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HomeMy WebLinkAbout2008-02-04MINUTES RIVERSIDE COUNTY PALM DESERT FINANCING AUTHORITY REGULAR MEETING MONDAY, FEBRUARY 4, 2008 — 10:00 A.M. NORTH WING CONFERENCE ROOM - PALM DESERT CIVIC CENTER 73-510 FRED WARING DRIVE, PALM DESERT, CALIFORNIA 92260 I. CALL TO ORDER President Benson convened the meeting at 10:07 a.m. II. ROLL CALL Present: Commissioner Dan Martinez (Alternate) Commissioner Carlos L. Ortega Vice President S. Roy Wilson President Jean M. Benson Excused Absence: Commissioner Larry Parrish Also Present: William L. Strausz, Authority Counsel Justin McCarthy, ACM for Redevelopment, City of Palm Desert Paul S. Gibson, Director of Finance/City Treasurer/Authority Treasurer Steve Aryan, Assistant to the City Manager, City of Palm Desert Leticia DeLara, Fourth District Supervisor Wilson's Office Rachelle D. Klassen, Secretary III. ORAL COMMUNICATIONS None IV. CONSENT CALENDAR A. MINUTES of the Adjourned Regular Riverside County Palm Desert Financing Authority Meeting of April 9, 2007, and the Adjourned Regular Meeting of October 1, 2007. Rec: Approve as presented. Upon a motion by Wilson, second by Benson, and 3-0-1 vote of the Authority Commission Board, with Benson ABSTAINING, the Consent Calendar was approved as presented. MINUTES REGULAR MEETING OF THE RIVERSIDE COUNTY PALM DESERT FINANCING AUTHORITY V. CONSENT ITEMS HELD OVER None VI. NEW BUSINESS FEBRUARY 4, 2008 A. UPDATE AND DISCUSSION REGARDING LIST OF PROPOSED COUNTY PROJECTS TO BE FINANCED THROUGH THE NEXT BOND ISSUANCE. Commissioner Martinez handed out copies of the "List of RCPDFA Projects 2-4-08," identifying Community Projects proposed for the next bond issue. Commissioner Ortega noted he'd sent advance copies of the materials to Authority Counsel Bill Strausz for his review. Responding to inquiry about the Authority's ability to finance, Mr. Strausz confirmed the Authority would be able to finance the named projects. With regard to the item for purchase of the building currently being used as a private school, he wanted to confirm that the intent wasn't to provide any long-term lease to continue with the school; that in fact, the building would eventually be used for something else. Vice President Wilson explained that Christian School of the Desert (CSOD) was attempting to build a new school. The school site would be purchased at present dollar value, and up to a five-year lease would be provided to CSOD at the present location while its new school was built. At the end of five years, the County would take possession of the property for use as a community park. In response to question, he elaborated that CSOD was located on a 10-acre site in the center of Bermuda Dunes, off of Yucca Lane, and includes a gymnasium, which could be used for recreational purposes. He said CSOD also has a number of portable buildings that would probably be removed, then the site would be turned into a community park. Further responding, he said that $5.3 million of bond proceeds would be utilized for the purchase. Regarding his previous comment about lease of the school site, Mr. Strausz indicated the long-term lease would only be a problem if the present value of lease payments over the five-year period equaled 5% of the bond proceeds. Vice President Wilson noted the County was planning to lease the site back to CSOD for $1.00/year. He went on to say the reason CSOD was selling was because the Riverside County Airport Land Use Commission would not 2 MINUTES REGULAR MEETING OF THE RIVERSIDE COUNTY PALM DESERT FINANCING AUTHORITY FEBRUARY 4, 2008 allow expansion on their current site, as it's within two miles of the Bermuda Dunes Airport. Commissioner Martinez went on to relate that the bulk of the bond issue would be used for construction of the new Palm Desert Sheriff's Station; $3 million cash had been spent to move that project along so far, with a lot of the architectural/design work already done. The County is currently working closely with the City as the project goes through the permitting process there, and the Sheriffs Station project is driving the timing of the bond issue. Other projects were added to the list, with some ready to go presently and a couple that may drop off if they're not ready at the same time. He went over the remaining list of projects with the following remarks: — Purchase of CSOD site, which should be easily accomplished. — Dillon Road (Indio Hills) Community Center, already designed and nearly ready to go at an estimated $1.3 million. — Mesa Verde Community Center, added recently, but should be able to be included in the bond issue; two-thirds of an acre of land with a 5,000-square-foot facility, estimated cost $2 million. Property currently owned by non-profit DACE but will be transferred to the County at no cost. Will likely utilize the same or similar design as that of the Indio Hills Community Center in order to expedite the project. — Mesa Verde Road Improvements needing to be made in the Mesa Verde Community near Blythe (just added to the list this morning), similar to road improvements being made locally in the Bermuda Dunes Community. This item is a placeholder; Transportation Department currently analyzing what the cost will be, and if it can be moved along fast enough, it may be able to be included in the subject bond issue. — Bermuda Dunes Infrastructure Transportation Improvements. County Transportation Department and Economic Development Agency have been working on this undertaking, identifying 17 projects in the community for either drainage or street improvements to be funded with approximately $7.2 million, including the widening of Fred Waring Drive. (A separate detailed report was handed out specifically describing the Bermuda Dunes Projects.) — North Shore Community Center and Daycare Center. There is an existing building (the former Yacht Club) designed by renowned architect Albert Frey on 14 acres in North Shore, and the project would include renovation of the structure into a Community Center. It was expected that $3.5 million would be required for the renovation, and construction of another facility on the site was being discussed, with $10 million being earmarked for both components of this project. At minimum, the $3.5 million renovation of the Yacht Club could be 3 MINUTES REGULAR MEETING OF THE RIVERSIDE COUNTY PALM DESERT FINANCING AUTHORITY FEBRUARY 4, 2008 included in the subject bond issue, and hopefully, the second facility could be as well. Responding to question about the purpose for the second building on the North Shore Site, Vice President Wilson said it would be for two facilities —a Youth Center and a Senior Center. Further responding to question about the existing building, Ms. DeLara answered it would be a Community Center plus a museum for historical artifacts, and it may include a small Postal Service as well. Commissioner Martinez commented that the grand total was $65.3 million in bonds, pointing out that the Project List right-hand column showing a total of $73 million represented a portion that had already been funded (i.e., $3 million for Sheriffs Station architecture/design, and $620,000 used to make road improvements in Bermuda Dunes). He further noted that the $4.1 million shown in the "Other" column for the Palm Desert Sheriffs Station represented purchase of the 10-acre site, working with the City on a cash purchase or a land swap for the existing site. Either way, the $4.1 million would not be included in the bond issue. Responding to question about a reimbursement resolution, he said the County was not seeking reimbursement on what had already been spent. However, he said there were some of the 17 Bermuda Dunes Infrastructure Projects that would begin their second phase this month, and a reimbursement resolution from the bond issue would be associated with them. Upon inquiry, Mr. Strausz affirmed his desire to first review the reimbursement resolution document. Commissioner Martinez agreed it would be provided. In answer to question about specifics of the Mesa Verde Road Improvements Project, Commissioner Martinez said the County would work diligently to firm up all aspects well in advance of the bond issue. Vice President Wilson added that half of the Mesa Verde Community had dirt roads, and with a bond issue through the City of Blythe, it was the County's hope to be able to install a new water system and roads. But it was only able to fund the water system and very little of the roads. Therefore, additional funds were needed to complete the commitment to Mesa Verde —providing potable water and roads. Responding to Commissioner Ortega's concern about having verifiable numbers to use for the bond issue, he confirmed that the numbers would be available within weeks. Responding to question, Commissioner Martinez said there wasn't currently a schedule for the list of projects, but County staff was trying to move them 4 MINUTES REGULAR MEETING OF THE RIVERSIDE COUNTY PALM DESERT FINANCING AUTHORITY FEBRUARY 4, 2008 along as quickly as possible. He said if they were not in line on time, they would not be funded; the County did not want to hold up the bond issue in any way. It was his intent to work with Mr. Strausz and the rest of the Finance Team to identify the absolute final day for determining project status. Mr. Strausz commented it was his role to look at the bond issue from the end of the process, meaning that bond proceeds would have been spent within three years. Based on a closing date of July 1, 2008, that would be July 1, 2011. He said if on that date there were unspent proceeds and the IRS decided to audit the transaction, they would return to July 1, 2008, to see how reasonable it was to expect to spend those proceeds in that three-year period. The way to show that expectation was reasonable was to provide a schedule, including the project cost and its progression, from design to going out to bid, and the construction process, all to have occurred well before July 1,2011. In response, Commissioner Martinez confirmed the County absolutely intended to complete the process for all the named projects within three years. In fact, he said most of them would be completed within one to two years. Mr. Strausz said in that case, his office would want an updated, detailed schedule, containing all the aforementioned facts and dates, within a couple weeks of the date of the bond issue. Commissioner Ortega noted from Palm Desert's perspective, the list seemed feasible, as long as it met with Bond Counsel's approval. Mr. Strausz went on to comment that another important aspect for structuring the financing was the property where the Sheriffs Substation would be sited. For the lease portion of the transaction, it was important that the property is actually owned by the County with a transaction where title is transferred before bonds are issued. Commissioner Ortega responded that the City's requirement is that property will be transferred, either an exchange or outright sale, when the project is entitled. He said based on the County's schedule for development of the Sheriffs Station, approval was anticipated in the next two months. Mr. McCarthy agreed it would likely occur within 90 days. Commissioner Ortega then confirmed that the property would be in the County's hands prior to issuance of the bonds. Mr. McCarthy added that it 5 MINUTES REGULAR MEETING OF THE RIVERSIDE COUNTY PALM DESERT FINANCING AUTHORITY FEBRUARY 4, 2008 was being contemplated as an exchange and affirmed that it was the 10-acre site along Gerald Ford Drive, adjacent to Marriott's Shadow Ridge. Upon question, Mr. Strausz verified the schedule for the bond issue was appropriate. Commissioner Ortega noted that Mr. Ken Dieker was already working on the numbers for this bond issue, and he was on standby via conference call if the Authority Board needed to contact him during this discussion. He added that through the City of Palm Desert/Palm Desert Redevelopment Agency, the County has sufficient bonding capacity for this process. B. STATUS REPORT ON THE UPCOMING BOND ISSUANCE PROCESS. Commissioner Ortega reviewed the Preliminary Plan of Finance for the Lease Revenue Bonds (County Facilities Projects) - Series 2008, where the issuer would be the Riverside County Palm Desert Financing Authority; debt would be secured by existing redevelopment pass -through payments, with a July 2008 expected sale. It was noted that while construction bids for the new Sheriff's Station did not specifically have to be in hand, a firm estimate of the construction cost was required. He went on to note the present bond size was set at $85 million, subject to finalization of the projects and costs. He reviewed the remaining aspects, debt structure, primary legal documents (to be handled by Mr. Strausz), and tax issues. With regard to the matter of credit objective, he said depending upon whether or not the Authority chose to buy insurance, he felt the issue could be AAA -rated. On principal amortization, he related that it was typically a 30-year term, and there was sufficient money to fund it in that period of time as opposed to a 35-year term. He said that underwriting was contemplated as a negotiated bond sale, and he called attention to the list of participants. As indicated in his memorandum to Bond Counsel and the Financial Advisor, the listed participants were all acceptable to the County, with the only one remaining to be decided being the Underwriter. He referred to an e-mail from Del Rio Advisors, which explained that based on the pricing on the bonds, a combination of Stone & Youngberg and Stinson Securities would be best, with Stone & Youngberg serving as primary Underwriter. Commissioner Martinez responded that the County's Treasurer and Finance Director wanted to be part of the selection process. Mr. Gibson offered that their participation should be set up soon, because the underwriting team needed to be part of the entire process. 6 MINUTES REGULAR MEETING OF THE RIVERSIDE COUNTY PALM DESERT FINANCING AUTHORITY FEBRUARY 4, 2008 Commissioner Martinez agreed that this issue would be discussed at the first all -hands meeting scheduled for next week. In response to question, he said the County Treasurer wanted to do something like Mr. Dieker did, obtaining initial quotes from the various providers and reviewing them himself. Commissioner Ortega moved that the Riverside County Palm Desert Financing Authority (RCPDFA), by Minute Motion, approve retaining Stone & Youngberg as lead Underwriter, along with Stinson Securities, to provide the underwriting for the RCPDFA Lease Revenue Bonds (County Facilities Projects) - Series 2008, subject to concurrence of the County of Riverside. Motion died for lack of a second. In answer to question, Mr. Gibson explained that the City typically includes its underwriters as part of the process up front to get the bond documents together, and they also like to participate in the process of determining the sizing (i.e., term bonds, serial bonds), as all of that has to be included in the documents. Commissioner Martinez commented that the County involves the underwriters at the end of the process, once the projects are identified. Mr. Gibson added that since Palm Desert is lead in the transaction, it would be its preference of process to determine the underwriters up front. However, he agreed to work with the County and its advisors to get the concerns worked out in the near future. He said the first full conference call next week would be a great way to get the discussion going. Commissioner Ortega agreed, noting that with the schedule of having a Preliminary Official Statement (POS) by March 13, it was important to get the Underwriter selected quickly, preferably in a couple of weeks. Upon inquiry, Commissioner Martinez answered that the schedule was prepared by the County's financial advisor, Curt de Crinis. Mr. Gibson remarked that in the last bond issue, it took over a month to prepare the POS. He said there were a lot of legalities involved in lease transactions, and a month would be the minimum amount of time needed. Responding to question, Commissioner Ortega said since Palm Desert's bond issues are negotiated, it put out a Request For Qualifications and also asked firms to identify what their fees would be. He said if the County can negotiate better fees from Stone & Youngberg, it would be fine; but this is what Palm Desert was quoted. He said Palm Desert had reviewed the background of all those responding to the Request, and Mr. Dieker had commented on the status of all the entities reviewed. However, he 7 MINUTES REGULAR MEETING OF THE RIVERSIDE COUNTY PALM DESERT FINANCING AUTHORITY FEBRUARY 4, 2008 acknowledged that Mr. de Crinis may have a different opinion. In the end, whichever Underwriter is selected, it needed to be done in the next couple of weeks to meet the schedule. Further responding, Mr. Gibson said the group involved in the conference call needed to agree, and if that didn't happen, then this Authority Board needed to meet again. Commissioner Martinez reiterated that the County performed the process differently but agreed that the decision could likely be made next week —during the first conference call. Vice President Wilson agreed that by discussing the subject list, the group could likely reach consensus. Commissioner Ortega noted that while it was the firms that were named, it was actually the people at the firms who were relied upon to do the best job. He said more importantly were the fees involved, and Stone & Youngberg quoted the lowest. In response to comment about the previous motion, Vice President Wilson suggested that the list be forwarded to the working group, asking that it expedite the selection of an Underwriter. With regard to the Preliminary Participants List, Commissioner Ortega went on to say that the Underwriter was the only selection that needed to be made; everyone else was in place. It was noted that a separate agreement would be obtained from Mr. Dieker of Del Rio Advisors for the subject bond issuance. It was further confirmed that Mr. Strausz of the firm Richards, Watson & Gershon would serve as Bond Counsel. Mr. Gibson requested that Ms. Jackie Jennings of the firm of Best, Best & Krieger serve as Disclosure Counsel for the bond issue. Commissioner Martinez agreed that it was something that could be discussed during next week's conference call. With Authority Board concurrence, it was agreed to move forward with the bond issuance process as proposed, noting that the decisions remaining to be made were for selection of the Underwriter and Disclosure Counsel, subject to approval of the working group. VII. CONTINUED BUSINESS None 8 MINUTES REGULAR MEETING OF THE RIVERSIDE COUNTY PALM DESERT FINANCING AUTHORITY FEBRUARY 4, 2008 VIII. OLD BUSINESS None XI. REPORTS AND REMARKS A. PRESIDENT None B. VICE PRESIDENT None C. MEMBERS OF THE AUTHORITY None D. STAFF None X. ADJOURNMENT With Authority Board concurrence, President Benson adjourned the meeting at 10:44 a.m. ATTEST: RA HELLE b. RI -ASS' JJ, SECRETARY RIVERSIDE COUNTY PALM DESERT FINANCING AUTHORITY AN M. BENS9I, PRESIDENT 9