HomeMy WebLinkAboutPayment of Premium for Debt Service Surety Bonds INTEROFFICE MEMORANDUM
PALM DESERT REDEVELOPMENT AGENCY
DATE: SEPTEMBER 9, 1999
TO: EXECUTIVE DIRECTOR, HONORABLE CHAIRMAN AND MEMBERS
OF THE REDEVELOPMENT AGENCY
FROM: DENNIS M. COLEMAN, REDEVELOPMENT FINANCE MANAGER
SUBJECT: AUTHORIZATION TO EXECUTE THE DOCUMENTS AND APPROVAL
OF THE PAYMENT OF THE PREMIUM FOR THE SURETY BONDS
Recommendation:
That the Agency Board, by minute motion:
1) Authorizes the staff to execute certain documents that pertain to the purchase of
Debt Service Reserve Surety Bonds.
2) Approves the payment of the premiums, not to exceed $294,000, for the
purchase of the Debt Service Reserve Surety Bonds.
Background:
On June 24, 1999, Staff presented to the Agency Board a report on requested
information pertaining to the FY 1999 - 2000 Budget (attached). Staff presented a
financing alternative for the Agency to carry out its programs without borrowing
additional funds as part of the report. Staff stated in this report that we would
accomplish the alternative financing plan by purchasing Surety Bonds to substitute for
the reserve funds for two of our bond funds. Staff has decided to pursue purchasing
Surety Bonds for four of our bond issues.
The Agency would purchase these Surety Bonds from the same corporation that
insured the bond issues, MBIA. The Surety Bonds would be used to replace the
reserve funds for the bond issues. The Agency would then use the reserve funds to
pay approximately one year's debt service for each of these four bond issues.
This action would enable the Agency to use tax increment funds from Project Area
No. 1 and Project Area No. 2, to assist the Agency with its capital financing plans for
the upcoming fiscal year and give the Agency a small reserve.
Staff will have to deal with MBIA, the bond insurer of the four issues, and will need to
execute certain documents pertaining to the transactions. Staffs preliminary estimates
show that we need to purchase four policies for approximately $5,341,500. Staff is
conservatively estimating a premium of 5.5% with the total costs for the policy of
approximately $293,783. This would generate $5,047,000, over a one year period, for
the Agency's use.
Staff is therefor recommending that the Agency Board authorize Staff to execute certain
documents necessary for the purchase of the Surety Bonds; and approve the premium
payment for the purchase of the Debt Service Reserve Surety Bonds, not to exceed
$294,000.
REVIEWED AND CONCUR
Dennis M. Coleman
Redevelopment Finance Manager Executive Director
DMC:mh
Attachment (as noted)
13141444.. BY RDA
VERIFIED BY 3-
Original on file with C y C k'8 Ofc
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PALM DESERT REDEVELOPMENT AGENCY
INTEROFFICE MEMORANDUM
DATE: June 24, 1999
TO: EXECUTIVE DIRECTOR. HONORABLE CHAIRMAN AND MEMBERS OF
THE REDEVELOPMENT AGENCY
FROM: DENNIS M. COLEMAN, REDEVELOPMENT FINANCE MANAGER
SUBJECT: ADDITIONAL INFORMATION REQUESTED FROM THE AGENCY BOARD
REGARDING THE FY 1999 - 2000 BUDGET
The Agency Board asked staff to provide the Board with additional information regarding
the FY 1999 - 2000 budget. The Board asked staff to provide information regarding the
Agency's bonding capability, and a summary of the pass-through payments to other
agencies across all of the project areas. In addition, Staff is also providing revised project
funding schedules for bonds and cash, with alternatives provided to borrowing funds from
the City.
Bonding Capacity
Staff has attached a copy of a report which was prepared for the Agency Board for an
adjourned meeting held on May 7, 1999. The report gave two scenarios for the Agency's
bonding capacity: conservative and aggressive. The report gives the assumptions that
were made for the growth of the assessed valuation of the project areas. The assumptions
are based upon the projects that have been either approved and not started, and the
projects that are in the permit and construction stages.
The report shows that the Agency has a conservative capacity to bond approximately
$53,195,000, and if certain assumptions on growth happen, then the Agency will have a
bonding capacity of $118,834,000.
The assumptions for interest rates and growth of the assessed valuation of the project
areas are detailed in the attached report for your review. We also have included the final
dates that each project area can issue debt according to the AB 1290 limits.
Pass-Through Payment Summary
Staff has attached a copy of a schedule that shows the projected pass-through payments
for FY 1999 - 2000. This schedule is a summary of payments by each of the agencies that
receive payments across all of the project areas. The report has a total within it for the
County of Riverside as a whole.
This report only gives the projected pass-through payments for each of the agencies. It
does not reflect the reimbursements to the Agencies by each of the pass-through
recipients for projects financed by the Agency. The County of Riverside reimburses the
Agency for debt service for bonds issued in 1989 and 1996, for the Sheriffs Substation and
the Blythe Administration Center. The County Library reimburses the Agency for the
advance by the Agency of$3,000,000 for the Multi-Agency Library Project. In addition, the
College of the Desert reimburses the Agency for their $2,000,000 advance for the Multi-
Agency Library Project. The Agency also receives reimbursement for debt service
payments from the Desert Sands Unified School District for the 1989 bond issue which
paid for improvements to Palm Desert High School.
Alternative Financing (No New City Loans)
Staff has reviewed the funding schedules of our current projects for cash and bond
purposes. We took a look at alternative ways to purchase property in the North Sphere
without any new loans from the City to the Agency. Staff reprogrammed bond funds set
aside for private use projects and used it for the purchase of the North Sphere Property for
future City needs. We also revised the schedule of the Agency's cash position to purchase
surety insurance substitution instruments to free and replace our bond debt reserve funds.
The freed reserve funds would be used to pay debt service and allow the Agency to
accumulate cash that could be used to purchase the additional property in the North
Sphere.
Staff prepared the alternative funding schedules so that the City Council/Agency Board
could decide whether they wanted to lend the Agency additional funds for projects or fund
the projects with the alternative methods.
REVIEWED AND CONCUR:
Dennis M. Coleman 61-1-1471
Redevelopment Finance Manager Executive Director
DMC:dl
Attachments (as noted)
INTEROFFICE MEMORANDUM
PALM DESERT REDEVELOPMENT AGENCY
DATE: MAY 7, 1999
TO: EXECUTIVE DIRECTOR. HONORABLE CHAIRMAN AND MEMBERS OF
THE REDEVELOPMENT AGENCY
FROM: DENNIS M. COLEMAN, REDEVELOPMENT FINANCE MANAGER
SUBJECT: REVIEW OF REDEVELOPMENT AGENCY BONDING
Recommendation:
To receive and file this report.
Background:
On April 27, 1999, the Agency Board had an adjourned joint meeting with the City Council.
One of the items on the agenda was a review of the Redevelopment Agency bonding.
Staff presented to the Agency Board a conservative projection of the levels of bonding
capacity the Agency is projected to have at the time that the AB 1290 limits take effect.
Staff stated to the Agency Board that based on the current projections of tax increment
growth, and an assumed interest rate of 6.5% at the time of issuance of the bonds, that
the Agency would have a total projected capacity of$53,195,000. Staff was asked to take
a look at what the bonding capacity would be at the highest estimates using assumed
projections based on current and proposed development in the various project areas.
Staff started the process by reviewing the assumptions for the projections. The growth
projections for Project Area No.1 (as amended), Project Area No. 2, and Project Area
No. 4 had some assumption for growth based upon development which was known at the
time of the issuance of bonds. Project Area No. 3 has not had any bonds issued.
Therefore, the projection was based more on the allowable increase of property taxes.
Project Area No. 3 and Project Area No. 4
Project Area No. 4 has the most current assumptions of development of all the project
areas. The Agency issued $11,020,000 of bonds in March 1998, and based the total sizing
of the bond issue on four years of projected growth. This made the need for the projected
increment critical for the bond issue. The consultant's report reflected a total of
$202,426,828 in projected growth from the Indian Ridge, Oasis Country Club and other
development. Staff felt that this was current information and there is some potential for
development but not really that significant. Staff has previously projected the bonding
capacity for Project Area No. 4 at July 2013 to be $9,985,000 with an interest rate of 6.5%
at the time of issuance.
Staff reviewed Project Area No. 3 and felt that most of the project area is built out and has
only small pockets of residential development available. We felt that this did not have as
significant development possibilities as Project Area No. 1 (as amended), and Project Area
No. 2. Staff has projected the bonding capacity in Project Area No.3 at July 2011 to be at
$7,975,000.
Project Area No. 1
Staff reviewed the consultant's report from the August 1997, $71,955,000 bond issue.
This report did include some significant development like the Gardens on Via Paseo, it only
reflected $33,600,000 of potential development at Bighom, based upon the previous sales
during 1995-1996. The average home prices reflected a price of $700,000 per home.
Staff felt that this was extremely conservative based on the current real estate prices, and
the fact the lowest homesite (lot) price at the Mountains at Bighorn was $600,000, and the
lot sales were not included in the projections. The consultant's projections also did not
include the Canyons of Bighorn.
Staff then reviewed the latest information on both projects at Bighorn, the Mountains at
Bighorn and the Canyons at Bighorn. This information was submitted as part of the
disclosure for the bonds issued for the Canyons of Bighorn, $34,760,000 bond issue of
December 1998. Staff is projecting that between now and March 2003 there could be as
much as approximately $225 million in construction and land sales in the Mountains of
Bighorn, and another $475 million in land sales and construction in the Canyons of
Bighom. This total of $700 million would increase our bonding capacity to a projected
$39,497,000 based upon an interest rate of 6.5% at the time of issue. Staff had previously
projected a conservative bonding capacity of $14,360,000 without any growth factored in
for the same period.
Project Area No. 2
Staff reviewed the consultant's projections and again realized that there were no
projections for growth since the last bonds that were issued in 1995. Staff looked at the
current projects and made assumption on the projected assessed valuation growth based'
on these projects. Staff also assumed that the following projects would be completed:
♦ Marriott Courtyard and Residence Inn
♦ Kaufman Broad - 160 Units of residential housing
♦ Desert Willow hotel sites (2)
• Desert Willow Office/Industrial Project
• IROC - 367 Timeshare Units
♦ Marriott Timeshare Project - 50% completed; 500 units and the golf course
• 225 room hotel - north of Frank Sinatra (north of Desert Willow)
• 678 residential homes - north of Frank Sinatra (north of Desert Willow)
• golf course - (north of Desert Willow)
These projects are either completed; in the construction phases; or currently entitled for
development. The total increased valuation from this assumed projected development is
$863 million. This projected increased valuation could lead to bonding capacity of
$61 ,377,000 at July 2007 with an interest rate of 6.5% at the time of issuance. Staff had
previously projected a bonding capacity of$20,875,000, based on conservative projections
without the growth factored in.
Staff is attaching two schedules which details the project development and assessed
valuation for Project Area No.1 (as amended), and Project Area No.2. Staff is also
attaching a schedule of bonding capacity which lists the conservative and aggressive
projected bond capacity, for the Agency Board to review.
REVIEWED AND CONCUR:
Dennis M. Coleman daGL09 vC ol—
Redevelopment Analyst Executive Director/
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Attachments (as noted)
Palm Desert Redevelopment Agency
Bonding Capacity for Project Areas
SB 1290 Fiscal Conservative Aggressive
Year Deadline Project Area Capacity Capacity
31-Dec-03 No.1 Amended 14,360,000 39,497,000
`16-Jul-07 No. 2 20,875,000 61,377,000
16-Jul-11 No. 3 7,975,000 7,975,000
18-Jul-13 No. 4 9,985,000 9,985,000
TOTALS 53,195,000 118,834,000
bondcapl
Palm Desert Redevelopment Agency
Schedule of Projected Development
and Assessed Valuation
Project Area No. 1 as Amended
Assessed
Description Valuation
Mountains of Bighorn
Construction of Homes (173) $225,000,000
Canyons at Bighom
Homesites Sold (202) 250,000,000
Homes Constructed (123) 225,000,000
TOTAL NEW ASSESSED VALUATION $700,000,000
Project Area No. 2
Assessed
Description Valuation
IROC $187,000,000
Marriott Court Yard/Residence Inn 30,000,000
Marriott Timeshare Project 500 units completed 250,000,000
Marriott Time Share Golf Course 20,000,000
Kaufman Broad - 160 units of residential units 21,000,000
Desert Willow Hotel Sites (2) 600 rooms at$200,000 per 120,000,000
Desert Willow Office/Industrial Site (21 Acres) 21,000,000
225 room Hotel - North of Frank Sinatra at 100,000 per 22,500,000
687 units of residential housing - North of Frank Sinatra 171,750,000
Golf Course- North of Frank Sinatra 20,000,000
TOTAL NEW ASSESSED VALUATION $863,250,000
prjdvlas
PALM DESERT REDEVELOPMENT AGENCY
SUMMARY OF PASS THROUGH PROJECTIONS
TO OTHER TAXING ENTITIES
FISCAL YEAR 1999-2000
Project Area Project Area Project Area Project Area
Taxing Entity No. 1 - 82 Annex No.2 No.3 No.4 TOTALS
County of Riverside-General $ 3,515,393.05 $1,844,158.06 $ 91,631.65 $ 439,732.04 $5,890,914.80
County of Riverside-Library 348,244.47 193,198.64 10,295.99 73,463.59 625,202.69
County of Riverside-Fire 599,734.36 - - 157,421.97 757,156.33
County of Riverside-Reg.Access 217,046.73 - 406,249.15 - 623,295.88
SUBTOTAL COUNTY OF RIVERSIDE $4,680,418.61 $2,037,356.70 $508,176.79 $ 670,617.60 $7,896,569.70
Riverside County Superintendent 42,510.82 6,411.08 - 53,616.29 102,538.19
C.V. Recreation and Park 18,663.76 - - 45,207.49 63,871.25
C.V.Mosquito Vector Control 14,219.28 96,994.15 - 29,889.90 141,103.33
Desert Sands Unified 362,500.62 51,642.18 - 395,218.72 809,361.52
C.V.Water District 58,549.35 - - 134,557.86 193,107.21
Desert Community College Dist. 78,137.56 11,783.96 - 82,125.02 172,046.54
P.S. Unified School District - 3,688.79 - - 3,688.79
CV Resource Conservation Ctr. - - - 765.56 765.56
TOTAL PASS THROUGH
OTHER AGENCIES $ 5,255,000.00 $2,207,876.86 $508,176.79 $1,411,998.44 $9,383,052.09
This does not account for pass through owed by certain entities,to the Agency,for debt service on projects financed by the Agency.
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Palm Desert Redevelopment Agency
Analysis of Available Cash for Private Projects
Fiscal Year Ending June 30, 1999
Project Project
Description Area No. 1 Area No. 2
Fund Balance $14,816,159 $1,598,135
Less: Due from Capital Funds (5,248,892) (1,597,133)
Subtotal Cash Available 9,567,267 1,002
Plus: Other Sources
ITM Settlement 1,176,976 -
Notes Receivable IROC - 832,500
Reimbursement From County,
COD and DSUSD 715,100 9,000
Interest Income (est.) 300,000 44,000
Net Tax Increment (est.) 3,000,000 1,550,000
Subtotal Cash Available 14,759,343 2,436,502
Uses of Funds:
Projects (est.) 4,588,000
12 Acre Project Private Development 1,775.000
Wind Damage to the Golf Course est. 250,000
Business Improvement Loans 1,000,000
Price Club Pass Through 400,000
Other Consultants 107,000 104,000
Adminstration RDA and City(est.) 750,000 450,000
Legal Consultants 100,000 50,000
Legal Consultants-Litigation 125,000
Subtotal Cash Available 5,664,343 1,832,502
Less: Debt Service
One Half Year of Parity Debt Service (4,438,400) (760,000)
Interest Payments to the City (336,700) (1,064,000)
TOTAL AVAILABLE PROJECTED FUNDS $ 889,243 $ 8,502
OTHER FUNDING AVAILABLE
Surety Reserve Fund Substitution
Project Area No.1, 1992 Bonds(est.) 2,150,000
Project Area No.1, 1995 Bonds(est.) 1,875,000
Subtotal Cash Available 4,914,243
Purchase of 17 Acres in North Sphere (3,300,000)
TOTAL FUNDING AVAILABLE $ 1,614,243 $8,502
prpvtfnd
BDGPRO99d
BOND FUNDED CAPITAL IMPROVEMENT PROJECTS
PROJECT AND FUNDS AS OF 7/1/98
AVAILABLE BALANCES IN BOND FUND ACCOUNTS: as of 6/30/98 I
Total All Bonds
Project Area#1 Project Area#2 Project Area#3 Project Area#4
Balances In Bond As of 6/30/98 26,978,387.00 6,041,613.00 4,351,889.00 37,371,889.00
PROJECTS TO BE PAID FROM BOND FUNDS:
Admin Costs of Projects 5% 1,084,172.87 285,730.39 1,369,903.26
Roller Blade/Hockey Site 550,000.00 550,000.00
Visitors Center 1,150,000.00 1,150,000.00
Desert Willow Clubhouse 5,571,000.00 5,571,000.00
Desert Willow Public Infrastructure -
5%Private Use - 129,096.74 129,096
El Paseo 8 Hwy 74 Land 8 Cosst. -
Fred Waring Improvements 435,000.00 435,000.00
Monterey/Cook Pymts to CVAG 250,000.00 250,000.00
Hovley Wall 425,000.00 425,000.00
Land Purchase for Regional Park 1,000,000.00 1,000,000.00
Parking Gardens on El Paseo
PD Country Club Drainage 1,817,889.00 1,817,889.00
Perimeter Landscape 374,000.00 374,000.00
Fred Waring Widening(Agency Share) 6,800,000.00 6,800,000.00
North Sphere Property-Golf Course 7,144,214.13 55,785.87 7,200,000.00
North Sphere Property-Other Purposes
Shah Project -
-
Superblock Landscape -
Town Center Parking 10,000,000.00 10,000,000.00
Washington Improvements(Agency Share) 300,000.00 300,000.00
-
Unallocated
;; ,Yr , I d;..' ! . - !: • ';j'� 26,978,387.00 6,041,613.00 - 4,351,889.00 - 37,371,889..,_-
CALCULATION OF AVAILABLE BONDS FUNDS:
Balance of Funds w/Trustee" - - 6,430,106.00 6,430,106.00
Escrow Funds** - - -
_ -
Required Reserve Funds*** - - -
Available Balance by Bond Issue - - - 6,430,106.00 - 6,430,106.00
'Balance of Funds on hand with Trustee including all reserved or special escrow funds.
Escrow Funds may not be available for current projects,these funds are usually set aside for other debt requirements
"'Amounts in reserve funds represent funds not available until coverage can be shown for debt service
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6/21/99 9.19 AM B DGPRO99d/j m m/dm c