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HomeMy WebLinkAboutAgenda Statement 1987/08/18 Item 7JOINT COUNCIL/REDEYELOPMENT AGENCY AGENDA STATEMENT • Item ~ Meeting Date 8/18/87 ITEM TITLE: a) Resolution (3 ~ ~ ~ of the City Council of the City of Chula Vista approving Lease Agreement and Operating Lease with Homart Development Co. relating to Town Centre II public parking project, approving form of Trust Agreement and official statement relating to the not to exceed $11,000,000 1987 Series A Certificates of Participation, authorizing and directing sale of such certificates and approving related documents and official action b) Resolution of the City Council of the City of Chula Vista approving amendment of Site Lease and Lease Agreement with respect to Town Centre I public parking project, approving form of Trust Agreement and official statement relating to the not to exceed $10,000,000 1987 Series B Certificates of Participation, authorizing and directing sale of such certificates, approving assignment of interests by Imperial Municipal Services Group and approving related documents and official action c) Resolution of the Redevelopment Agency of the City of Chula Vista approving amendment of site lease and lease • agreement with respect to Town Centre I Public Parking Project, approving Form of Trust Agreements, Assignment Agreement and Official Statement relating to the not to exceed $10,000,000 1987 Series B Certificates of Participation authorizing and directing sale of such certificates, approving assignment of interest by imperial municipal services group by Imperial Municipal Services Group and approving related documents and official action d) Resolution of the Redevelopment Agency of the City of Chula Vista approving site lease and lease agreement relating to Town Centre II Public Parking Project, approving Form of Trust Agreement and Official Statement relating to the not to exceed $11,000,000 1987 Series A Certificates of Participation, authorizing and directing sale of such certificates and approving related documents and official action SUBMITTED BY: Director of Financeo~,~ Community Development Directo~ REVIEWED BY: City Manager ~ ~f~`~ (4/5ths Vote: Yes_No X On April 30, 1987, the Redevelopment Agency and Homart Development Co. entered into a Disposition and Development Agreement whereby Homart agreed to develop and redeye op the u a ista hopping Center. Total cost of the project is estimated to be ~42,150,G00. Of this amount, $35,000,000 is to be invested by Homart and $7,150,000 by the City/Agency. Page 2, Item 7 • Meeting Date~7$7 City staff has been working closely with our bond counsel (Chick Adams of Jones Hall Hill & White), Agency counsel (Marcia Scully of McDonough, Holland & Allen), the underwriter (Peter Ross of Dean Witter Reynolds), and the developer (Tom Gourguechon of Homart) in order to structure the Certificates of Participation financing to provide the City's share in the amount of $7,150,000. In addition, staff has structured the Certificates to provide financing for refunding the 1982 Parking Facility Certificates ($3,135,000), court improvements to the South Bay Regional Center ($1,300,000), and General Fund Capital Improvement Projects ($1,300,000). RECOMMENDATION: That Council adopt the resolutions approving the various agreements and legal documents and directing the sale of Certificates of Participation. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: As mentioned above, the proposed Certificate financing is made up of several elements. Because there are leases involved for two different sites (Shopping Center and the Parking Facility in Town Centre I), the financing is being divided into two separate series of Certificates of Participation: the 1987 • Series A Certificates and the 1987 Series B Certificates. They will be marketed under one Official Statement. I. 1987 Series A Certificates A. Project Description. The purpose of the 1987 Series A issue is to fund a 7, 50,000 public parking project (the "Project") in the Redevelopment Agency's Town Centre II Redevelopment Project Area. The Project consists only of land, not improvements. The Project Area, which totals approximately 65 acres, consists of an existing retail shopping center. However, Homart Development Co., a major shopping center developer ("Homart"), has agreed to redevelop the Project Area into a regional shopping mall pursuant to the terms of a Disposition and Development Agreement, dated April 30, 1987. That Disposition and Development Agreement requires Homart to acquire most of the parcels in the Project Area, to construct a mall with 140,000 square feet of gross leasable space, to link 2 of the 3 major retailers in the Shopping Center (Sears and Broadway; Penney's is the third) and to construct certain public improvements. Homart is on a "fast-track" construction schedule and expects to complete the development of the Shopping Center by January 1989 or earlier. Completion is guaranteed by a completion bond. • The overall cost to redevelop the Project Area is estimated to exceed $42,000,000. Homart already has expended $12,000,000 for land acquisition on April 30, 1987, is under contract to expend $7 ~.-~ . Page 3, Item 7 • Meeting Date 8/18/87 million for additional land and leasehold acquisition, has contracted for the off-sites and by mid-August expects to have entered into contracts for construction and on-site improvements. The redevelopment of the Project Area by Nomart represents a key piece in the City and Redevelopment Agency's overall plan of revitalization in Chula Vista. It also is a means to preserve the City's retail competitiveness with recently opened shopping centers in nearby National City (Plaza Bonita) and downtown San Diego (Horton Plaza) and a means of boosting sales tax revenue from the existing shopping center. The Disposition and Development Agreement requires the Agency to contribute $7,150,000 to the shopping center redevelopment and to close the section of 5th Avenue in the City which bisects the Center. The Agency already has approved the vacation and closure of 5th Avenue. With the issuance of approximately $9,670,000 of Certificates of Participation, 1987 Series A, the Agency will have satisfied its other requirement under the Disposition and Development Agreement. B. The Lease Structure. The proceeds of the 1987 Series A Certificates will be used to acquire a leasehold interest in a 7-acre Lease Parcel to be used for public parking in the Shopping • Center. Homart, which owns the parking site, will lease the Lease Parcel to the Agency pursuant to a Site Lease. The Agency will sublease the Lease Parcel to the City pursuant to the 1987 Series A Lease Agreement. The City will then sub-sublease the Lease Parcel to omart pursuant to an Operating Agreement. This structure is diagrammed as follows: Homart (as owner) n i COP ~ Site Lease Proceeds ; i Assignment 77~usiee Agreer,ient Agency <-- -- Assigned Lease Payments Annual ~ I Lease Agreer,~ent Lease ~ (sub-lease) Payments ' City Sl ~ Operating Agreement • ^ ~ (sub-sublease) Nomart (a s operator) Page 4, Item 7 • Meeting Date~/T$7$7 During the term of the 1987 Series A Lease Agreement, the City will use and occupy the Lease Parcel solely for the purpose of providing free parking for the public and for the purpose of sub-subleasing the Lease Parcel to Homart pursuant to the Operating Agreement. C. Security Features 1. Annual Appropriations. The 1987 Series A Certificates are secure y annua appropriations from the City's General Fund. The annual lease payments of approximately X965,000 ased on current market rates) represent approximately 3% of the City's 1987/88 General Fund. 2. Revenues from the Project Area. The 1987 Series A COPS will result in the generation of revenues which are estimated to more than replenish the City's General Fund. These revenues are in the form of (i) real property tax increment, which is paid to the City pursuant to a Reimbursement Agreement with the Agency and (ii) sales tax revenues which flow directly into the City's General Fund. The accompanying cash flows reflect these projected revenues. The tax increment revenues were projected by Community Systems Associates, Inc. as redevelopment consultant; the sales tax revenues, which • represent incremental revenues over the current level of sales tax generated from the existing center, were projected initially by Homart and confirmed by the Agency's consultant, Gruen + Gruen. 3. Sales Tax Guaranty. Homart is furnishing a Sales Tax Guaranty through 1996 which will require them to make a payment to the City if the sum of the annual increment sales tax, increment property tax, and cumulative tax surpluses is less than the City's Lease Payment obligation. The amount that Homart is required to pay in the event a payment is necessary under the Sales Tax Guaranty, is the lesser of the shortfall or an amount equal to 90% of the sales tax increment as estimated for that year. 4. Capitalized Interest. The 1987 Series A COPs includes two years of capitalized interest payments. Such funding is not legally required because COP proceeds will be expended soon after closing and the land theoretically will be immediately available for leasing. Nonetheless, the two years of funded interest will permit Homart sufficient time to redevelop the Project Area and thus allow the generation of real property and sales tax increment revenues. It also allows the City to cumulate a "cushion" of revenues which effectively can be used to offset any revenue "deficits" in future years. • Page 5, Item 7 Meeting Date 8/18/87 • 5. Reserve Fund. The 1987 Series A COPs will include a reserve fund in an amount equal to 10% of the COP amount. II. 1987 Series B Certificates A. Project Description. The 1987 Series B Certificates are being issue to re un the outstanding City of Chula Vista 1982 Certificates of Participation (Parking Facility) in the approximate amount of $3,135,000, to provide $1,300,000 for court improvements to South Bay Regional Center and to provide $1,300,000 for General Fund Capital Improvement Projects. The Parking Facility and site were leased by the City to Imperial P1unicipal Services Group in relation to the 1982 Certificates of Participation. In order to accomplish the proposed refunding, it will be necessary for Imperial to execute an Assignment Agreement which will assign all of its interests and rights to the Parking Facility and site to the Redevelopment Agency. Proceeds of the 1987 Series B Certi fi Cates wi 11 then be deposited i n escrow i n an amount sufficient, together with interest earnings thereon, to fully pay the 1982 Certificates in 1992, the first redemption date. It is estimated that the refunding will result in total debt service savings in the amount of over $1,000,000 during the life of the Certificates. • Proceeds in the amount of $1,300,000 from the sale of the 1987 Series B Certificates will be used to satisfy the Agency's capital improvements obligation to the County. The County agreed to permit the Agency to retain tax increment revenues generated from the Project Area in exchange for the Agency's assistance in financing construction of court improvements to the South Bay Regional Center. Finally, proceeds also in the amount of $1,300,000 will be used to assist in financing General Fund capital improvement projects. The Public Safety Communications center has a total budget of $1,110,700 ($488,700 in 1987/88 and $622,000 in 1988/89) and the Police Crime Laboratory has a budget of $355,750 in 1987/88. The major portion of the financing for these projects may be included in the Certificates, thus spreading the financing over several years rather than reducing the General Fund reserves by $1.3 million in one year. • • Page 6, Item 7 Meeting Date-$%T$7$~ B. Lease Structure. The lease structure for the 1987 Series B certificates essentially parallels the conventional COP structure. The only modification is an assignment agreement by Imperial Municipal Services Group to the Agency. Imperial, now effectively defunct, was the lessor under the 1982 issue and the Agency will be assuming its obligations as lessor under the 1987 Series B issue. Trust e e Assiynment Agreement Ayency Lease Payments n i ~ Lease Ayreement i i i City • C. Security 1. General Fund. The 1987 Series B issue will be secured by annua appropriations that the City will covenant to make from its General Fund. The annual lease payments, approximately $920, represent approximately 2.5°~ of the City's 1987-88 General Fund. However, the amounts attributable to the refunding portion alone are fully reimbursed through tax increment revenues generated out of the Agency's Town Centre I Redevelopment Project and the amounts attributable to the $1.3 million County contribution are projected to be reimbursable through excess property tax and sales tax increment revenues from the Town Centre II Redevelopment Project. 2. Capitalized Interest. The 1987 Series B issue includes one year o un ed interest. 3. Debt Service Reserve Fund. The 1987 Series B issue will include a debt service reserve fund in an amount equal to 10% of the COP size. • Page 7, Item 7 • Meeting Date III. Rating Presentations have been made by City staff and Homart to the rating agencies of Moody's and Standard & Poor's in New York on August 4, 1987. As of this date we have not received a rating but anticipate having one prior to the Council meeting. IV. Underwriter The Certificates of Participation will be sold by the City/Agency to Dean Witter Reynolds (the "Underwriter") pursuant to a Purchase Agreement. FISCAL IMPACT: Certificates of Participation in an estimated total amount of $16,725,000 are to be issued in Series A and Series B: Series A Series B Project Expenses $7,150,000 $5,735,000 Capitalized Interest 1,230,000 398,000 Reserve Fund 967,000 706,000 Costs of Issuance & Discount 323,000 216,000 _$9,670,000 _$7,055,0_00 • The Series A Certificates will be issued for a 25-year term (2012) and the Series B Certificates issued fora 15-year term (2002). Sources of Revenue for Debt Service Payments Series A Certificates - It is anticipated that the incremental property tax and sales tax revenues generated from the Project will offset the debt service requirement for Series A (Shopping Center parking) and also contribute toward debt service on Series B. Series B Certificates - Currently the City receives tax increment payments each year from the Redevelopment Agency Town Centre I Project in an amount sufficient to pay the debt service on the 1982 Parking Facility Certificates. This practice will continue following the refunding with the issuance of the 1987 Series B Certificates. Since the Parking Facility refunding makes up 55% of the Series B issue, 55~ of the debt service on the Series B Certificates will continue to be funded by payments from the Town Centre I Project. The source of debt service payment for the principal portion included in the Series B issue for financing court improvements ($1,300,000) is anticipated to come from increment sales tax and property tax revenues in excess of the amount required for debt service payments on the Series A Certificates. This is as was contemplated when the Agency entered into agreement with the County whereby the Agency will receive tax increment revenue from the Project Area. • • Page 8, Item ~ Meeting Date /~1 There is also the possibility that excess increment sales and property tax revenues could fund the debt service for the remaining portion of the Series B issue ($1,300,000 for General Fund Capital Improvement Projects). If not, the funding would come from General Fund revenues. Financing the $1,300,000 in the Series B Certificates will result in an annual debt service of approximately $185,000 as opposed to reducing the General Fund reserves by $1.3 million during 1987-88. DOCUMENTS: A. The following documents are included with this agenda item: 1. Cash flows showing: Debt Service schedules for Series A and B separately and combined, Series A Pro Forma Analysis. 2. Preliminary Official Statement 3. Purchase Agreement among the City, Agency and Dean Witter Reynolds. 4. Sales Tax Guaranty among Homart, City and Agency relating to Series A Certificates. • In addition to the above, the following documents are on file and available for review in the City Clerk's office: B. 1987 Series A Materials 1. Trust Agreement among the City, Agency and First Interstate Bank. 2. Site lease between the Homart and the Agency for the parking site in the Shopping Center. 3. Lease Agreement between the Agency and City for the parking site. 4. Operating lease between the c;ty and Homart for the parking site. 5. Assignment Agreement between the Agency and First Interstate Bank whereby Bank will receive lease payments from the City. 6. Recognition and Attornment Agreement by and among the Agency, City, Homart, and First Interstate Bank. C. 1987 Series B Materials 1. Trust Agreement among the City, Agency and First Interstate Bank. 2. Assignment Agreement by and among the Agency, City, and Imperial Municipal Services Group relating to the parking facility. 3. Assignment Agreement between the Agency and First Interstate Bank. • 4. Amended Lease Agreement between the Agency and the City. ~.-,~- Page 9, Item ~ • Meeting Date 8/18/87 5. Escrow Deposit and Trust Agreement establishing an escrow fund for the refunding of the 1982 Parking Facility Certificates of Participation. 6. Amended and Restated Site Lease between the City of Chula Vista and the Agency continuing the Site Lease that was executed in 1982 in connection with the 1982 Certificates and conforming to the Series B Certificates being issued now. • WPC 0447G the City Council of Chula Vita, CUiifornia Dated ~ / ~. • JOINT COUNCIL/REDEVELOPMENT AGENCY AGENDA STATEMENT • Item 7 Meeting Date 8/18/87 ITEM TITLE: a) Resolution of the City Council of the City of Chula Vista approving Lease Agreement and Operating Lease with Homart Development Co. relating to Town Centre II public parking project, approving form of Trust Agreement and official statement relating to the not to exceed $11,000,000 1987 Series A Certificates of Participation, authorizing and directing sale of such certificates and approving related documents and official action b) Resolution /~~2 D,~ of the City Council of the City of Chula Vista approving amendment of Site Lease and Lease Agreement with respect to Town Centre I public parking project, approving form of Trust Agreement and official statement relating to the not to exceed $10,000,000 1987 Series B Certificates of Participation, authorizing and directing sale of such certificates, approving assignment of interests by Imperial Municipal Services Group and approving related documents and official action c) Resolution of the Redevelopment Agency of the City of Chula Vista approving amendment of site lease and lease • agreement with respect to Town Centre I Public Parking Project, approving Form of Trust Agreements, Assignment Agreement and Official Statement relating to the not to exceed $10,000,000 1987 Series B Certificates of Participation authorizing and directing sale of such certificates, approving assignment of interest by imperial municipal services group by Imperial h1unicipal Services Group and approving related documents and official action d) Resolution of the Redevelopment Agency of the City of Chula Vista approving site lease and lease agreement relating to Town Centre II Public Parking Project, approving Form of Trust Agreement and Official Statement relati ng to the not to exceed $11,000,000 1987 Series A Certifi cates of Participation, authorizing and directing sale of such certificates and approving related documents and official action SUBMITTED BY: Director of Financeo~,~ Community Development Di recto REVIEWED BY: City Manager t, , t"~`~ (4/5ths Vote: Yes No X ) f I On April 30, 1987, the Redevelopment Agency and Homart Development Co. entered • into a Disposition and Development Agreement whereby Homart agreed to develop and redeye op the hu a ista Shopping Center. Total cost of the project is estimated to be 542,150,000. Of this amount, $35,000,000 is to be invested by Homart and $7,150,000 by the City/Agency. ' Page 2, Item ~ • Meeting Date~7T87~7 city staff has been working closely with our bond counsel (Chick Adams of Jones Hall Hill & White), Agency counsel (Marcia Scully of McDonough, iialland & Allen), the underwriter (Peter Ross of Dean Witter Reynolds), and the developer (Tom Gourguechon of Homart) in order to structure the Certificates of Participation financing to provide the City's share in the amount of $7,150,000. In addition, staff has structured the Certificates to provide financing for refunding the 1982 Parking Facility Certificates ($3,135,000), cQUrt improvements to the South Bay Regional Center ($1,300,000), and General Fund Capital Improvement Projects ($1,300,000). RECOMMENDATION: That Council adopt the resolutions approving the various agreements and legal documents and directing the sale of Certificates of Participation. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: As mentioned above, the proposed Certificate financing is made up of several elements. Because there are leases involved for two different sites (Shopping Center and the Parking Facility in Town Centre I), the financing is being divided into two separate series of Certificates of Participation: the 1987 • Series A Certificates and the 1987 Series B Certificates. They will be marketed under one Official Statement. I. 1987 Series A Certificates A. Project Description. The purpose of the 1987 Series A i ssue i s to fund a 50,000 public parking project (the "Project") in the Redevelopment Agency's Town Centre II Redevelopment Project Area. The Project consists only of land, not improvements. The Project Area, which totals approximately 65 acres, consists of an existing retail shopping center. However, Homart Development Co., a major shopping center developer ("Homart"), has agreed to redevelop the Project Area into a regional shopping mall pursuant to the terms of a Disposition and Development Agreement, dated April 30, 1987. That Disposition and Development Agreement requires Homart to acquire most of the parcels in the Project Area, to construct a mall with 140,000 square feet of gross leasable space, to link 2 of the 3 major retailers in the Shopping Center (Sears and Broadway; Penney's is the third) and to construct certain public improvements. Homart is on a "fast-track" construction schedule and expects to complete the development of the Shopping Center by January 1989 or earlier. Completion is guaranteed by a completion bond. • The overall cost to redevelop the Project Area is estimated to exceed $42,000,000. Homart already has expended $12,000,000 for land acquisition on April 30, 1987, is under contract to expend $7 • Page 3, Item 7 • Meeting Date 8/18/87 million for additional land and leasehold acqu~s~tion, has contracted for the off-sites and by mid-August expects to have entered into contracts for construction and on-site improvements. The redevelopment of the Project Area by Homart represents a key piece in the City and Redevelopment Agency's overall plan of revitalization in Chula Vista. It also is a means to preserve the City's retail competitiveness with recently opened shopping centers in nearby National City (Plaza Bonita} and downtown San Diego (Horton Plaza) and a means of boosting sales tax revenue from the existing shopping center. The Disposition and Development Agreement requires the Agency to contribute $7,150,000 to the shopping center redevelopment and to close the section of 5th Avenue in the City which bisects the Center. The Agency already has approved the vacation and closure of 5th Avenue. With the issuance of approximately $9,670,000 of Certificates of Participation, 1987 Series A, the Agency will have satisfied its other requirement under the Disposition and Development Agreement. B. The Lease Structure. The proceeds of the 1987 Series A Certificates will be used to acquire a leasehold interest in a 7-acre Lease Parcel to be used for public parking in the Shopping • Center. Homart, which owns the parking site, will lease the Lease Parcel to the Agency pursuant to a Site Lease. The Agency will sublease the Lease Parcel to the City pursuant to the 1987 Series A Lease Agreement. The City will then sub-sublease the Lease Parcel to Homart pursuant to an Operating Agreement. This structure is diagrammed as follows: Homart (as ok~ner) n i COP ~ Site Lease Proceeds ; i Assignment Trustee Agreerient Agency Assigned Lease ^ Pa~~rients ~ Annual ~ Lease Agreerient Lease i (sub-lease) Payments City Sl i Operating Agreement • ^ (sub-sublease) Homart (a S operator) -~ f Page 4, Item 7 • Meeting Date-87T$7$7 During the term of the 1987 Series A Lease Agreement, the City will use and occupy the Lease Parcel solely for the purpose of providing free parking for the public and for the purpose of sub-subleasing the Lease Parcel to Homart pursuant to the Operatiny Agreement. C. Security Features 1. Annual Appropriations. The 1987 Series A Certificates are secure y annua appropriations from the City's General Fund. The annual lease payments of approximately $965,000 ased on current market rates) represent approximately 3% of the City's 1987/88 General Fund. 2. Revenues from the Project Area. The 1987 Series A COPS will result in the generation of revenues which are estimated to more than replenish the City's General Fund. These revenues are in the form of (i) real property tax increment, which is paid to the City pursuant to a Reimbursement Agreement with the Agency and (ii) sales tax revenues which flow directly into the City's General Fund. The accompanying cash flows reflect these projected revenues. The tax increment revenues were projected by Community Systems Associates, Inc. as redevelopment consultant; the sales tax revenues, which represent incremental revenues over the current level of sales • tax generated from the existing center, were projected initially by Homart and confirmed by the Agency's consultant, Gruen + Gruen. 3. Sales Tax Guaranty. Homart is furnishing a Sales Tax Guaranty through 1996 which will require them to make a payment to the City if the sum of the annual increment sales tax, increment property tax, and cumulative tax surpluses is less than the City's Lease Payment obligation. The amount that Homart is required to pay in the event a payment is necessary under the Sales Tax Guaranty, is the lesser of the shortfall or an amount equal to 90°~ of the sales tax increment as estimated for that year. 4. Capitalized Interest. The 1987 Series A COPS includes two years of capitalized interest payments. Such funding is not legally required because COP proceeds will be expended soon after closing and the land theoretically will be immediately available for leasing. Nonetheless, the two years of funded interest will permit Homart sufficient time to redevelop the Project Area and thus allow the generation of real property and sales tax increment revenues. It also allows the City to cumulate a "cushion" of revenues which effectively can be used to offset any revenue "deficits" in future years. • ' Page 5, Item 7 • Meeting Date 8/18/87 5. Reserve Fund. The 1987 Series A COPS will include a reserve fund in an amount equal to 10~ of the COP amount. II. 1987 Series B Certificates A. Project Description. The 1987 Series B Certificates are being issue to re un the outstanding City of Chula Vista 1982 Certificates of Participation (Parking Facility) in the approximate amount of $3,135,000, to provide $1,300,000 for court improvements to South Bay Regional Center and to provide $1,300,000 for General Fund Capital Improvement Projects. The Parking Facility and site were leased by the City to Imperial Plunicipal Services Group in relation to the 1982 Certificates of Participation. In order to accomplish the proposed refunding, it will be necessary for Imperial to execute an Assignment Agreement which will assign all of its interests and rights to the Parking Facility and site to the Redevelopment Agency. Proceeds of the 1987 Series B Certi fi Cates wi 11 then be deposited i n escrow i n an amount sufficient, together with interest earnings thereon, to fully pay the 1982 Certificates in 1592, the first redemption date. It is estimated that the refunding will result in total debt service savings in the amount of over $1,000,000 during the life of the Certificates. • Proceeds in the amount of $1,300,000 from the sale of the 1987 Series B Certificates will be used to satisfy the Agency's capital improvements obligation to the County. The County agreed to permit the Agency to retain tax increment revenues generated from the Project Area i n exchange for the Agency' s assistance i n financing construction of court improvements to the South Bay Regional Center. Finally, proceeds also in the amount of $1,300,000 will be used to assist in financing General Fund capital improvement projects. The Public Safety Communications center has a total budget of $1,110,700 ($488,700 in 1987/88 and $622,000 in 1988/89) and the Police Crime Laboratory has a budget of $355,750 in 1987/88. The major portion of the financing for these projects may be i ncl uded in the Certificates, thus spreading the financing over several years rather than reducing the General Fund reserves by $1.3 million in one year. • • Page 6, Item 7 Meeting Date~T$7$7 B. Lease Structure. The lease structure for the 1987 Series B certificates essentially parallels the conventional COP structure. The only modification is an assignment agreement by Imperial Municipal Services Group to the Agency. Imperial, now effectively defunct, was the lessor under the 1982 issue and the Agency will be assuming its obligations as lessor under the 1987 Series B issue. Trustee Assiynment Agreement Ayency Lease Payments n ~ Lease Ayreement i i i i City • C. Security 1. General Fund. The 1987 Series B issue will be secured by annua appropriations that the City will covenant to make from its General Fund. The annual lease payments, approximately $920, represent approximately 2.5°6 of the City's 1987-88 General Fund. However, the amounts attributable to the refunding portion alone are fully reimbursed through tax increment revenues generated out of the Agency's Town Centre I Redevelopment Project and the amounts attributable to the $1.3 million County contribution are projected to be reimbursable through excess property tax and sales tax increment revenues from the Town Centre II Redevelopment Project. 2. Capitalized Interest. The 1987 Series B issue includes one year o un ed interest. 3. Debt Service Reserve Fund. The 1987 Series B issue will include a debt service reserve fund in an amount equal to 10% of the COP size. Page 7, Item 7 Meeting Date-$7T~i7$'e~ III. Rating Presentations have been made by City staff and Homart to the rating agencies of hloody's and Standard & Poor's in New York on August 4, 1987. As of this date we have not received a rating but anticipate having one prior to the Council meeting. IV. Underwriter The Certificates of Participation will be sold by the City/Agency to Dean Witter Reynolds (the "Underwriter") pursuant to a Purchase Agreement. • FISCAL IMPACT: Certificates of Participation in an estimated total amount of $16,725,000 are to be issued in Series A and Series B: Series A Series B Project Expenses $7,150,000 $5,735,000 Capitalized Interest 1,230,000 398,000 Reserve Fund 967,000 706,000 Costs of Issuance & Discount 323,000 216,000 $9,670,000 $7,055,000 The Series A Certificates will be issued for a 25-year term (2012) and the Series B Certificates issued fora 15-year term (2002). Sources of Revenue for Debt Service Payments Series A Certificates - It is anticipated that the incremental property tax and sales tax revenues generated from the Project will offset the debt service requirement for Series A (Shopping Center parking) and also contribute toward debt service on Series B. Series B Certificates - Currently the City receives tax increment payments each year from the Redevelopment Agency Town Centre I Project in an amount sufficient to pay the debt service on the 1982 Parking Facility Certificates. This practice will continue following the refunding with the issuance of the 1987 Series B Certificates. Since the Parking Facility refunding makes up 55% of the Series B issue, 55% of the debt service on the Series B Certificates will continue to be funded by payments from the Town Centre I Project. The source of debt service payment for the principal portion included in the Series B issue for financing court improvements ($1,300,000) is anticipated to come from increment sales tax and property tax revenues in excess of the amount required for debt service payments on the Series A Certificates. This is as was contemplated when the Agency entered into agreement with the County whereby the Agency will receive tax increment revenue from the Project Area. ', ~f '; Page 8, Item ~ • Meeting Date /18/87 There is also the possibility that excess increment sales and property tax revenues could fund the debt service for the remaining portion of the Series B issue ($1,300,000 for General Fund Capital Improvement Projects). If not, the funding would come from General Fund revenues. Financing the $1,300,000 in the Series B Certificates will result in an annual debt service of approximately $185,000 as opposed to reducing the General Fund reserves by $1.3 million during 1987-88. DOCUf~ENTS: A. The following documents are included with this agenda item: 1. Cash flows showing: Debt Service schedules for Series A and B separately and combined, Series A Pro Forma Analysis. 2. Preliminary Official Statement 3. Purchase Agreement among the City, Agency and Dean Witter Reynolds. 4. Sales Tax Guaranty among Homart, City and Agency relating to Series A Certificates. In addition to the above, the following documents are on file and available for review in the City Clerk's office: B. 1987 Series A Materials • 1. Trust Agreement among the City, Agency and First Interstate Bank. 2. Site lease between the Homart and the Agency for the parking site in the Shopping Center. 3. Lease Agreement between the Agency and City for the parking site. 4. Operating lease between the City and Homart for the parking site. 5. Assignment Agreement between the Agency and First Interstate Bank whereby Bank will receive lease payments from the City. 6. Recognition and Attornment Agreement by and among the Agency, City, Homart, and First Interstate Bank. C. 1987 Series B Materials 1. Trust Agreement among the City, Agency and First Interstate Bank. • 2. Assignment Agreement by and among the Agency, City, and Imperial Municipal Services Group relating to the parking facility. 3. Assignment Agreement between the Agency and First Interstate Bank. 4. Amended Lease Agreement between the Agency and the c;ty. ~; ~-- Page 9, Item 7 • Meeting Date 8/18/87 5. Escrow Deposit and Trust Agreement establishing an escrow fund for the refunding of the 1982 Parking Facility Certificates of Participation. 6. Amended and Restated Site Lease between the c;ty of Chula Vista and the Agency continuing the Site Lease that was executed in 1982 in connection with the 1982 Certificates and conforming to the Series 8 Certificates being issued now. • • WPC 0447G the City Council of Chula Vista, California Dated c~ . ,~ .