City Council
MEETING DATE: 6/22/2015
TITLE:
Title
Resolution Authorizing the Refunding of Lease Revenue Bonds
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FROM:
Tami E. Scott, Administrative Services Director
RECOMMENDATION:
Recommendation
Staff recommends the City Council approve a resolution and corresponding documentation, in substantially the form provided, to complete the issuance of Lease Revenue Refunding Bonds, Series 2015A (Taxable) (the "Bonds") to provide for the redemption of Cathedral City Public Finance Authority 1997 Lease Revenue Bonds to reduce the annual debt obligation.
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BACKGROUND:
On March 31, 1997 the Cathedral City Public Financing Authority (the "Authority") issued its 1997 Taxable Lease Revenue Bonds (Capital Facilities Projects) (the "1997 Bonds") the proceeds of which were used to construct a sports complex and community park in the City, with the Civic Center utilized as the leased asset to secure the debt. The municipal bond market will currently allow the 1997 Bonds to be refunded and achieve debt service savings for the City. The documents on file with the City Clerk, together with the proposed Authorizing Resolution, relate to the issuance by the Authority, on behalf of the City, of the Bonds.
The approval of the Resolution would authorize the issuance of the Bonds and their delivery to City National Bank in an amount not to exceed $3,900,000 and a true interest rate on the Bonds not greater than 4.50%. The Authority will assist the City with such financing by entering into certain lease agreements as a counter-party. The City expects to use the Civic Center of the City as the "Leased Property" for the financing, as an essential asset is required by the proposed Bond purchaser. The proposed purchaser is City National Bank and/or another qualified institution buyer or accredited investor.
DISCUSSION:
The outstanding 1997 Taxable Lease Revenue Bonds (Big League Dreams Stadium) were issued in March of 1997. The original Par Amount was $5,920,000. The Par outstanding is $4,065,000. The Coupon Rates range from 7.75%-7.875% with final maturity August 1, 2027.
The Proposed 2015 Taxable Refunding Bonds would have an estimated closing date of July 1, 2015 with an estimate Par amount of $3,850,000 and an estimated Coupon Rate of 4.25% with final maturity August 1, 2027.
The refunding bonds will not extend the length of repayment of the original bonds
The refunding will result in debt service savings each year throughout the life of the issue.
About 80% of the anticipated savings is expected to be passed on to the operator of the Big League Dreams Sports Park, in the form of an updated promissory note, so capital improvements can be made to the park for the benefit of the Cathedral City community.
FISCAL IMPACT:
Estimated annual debt service savings of $100,000 or $1.3 million over the remaining life of the bonds.
ATTACHMENTS:
Resolution and supporting documents