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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 CITY MGR L 7 e v Q K1 P 0 ;rm& pr$, .. z o i= 0 ?3 z 5 0 a A %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 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 0 0 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. < 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 0 0 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. -2- I l 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e 0 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) -3 - e 0 DRAl 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. 4 + + + + + + + -2- e e 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. -3- a a 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 -4- a 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. -5-