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HomeMy WebLinkAbout10-11-09 Civic Center Financing DocumentsCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. s 16 November 9, 2010 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Tracy McCraner, Administrative Services Director (949) 644 -3123 or tmccraneranewportbeachca.gov Dan Matusiewicz, Deputy Administrative Services Director (949) 644 -3126 or danm(a)newportbeachca.gov SUBJECT: RESOLUTION 2010 -_; Authorization for 2010 Civic Center Financing Documents ISSUE: Authorize the execution and delivery of all legal documents necessary for the sale of Certificates of Participation (COPS) to finance the Civic Center Project and refinance the 1998 Central Library COPs (the "2010 COPs "). RECOMMENDATION: 1. Adopt Resolution No. 2010 authorizing the preparation, execution and delivery of the 2010 Certificates of Participation (COPS) in an amount not to exceed $128 million and authorizing the execution and delivery of certain documents and directing certain actions in connection with the issuance, sale and delivery of said COPs. 2. Approve Budget Amendment appropriating funds necessary for the first principal and interest installments due through July 1, 2011, and additional funds estimated for the underwriter's discount and cost of issuance. 3. Approve the attached two Mutual Understandings and the Amendment of Declaration of Special Land Use Restrictions with The Irvine Company. DISCUSSION: Background: In conjunction with the City's Facilities Replacement Plan, the City Council has directed staff to take certain steps toward the preparation and construction of the Civic Center Authorization for Civic Center Financing Documents November 9, 2010 Page 2 project site. Grading of the site is nearly complete and various construction contracts are currently in progress. Build America Bonds Currently, the City has the option to utilize taxable federal Build America Bonds (BABs) with a 35% federal interest rate subsidy to achieve a significantly lower financing cost than would be otherwise available through the sole use of traditional tax exempt municipal bonds. In the current market, it is estimated that the use of the BABs program would save the City approximately $310,000 per year for thirty years for a net present value savings of approximately $5.2 million. These savings are inclusive of all issuance costs The BAB subsidy program is scheduled to expire on December 31, 2010. While there have been several legislative proposals introduced to extend the program beyond 2010, none have passed to date. Further, proposals to extend the program have been at a reduced subsidy rate, making the program less economically beneficial to the City. In order to position the City to take advantage of historically low interest rates, a favorable construction bidding environment and the current BAB interest rate subsidy of 35% (due to expire by the end of the calendar year), staff is proposing that Council authorize staff to take all the steps necessary to issue COPS at this time. Delaying the financing any further could jeopardize the significant savings offered from the BAB program and expose the City to potential market risk versus the favorable financing rates available at this time. As currently contemplated, the City proposes to issue a combination of traditional tax exempt municipal COPS (Series A) for those COPS maturing in the first ten years and taxable BAB COPS (Series B) for those COPS maturing beyond 10 years. The precise combination of traditional tax exempt versus taxable BAB COPS will be driven by market conditions and will continue to be analyzed up until the day of issue in order to determine the combination that achieves the lowest overall interest cost to the City. Based on current project estimates, staff is proposing that Council authorize an amount not to exceed $128 million for the uses approximated as follows: Current Civic Center Project Estimate $123,000,000 Refinancing of 1998 COPS 3,525,000 Cost of Issuance 625,000 Underwriter's Discount 715,000 TOTAL $127,865,000 The Legal Structure Certificates of Participation are similar to bonds but a COP investor receives fractional interest lease revenues as opposed to receiving a simple pledge of interest and principal payments secured by a bond. Therefore, integral to the COP structure is a lease - leaseback of public facilities. Accordingly, included with this transaction are several required lease agreements reflecting the City's intent to lease- leaseback several public Authorization for Civic Center Financing Documents November 9, 2010 Page 3 facilities between the City and the City's non - profit Newport Beach Public Facilities Corporation. Avoiding Capitalized Interest - In order to make lease payments on a facility, the City must have the ability to occupy a facility. Because the Civic Center will not be completed for another two years, the City would be required to pre fund or borrow the lease payments to compensate investors during the construction phase of the project. Instead, the City opted to offer ten City -owned facilities to serve as interim collateral for the lease payments thus avoiding the need to fund capitalized interest on the COPs. Collectively the pledged interim collateral needs to meet or exceed the expected principal amount of COPS issued approximating fair rental value of the project lease. The proposed interim collateral consists of the following Properties: List of City Assets Securing 2010 COP Lease Asset Year Constructed Asset Values $1000 Newport Coast Community Center 2007 17,600 Mariner's Library 2006 10,100 Fire Station 7 (Santa Ana Heights) 2007 11,300 Fire Station 8 (Newport Coast) 1995 5,500 Central Library 1997 28,700 OASIS Senior Center 2010 29,800 Fire Station 3 (Newport Center) 1971 8,100 Fire Station 4 (Balboa Island) 1994 3,900 Police Station 1973 19,400 Civic Center Site N/A Undetermined TOTAL ASSET VALUE $ 134,400 Upon completion of the Civic Center, the encumbrance on the above properties can be released at which time the encumbrance will be solely the Civic Center itself (including the Central Library), which will serve as the basis for the lease collateral until the COPs are paid off. By utilizing the "Asset- transfer" form of lease financing, the City was able to avoid capitalizing interest costs with a present value savings of approximately $409,000. One of the above listed properties, the Central Library, had an existing encumbrance related to the 1998 COP financing of the Central Library and a deed restriction originating when the property was acquired from The Irvine Company. At the October 26th Council meeting the City authorized and directed staff to defease the 1998 COPs thereby releasing the encumbrance on this property. As part of this transaction, the City has also confirmed with The Irvine Company that the financing and construction of the Civic Authorization for Civic Center Financing Documents November 9, 2010 Page 4 Center project is consistent with the terms under which the City acquired the Civic Center and Central Library parcel. No Debt Service Reserve - Because of the City's conservative fiscal policies and fiscal strength, the City was also able to structure this financing without a required debt service reserve. This is rather unique and is only feasible for issuers with the highest credit ratings. A typical debt service reserve for a COP issue of this size and term would be approximately $8.6 million. By not funding this reserve, the City was able to reduce the total borrowing to achieve approximately $845,000 in net present value savings avoiding negative arbitrage on the debt service reserve. RATINGS In October, the top three rating agencies reviewed the finances and management policies of the City along with the proposed financing structure described above. The City and the proposed bond issue received the highest achievable ratings as follows: Underlying COP City Rating Rating Moody's Aaa Aa2 Standard and Poor's AAA AA+ Fitch AAA AA+ With these ratings the City became the first Orange County city to receive an AAA by all three rating agencies and only the fifth city in California to receive an AAA rating by all three agencies. These high ratings are important to the City because the investor relies heavily on these ratings to assess the risk of a given investment. The high ratings translate to lower perceived credit risk and ultimately lower interest rates for the City. TIMING With the above credit ratings in mind, current market conditions and a federal BAB subsidy of 35 %, the all -in true interest cost is expected to be approximately 4.20 %. This produces an average annual net debt service payment of approximately $7.5 million ($8.8 million before subsidy). This debt service payment is consistent, in both amount and timing, with those estimated throughout the Facilities Replacement Plan and is within policy constraints of Council Policy F- 28. The combination of the strong credit ratings, historically low interest rates (including the BAB subsidy) and the advantageous construction bidding environment create an excellent opportunity to enter into this debt issue and construction project. If approved, the interest rates will be determined by market orders and pricing on November 18th and is expected to close on November 30`h Adoption of Resolution No. 2010- approves the form of the documents on file with the City Clerk and authorizes the Mayor, City Manager, Administrative Service Director and City Clerk to execute the documents and to take all actions necessary to complete the Authorization for Civic Center Financing Documents November 9, 2010 Page 5 financing. In particular, adoption of this resolution approves the form of the Preliminary Official Statement (POS) the Site Lease, the Lease /Purchase Agreement, Trust Agreement, Certificate Purchase Agreement, the Agency Agreement and Continuing Disclosure Agreement. Among these documents, the POS is of particular importance because it represents the offering document or prospectus pursuant to which the Certificates are offered to investors. The POS contains certain financial and operating information related to the City and is drafted to comply with federal securities law. Other documents that are submitted for approval include a Budget Amendment for initial principal and interest installments due through July 1, 2011, and additional appropriations necessary to fund the estimated underwriters discount and additional cost of issuance of the COPS. The MOUs with The Irvine Company are also submitted for approval documenting that both parties concur that the intended use of the Civic Center and Central Library properties are consistent with previous acquisition and development agreements. Environmental Review: This action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Public Notice The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Funding Availability: Initial funding is provided by the General Fund and the facilities replacement reserve but it is anticipated that project advances will be reimbursed by the proposed COPs. Alternatives: City Council could direct staff to seek alternative means to finance the Civic Center project. Prepared by: Submitted by: Dan Matusiewicz Deputy Director e , J/t"' Tracy Mc ner Administr a Services Director Authorization for Civic Center Financing Documents November 9, 2010 Page 6 Lease /Purchase Agreement Resolution Authorizing Sale of Certificates of Participation 2010A (Tax Exempt) (Civic Center Project/Central Library Refunding) and related documents Trust Agreement Agency Agreement Preliminary Official Statement Continuing Disclosure Agreement Bond Purchase Agreement Budget Amendment Mutual Understanding for Library Site Mutual Understanding for Civic Center Site Amendment to Declaration of Special Land Use Restrictions F \! FO RI City Council Meeting 11/09/2010 2010 Civic Center Financing Overview and Related Documents CITY OF Newport Beach Presentation Outline • Project Estimate Update • Introduce Financing Team • Financing Overview • "What is a Certificate of Participation (COP) ?" • Financing Structure & Legal Documents • Credit Strengths, Market Conditions & Affordability • Next Steps • Summary T C�C/FOPN\P e ?E��Rr U G Project Phase All-In Estimates All- In Estimates Concept Design Phase Schematic Design Phase Design Development Phase Construction Document Phase � dE��Rr O U C�tIFOP� \r e. CITY OF Newport Beach $140,000,000 $1341000,000 $1301000,000 $123,000,000 3 CITY OF Newport Beach All-In Construction Document Phase All-In Estimate - Construction Document Phase City Hall Office Building $56,000,000 Parking Structure (450 Spaces) *$7,400,000 Grading, Export, & Shoring wall *$755009000 Central Library Expansion $1011009000 Civic Center Park (North Park, Central, and Civic Green) $185000,000 Construction Contingency (< 3 %) $2,9001000 Project Design (time & material at a cost not to exceed) $12,000,000 Project Management ( time & material at a cost not to exceed) $79000,000 Furniture, fixtures and Equipment $2,000,000 Total Construction Document Project cost = $123,0009000 Cost of Issuance $1,3435715 Library Bond Refinancing $3,525,858 Total Bond financing = $127,8691573 *actual bid numbers 4 CITY OF Newport Beach Civic Center Component Costs Project Constructic Contingency,' Parks, $1 Library Adc Lei e C* Project Estimate - $123 Million Project FF &E, $21A Wall, $8M Parking Structure, $71M City Hall, Council Chambers, Community Room $56M 5 CITY OF Newport Beach Civic Center Financing Team • City of Newport Beach • Dave Kiff, City Manager • Tracy McCraner, Director of Administrative Services • Dan Matusiewicz, Deputy Director of Administrative Services • Steve Badum, Public Works Director • Leonie Mulvihill, Assistant City Attorney • Financial Advisor - Fieldman, Kolapp &Associates. The role of the financial advisor is to work with the issuer, financing team and the underwriter to determine the structure and timing of the issue, to review bond documents and ensure the issuer receives the lowest cost of financing the market will bear. • Tom DeMars • Robert Porr • Paul Pender • Bond Counsel — Stradling, Yocca, Carlson & Kauth: Primary role is to certify as to the validity of the securities and that the securities qualify for federal tax exemption. They also assist in drafting financing documents, ordinances and resolutions. ■ Dave McEwen Brian Forbath 6 CITY OF Newport Beach Civic Center Financing Team (continued) • Disclosure Counsel — Hawkins Delafield & Wlood LLP. Responsible for the preparation of the Official Statement (OS), Preliminary Official Statement (POS) and the purchase agreement. Advise the City regarding compliance with securities regulations and SEC disclosure issues. The POS is an important document as it summarizes the proposed issue, security pledge, and relevant information concerning the creditworthiness of the City. • Arto Becker • John McNally ■ Diane Quan • Lead Underwriter Stone & Youngberg. The primary function of the underwriter is to market and sell securities issued by the City to investors. The goal of the underwriter is to create as much demand as possible, causing competition between buyers, and to achieve the lowest cost of funds for the City's financing that the market will bear. Stone and Youngberg is the senior underwriter and will handle the affairs of the team of underwriting firms on behalf of the City. • Bill Huck • Ken Holman ®STONE & Bankof America DE LARoSA &Co. YOUNGBERG Merrill Lynch , , ' C i H VESTMENT BANKERS O et U e. C7f /FOPN \�' ! CITY OF Newport Beach Financing Overview • City anticipates issuing up to $128,000,000 in Certificates of Participation (COPs), secured by lease payments subject to annual appropriations from its General Fund �dEW�R, O ei v a. C�fIFOPN \r ■ New Civic Center Complex — Project includes a City Hall building, City Parks, a 450 -space parking structure, expansion of the Newport Beach Central Library and a disasterpreparedness center — COPs will be secured by lease payments relating to several existing, and essential, City assets ■ Refunding — A portion of the proceeds will be used to refund the remaining 1998 Central Library COPS — $3.99 million outstanding — Estimated savings $195,000 peryear over the next 9years fora total savings of $1,035,000 Source: City of Newport Beach Design forNew Civic Center ■ CITY OF Newport Beach Certificates of Participation (COPs) COPs are one of the most commonly used financing instruments by local governments in California. Structured as lease obligations, COPs are like bonds, but are not general obligations of the City and do not involve any increases in local taxes. a • Lessor (Newport Beach Public Facilities Corporation) and Lessee (City) enter into a lease /purchase agreement related to the "Leased Premises ". • City promises to make semi - annual lease payments for use of the "Leased Premises ". • Corporation assigns its right to receive lease payments to the Trustee. • COPs represent the right of the investor to "participate" in receiving the stream of lease Payments. • COPs are sold to investors through the underwriters. o Proceeds will be used to construct the Civic Center Complex and refinance the outstanding 1998 Library COPs to achieve annual savings. Source: City of Newport Beath Design forNew Civic Center 9 CITY OF Newport Facilities Included in "Leased Premises" Eliminates need to finance Capitalized Interest of $12.9 million Beach OASIS Senior Center ** 2010 169,884 36,467 $14,700,000 $ 15,100,000 $ 29,800,000 Central Library ** 1997 174,240 50,930 12,500,000 16,200,000 28,700,000 Police Station ** 1973 118,152 47,964 9,100,000 10,300,000 19,400,000 Newport Coast Community Center ** 2007 133,548 16,865 9,600,000 8,000,000 17,600,000 Fire Station 7 — Santa Ana Heights ** 2007 91,912 11,027 4,700,000 6,600,000 11,300,000 Mariner's Library ** 2006 64,355 15,305 3,900,000 6,200,000 10,100,000 Fire Station 3 — Newport Center ** 1971 49,380 13,605 3,300,000 4,800,000 8,100,000 Fire Station 8 — Newport Coast ** 1995 47,350 6,975 2,900,000 2,600,000 5,500,000 Fire Station 4 ** 1994 41482 4,400 2,200,000 1,700,000 3,900,000 Civic Center Site N/A 698,331 N/A Undetermined N/A Undetermined Total $ 62,900,000 S 71,500,000 $134400,000 *All values as of September 1, 2010 as determined by third party MAI appraisal. ** The City will release all liens on "Leased Premises" upon the completion of the Civic Center ®� complex. g4cone,� Source: G!T of Newport Beach 10 CITY OF Newport Beach Financing Structure Contemplates both Tax - Exempt Series A and Taxable Series B • Series A — Traditional Tax - Exempt Municipal Bonds (COPs) - interest payments are NOT subject to Federal income tax. • Series B — Taxable COPS sponsored by the federal Build America Bonds (BABs) program — interest payments are subject to federal income tax BUT, the federal government pays the issuer a subsidy = 35% of the interest rate. BABs program expires December 31, 2010. �dEW�Rr O ei v a. C�fIFOPN \r ■ the economic benefit of utilizing BABs, as compared to issuing only tax- exempt bonds, is estimated to be approximately $306,000 /year or $9.2 million in cumulative savings over the life of the COPs (based on 11 / 1 /2010 market conditions.) Source: City of Newport Beach Design forNew Civic Center 11 Financing Estimates Dated /Delivery: 11/30/2010 First Interest Payment: 01/01/2011 First Principal Payment 07/01/2011 Series CITY OF Newport Beach 2010 -A 2010 -B :es (Tax - Exempt) (Taxable BABs) Total Par S31,525,000 $93,415,000 $124,940,000 Premium 2,929,573 $2,929,573 Total Sources $34,454,573 $93,415,000 $127,869,573 Project Fund 530,372,136 $92,627,864 $123,000,000 Escrow for 1998 COPS 3,525,858 - $3,525,858 Costs of Issuance 556,579 $787,136 51,340,845 Total Sources $34,454,573 $93,415,000 $127,869,573 �aE °Ppa, *Preliminary draft, subject to change. Build America Bond series o m ee allocation dependent on market conditions. G i Source: Stone & Youngberg C�4cp0.N�' CITY OF Newport Beach COP Legal Documents • Preliminary Official Statement (POS) similar to a "prospectus" in the corporate context, is the disclosure document prepared by the City for use by the underwriters in offering the COPs for sale to the public. The POS contains the terms of the Certificates, the security pledged, the financial condition of the City, and other important data which investors will rely upon before purchasing the 2010 Certificates. The offering of the CON pursuant to the POS is subject to federal securities laws. ' Management is responsible for ensuring the accuracy and content disclosed in the POS. • Bond Counsel, Disclosure Counsel, Financial Advisors and Underwriters all provide professional advice to management, based on their experience and knowledge of the financing. � dE��Rr O U C�(IFOP� \r e. Source: Cite of Neupori Beach 13 CITY OF Newport Beach COP Legal Documents • Site Lease between the City and the Corporation wherein the City will lease the "Leased Premises" to the Corporation. • Lease /Purchase Agreement between the City and the Corporation where the Corporation agrees to lease the Leased Premises back to the City. The lease purchase agreement sets forth the City's obligation to make lease payments and other covenants protecting the security interests of investors. The purpose of the lease arrangement is to provide security for the City's pledge that it will provide a revenue stream sufficient to pay the principal and interest of the COPS to the investors. Once the Civic Center � dE��Rr O U C�(IFOP� \r e. construction is complete, the liens against all other "Leased Premises" will be removed. Source: Cite of Neupori Beach 14 CITY OF Newport Beach COP Legal Documents • Trust Agreement among the City, the Corporation and the Trustee (BNY I) sets forth the responsibilities of the Trustee, flow of funds, certificate covenants and other provisions to protect the investors. • Assignment Agreement between the Corporation and the Trustee whereby the Corporation assigns all of its rights to receive lease payments from the City to the Trustee for the benefit of the investors. • Agency Agreement between the Corporation and the City whereby the Corporation appoints the City to construct the Civic Center project. � dE��Rr O U C�(IFOP� \r e. Source: Cite of Neupori Beach 15 CITY OF Newport Beach COP Legal Documents • Continuing Disclosure Agreement establishes the terms and conditions pursuant to which the City will file an Annual Report of operations and finances related to the status of the COPs. The underwriters are required by SEC Rule 15c2 -12 to obtain such agreement from the City. • Purchase Contract outlines the terms, prices and conditions by � dE��Rr O U C�(IFOP� \r e. which the underwriters agree to purchase the COPs from the City and by which the City agrees to sell the COPs to the underwriters. F-1 Source: Cite of Neupori Beach 16 CITY OF Newport Beach Other Notable Financing Terms • No Reserve Fund- due to our strong financial health the City will not be required to finance a reserve fund, saving the City approximately $90,000 in cost of issuance (COI) and $58,500 /year in debt service payments for a total savings of $1,845,000 over the life of the COPs. • The Asset Transfer structure eliminated need to finance capitalized interest of approximately $12,900,000. Saving the City approximately $37,000 in COI and $24,000 /year in debt service payments for a total savings of $757,000 over the life of the COPs. • Refunding the Library COPS will save the City approximately $115,000 /year in debt service payments, or $1,035,000 over the next 9 years(based on market conditions as of 11/1/2010). C�(IFOP� \r � dE��Rr O U e. Source: Cite of Neupori Beach 17 CITY OF Newport Beach 10 - YR TREASURY YIELDS CURRENTLY NEAR HISTORIC LOWS 16 14 12 10 M 8 6 4 2 0 Nov-62 10 -Year U.S. Treasury IR ^Jil'1kr e--� 71w-;I. �TMi.�kGr-13��,kq rim If, • 10 -Yr yields are slightly above December 2008 all -time lows. Rates have been lower than current 2.60% approximately 1% of the time since November 1962. lover a span of -48 yearn C(IFOP� \r 18 CITY OF Newport Beach 30 -YR TREASURY YIELDS CURRENTLY NEAR HISTORIC LOWS 30 -Year U.S. Treasury 16 14 12 10 ( %) 8 6 4 2 0 Nov-77 Nov-80 Max = 15.21% In = 2.53% Current = 4.12% (11/8110) Nov-83 Nov-86 Nov-89 Nov-92 Nov-95 No).-98 Nov-01 Nov-04 Nov-07 Nov-10 • 30 -Yr yields are above December 2008 all -time lows. Rates have been lower than current 4.12% approximately 2% of the time since November 1977. (overa span of-33 years) o� e v C7[ /FOPS \' 19 CITY OF Newport Beach Build America Bond (BAB) Opportunity • Currently the City has the option to utilize the federal Build America Bond (BAB) program where the could issue taxable bonds that would be eligible for interest subsidy of 35% of the interest cost. However, this program is due to expire December 31, 2010. While there have been several legislative proposals to introduced to extend beyond 2010 none have passed to date. • Including BABs within a portion of the financing structure is anticipated to save the City approximately $306,000 /year in debt payments, or $9.2 million over the life of the COPS (based on market conditions of 11/l/2010.) • The City's Financial Advisor and Underwriting Team will continue to monitor the BAB savings through the pricing date to ensure the best possible structure to the City. � dE��Rr O U C�fIFOP� \r a. Source: City of Neupord Beach Design forNew Civic Center 20 CITY OF Newport Beach Facilities Replacement Plan • Before embarking on the Project, the City Council and management reviewed a comprehensive plan to replace all critical facilities through the creation of Facilities Financing Plan. • City estimated the cost of replacing all facilities over thirty year period and created a sinking fund to amortize and level fund the replacement considering cash set - asides, developer contributions and private fundraising. To date, the City has set -aside $31.3 million to cash fund the construction expenditures or debt service. Per Council Policy F- 28, the City has set a maximum threshold for annual General Fund contributions to the Facilities Replacement Program at no more than 5% of total General Fund Operating Budget. • Facilities Financing Plan, awarded the Helen Putnam Award for Excellence in Internal Administration, ensures prudent financial management, that the City can afford this issue at this time, and projected over the next 30 years that the COPS remain outstanding. � ?EW�Rr O U e. C1t�cOPM�r .Source: GO of Neupox Beach 21 CITY OF Newport Beach Independent Ratings After considering the Financial Strength of the City including governance, financial management, demographics, proposed legal and financing structure, the top three rating agencies were asked to provide an underlying rating of the City and the COP credit. ' Newport Beach received an underlying AAA rating from all 3 rating agencies, becoming the 1" Orange County city and only the 5t' California city to earn a AAA from all three. �dEW�Rr O ei U e. C�QFOPNd The COP ratings of Aa2 and AA+ are the highest attainable ratings offered by each agency for COPs. For more information visit: www.ngmTortbeachca.gov /bonds 22 CITY OF Newport Beach What's next ■ November 11, 2010 - target for plan completion and building permit issuance. • November 17 -18, 2010 - pricing of COPs • November 30, 2010 - COP Closing, proceeds available for Project • December 1, 2010 - "1998 Library COPs" redeemed. • Mid - December - bids returned for various trade packages. ■ January 23, 2011 - final construction GMP amendment to be considered by City Council. a February 2011 - begin construction of City Hall office building, Parking Structure, Council Chambers, Community Room, Library addition, Central Park and North Park 23 CITY OF Newport Beach Summary • Part of 30 year master facilities replacement plan (also known as the Facilities Financing Plan) • Good Construction Bidding Environment • Efficient Legal & Financing Structure • Historically Low Interest Rates ■ Opportunity to utilize Build America Bonds (BAB) for potential additional savings • Independent rating agencies assigned by the City and COP structure the highest attainable rating signifying strong financial position, strong governance & financial management, good credit structure and affordability. • Paid from existing revenue sources — Not an additional tax levy. � dE��Rr O @� t) C�CIFOPN\P 24 CITY OF Newport Beach Recommendations ■ Adopt Resolution No. 2010 - Authorizing the preparation, execution and delivery of the 2010 COPs in an amount not to exceed $128 million and authorizing the execution and delivery of certain documents and directing certain actions in connection with the issuance, sale and delivery of COPs. ■ Approve Budget Amendment appropriating funds necessary for the first principal and interest installments due through July 1, 2011, and additional funds estimated for the underwriter's discount and cost of issuance. ■ Approve two Mutual Understandings and the amendment of Declaration of Special Land Use Restrictions with the Irvine Company. O @� U C7C /FOPN \I' 25 CITY OF e Newport Calendar Subscribe to News & Alerts FAOs Beach Welcome to the City of Newport Beach Webpage Related to tht Upcoming Issuance and Sale of its 2010 Certificates of Participati (2010 Certificates) The City of Newport Beach, in conjunction with the City of Newport Beach Public Facilities Financing Corporation, plan to issue Certificates of Participation to refinance the City's outstanding 1999 Library COPS and finance the acquisition, improvements and equipping of the Civic Center Project. City Press Release — October 19, 2010 City of Newport Beach Underlying Ratings: Moody's Investor Service, Standard & Poor's and Fitch Ratings have a assigned the City of Newport Beach an AAA credit rating, the highest possible underlying rating. 2010 Certificates of Participation Ratings: Standard & Poor's and Fitch have both assigned a AA+ rating to the COPs. (Generally, and in this instance, Standard & Poor's and Fitch assign COPS a rating which is one step lower than an agency's underlying rating) Moody's has assigned an Aa2 rating. (Generally, and in this instance, Moody': assigns COPS a rating which is two steps lower than an agency's underlying rating) A link to the three rating reports is below: • Fitch Report • Moody's Report • Standard & Poor's Report Via the five links to the left, you are invited to learn more about the City's 2010 Certificates and how to inquire about being an investor. CITY OF Newport Beach Affordability - COPs Lease Payment Compared to General Fund Expenditures Total Projected COP Lease Payment Compared to Total GF Expenditures ■ Total General Fund Expenditures ■ Total COP Debt Service � dE��Rr O U �. C�(IFOP� \r 4.70 " /0 Newport Beach Median Household Income compared to Mortgage Expense ■ Income After Mortgage ■ Annual Mortgage Payment 27