TITLE
Recommendation to adopt resolution authorizing Long Beach Bond Finance Authority to issue 2010 Refunding bonds in an amount not to exceed $34,000,000 to prepay the 1997 Civic Center Lease thus refunding the outstanding Long Beach Bond Finance Authority Lease Revenue and Refunding Bonds (Civic Center) 1997 Series A, and pay cost of issuance for the Series 2010 bonds. (District 2)
DISCUSSION
On November 11, 1997, the City Council authorized the refinancing of the Long Beach Civic Center Revenue Bonds issued in 1973. On December 1, 1997 the City of Long Beach and the Long Beach Bond Finance Authority (LBBFA) entered into a Trust Agreement and Facilities Lease, to refinance the 1973 Civic Center lease and to assist in financing of the police headquarters facility, emergency services system center, and other improvements to the Long Beach Civic Center.
Pursuant to the December 1, 1997 Trust Agreement between the City and LBBFA, the City's base rental payment was assigned to a trustee in support of the LBBFA Lease Revenue and Refunding Bonds (Civic Center) 1997 Series A, for the purpose of refunding the 1973 Long Beach Civic Center Revenue Bonds.
The objective of the proposed refunding was to reduce the annual debt service burden of the Civic Center Fund without extending the term of the existing bonds, or back-loading the debt service burden to a future date. The proceeds from the Series 2010A Bonds and the 1997 Debt Service Reserve Fund will be used to refund approximately $33,400,000 aggregate principal of 1997 Series A Bonds (Civic Center), and pay approximately $450,000 for the cost of issuing the Series 2010A Bonds.
The recommended bond structure is estimated to reduce the interest rate to 4.55 percent from 5.00 percent, thereby, producing an average annual debt service savings of approximately $140,000, while also reducing the bond term by one year to 2027 from 2028.
This item was reviewed by Chief Assistant City Attorney Heather A. Mahood on July 21, 2010 and Budget Management Officer Victoria Bell on July 14, 2010.
TIMING CONSIDERATIONS
City Council action is requested on August 10, 2010 in order to facilitate processing of required documents and benefit from currently advantageous interest rates.
FISCAL IMPACT
The FY 11 annual debt cost of this obligation is estimated to decrease from approximately $2,826,750 to approximately $2,650,000 in the current market environment. The proposed refunding will assist in reducing costs in the Civic Center Fund without extending the term of the bonds. There is no job impact associated with this request.
SUGGESTED ACTION
Approve recommendation.
BODY
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LONG BEACH A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LONG BEACH AUTHORIZING PROCEEDINGS TO PREPAY BASE RENTAL PAYMENTS AND THEREBY REFUND OUTSTANDING LONG BEACH BOND FINANCE AUTHORITY LEASE REVENUE AND REFUNDING BONDS (CIVIC CENTER PROJECT) 1997 SERIES A, AND APPROVING RELATED DOCUMENTS AND ACTIONS
Respectfully Submitted,
LORI ANN FARRELL
DIRECTOR OF FINANCIAL MANAGEMENT/CFO
APPROVED:
PATRICK H. WEST
CITY MANAGER