06-07-2016 - Successor Agency Treasurers Report for the Month - Item No. SA1 (2).pdfCity of West Covina
Memorandum
AGENDA
ITEM NO SA1
DATE June 7, 2016
TO: Chair and Board Members of the Successor Agency
FROM: Chris Freeland
Executive Director
BY: Christa Buhagiar
Finance Director
SUBJECT: SUCCESSOR AGENCY TREASURER'S REPORT FOR THE MONTH
ENDED APRIL 30, 2016
RECOMMENDATION:
It is recommended the City Council, acting as the Successor Agency to the former West Covina
Redevelopment Agency, receive and file this report.
DISCUSSION:
The Investment Policy of the City of West Covina also applies to the Successor Agency to the
former West Covina Redevelopment Agency. In accordance with Section XVI of the City of
West Covina Fiscal Year 2015-16 Statement of Investment Policy, a Treasurer's Report for the
month ended April 30, 2016, is hereby submitted to the Successor Agency. It also includes cash
held by trustees for all bond issues and cash in the various Successor Agency bank accounts as
well as reporting on compliance with the City's Investment Policy, and providing a statement of
the ability to meet budgeted expenditure needs for the following six months.
At April 30, 2016, the Treasurer's Report shows that the Successor Agency's portfolio increased
by $767,255.16 from $8,656,811.32 on March 31, 2016, to $9,424,066.48 on April 30, 2016.
The increase is the result of sales tax and property tax revenue for the Community Facilities
District (CFD) received in April. Property tax revenue is the largest source of income and the
large payments are received in December, April and May of each year. The Successor Agency's
surplus funds are in the Los Angeles County Investment Pool (LACIP) which is completely
liquid, as the City can withdraw them at any time. This is approximately 96 percent of the
portfolio with the remaining small amount of available cash on deposit in the checking account.
The Bond Detail Report includes fiscal agent investments of Successor Agency cash which is
being held to service various issues of bonded debt
Prepared by:
Nicole Lugotoff
Accounting Manager
Reviewed by:
ATTACHMENT NO. 1 — Treasurer's Report
3.54%
0.00%
96.46%
100.00%
Market Value
397,059
560,816
1,420
799,355
996,547
5,042,651
Book Value
397,059
560,816
1,421
779,488
996,547
5,042,651
Colleen B. Rozatti, CitTfqsurer
ATTACHMENT NO. 1
West Covina Successor Agency
Treasurer's Report
April 30, 2016
Book Value
Market Value % of Portfolio Investment Portfolio
Bank Accounts
State Local Agency Investment Fund (LAIF)
Los Angeles County Investment Pool (LACIP)
Total Cash and investments
333,749 $
1
9,090,318
9,424,068 $
333,749
1
9,090,318
9,424,068
Blended Yield *
0.87%
Benchmarks:
LAIF 0.53%
LACIP * 0.87%
6mo U.S. Treasury 0.40%
2yr U.S. Treasury 0.77%
5yr U.S. Treasury 1.28%
Restricted Funds with Fiscal Agent
1988 Housing Set-Aside Tax Allocation Bonds Series A & B
1998 Housing Set-Aside Tax Allocation Bonds Series A & B
1999 Taxable Variable Rate Demand Tax Allocation Bonds
2001 Housing Set-Aside Tax Allocation Revenue Bonds
2002 Taxable Variable Rate Lease Revenue Refunding Bonds
1996 Special Tax Refunding Bonds
'Total Restricted Funds 7,797,848 $ 7,777,982 I
* To ensure timely submission of the City Treasurer's Report, the prior month's LACIP percentage yield is used.
I hereby certify that the investments are in compliance with the investment policy adopted by the City Council in
July 2015. The investment portfolio provides sufficient cash flow liquidity to meet estimated expenditures for the
next six months. This report meets the requirements of Government Code Section 53646.
PREPARED BY: APPROVED BY:
Christa Buhagiar, Finance Director
West Covina Successor Agency
Investment Portfolio Activity
April 30, 2016
March 31, 2016 Deposits Withdrawals April 30, 2016
Checking Accounts
Wells Fargo Checking
Wells Fargo Checking - C.F.D.
Subtotal
Other Investments
110,177.83
200,278.68
310,456.51
80,000.00
848,170.75
928,170.75
82,565.45 107,612.38
822,313.29 226,136.14
904,878.74 333,748.52
Local Agency Investment Fund (LAIF) $ $ 0.65 $
Los Angeles County Investment Pool (LACIP) 7,284,473,27 3,021.15
Los Angeles County Investment Pool (LACIP) - C.F.D. 1,061,881.54 820,941.35
Subtotal $ 8,346,354.81 $ 823,963.15
80,000.00
0.65
7,207,494.42
1,882,822.89
$ 9,090,317.96 80,000.00
Total Successor Agency $ 8,656,811.32 $ 1,752,133.90 $ 984,878.74 $ 9,424,068.48
In January 2016, the Successor Agency received funds from the DOF-approved ROPS for the January to June 2016 period which will provide
sufficient cash flow liquidity to meet estimated expenditures from Janaury to June 2016.
West Covina Successor Agency
Investment Portfolio Detail
April 30, 2016
Maturity Book Market
Issuer/Security Date Yield Value Value
Local Agency_Investment Fund
LAIF - Successor Agency
Local Agency Investment Fund Subtotal
N/A 0.53% $
1
1
Los Angeles County Investment Pool
LACIP - Successor Agency
LACIP - CFD
Los Angeles County Investment Pool Subtotal
N/A 0.87%
N/A 0.87%
7,207,494
1,882,823
9,090,317
7,207,494
1,882,823
9,090,317
Portfolio Total
$ 9,090,318 $ 9,090,318
West Covina Successor Agency
Bond Detail Report
April 30, 2016
Bond / Investment / Issuer / Account Maturity Date Rate Market Value* Original Cost
1988 Lease Revenue Refunding Bonds (The Lakes Public Parking Project)
Federated Treasury Obligations
Federated Investors Co
Reserve 8/1/2018
Original LOC #NZS671159 CUSIP #S66714370
Wells Fargo
L/C Fund 8/1/2018
$ 396,665.67 $ 396,665.67
392.90 392.90
$ 397,058.57 $ 397,058.57
1998 Housing Set-Aside Tax Allocation Bonds Series A & Taxable Series B (Executive Lodget Project)
First American Tress Oblig Cl d Corp Trust
First American Funds, Inc.
Bond 9/1/2025 $ 0.03 $ 0.03
Interest Series A 9/1/2025
Interest Series B 9/1/2025 -
Reserve Series A 9/1/2025 344,290.00 344,290.00
Reserve Series B 9/1/2025 101,650.00 101,650.00
Project Fund Series B 9/1/2025 114,681 26 114,681.26
Principal Account 9/1/2025 194.59 194.59
$ 560,815.88 $ 560,815.88
1999 Taxable Variable Rate Demand Tax Allocation Bonds
First American Tress Oblig CI d Corp Trust
First American Funds, Inc.
Revenue Fund 11/1/2029
Cash
L/C Fund 4/30/2017
2001 Housing Set-Aside Tax Allocation Revenue Bonds
First American Trees Oblig Cl d Corp Trust
First American Funds, Inc.
Special Fund
FHLMC Discount Note
U S. Trees & Agency
Reserve Account 9/1/2016
First American Treas Oblig Cl d Corp Trust
First American Funds, Inc.
Reserve Account 9/1/2031
Project Fund 9/1/2031
1,419.74 $ 1,419.74
1.00
$ 1,419.74 $ 1,420.74
5.27% 798,968.00 779,100.62
336.88 336.88
50.43 50.43
$ 799,355.31 $ 779,487.93
2002 Taxable Variable Rate Lease Revenue Refunding Bonds (Public Facilities Project)
First American Treas Oblig CI d Corp Trust
First American Funds, Inc.
Special Fund 9/1/2035 14.97 $ 14.97
First American Government Obligation
First American Funds, Inc.
Reserve Fund 9/1/2035 0.01% 996,532.50 996,532.50
$ 996,547.47 $ 996,547.47
Community Facility District No. 1989-1 (Fashion Plaza)
1996 Special Tax Refunding Bonds
Guaranteed Investment Contract
VVestdeutsche Landesbank Girozentrale
Reserve Fund 9/1/2022
First American Trees Oblig Cl d Corp Trust
First American Funds, Inc.
Bond 9/1/2022
Rebate Reserve Fund 9/1/2022
7.01% $ 5,002,670.40 $ 5,002,670.40
39,980.14 39,980.14
$ 5,042,650.54 $ 5,042,650.54
GRAND TOTAL $ 7,797,847.51 $ 7,777,981.13
*Market valuations have been provided by BNY Western Trust Company and U.S. Bank
City of West Covina
Memorandum
AGENDA
ITEM NO SA2
DATE June 7, 2016
TO: Chair and Board Members of the Successor Agency
FROM: Chris Freeland
Executive Director
BY: Christa Buhagiar
Finance Director
SUBJECT: INTENT TO REFUND CERTAIN SUCCESSOR AGENCY BONDS
RECOMMENDATION
It is recommended that the Successor Agency Board members authorize staff, subject to
Oversight Board approval, to undertake proceedings for the refunding of Successor Agency debt
through participation in the County of Los Angeles Redevelopment Bond Refunding Program
(Program).
BACKGROUND
Effective February 1, 2012, pursuant to Assembly Bill xl 26 (AB 26), redevelopment agencies
throughout the State were abolished and prohibited from engaging in future redevelopment
activities. AB 26 enabled the formation of Successor Agencies (SA's), which have the
responsibility of winding down outstanding obligations of the former redevelopment agencies.
On June 27, 2012, the State passed Assembly Bill 1484 (AB 1484), which included provisions
permitting SAs to refund outstanding bonds or other obligations of a former redevelopment
agency to achieve savings. A large number of SAs have since refunded their existing
redevelopment bonds to provide savings to taxing entities.
The County of Los Angeles has developed a Program to assist SAs located within the County in
refinancing their outstanding redevelopment bonds in an efficient and cost-effective manner.
Refunding the former Redevelopment Agency's bonds through this program will reduce costs
and the burden on City staff.
DISCUSSION
The former Redevelopment Agency of the City of West Covina (The Former Agency) issued
$4,945,000 of 1998 Housing Set-Aside Tax Allocation Bonds Series A, (Series I998A) and
$1,200,000 of 1998 Housing Set-Aside Tax Allocation Bonds, Series B (Series 1998B) to fund,
among other things, eligible costs of the Executive Lodge Project, a multifamily housing project
within the West Covina Project Areas. In 2001, the Former Agency issued $11,275,000 of
Housing Set-Aside Tax Allocation Revenue Bonds (Series 2001) to fund, among other
obligations, eligible costs of an 85-unit senior housing complex and the implementation of
certain low and moderate income housing programs within the West Covina Project Areas. In
addition to these bonds secured by housing set-aside, in 2002 the Former Agency issued
$12,200,000 of Tax Allocation Revenue Refunding Bonds (Series 2002 bonds) to fund, among
other things, the prepayment of the outstanding balance of the Agency's 1993 Loans and refund
the outstanding West Covina Public Financing Authority's 1993 Revenue Bonds. The 1993
obligations were issued to pay for the construction of Fire Station No. 2 as well as the seismic
upgrade, asbestos removal and building upgrades to the City owned building located at 811 S.
Sunset.
These previously issued bonds (Prior Bonds) are currently outstanding in the amount of
$16,040,000, and have a final term of 2031 with existing interest rates ranging from 4.75% to
7.00%. Based on today's interest rates, the Prior Bonds could be refunded to the same term at
interest rates ranging from 0.72% to 3.45%. At current rates, the refunding bonds (Refunding
Bonds) would produce annual savings averaging about $302,000. Total savings would be about
$4.5 million, or about $1.8 million on a present value basis, representing over 12% of the
refunded par amount of bonds. These savings will increase the amount of "residual" property tax
available to be redistributed to other taxing entities, including West Covina, based on their
proportionate share of the 1% property tax levy.
The potential savings from the refunding are summarized below.
Name of Bond(s) Refunded
Average Annual
Savings Total Savings
Total
NPV Savings
Series 1998A $67_000 $601,000 $202,000
Series 1998B $25,000 $228,000 $108,000
Series 2001 $125,000 $1,875,000 $812,000
Series 2002 $204,000 $1,833,000 $659,000
One additional bond issue will be considered for refunding. In 1999, the West Covina Public
Financing Authority issued $3,945,000 of Taxable Variable Rate Demand Tax Allocation Bonds,
the proceeds of which were used to fund a loan to the Former Agency (1999 Obligation), which
loan proceeds were used to finance certain redevelopment projects of the Former Agency.
Because these bonds bear a variable interest rate, there are factors besides interest savings that
merit refunding these bonds with fixed rate bonds, including elimination of interest rate risk,
letter of credit fees, and the costs and risks associated with renewing the letter of credit every few
years. With the assistance of the County's financing team and the Successor Agency's Financial
Advisor, the Successor Agency is currently working on the cost savings analysis. If it can be
determined that a fixed rate refunding of the 1999 Obligation can meet the State law
requirements for refunding, it will be included in the 2016 refunding transaction, as well.
The refunding bonds will be sold through a pooled financing structure with the County of Los
Angeles Bond Refunding Authority serving as the issuer of bonds to the capital markets. Bonds
issued under the Program may be sold in one or more series depending on the number of
participating successor agencies and the various credit and financing characteristics of the
refunded bonds. The Program offers SA participants the following benefits:
• County Assistance - The County will lead the effort to prepare all legal documents and
Official Statements, solicit credit ratings and market the bonds.
• Department of Finance Approval — The County will take the lead in seeking approval of
the refunding transactions from the California Department of Finance (DOF). The
Program has been assigned dedicated staffing by DOF that will streamline the approval
process required under AB 1484.
• Continuing Disclosure - The County will assume substantial responsibility for continuing
disclosure related to the Refunding Bonds.
• Efficient Procurement Process - The County has put together a team of financial and legal
experts to work on all aspects of the financing process.
• Enhanced Financing Structure - The Program will feature structural enhancements that
improve the marketability of the Refunding Bonds and increase savings to local taxing
entities.
Upon formally joining the Program, the County will begin the process to draft finance
documents for review and approval from the Successor Agency Board, Oversight Board, and the
Department of Finance. The schedule below outlines the financing milestones associated with
the 2016 Refunding.
Tentative Financing Schedule:
June 2016 Governing Board Authorizes Successor Agency to Pursue
Financing, Oversight Board Approves Opt-In Resolution
August- September 2016 Successor Agency Approves Financing, Oversight Board
Approves Financing
November 2016 DOF Approves Financing, County Board Approves
Financing
November/December
2016 Credit Presentation/Receive Rating
December 2016 County Sells Tax Allocation Revenue Refunding Bonds
December 2016/January
2017 Close
March 2017 Redeem Bonds
FISCAL IMPACT
If the Refunding Bonds were issued under current market conditions, the refinancing will reduce
existing debt payments by about $4.5 million over the life of the Refunding Bonds, which will
increase the "residual" property tax distribution to all taxing entities. Present value savings
would be about $1.8 million. The City will receive a share of this savings as a residual
distribution from the Redevelopment Property Tax Trust Fund. Based on its most recent ROPS
distribution, the City will receive approximately 16% of the total savings generated from the
Refunding Bonds. This would produce additional general fund revenue of about $48,000
annually (or a total savings of $726,000). All costs of the refinancing will be paid on a
contingent basis from the bond proceeds. The refinance will also save staff time since there are
less bonds to administer, and the County will assume substantial responsibility for continuing
disclosure related to the Refunding Bonds.
If the refinancing, as directed by the Oversight Board, does not proceed for any reason, any costs
already incurred by the SA will be submitted for reimbursement on the next ROPS, and shall not
count against any administrative cost allowance of the SA as such allowance is defined in the
Health & Safety Code Section 34171(b).
Prepared by:
Chiista Buhagiar
Finance Director