Redevelopment Overview & Agency Update Prepared by: Mark Curran Managing Director (415) 616-1616 Denise Rappmund Asst. Vice President (310) 297-6018 Andrew Zimmerman Junior Associate (415) 616-1610 May 11, 2010
January 30, 2010 Strategic Planning Overview of Redevelopment Finance 1. California Economic Outlook 2. Review of the Atascadero 3. Redevelopment Program Project Area Growth • 2004 Bond Status • Current Bonding Capacity • City Hall Financing Options • Bond Financing options • Council expressed interest in further 4. pursuing bond options 1
May 11, 2010 – Bond Financing Team Proposed 2010 Financing 1. Why issue bonds now • Advantages / Disadvantages of Different • Financing Methods for City Hall Project City vs. Agency Issuance • Build America Bonds • City Hall Financing Options City Hall Financing Options • • Analysis of Proposed Bonds 2. Review of Atascadero Redevelopment 3. Program Hired bond counsel and underwriters 4. 2
Preliminary Financing Schedule C ITY OF A TASCADERO S ERIES 2010 L EASE R EVENUE B ONDS P RELIMINARY F INANCING S CHEDULE A PRIL 23, 2010 *City Council Meetings are Held on the 2 nd and 4 th Tuesday of Each Month* M A Y S M T W T F S May 12 • Project Go Ahead 1 2 3 4 5 6 7 8 May 19 • Draft Documents with Bond and Disclosure 9 10 11 12 13 14 15 Counsel 16 17 18 19 20 21 22 23 24 25 26 27 28 29 May 26 • Draft Rating Presentation 30 31 June 2 • Conference Call to Discuss Ratings and Bond J U N E Documents S M T W T F S 1 2 3 4 5 June 9 6 7 8 9 10 11 12 • Revised and Updated Documents Go Around for 13 13 14 14 15 15 16 16 17 17 18 18 19 19 Final Comments Final Comments 20 21 22 23 24 25 26 27 28 29 30 June 14 • Documents go to Rating Agency J U L Y July 15 • Rating Presentation in San Francisco S M T W T F S July 22 1 2 3 • Reciept of Bond Ratings 4 5 6 7 8 9 10 11 12 13 14 15 16 17 July 27 • Pre-sale Activity 18 19 20 21 22 23 24 25 26 27 28 29 30 31 August 11 • Bond Sale A U G U S T August 24 • Bond Closing S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 3
July 27, 2010 – Authorize Issuance of Bonds Proposed 2010 Financing 1. Rating Information 2. Authorization to issue bonds Authorization to issue bonds 3. 3. 4
The Series 2010 Financing Program Program 5
Purpose of a New Bond Financing � Three Key reasons for Series 2010 financing; – Funding of Completion of the City Hall – “Freeing up” of saved funds earmarked for City Hall that could now be utilized for economic development projects – Funding of much needed public infrastructure projects Funding of much needed public infrastructure projects 6
Purpose of New Bond Financing Atascadero Community Redevelopment Agency Overall Cash Flow of Agency After Issuance of Tax Exempt Series 2010 Bonds 28,000,000 Capitalized Interest Agency Admin 26,000,000 AB 1290 Pass Throughs Basic Aid Pass-Through County Admin. Fee Housing Set-Aside 24,000,000 Projected Series 2010 Debt Service Series 2004 Debt Service 22,000,000 Gross Revenues 20,000,000 18,000,000 16,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - 7
Debt Service Coverage and Cash Flow: Table 4 Projected Net Agency Pledged Series 2004 Debt Series 2010 Total Projected Debt Service Subordinate Cash Flow After Year Revenues Service Debt Service Debt Service Coverage (1) Pass-Throughs Obligations 2008 2,627,770 (574,043) - (574,043) 458% (707,139) 1,196,588 2009 2,756,708 (849,043) - (849,043) 325% (741,836) 1,008,329 2010 2,636,882 (850,793) (132,521) (983,313) 268% (709,591) 778,603 2011 2,778,813 (851,530) (795,123) (1,646,653) 160% (779,868) 178,648 2012 2,925,002 (851,205) (795,123) (1,646,328) 160% (852,253) 244,095 2013 3,075,577 (850,835) (1,000,123) (1,850,958) 142% (926,810) 106,367 2014 3,334,063 (849,023) (1,001,310) (1,850,333) 143% (1,054,799) 227,917 2015 3,605,474 (851,023) (1,001,459) (1,852,482) 142% (1,189,188) 352,740 2016 3,890,456 (852,423) (1,000,547) (1,852,969) 142% (1,330,296) 485,573 2017 4,189,687 (848,223) (1,003,595) (1,851,817) 142% (1,478,459) 626,711 2018 4,503,879 (847,528) (1,000,660) (1,848,187) 143% (1,634,031) 777,327 2019 4,833,781 (850,808) (1,001,988) (1,852,796) 142% (1,797,381) 927,053 2020 5,180,178 (847,808) (1,002,384) (1,850,192) 143% (1,968,899) 1,091,708 2021 5,543,894 (848,718) (1,001,878) (1,850,596) 142% (2,148,993) 1,261,459 2022 5,925,797 (849,143) (1,000,510) (1,849,652) 143% (2,338,091) 1,441,064 2023 2023 6,326,795 6,326,795 (848,213) (848,213) (1,003,327) (1,003,327) (1,851,540) (1,851,540) 142% 142% (2,536,645) (2,536,645) 1,626,771 1,626,771 2024 6,747,842 (850,056) (1,000,248) (1,850,304) 143% (2,745,126) 1,824,981 2025 7,189,942 (850,681) (1,001,478) (1,852,159) 142% (2,964,031) 2,029,950 2026 7,654,147 (850,088) (1,001,768) (1,851,855) 142% (3,193,881) 2,247,418 2027 8,141,562 (848,275) (1,000,202) (1,848,477) 143% (3,435,224) 2,478,820 2028 8,653,348 (850,244) (997,883) (1,848,126) 143% (3,688,633) 2,718,594 2029 9,190,724 (850,750) (999,811) (1,850,561) 142% (3,954,714) 2,967,555 2030 9,754,968 (849,000) (1,000,735) (1,849,735) 143% (4,234,098) 3,232,346 2031 10,347,424 (850,750) (1,000,655) (1,851,405) 142% (4,616,733) 3,418,557 2032 10,969,503 (850,750) (998,773) (1,849,523) 143% (5,018,500) 3,617,715 2033 11,622,686 (849,000) (1,000,849) (1,849,849) 143% (5,440,356) 3,824,528 2034 12,308,528 (850,500) (1,001,622) (1,852,122) 142% (5,883,304) 4,039,751 2035 13,028,662 - (1,851,093) (1,851,093) 142% (6,348,399) 4,269,152 2036 13,784,803 - (1,849,977) (1,849,977) 143% (6,836,749) 4,510,058 2037 14,578,751 - (1,850,213) (1,850,213) 143% (7,349,517) 4,761,601 2038 15,412,397 - (1,851,542) (1,851,542) 142% (7,887,923) 5,024,640 2039 16,287,724 - (1,848,703) (1,848,703) 143% (8,453,250) 5,305,066 2040 17,206,818 - (1,851,696) (1,851,696) 142% (9,046,842) 5,593,539 Total 257,014,584 (22,670,446) (34,847,789) (57,518,235) (113,291,560) 74,195,223 (1) Debt Service Coverage assuming no grow th in assessed value from 2009/10 (2) Grow ing at 3% annually for 3 years and 5% annually thereafter 8
2010 LEASE REVENUE BONDS • Bonds will be backed by the General Fund, but will be paid via a Reimbursement Agreement between the City and the Redevelopment Agency • Combination of Tax-exempt Muni Bonds and Build America Bonds • Approximate par amount of $16 million • Approximate par amount of $16 million • Raise $14.5 million in net proceeds to fund improvements to the City Hall building and other public improvements • Bonds will be structured with 30 year amortization and will wrap around the 2004 Tax Allocation Bonds 9
City Issue / Redevelopment Reimbursement � Utilize City Credit for Lowest Borrowing Cost � Fund Public Infrastructure Including City Hall Completion � Structure Financing with Redevelopment Agency Reimbursement Agreement 10
City Issue / Redevelopment Reimbursement � City and Agency Borrowing Costs: – City and Agency combined borrowing: 5% – 5.5% – Agency standalone borrowing: 6% – 6.5% � For a $15 million net funded bond financing, City and Agency combined will save approximately $160,000 per year or $4,800,000 in total 11
Leasing and Reimbursement Structure � City leases buildings to PFA for $1 a year � PFA leases buildings back to City for debt service � Agency reimburses City for all of debt service � With Agency reimbursement, bond funds must be spent on Agency eligible projects 12
Build America Bonds (“BABS”) � Finance any tax-exempt public facilities for municipalities � “Subsidy” BABs can only be issued for new projects (no refunding) � Bonds issued on a taxable basis – issuer receives 35% subsidy from Federal Government � No allocation necessary � BAB financings have been issued very successfully since April, 2009 – the market is evolving and improving � 2% limitation on cost of issuance 13
BAB Bonds Interest Rate Benefit Federally Subsidized Net Taxable Yields Tax-Exempt Yields Taxable Yields 8.00% 7.00% 6.00% 5.00% aturity Yield To Mat 4.00% 4.00% 3.00% 2.00% Potential Benefit/Cost of Tax-Exempt Issue (By Maturity) 1.00% 0.00% -1.00% 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 14
Lease Revenue Bonds, Series 2010 – Sources and Uses of Funds SOURCES AND USES OF FUNDS City of Atascadero, Lease Revenue Bonds, Series 2010 Scenario 1: Tax-Exempt Dated Date 9/1/2010 Delivery Date 9/1/2010 Sources: Bond Proceeds: Par Amount 16,325,000.00 Net Original Issue Discount -113,866.05 16,211,133.95 Uses: Project Fund Deposits: Project Fund 14,400,279.77 Other Fund Deposits: Debt Service Reserve Fund 1,443,213.12 Delivery Date Expenses: Cost of Issuance 200,000.00 Underwriter's Discount 163,250.00 363,250.00 Other Uses of Funds: Additional Proceeds 4,391.06 16,211,133.95 15
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