TITLE
Recommendation to adopt resolution of the City Council approving the issuance and/or incurrence, from time to time, by the Board of Harbor Commissioners, on behalf of the City of Long Beach, of Subordinate Harbor Revenue Revolving Obligations secured by Subordinate Harbor Department Revenues, in an aggregate principal amount, outstanding at any one time, not to exceed $200,000,000, to finance any legal purposes of the Harbor Department and certain other matters.
(District 2)
DISCUSSION
The Board of Harbor Commissioners (Board) acting on behalf of the City of Long Beach (City) proposes to issue Subordinate Harbor Revenue Revolving Obligations in an aggregate principal amount, outstanding at any one time, not to exceed $200,000,000 for the purpose of financing and refinancing certain capital improvements. The Subordinate Harbor Revenue Revolving Obligations shall be secured and payable from subordinate Harbor Department revenues.
The Harbor Department currently expects to finance approximately $1.2 billion of the capital projects and improvements to be completed at the Port of Long Beach over the next three years. The capital projects and improvements will include, but not be limited to, the Middle Harbor Development Project, Pier G Modernization, rail projects, replacement of the Gerald Desmond Bridge, Port maintenance building, fire station/fire boat replacements, Pier T/Pier Echo redevelopment, dredging projects, Port security projects, Port mitigation projects, Harbor Department buildings, and various engineering projects (collectively, the Projects).
The Board has determined that it is in the best interest of the City to have the capacity to issue and/or incur short-term Subordinate Harbor Revenue Revolving Obligations in order to provide funds to finance and refinance the acquisition, construction, rehabilitation and equipping of facilities at, and improvements to, the Port. It is anticipated that the short-term Subordinate Harbor Revenue Revolving Obligations will be refinanced in the future, subject to approval by the City Council, with long-term Harbor revenue bonds.
Subordinate Harbor Revenue Revolving Obligations, Series A (Tax-Exempt)
The Board intends to issue up to $78,000,000 aggregate principal amount of tax-exempt Subordinate Harbor Revenue Revolving Obligations, Series A (Series A Subordinate Revolving Obligations), pursuant to a revolving line of credit to be provided by Bank of America, N.A.
Subordinate Harbor Revenue Revolving Obligations, Series B (Tax-Exempt) and Series C (Taxable)
The Board also intends to issue up to $122,000,000 aggregate principal amount of tax-exempt Subordinate Harbor Revenue Revolving Obligations, Series B (Series B Subordinate Revolving Obligations) and taxable Subordinate Harbor Revenue Revolving Obligations, Series C (Series C Subordinate Revolving Obligations, and together with the Series B Subordinate Revolving Obligations, the Series B/C Subordinate Revolving Obligations). The Series B/C Subordinate Revolving Obligations shall be issued and/or incurred pursuant to a revolving line of credit to be provided by Union Bank, N.A.
On July 10, 2013, the City, acting on behalf of the Board, held a Tax Exempt and Fiscal Responsibility Act of 1982 (TEFRA) public hearing (July 2013 Hearing) in order to comply with the requirements of the Internal Revenue Code. The purpose of the hearing was to allow the public to voice its approval for or against the issuance of one or more series of senior and/or subordinate harbor revenue bonds, notes, certificates and other obligations (collectively, the Harbor Bonds), in an aggregate principal amount not to exceed $1.2 billion. The Harbor Bonds are expected to be issued over the course of the next three years to provide proceeds (i) to pay or reimburse the Harbor Department for the costs of various projects, specifically the Projects; (ii) to pay a portion of the costs of issuing or insuring the Harbor Bonds; (iii) to fund capitalized interest on a portion of the Harbor Bonds; and (iv) to fund necessary reserves for the Harbor Bonds. The hearing notice was published in the Press-Telegram on June 25, 2013.
The Subordinate Harbor Revenue Revolving Obligations represent the first three series of Harbor Bonds to be issued pursuant to the July 2013 Hearing. The issuance of additional series of Harbor Bonds will be subject to future approval by the City Council.
This matter was reviewed by Assistant City Attorney Charles Parkin on June 21, 2013 and by Budget Management Officer Victoria Bell on July 25, 2013.
TIMING CONSIDERATIONS
City Council action is requested on July 16, 2013 to facilitate the Harbor Department's capital projects and improvement program.
FISCAL IMPACT
The Subordinate Harbor Revenue Revolving Obligations will be special, limited obligations of the City. The Board has pledged and assigned subordinate revenues by the Harbor Department to secure the payment of the Subordinate Harbor Revenue Revolving Obligations. These financial transactions will not have an impact on the General Fund (GP). The Harbor Department's capital projects and improvements are expected to create approximately 20,000 jobs in the five-county region over the next three years.
SUGGESTED ACTION
Approve recommendation.
BODY
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LONG BEACH APPROVING THE ISSUANCE AND/OR INCURRENCE, FROM TIME TO TIME, BY THE BOARD OF HARBOR COMMISSIONERS, ON BEHALF OF THE CITY OF LONG BEACH, OF SUBORDINATE HARBOR REVENUE REVOLVING OBLIGATIONS SECURED BY SUBORDINATE HARBOR DEPARTMENT REVENUES IN AN AMOUNT NOT TO EXCEED $200,000,000 AGGREGATE PRINCIPAL AMOUNT OUTSTANDING AT ANY ONE TIME TO FINANCE ANY LEGAL PURPOSES OF THE HARBOR DEPARTMENT OF THE CITY OF LONG BEACH AND CERTAIN OTHER MATTERS
Respectfully Submitted,
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT
AL MORO
ACTING EXECUTIVE DIRECTOR
PORT OF LONG BEACH
APPROVED:
PATRICK H. WEST
CITY MANAGER