HomeMy WebLinkAbout092711 Finance Committee Agenda In compliance with the Americans Disabilities Act, if you need special assistance to participate in this meeting, please contact
the City Cleric's Department at 951-694-6444. Notification 48 hours prior to a meeting will enable the City to make reasonabie
arrangements to ensure accessibility to that meeting [28 CFR 35.102.35.104 ADA Title II]
MEETING NOTICE/AGENDA
FINANCE COMMITTEE
VINEYARD MEETING ROOM
41000 MAIN STREET
TEMECULA, CALIFORNIA
TUESDAY, SEPTEMBER 27, 2011
4:00 P.M.
ROLL CALL: Council Member Chuck Washington
� Council Member Michael S. Naggar `
PUBLIC COMMENTS
A total of 15 minutes is provided so members of the public may address the Committee
on items that are not listed on the agenda. Speakers are limited to two (2) minutes
each. If you desire to speak to the Committee on an item not listed on the agenda, a
"Request to Speak" form should be filled out and filed with the staff liaison.
When you are called to speak, please come forward and state your name for the record. �
For all Public Hearing/Committee Business matters on the agenda, a"Request to
Speak" form must be filed with the staff liaison rp ior to the Committee addressing that
item. There is a five-minute (5) time limit for individual speakers.
COMMITTEE BUSINESS
1. Refinancing of existing City debt obligations.
2. Community Development Block Grant (CDBG) Entitlement process. .
ADJOURNMENT
�tt • Z Z • 11 �:. �Z.�..s��-- �- � �'j� ,
Date Michaela A. Ballreich
Deputy City Clerk
NOTICE TO THE PUBLIC
The Agenda will be available for viewing, prior to the meeting, at the Main Reception at City Hall — 41000 �
Main Street, Temecula, 8:00 —�5:00 PM as well as on the City's website — www.cityoftemecula.orq. Any staff
report/written material pertaining to this meeting will be available, prior to the meeting, for public review at
the Main Reception and at the respective meeting. Any Supplemental Material distributed to a majority of
the Committee Members regarding any item on the Agenda, after the posting of the Agenda, will be
available for public review at the Main Reception. In addition, such material will be made available for
review at the respective meeting.
If you have any questions regarding any item of business on the Agenda for this meeting, please contact
City Hall — 951-694-6444.
C�TY O]E T�11V1]EC�]LA
FINANCE DEPARTMENT
. MEMORANDUM
TO: Mike Naggar, Finance Committee Member
Chuck Washington, Finance Committee Member
Shawn Nelson, City Manager
FROM: Genie Roberts, Director of Finance
David Bilby, Senior Debt Analyst '
DATE: September 27, 2011
SUBJECT: Refinancing of Existing City Debt Obligations
Recommendation:
Provide direction to staff to proceed with a refinancing of the 2001 and 2008 Certificates of
Participation (COPs). .
Background:
The City has two existing COPs debt obligations. The 2001 COPs have an outstanding principal
balance of approximately $3,900,000 and an average remaining interest rate of 4.7%. The 2008
COPS have an outstanding principal balance of approximately $23,200,000 and an average
remaining interest rate of 4.8%.
As part of the ongoing debt review process, all outstanding debt obligations have been evaluated in
consideration of refinancing to lower market rates. During thisevaluation, a new financing option
called "Private Placement" was discovered. By using this option, the City can reduce the term of the
outstanding 2008 COPs from 27 years to 20 years, and in doing so would eliminate seven years of
annual debt service payments. The term of the 2001 COPs would remain at ten years.
A Private Placement financing is a relatively new financing instrument in which a bank makes a
direct loan to an Agency in order to finance or refinance capital projects using capital assets (Civic
Center, Recreation Center, etc.) as collateral
A few key points about Private Placementfinancing include:
• no underwriter or disclosure requirements;
• no reserve fund requirement;
• rate can be locked up front, removing interest rate risk;
• lower total cost of issuance compared to public financing options;
• limited to a maximum of 20 year term;
• limited closing document requirements.
R:IFinance Committee Meetingsl9-27-111Refinancing - Finance Committee Memo.doc
'
Staff has discussed a Private Placement refinancing with the City Attorney and Bond Counsel and
have also been working with a broker/dealer in orderto obtain the best interest rates available today.
Through our broker, a bank has offered the City a rate of 3.1 % for the 2001 COPs and 4.0% for the
2008 COPs which would provide total savings of $8,718,680 overthe life of the loan which results in
a net present value savings of $3,194,295 or 11.80%.
The specifics of this type of financing option will be reviewed in further detail. Also, with Finance
Committee approval, staff would move forward to bring an action to the City Council to approve
documents and hire consultants necessary to complete the fnancing. _ `
R:IFinance Committee Meetingsl9-27-111Refinancing - Finance Committee Memo.doc