TITLE
Recommendation to adopt resolution to authorize issuance of 2005 Long Beach Bond Finance Authority (LBBFA) Limited Obligation Improvement Bonds (2005 Earthquake Bonds) in an amount not to exceed $5.6 million to refinance the 1997 Limited Obligation Revenue Bond, approve waivers to City Investment Policy as stated in resolution in regards to investment maturities; and authorize City Manager to execute all documents. (Citywide)
DISCUSSION
In 1991, the City Council authorized the issuance of $17.4 million of Earthquake Repair
Assessment District No. 90-3 (AD 90-3) conduit bonds to enable property owners to make
necessary seismic repairs by allowing an annual assessment levy on their properties. In
1997, the AD 90-3 bonds became at risk of default due to a high level of property
delinquencies driven by the real estate recession. To prevent a default and protect the
City's reputation in the financial markets, the City Council approved the 1997 restructuring
of the AD 90-3 bond issue.
On June 24, 1997, the City Council authorized the formation of the Long Beach Bond
Finance Authority (LBBFA), a joint powers authority between the City and Redevelopment
Agency (Attachment). The LBBFA was established to issue bonds under the Marks-Roos
Local Bond Pooling Act of 1985. Concurrently, the City Council authorized the
restructuring of the AD 90-3 bonds, and the purchase of certain of those bonds issued by .
the LBBFA as an investment by the City.
The 1997 transaction restructured the original bonds by splitting the transaction into
Series A and Series B bonds. Series A bonds were secured by properties whose
assessment payments were current and had a strong record of prompt payment; this
series was sold to outside investors. The Series B bonds were established for the bonds
associated with those non-performing properties; those bonds were purchased by the City
at a discount and were secured by properties that were in default. The Series B debt was
managed by the City At...
Click here for full text