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HomeMy WebLinkAbout1997-06-26MINUTES PALM DESERT FINANCING AUTHORITY MEETING THURSDAY, JUNE 26, 1997 CIVIC CENTER COUNCIL CHAMBER * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * I. CALL TO ORDER President Kelly convened the meeting at 4:10 p.m. H. ROLL CALL Present: Vice President Jean M. Benson Commissioner Walter H. Snyder Commissioner Robert A. Spiegel President Richard S. Kelly Excused Absence: Commissioner Buford A. Crites Also Present: Ramon A. Diaz, Chief Administrative Officer David J. Erwin, City Attorney William Strausz, Redevelopment Agency Counsel Sheila R. Gilligan, Authority Secretary Richard J. Folkers, ACM/Director of Public Works John Wohlmuth, ACM/Director of Administrative Services Carlos L. Ortega, RDA Executive Director Paul S. Gibson, Finance Director/City Treasurer Steve Smith, Planning Manager III. ORAL COMMUNICATIONS None IV. CONSENT CALENDAR A. MINUTES of the Financing Authority Meeting of May 22, 1997. Rec: Approve as presented. Upon motion by Spiegel, second by Snyder, the Consent Calendar was approved as presented by unanimous vote of the Authority Board. MINUTES PALM DESERT FINANCING AUTHORITY MEETING JUNE 26, 1997 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * V. RESOLUTIONS A. RESOLUTION Na FA-21 - A RESOLUTION OF THE PALM DESERT FINANCING AUTHORITY AUTHORIZING THE EXECUTION AND DELIVERY OF AN AGREEMENT AMENDING A 1995 LOAN AGREEMENT. Mr. Ortega noted the staff report in the packets, noting that this was similar to the resolution adopted by the Redevelopment Agency. He recommended approval. Mr. Strausz addressed the Board and briefly reviewed the background of this matter. He noted that in 1995 the Financing Authority issued some bonds, a portion of which were put aside into a special escrow to be released for expenditure by the Authority if tax increment revenues increased to a certain level. A provision of the 1995 indenture and documents with respect to those bonds indicated that in order for the Financing Authority to later issue bonds, like right now, which will be on a parity with those 1995, that escrow has to have been released. He noted that those tax increment revenues had not grown to the point at this time where that escrow can be released, but after talking with MBIA, the insurance company that insured the 1995 bonds and imposed that requirement, they see no reason why we should not be able to refund some 1992 bonds and that the refunding would stand on a parity with those 1995 bonds, notwithstanding the fact that the monies had not been released from that escrow. He said they had agreed to that provision and would permit us to proceed with this refunding being contemplated now in 1997. Upon question by Commissioner Spiegel, Mr. Strausz responded that he did not envision any jeopardy. Commissioner Spiegel moved to waive further reading and adopt Resolution No. FA-21. Motion was seconded by Snyder and carried by unanimous vote. VI. CONSENT ITEMS HELD OVER None VII. NEW BUSINESS None VIII. CONTINUED BUSINESS None 2 MINUTES PALM DESERT FINANCING AUTHORITY MEETING JUNE 26, 1997 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * IX. OLD BUSINESS None R. REPORTS, REMARKS, AND AGENCY BOARD ITEMS REQUIRING ACTION A. CHIEF ADMINISTRATIVE OFFICER Mr. Ortega asked that the Board add an item to the Agenda which arose after the Agenda was posted and which would allow the Authority to proceed with pricing in connection with Resolution No. FA-21 previously adopted. Mr. Strausz stated that in 1992 the Financing Authority issued bonds. A provision of the indenture pursuant to which those bonds were issued describes what types of investments can be both invested in with the proceeds of the bonds and also which can be put into an escrow which later on could defease the 1992 bonds. He said what is typically done in a refunding escrow is that Federal securities of some nature will be deposited into that escrow to pay the principal and interest on old bonds, which would provide the bondholders with absolute assurance that their bonds are going to be paid when due. He said the definitions of permitted investments in the 1992 indenture did not include a type of investment that it tantamount to Federal securities, and that is municipal bonds, which have themselves been refunded and are now secured by Federal securities. What could be in an escrow directly as Federal securities could also be in there indirectly with pre -refunded municipal bonds which are backed by the full faith and credit of the United States. They would still have a triple-A rating as would a Federal security. The definitions of the 1992 indenture with respect to permitted investments, which definition was supplied by and approved by MBIA, the insurer for the bonds, didn't contain that provision. Now, in 1997, that type of investment is on MBIA's preapproved list of investments that can be put into an escrow which can defease refunded bonds. He said the fact that this definition was not in the 1992 indenture came to staff's attention because of a proposal that the Financing Authority had received from an investment contract broker, the broker that was the subject of discussion earlier in the day at the Investment Committee meeting, and this after the Agenda was posted. He said staff recommended that the indenture for the 1992 bonds be amended to provide that flexibility to the Authority if it ever wanted to use that type of security with which to fund an escrow. This amendment would add a definition to permitted investments to make it clear that the tax exempt municipal bonds that are pre -refunded were within the definitions of what MBIA would permit. He 'dded that MBIA had already agreed to this type of amendment. He noted that the reason for t;ie urgency was that the pricing of the bonds would happen before the next regular meeting of the Redevelopment Agency. Commissioner Snyder moved to add this item to the Agenda. Motion was seconded by Spiegel and carried by unanimous vote. 3 MINUTES PALM DESERT FINANCING AUTHORITY MEETING JUNE 26, 1997 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Upon question by Commissioner Spiegel, Mr. Strausz responded that he did not think it would affect the interest rate. Commissioner Snyder moved waive further reading and adopt Resolution No. FA-22, authorizing the execution and delivery of a supplemental indenture amending a 1992 indenture. Motion was seconded by Spiegel and carried by unanimous vote. B. AUTHORITY COUNSEL None C. PRESIDENT AND MEMBERS OF THE AUTHORITY None XI. ORAL COMMUNICATIONS None XII. ADJOURNMENT Upon motion by Spiegel, second by Benson, and unanimous vote of the Authority Board, President Kelly adjourned the meeting at 4:25 p.m. ATTEST: SHEILA R..;1f IGAN, S TARY TO THE PALM L`ESLRT FINANC G AUTHORITY RICHARD S. kELLY, PRF,S+I'DENT 4