $4.5 million. This results in net present value (NPV) savings of about 19.7% 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. Those savings would then be realized by the various taxing entities that receive shares of the property tax