01-07-2003 - Public Hearing - Resolution Authorizing the Issuance of Lease Revenue Bonds, 2003 Series A (Community Center Project)City of West Covina
Memorandum
AGENDA
Item No
Date:
C- 2
1/7/03
TO: Andrew G. Pasmant, City Manager and City Council
FROM: Tom Bachman, Director of Finance
SUBJECT: Public Hearing - Resolution authorizing the issuance of Lease Revenue
Bonds, 20,03 Series A (Community Center Project)
RECOMMENDATION:
It is recommended that the City adopt the following resolution:
RESOLUTION NO. - RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF WEST COVINA
AUTHORIZING AND APPROVING A PROJECT LEASE, A
LEASE AGREEMENT, A PRELIMINARY OFFICIAL
STATEMENT, A FINAL OFFICIAL STATEMENT, A
CONTINUING DISCLOSURE AGREEMENT, AND A BOND
PURCHASE AGREEMENT; APPROVING THE
RETENTION OF CERTAIN PROFESSIONAL FIRMS; AND
AUTHORIZING THE TAKING OF CERTAIN OTHER
ACTIONS IN CONNECTION THEREWITH
DISCUSSION:
In June 2002, the City Council approved the 2002-03 Capital Improvement Program that
included the Cameron Park Community Center and identified the funding source as $4.2 million
in bond financing. The community center will consist of an approximate 24,000 square foot
multi -purpose community center building that will include a gymnasium, multi -purpose rooms to
be used for classes and other activities, kitchen facilities and offices for recreation staff. The
current architect's estimate is about $4.4 million and could be $4.7 million with contingencies,
administration and testing included. The total cost will depend on results of the bid process.
Staff has since identified alternative funding sources which include $800,000 in State Park Bond
Grant finds, $350,000 from Park Dedication Fees, $200,000 from the deferral of previously
approved capital projects (including the enclosure of the City Hall lobby and the lease payments
for the finance software system), and $350,000 from the general fund reserve. The grant funds
from the state may be delayed in their availability to the City. If this is the case, it is proposed
that reserve funds be used to find the construction and that the grant finds will reimburse the
reserve when received from the state.
With a project cost of $4.7 million, bond financing would be approximately $3.465 million with
net proceeds of approximately $3 million. These bonds would be issued using a fixed rate
structure with a term of 20 years. The interest rates would range from 2.0% to 5.25% with an
average interest rate of approximately 4.8%. `Net annual debt service payments would be
approximately $260,000. The structure of the bonds would consist of the West Covina Public
Financing Authority issuing lease revenue bonds, the. Authority leasing the facility from the City
and in turn leasing the facility back to the City. The City would make annual lease payments to
the Authority in an amount equal the annual debt service payments of the bonds. The Authority
is required to make the debt service payments on the bonds.
ALTERNATIVES:
An alternative to financing this project would be to pay for the project using cash reserves. This
would avoid cost of issuance and interest costs. However, given the current low interest rate
market and the City's need to use reserves to fiend the, budget gap it makes sense to take
advantage of the low rates and finance the. project. Financing the project also maintains the
City's cash reserves, which will also provide added protection in the short term in the event that .
the state takes away City revenue sources in an effort to balance their own budget.
FISCAL IMPACT:
Net bond proceeds would be $3 million. Adding in the funding of a reserve fund of $274,000, a
capitalized interest fund of $66,000 and issuance costs of approximately $125,000, would bring
the total bond issue to $3.465 million. The bond financing will result in net annual debt service
payments over the next 20 years of approximately $260,000, beginning in fiscal year 2003-04.
The source of repayment will be the general fund. Staff also believes that at least a portion of the
annual debt service can be funded with Community Development Block Grant (CDBG) funds.
This use of CDBG funds has not been verified yet, but staff is continuing to work with HUD
officials to resolve this issue. Total debt service payments of $3.465 million of principal plus
approximately $2.054 million in interest, would be $5.519 million over the twenty-year
repayment schedule (see attachment no. 2).
Prepared by:
Tom Bachman
Director of Finance
Attachments: No: 1 —
Resolution
No. 2
— Bond Sources and Uses of Funds; Debt Service Schedules
No. 3
— Preliminary Official Statement
No. 4
— Project Lease
No. 5
— Lease Agreement
No. 6
— Continuing Disclosure Agreement
No. 7
- Bond Purchase Agreement
•
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SAN GABRIEL VALLEY TRIBUNE
affiliated with
S.GV Newspaper Group
1210 N. Azusa Canyon Road
West Covina, CA 91790
3c;�O:as-/011 6x,
STATE OF. CALIFORNIA
County of Los Angeles
.a
PROOF OF PUBLICATION
(2015.5 C.C.P.)
am a citizen of.the United States, and a resident
of the county aforesaid; I am over the age of
eighteen years, and not a party to or interested in
the above -entitled matter. I am the principal clerk of
the printer of SAN GABRIEL VALLEY TRIBUNE, a
newspaper of general circulation which has been
adjudicated as a newspaper of general circulation
by the Superior Court of the.County of Los
Angeles, State of California, on the date of
September 10, 1957, Case Number 684891. The
notice, of which the annexed is a true printed copy,
has been published in each regular and entire issue
of said newspaper and not in any supplement
thereof on the following dates, to wit:
1/2/03
I declare under penalty of perjury that the
foregoing is true and correct.
Executed at West Covina, LA Co. California
this 2 day of JANUARY 20 43__
s'g ature
FIVFF-
JAN -6 j .:08
WES I COVINA
FINtXE DE[)'l.
Proof of Publication of
NOTICE.OF PUBLIC HEARING
CITY OF WEST COVINA CITY
COUNCIL
NOTICE IS HEREBY GIVEN that the
City Council of the City of West Covina
will hold a public hearing on the proposed
issuance of Lease Revenue Bonds, 2003
Series A (Community Center Proiect)
(the "Bonds"), by the West Covina Public
i of
proceedsgof the Bonds willrtion be usedthe to
finance `certain - public capital
improvements which are to include a'
community center to be located at
I Cameron Park, 1305 , Cameron Avenue,
West Covina. At the hearing, the
testimony of all interested persons will be
heard.
IPersons requiring special accommodation,
to participate in a public hearing or any
other city program, service or activity,
may contact the City Clerk's office at the
address provided below, or call (626)
939-8433.
PUBLIC HEARING WILL BE HELD:
PLACE: . West Covina City Hall
1444 West Garvey Avenue,
South
City Council Chambers
Level One
DATE: January 7, 2003
TIME: 7:00 P.M.
If You have any questions, please contact
Thomas Bachman,. finance Director at
(626) 939-8438."
Publish: January 2, 2003
San Gabriel Valley Tribune Ad No. 111925
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