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