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AMENDED AND RESTATED RESOLUTION APPROVING THE SUCCESSOR AGENCY’S AUTHORIZATION OF THE REFUNDING OF CERTAIN OUTSTANDING OBLIGATIONS OF THE SUCCESSOR AGENCY
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RECOMMENDATION
It is recommended that the Stockton Successor Agency Oversight Board (Oversight Board) adopt an amended and restated resolution approving the Successor Agency to the former Redevelopment Agency of the City of Stockton’s (Successor Agency) authorization of the refunding of certain outstanding obligations of the Successor Agency and the execution and delivery of an indenture of trust, bond purchase contract, escrow agreement, refunding agreements and related documents, and approving and authorizing certain related actions.
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Summary
On June 29, 2016, by Resolution OB 2016-06-29-0601 (Attachment A - Resolution OB 2016-06-29-0601), the Oversight Board approved the Successor Agency’s refunding of certain enforceable obligations and authorizing the issuance and sale of Successor Agency’s 2016 Tax Allocation Refunding Bonds (2016 Bonds) and certain related actions. The resolution and supporting documents were submitted to the State Department of Finance (DOF) as required. During the DOF review period, the Successor Agency was informed that certain technical changes to the Oversight Board resolution were necessary to gain approval of the refunding by the DOF.
The amended and restated resolution includes the DOF’s recommended changes. If approved, the resolution will be submitted to the DOF for their continued review of the refunding. None of the changes affects the economic substance of the refunding transaction, so the savings analysis and number runs that were previously provided remain valid.
DISCUSSION
Background
The Successor Agency assumed responsibility for all debt management with respect to the former Redevelopment Agency in 2012. Under State law (including the Fiscal Year 2012-13 State of California budget bill (Assembly Bill 1484) and California Health and Safety Code Section 34177.5(a)), the Successor Agency may refund outstanding bonds and other indebtedness of the Former Agency with approval from the Oversight Board and the DOF, subject to certain conditions, including that the total interest cost to maturity plus the principal amount of the refunding bonds does not exceed that of the bonds or other indebtedness to be refunded. In other words, there must be debt service savings created by the refinancing.
On June 29, 2016, the Oversight Board authorized the issuance and sale of the 2016 Bonds in one or more series not to exceed $130 million. The primary goal of the refinancing was to generate significant savings on certain Successor Agency obligations. The resolution was submitted to the DOF for review.
Present Situation
The DOF is requiring specific changes to the language in the resolution. These changes have been included in the amended and restated resolution. The changes do not affect the savings analysis or numbers presented at the June 29, 2016 Oversight Board meeting as listed below.
Summary of Savings Results for 2016 Bonds
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2016 Bonds |
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Net Present Value Savings |
$16.2 million |
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Net Present Value Savings (% of Par Value Refunded) |
13.17% |
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Avg. Annual Savings |
$1.2 million |
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Total Debt Service Savings |
$25.5 million |
*Projected savings are based on current interest rates assuming the 2016 Bonds have a “BBB” underlying rating and overall level debt service on the bonds issued for the refinancing. These rates are subject to change based on market conditions at the time of sale.
Per DOF request, the amended and restated resolution specifically refers to the enforceable obligations of the former Redevelopment Agency and the Successor Agency being refunded with the proceeds of the Successor Agency’s Refunding Bonds, which also include an Arena Refunding Agreement.
The refunding is designed to terminate all of the Former Redevelopment Agency’s and Successor Agency’s obligations under various documents related to the refunded obligations (Exhibit 1 to the resolution - Refunded Obligations).
FINANCIAL SUMMARY
The amended and restated resolution were required by the DOF during their review of the refunding request. None of the changes affects the economic substance of the refunding transaction, so the savings analysis and number runs that were previously provided remain valid.
Attachment A - Resolution OB 2016-06-29-0601