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Current Council Agenda and Past Meeting Information

 

CITY COUNCIL AGENDA ITEM NO. 13

Meeting Date: November 14, 2006

Subject/Title: Refunding of CIFP 2003-1 Infrastructure Revenue Bonds, Series 2003 and the Refunding of CIFP 2004-1 Infrastructure Revenue Bonds, Series 2004

Prepared by: Brian Kelleher, Accountant II

Submitted by: Pamela Ehler, Director of Finance and Information Systems

RECOMMENDATION
Approve a Resolution approving form and substance of an amended and restated trust agreement in connection with the issuance by Brentwood Infrastructure Financing Authority of its infrastructure revenue refunding bonds, Series 2006A and subordinated Series 2006B and authorizing changes thereto and execution thereof and approving the form and substance of an official statement with respect to such bonds and authorizing changes thereto.
PREVIOUS ACTION
None.
BACKGROUND
The City of Brentwood and the Brentwood Infrastructure Financing Authority have previously issued bonds to finance improvements for CIFP 2003-01, which comprised approximately 1,218 residential units in the City, and 5.66 acres of commercial property and CIFP 2004-01, which comprised approximately 1,251 residential units in the City.

Due to favorable market interest rates and the fact that approximately 70% of those units are now completed and occupied, it is possible to refinance those bonds and achieve lower interest rates. It is also possible to substitute a surety bond for a portion of the reserve fund which was originally funded with cash. In all, based on today’s market interest rates, the refinancing and substitution of the reserve fund can produce up to $345,000 per year over the remaining life of the financing (2033) in new proceeds which can be used for additional capital improvements. This method of generating new proceeds through refinancing was successfully used by the City with CIFP 1994-1, CIFP’s 98-1 and 99-1, CIFP 2000 and CIFP 2002-1.

The Refunding Bonds will be issued in a senior series, which will be insured and rated “AAA”. The subordinate series will be issued non rated. The refinancing will not affect the assessment installments payable by any property owner in the district and their assessments will remain the same, although the change in the reserve fund amount for the bonds may reduce or eliminate any reserve fund credits available.

FISCAL IMPACT
This action could generate up to $9.3 million in new funding for public capital improvements without raising assessments or taxes or using the City’s other funds.

Attachments:
Resolution
Form of Amended and Restated Trust Agreement
Form of Escrow Agreement
Form of Bond Purchase Agreement
Form of Preliminary Official Statement

RESOLUTION NO.

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD
APPROVING FORM AND SUBSTANCE OF AN AMENDED AND RESTATED TRUST AGREEMENT IN CONNECTION WITH THE ISSUANCE BY THE BRENTWOOD INFRASTRUCTURE FINANCING AUTHORITY OF ITS INFRASTRUCTURE REVENUE REFUNDING BONDS, SERIES 2006A AND SUBORDINATED SERIES 2006B AND AUTHORIZING CHANGES THERETO AND EXECUTION THEREOF

WHEREAS, in connection with the funding for the acquisition and construction of public improvements under the Capital Improvement Financing Plan 2003-1 (“CIFP 2003-1”) the Brentwood Infrastructure Financing Authority (the “Authority”), acting through its Board Members (the “Authority Board”), authorized and issued its CIFP 2003-1 Infrastructure Revenue Bonds, Series 2003 (the “2003 Prior Bonds”), pursuant to a Trust Agreement dated as of August 1, 2003 (the “Prior 2003 Trust Agreement”), by and among the Authority, the City of Brentwood (the “City”) and U.S. Bank National Association (the “Trustee”), for the purpose of purchasing from the City its Limited Obligation Improvement Bonds, Assessment District No. 2003-1 (the “2003 Local Obligations”);and
WHEREAS, in connection with the funding for the acquisition and construction of public improvements under the Capital Improvement Financing Plan 2004-1 (“CIFP 2004-1”) the Authority Board authorized and issued its CIFP 2004-1 Infrastructure Revenue Bonds, Series 2004 (the “2004 Prior Bonds,” and together with the 2003 Prior Bonds, the “Prior Bonds”), pursuant to a Trust Agreement dated as of August 1, 2004 (the “Prior 2004 Trust Agreement,” and together with the Prior 2003 Trust Agreement, the “Prior Trust Agreements”), by and among the Authority, the City and the Trustee, for the purpose of purchasing from the City its Limited Obligation Improvement Bonds, Assessment District No. 2004-1 (the “2004 Local Obligations,” and together with the 2003 Local Obligations, the “Local Obligations”);and
WHEREAS, it is proposed that the Authority authorize, issue and sell to RBC Capital Markets, as underwriter (the “Underwriter”), its Infrastructure Revenue Refunding Bonds, Series 2006A and Subordinated Series 2006B (collectively, the “Bonds”), with the net proceeds of sale thereof, together with certain funds on hand under the Prior Trust Agreements (after funding a reserve fund and payment of costs of issuance), to be utilized to refund the outstanding Prior Bonds; and
WHEREAS, in furtherance of implementing the proposed refinancing, there has been filed with the Interim City Clerk for consideration and approval by this City Council an Amended and Restated Trust Agreement amending and restating the Prior Trust Agreements (the “Amended and Restated Trust Agreement”) by and among the Authority, the City and the Trustee. The Bonds are to be issued by the Authority under the terms of the Amended and Restated Trust Agreement; and
WHEREAS, being fully advised in the matter, this City Council wishes to approve the form and substance of the Amended and Restated Trust Agreement and to authorize execution thereof on behalf of the City;
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Brentwood, as follows:
Section 1. The foregoing recitals are true and correct, and this City Council so finds and determines.
Section 2. The City finds and determines that the issuance of the Bonds by the Authority will result in significant public benefits, including demonstrable savings in effective interest rate, bond preparation, bond underwriting and bond issuance costs.
Section 3. The form and substance of the Amended and Restated Trust Agreement is hereby approved. The City Manager, the Director of Finance and Information Systems, or designee thereof is hereby authorized to approve modifications and changes to the Amended and Restated Trust Agreement not inconsistent with its essential terms, such approval to be conclusively established by execution thereof. The City Manager, the Director of Finance and Information Systems, or designee thereof is hereby authorized to execute the Amended and Restated Trust Agreement, as modified.
Section 4. The City Manager, Director of Finance and Information Services, City Attorney, City Engineer and all other officers, employees and agents of the City are hereby authorized and directed to take any and all actions and execute any and all agreements, documents, certificates and other instruments, necessary or convenient to carry out the purposes of this Resolution and to assist in the issuance, sale and delivery of the Bonds.

Section 5. This resolution shall take effect immediately.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 14th day of November, 2006 by the following vote:
 

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