HomeMy WebLinkAbout1997-06-03; City Council; 14185; AUTHORIZATION TO REFUND EXISTING DEBT ISSUESAB# )4,/85 TITLE:
MTG. 6-3-97 EXISTING DEBT ISSUES
DEPT. CM
AUTHORIZATION TO REFUND
DEPT. HD.
CITY ATTY. 1
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%Y OF CARLSBAD - AGENU a BILL
RECOMMENDED ACTION:
Adopt Resolution No. ??-L(68 authorizing the staff to proceed with refunding existi
issues.
ITEM EXPLANATION:
During the past 20 years, the City of Carlsbad and Carlsbad Municipal Wate
(CMWD) have not been heavy users of debt financing. However, from time to time
and the Water District have issued tax exempt bonds to purchase property, 1
roads, or build public improvements. Each bond issue was priced and sold at
favorable interest rates available at the time the bonds were offered to the market.
Just as interest rates have risen and fallen in the general economy, rates are c
changing in the public finance market. From time to time there are periods whet
rates decline below the rates at which a bond issue was originally sold. In these r
may be in the City’s and CMWD’s best interest to refinance the issue by doin
called a “refunding”. This action is very similar to refinancing a home in that the c
paid off, or satisfied in some manner, and the new loan, with its lower interest I
annual debt service payment, is carried forward.
In the recent past, the City has refunded two multi-family mortgage revenue bor
the Redevelopment Agency Bonds, and the Encina Phase IV Expansion Bonc
CMWD has refunded the existing Certificates of Participation (COPs) to take ad\
declining interest rates. In each case the refunding resulted in a significant at
cumulative savings on debt payments.
There are currently several existing bond issues which are candidates lor refundir
issues are summarized in the table below. Debt issues like Hosp Grove or tt
COPs are excellent candidates for refunding because current interest rates are bc
associated with these issues, and market demand for these types of issues is stro
Although Assessment District Bonds, such as College Boulevard, Palomar Air1
and Alga Road may be slightly weaker candidates for refunding due to the marke
view of land backed securities, there are opportunities for refunding these iss
should also be investigated. In order to complete a successful refunding
Assessment District issues the City would need to show that the District:
developed with diverse land ownership, and has a history of making debt paymen
In any case, if a refunding can be accomplished, it will reduce the annual de
costs for the City and/or the property owners in the Assessment District areas.
The staff is asking the City Council and the CMWD Board to adopt the attached
which would direct staff to review all outstanding bond issues and to procee
refunding of those issues that would result in a substantial savings in dc
payments. The Council’s, and Board’s, authorization would allow the stal
DEBT ISSUE
College Blvd
Palomar Airport Road
Alga Road
Hosp Grove
CMWD
TYPE OF ISSUE OUTSTANDING CURRENT RANGE
PRINCIPAL OF INTEREST
RATES
1913 Act Assessment $6,180,000 7.6 to 8%
District
19 13 Act Assessment $3,085,000 7.38 to 8% District
1913 Act Assessment $16,940,000 7.5 to 8%
District
Certificates of $6,615,000 6 to 7.6%
Participation
Certificates of $8,160,000 6.8 to 7.3% Participation
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RESOLUTION NO. 97-468
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, AUTHORIZING THE STAFF TO
PROCEED WITH PRELIMINARY WORK RELATED TO
PROCEED WITH REFUNDING EXISTING BOND ISSUES.
WHEREAS from time to time the City of Carlsbad has issued various tyF
debt to finance the construction of public projects within the City; and
WHEREAS the interest rates applied to these debt issues reflect the mi
conditions at the time the issue was originally sold to the market, and
WHEREAS over time, interest rates in the tax exempt municipal market
fluctuate to reflect economic conditions and the market’s interest in various tyF
exempt debt; and
WHEREAS it is in the best interest of the City of Carlsbad and the tax F
within the City to achieve the lowest cost possible for any debt issue, consiste
prudent financial management principles; and
WHEREAS from time to time it is appropriate for the City staff to prepa
submit to the Council refunding proposals which will reduce the annual cost o
the City.
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NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITJ
CARLSBAD AS FOLLOWS;
1) That the above recitations are true and correct.
2)
existing debt issue.
That the staff is here by authorized to actively consider the refunding of
3) That the staff may proceed with requesting proposals from underwriters
experts and other parties deemed necessary to accomplish a refunding of any
subject debt issues.
4)
prior to commencing any official work on a refunding.
That the staff shall present to the City Council any recommended financ
5) That the staff may consider combining any CMWD refunding with any (
Carlsbad refunding where such combination results in improved savings for bi
entities.
6) That the staff shall endeavor to recover from any subsequent refundins
amount necessary to reimburse the City and/or District for staff time invested
refunding effort, but not less than $10,000 per issue refunded, and any direc
related to the refunding effort.
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PASSED, APPROVED, AND ADOPTED at a regular meeting of the Carl3
Council held on the 3rd day of June , 1997, by the followini
wit:
AYES:
NOES: None
ABSENT: None
ABSTAIN: None
Council Members Lewis, Finnila, Nygaard, Kulchin,
ATTEST:
0, n, iy 2
ALETHA L. RAUTENKRANZ, City Clerk
(SEAL)
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CITY OF CARLSBAD
REQUEST
FOR
STATEMENT OF QUALIFICATIONS
FROM
UNDERWRITING FIRMS
Date Distributed:
June ,1997
Date Due:
June -, 1997
Issue
Hosp Grove - Certificates of Participation
Carlsbad Public Improvement Corporation
Alga Road Assessment District (1 91 5 Act Bonds)
Costa Real Municipal Water District (Independent
Public Facilities 1 Corporation) - Certificates of
Participation
College Boulevard Assessment District (1 91 5 Act
Bonds)
Palomar Airport Road Assessment District No 86-1
(1 9 15 Act Bonds)
Original Issue Date Amount
Outs tanding
June 1988 6,615,000
September 1990 16,940,000
October 1988 9,040,000
March 1986 6,9 10,000
July 1988 3,085,000
0 0
Additional information is included in the exhibits to this request for qualification.
SPECIAL REQUIREMENTS
The following terms will be required with respect to this refunding. Any Underwriter offering
services must understand and agree to the following:
1. The underwriting spread, management fee, expenses and sales, including takedown, v
finalized at the time of pricing.
All underwriter compensation will be contingent on the successful negotiation, execut
and final closing of the transaction.
Joint proposals will not be accepted.
be negotiated based on comparable rransacdons and market coiiditions and will
2.
3.
SCOPE OF SERVICES
The firm selected as the City’s Underwriter will be expected to fulfill the following duties:
+ Assist the City and assume primary responsibility for preparation of
Preliminary and Final Official Statements.
Attend and participate in meetings related to financing.
Provide support services for completion of the financing, including identify
methods of reducing debt service costs, development of a financing strate
rating agency liaison. and assistance with continuing disclosure requirements.
Assist in preparation and review of financing and contract documents.
Assist in preparation for presentations to the City Council, rating agenc
investors and insurers, as appropriate.
Analyze and assist in the evaluation of credit enhancement proposals,
appropriate.
Provide ongoing information to staff and the City’s financing team regarding
activity and status of the financing.
Structure, market and purchase the financing.
Prepare and present pre- and post-sale market analyses.
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+
+
+
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+
+
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PROPOSAL REQUIREMENTS
Responding firm should address the following topics:
1. Describe the organizational structure of your firm as it relates to municipal investm
California. Include brief summaries of your firm’s investment banlung servic
underwriting and trading and the firm’s sales organization.
Describe the firm’s experience in lease revenue bond and certificate of participation ;
assessment district financing in California and provide no more than two brief c
studies for comparable California financings managed by the lead banker assigned to
City’s financing. Please provide in Appendix 1 a list of negotiated California le
revenue and certificate financings, and assessment district financings managed by y
firm since 1991. Include the name of issuer, size of the financing, pricing date, role
the firm, lead banker, and agency contact.
Identify the individual who will be the firm’s senior representative for the dl
management of this transaction - the individual who will attend the City’s financing te
meetings, appropriate City Council meetings, and meetings with City staff. Discuss
underwriting and marketing personnel. Please provide a list of public agency executi
who the City may contact as personal references for the lead banker. In Appendix
provide brief resumes of your team, their relevant experience, and briefly describe tl
proposed role in serving the financing. If an interview is scheduled with your firm, o
key members of the team should appear.
Provide your firm’s capital position as of the date of your most recent financial statem
and indicate your firm’s willingness to commit its capital to underwrite public fina
transactions in difficult markets.
Describe your firm’s institutional and/or retail bond distribution capabilities. Desci
your approach to marketing the COPS or other products you propose, including I
investor liaison you would recommend. The City is interested in maximizing IC
participation in the distribution process if this does not increase the cost of the borrow
to the City. How would you suggest accomplishing this goal?
Please summarize your views with respect to the following matters.
a.
b.
C.
d.
banking, underwriting and sales. Describe the firm’s presence and activity in the State
2.
3.
availability of this individual, List the other members of your team includ
4.
5.
6.
Discuss the key credit rating factors the City will be facing in the issuance of
financing.
Preferred structure for the proposed issue.
Timing of the proposed issue, given current and anticipated market conditions.
Financing techniques you have used in California for minimizing rate impacts.
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7. Is your firm involved in litigation regarding sales methods, security dealin
undenvritings, or related practices? Please disclose the status of such matters.
STATEMENT OF QUALIFICATION CONTENT
The submittal should specifically address the topics given above. Please refrain from submitt
general marketing materials which do not explicitly respond to the questions below. Respon
should not exceed a total of fifteen (15) pages in length, excluding a one or two-page cover let
and two appendices as follows:
1. List of negotiated California lease revenue or certificate of participation, :
assessment district transactions managed by your firm since 1991 ;
Resumes of finance team members. 2.
SELECTION CRITERIA AND EVALUATION OF QUALIFICATIONS
Your submittal will be evaluated in accordance with your responses to the questions raised un
“Proposal Requirements” and will be evaluated for specificity, completeness, demonstra
knowledge of lease-based financings, structuring ideas, relevant experience and qualifications
personnel, past participation in comparable financings and, if interviews are deemed advisable
the City, your interview presentation.
SCHEDULE
The City intends to proceed with the following schedule in the selection of an Underwriter
the financing:
+ Request Statement of Qualifications June 4, 1997
+ Receive Submittals June 11,1997
4 Announce Underwriters to be Interviewed June 17, 1997
+ Interviews, if appropriate, of short-listed Underwriters June 24, 1997
+ Recommendation by Selection Panel to City Council and
selection of Underwriter July 8, 1997
POINT OF CONTACT
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Questions regarding this Request for Qualifications and the City should be directed to .
Elliott, Financial Management Director 760/434-2948, or Lisa Hildabrand, Finance Direc
6191434-2872.
SUBMITTAL INSTRUCTIONS
Ail submittals should be delivered no later the 5:OO p.m., California time, June 11, 1997.
exceptions will be made to this deadline. Seven (3) bound copies should be delivered to the (
at the address indicated below:
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008-1989
The submittal shall be transmitted with a cover letter that includes but is not limited to
following:
a.
b.
Signed by an officer authorized to contractually bind the underwriting firm.
Provides that name, title, address, fax number and telephone number of
individual to whom correspondence and other contacts should be directed dur;
the selection process; and
Provides the name, title, address and telephone number of the individual who P
negotiate with the City and is authorized to contractually bind them.
c.
Responses should provide straightforward, concise responses to satisfy the requiremer
Emphasis should be on completeness and clarity of content. It is not sufficient for
Underwriter to respond in general terms or in terms other than those outlined herein. No prin
brochures or materials other than the written responses to the specific requirements will
accepted. Each copy of the submittal should be bound as a single volume.
REJECTION OF SUBMITTALS
The City reserves the right to reject any or all submittals received as a result of this request a
to waive any informality, technical defect or clerical error in any submittal as the interests oft
City may require. Non-acceptance will not imply any criticism of the submittal and shall
construed as simply that another submittal was deemed to be more advantageous to the Ci
Late or non-responsive submittals will be rejected.
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