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Home My WebLink About1988 02-16 CC ADJ MINBook 69/Page 98 held 2/16/88 IV MINUTES OF THE FEBRUARY 11, 1988, ADJOURNED MEETING OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY, CALIFORNIA Held February 16, 1988 The adjourned (workshop) meeting of the City Council was called to order by Mayor Waters at 2:00 p.m. in the Main Conference Room of the Civic Center. ROLL CALL: Council Members present: Cooper, Dalla, Pruitt, VanDeventer, Waters. Administrative officials present: Bolint, Campbell, Caloza, Eiser, McCabe. Others present: Staff: Tom Deese, Terry Hart, NCPD; Arnold Peterson, CDC; Jim Ruiz, Park/Rec; Richard Schulman, Personnel; Curtis Williams, Pub Wks; Gladys Dickson, Everett Dickson, Walter Popelar, Robert Thomas, Sr. public; George McCrory, Star -News; Laura Preble, Evening Tribune. Mayor Waters announced that this meeting was a workshop to hear and discuss alternative methods for financing the proposed new police facility; his intention was to first hear from staff, then the investment bankers, the public, and finally the Council. The Mayor turned the meeting over to City Manager McCabe. CITY STAFF City Manager McCabe outlined the background of the need for seeking alternative funding, saying that after the general obligation bond measure for the construction of the police facility failed the second time, the Council directed him to review alternative financing; Staff has been reviewing financing and development with professionals in the field of public financing. The City Manager introduced investment bankers and attorneys who were present: Bill Huck, Tom Lockard, Stone and Youngberg; Andy Hall, bond counsel, Jones, Hall, Hill & White. City Manager McCabe stated the review consists of two parts: one, financial and the second, development, today he would focus on financing. Mr. McCabe said there were two places to look for alternative financing, one was the City's operational budget, the General Fund and Tax Increment Revenue; the first, unfortunately, is limited by the Gann Initiative, already we have spent $200,000 over our limit, if we were to use the operational budget, it would require cutting services in other areas. Mr. McCabe continued the second, Tax Increment Revenue, would have no impact on our Gann limitation, nor on our Community Development Commission's bond capacity for future projects. The City Manager introduced the City Finance Director, Alex Caloza. Mr. Caloza displayed two five year projections: "Police Facility Financing Study using Tax Increment Revenue with (three construction/acquisition projects)", Exh. A attached, and "Police Facility Financing Study (with four construction/acquisition projects)", Exh. B attached, and explained them in some detail, stating that all figures he used were conservative. Mr. Caloza next displayed "Police Facility Financing Study...FY 1984- 92, Tax Increment Valuations (actual and projected)", Exh. C attached, and explained the actual increases and how the projections were determined. Book 69/Page 99 I held 2/16/88 INVESTMENT BANKERS Bill Huck, Stone and Youngberg, investment bankers, spoke of Certificates of Participation which would allow the City, using the Community Development Commission, to fund the project by lease - purchase. Mr. Huck displayed "Certificates of Participation, Flow of Funds", Exh. D attached, and explained the flow of funds through six phases to completion of the project. Mr. Huck next displayed and explained: "2 Financing Alternatives Using Fixed Rate Certificates of Participation (1) 24 Months of Funded Interest and (2) No Funded Interest for 20 year term and 25 year term (Exh. E attached); a chart, "Estimated Payment Profiles"; and a chart, "Weekly Variable Rates, AAA, Tax Exempts, Nov 84 to Feb 88", Exh. F attached. Mr. Huck said that Variable Rates might be an attractive alternative; that it would be possible to start with fixed rate and later switch to variable, or vice versa, always at the prevailing market rate. Tom Lockard, Stone and Youngberg, confirmed Mr. Huck's statements made during his presentation. A. Hall, bond counsel, Jones, Hall, Hill and White, added that he too was in agreement. City Attorney Eiser also stated his approval. PUBLIC ORAL COMMUNICATIONS Mayor Waters asked for public input. There was none. CITY COUNCIL Members of the City Council asked questions of the investment bankers and staff. City Manager McCabe said this would all come back to Council after review of the project development alternatives. Moved by VanDeventer, seconded by Cooper, in favor of the financing concept presented and the City Manager bring back a package on the Developmental aspects to a special workshop meeting. Carried by unanimous vote. Moved by Cooper, seconded by VanDeventer, the workshop meeting be held at 3:00 p.m., Friday, February 26, 1988. Carried by unanimous vote. ADJOURNMENT Moved by Cooper, seconded by VanDeventer, the meeting be adjourned to the regular meeting at 4:00 p.m. Carried by unanimous vote. The meeting closed at 3:19 p.m. City' Clerk !l Approved at the regular meeting of February 23, 1988 Corrections No Corrections Book 69/Page 100 1111111101 held 2/16/88 POLICE REVENUES: Tax Increment Bond Surplus/Interest Land Sales Loan from HUD Loan from City Total Revenues EXPENDITURES: Administration Debt Service: Downtown Bonds Police Facility COP's HUD City Construction Acquisition Low Income Housing Relocation Nutrition Project Miscellaneous Total Expenditures OPERATING SURPLUS (DEFICIT) FUND BALANCE, BEGINNING FUND BALANCE, END EXHIBIT A FACILITY FINANCING STUDY USING TAX INCREMENT REVENUE ESTIMATED SOURCES AND USES OF FUNDS FY 1987-92 FY 1987-88 FY 1988-89 FY 1989-90 FY 1990-91 FY1991-92 2,659,070 1,411,000 700,000 300,000 5,070,070 282,828 1,684,920 20,000 378,651 531,814 20,000 20,000 4,968 2,943,181 2,126,889 (304,992) 1,821,897 3,100,000 3,600,000 350,000 350,000 1,394,158 4,000,000 4,400,000 350,000 350,000 3,450,000 5,344,158 4,350,000 1,668,580 852,000 160,725 330,000 620,000 20,000 5,000 3,967,416 (517,416) 1,821,897 1,304,481 342,222 1,657,810 852,000 160,725 1,200,000. 720,000 20,000 5,000 4,957,757 386,401 1,304,481 1,690,882 376,444 1,664,120 852,000 160,725 1,000,000r 800,000 20,000 5,000 4,878,289 (528,289) 1,690,882 1,162,593 NOTES: Other potential construction/acquisition projects to be funded contingent on actual sale of 8th & National City Boulevard land. a. Development, National City Marina 1,200,000 b. Acquisition and development, Downtown parking facility 1,000,000 c. Acquisition of property, Southend of National City Blvd 1,500,000 4,750,000 414,088 1,666,300 852,000 160,725 1,500,000c 880,000 20,000 5,000 5,498,113 (748,113) 1,162,593 414,480 Book 69/Page 101 MMUS held 2/16/88 POLICE REVENUES: Tax Increment Bond Surplus/Interest Land Sales Loan from HUD Loan from City Total Revenues EXPENDITURES: Administration Debt Service: Downtown Bonds Police Facility COP's HUD City Construction Acquisition Low Income Housing Relocation Nutrition Project Miscellaneous Total Expenditures OPERATING SURPLUS (DEFICIT) FUND BALANCE, BEGINNING FUND BALANCE, END EXHIBIT B FACILITY FINANCING STUDY USING TAX INCREMENT REVENUE ESTIMATED SOURCES AND USES OF FUNDS FY 1987-92 FY 1987-88 FY 1988-89 FY 1989-90 FY 1990-91 FY1991-92 2,659,070 3,100,000 3,600,000 4,000,000 4,400,000 1,411,000 350,000 350,000 350,000 350,000 1,394,158 700,000 300,000 5,070,070 3,450,000 5,344,158 4,350,000 4,750,000 282,828 1,684,920 20,000 378,651 531,814 20,000 20,000 4,968 2,943,181 2,126,889 (304,992) 1,821,897 1,668,580 705,000 160,725 330,000 620,000 20,000 5,000 3,820,416 (370,416) 1,821,897 1,451,481 342,222 1,657,810 705,000 160,725 1,200,000. 720,000 20,000 5,000 4,810,757 533,401 1,451,481 1,984,882 376,444 1,664,120 705,000 160,725 1,000,000b 800,000 20,000 5,000 4,731,289 (381,289) 1,984,882 1,603,593 NOTES: Other potential construction/acquisition projects to be funded contingent on actual sale of 8th & National City Boulevard land a. Development, National City Marina 1,200,000 b. Acquisition and development, Downtown parking facility 1,000,000 c. Fill canyon at 30th & National City Blvd 500,000 Acquisition of property, Southend of National City Blvd 1,500,000 Sub -total 2,000,000 414,088 1,666,300 705,000 160,725 2,000,000c 880,000 20,000 5,000 5,851,113 (1,101,113) 1,603,593 502,480 Book 69/Page 102 meld 2/16/88 P O L= C E Fiscal Year 1984-85(actual) 1985-86(actual) 1986-87(actual) 1987-88(actual) 1988-89(projected) 1989-90(projected) 1990-91(projected) 1991-92(projectedl EXHIBIT C FAC2L2TY F2NANCII STUDY USING TAX INCREMENT REVENUE TAX INCREMENT REVENUE ANALYSIS FY 1984-92 Estitated Cutulative Actual Tax Incretent Tax Incretent Annual Increase Tax Incretent Valuation Revenue a It $Increase (Fro, 1987-88) Revenue (1) (1) 152,374,726 1,523,747 191,488,619 1,914,886 231,736,024 2,317,360 278,623,244 2,786,232 318,303,893 3,183,039 360,203,189 3,602,032 402,102,485 4,021,025 444,001,781 4,440,018 191,139 402,474 468,872 396,807 418,993 418,993 418,993 396,807 815,800 1,234,793 1,653,786 (G) 1,784,647 2,484,237 2,865,634 Estitate Variance (I) 260,900 569,351 548,274 MOTES: (a) Prior year actual tax increment valuations taken from San Diego County Auditor & Controller's Combined Valuations Report. (b) Actual tax rate includes Proposition 13 1% base tax plus any property tax override imposed by taxing agencies within the tax rate area. (c) Actual tax increment per audited financial statements. (d) Variance between actual revenue received and estimated revenues. Book 69/Page 103 EXHIBIT D vow held 2/16/88 CERTIFICATES OF PARTICIPATION FLOW OF FUNDS (1) Lender buys certificates from Trustee, pays proceeds into Construction Fund held by Trustee LENDER T 1 1 1 1 TRUSTEE BANK (6) Trustee pays lease payments to Lender, thereby paying the certificates held by Lender (5) Lessor assigns lease payment revenues to Trustee 4 — — — — — — (2) Trustee holds Construction Fund - Public Agency as agent of Lessor draws funds to finance construction of project (3) Public Agency pays its installment Obligations from annual budgetary appropriations > LEGEND Flow of proceeds of certificate sale Flow of lease payments Flow of title to project (4) Lessor and Public Agency enter into a Lease -Purchase agreement, whereby Lessor purchases projects and leases it to public agency LESSOR t 1 1 I I 1 I 1 PUBLIC AGENCY (LESSEE) EXHIBIT E CITY OF NATIONAL CITY City Police Administration Facility Book 69/Page 104 l held 2/16/88 2 Financing Alternatives Using Fixed Rate Certificates of Participation Assumptions: Alternative 1 -- 24 Months of Funded Interest Alternative 2 -- No Funded Interest Certificate Issue Sizing Notes A B C D E F G H Project Cost Less Revenue Sharing Less Interest Earnings Net Project Cost Funded Interest Reserve Fund Costs of Issue Certificates Issued Estimated Annual Payments I 20 Year Term Reserve Fund Earnings Net Annual Payment 25 Year Term Reserve Fund Earnings Net Annual Payment Notes Alternative 1 $8,100,000 (900,000) (530,000) 6,670,000 1,420,000 737,600 392,400 $9,220,000 $904,000 (52,000) $852,000 $836,000 (52,000) Alternative 2 $8,100,000 (900,000) (530,000) 6,670,000 610,400 349,600 $7,630,000 $748,000 (43,000) $705,000 $692,000 (43,000) $784,000 $649,000 A Estimated Cost of Acquisition and Construction B Revenue Sharing Carry -Forward C Earnings During Construction Estimated at Approx. 6.5% D Estimated Cost Needed for Financing E Borrowed Interest Until Construction Completed F Estimated at 8% of the Amount of Certificates Issued G Includes U'writer, Counsel, Trustee, Ins. Premium, etc. H Total Par Amount of COPs Issued for Financing I Approximate Annual Payment Net of Reserve Earnings Assuming Amount Issued and a 20 Year Term to the Issue J Approximate Annual Payment Net of Reserve Earnings Assuming Amount Issued and a 25 Year Term to the Issue STONE & YOUNGBERG 10-Feb-88 co 00 m Y$ CITY OF NATIONAL CITY E IIMYMATED PAW ENT PROFILES 900 800 — 700 Q Q Q u u 1 1 1 1 1 .0 J Q g Q Q E] El Q El Q Q Q Q Q 0 0 600 — ` P 1 a)? ow em as }- 500 — I d a11 5 w 4. .c 400 — E-. Z E Z =< 300— 200 — 100 — 0 C1 RLI1 i 1989 .S Zs 8 ti G a b ?• I I I 1 1 1 1 1 III 1 I I I 1 I I I 1 1 1 1 1 2000 2010 + ALT 1 25 YR 2015 TERIA OF THE FINANCINGS 0 ALT2 20 YR . ALT2 25 YR EXHIBIT E - Page 2 PERCENT (%) Book 69/Page 106 . held 2/16/88 Cr+ Cn rn CU m