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January 9, 2024
ITEM TITLE
Agreement: Approve an Agreement with Raymond James & Associates, Inc. to Provide Underwriter Services Report Number: 24-0004
Location: Community Facilities Districts 06-I IA A, 06-I IA B, 07-I, 08-I, and 2001-2 Department: Finance
G.C. § 84308: No
Environmental Notice : The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines. Therefore, pursuant to State Guidelines Section 15060(c)(3), no environmental review is required.
Recommended Action
Adopt a resolution approving an agreement with Raymond James & Associates, Inc. to provide underwriter services in connection with the bond refinancing of the Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 2013.
SUMMARY
The City of Chula Vista (the "City") refinanced five series of special tax refunding bonds in 2013 under the Chula Vista Municipal Financing Authority, each issued by a Community Facilities District (CFD) of the City.
The City now has the opportunity to refinance the Special Tax Revenue Refunding Bonds, Series 2013, and reduce the future special taxes levied on affected homes within the applicable CFDs. The City issued a Request for Proposal (RFP) for underwriter services in connection with the bond refinancing of the Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 2013. Seven bidders submitted proposals. After an evaluation of the proposals, a selection committee recommended Raymond James & Associates, Inc. In this action, staff recommends approval of an agreement with Raymond James & Associates, Inc. for Underwriter Services in relation to the Bond Refinancing of the Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 2013.
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ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the environment. Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. Thus, no environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
DISCUSSION
The City has the opportunity to refinance the Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 2013. Th e Special Tax Revenue Refunding Bonds, Series 2013 (2013 Bonds) refinanced five series of special tax refunding bonds, each issued by a CFD of the City (CFD 06-I IA A, CFD 06- I IA B, CFD 07-I, CFD 08-I and CFD 2001-2).
The estimated bond issuance (2024 Bonds) for this bond refinancing will be approximately $40,000,000 and the bonds will mature in 2034, with no extension of the existing 2013 Bonds maturity. The total costs of issuance are estimated to be $ 400,000 to be paid from the bond proceeds provided by the bond refinancing. This includes the cost of Bond Counsel and Disclosure Counsel ($90,000), Special Tax Consultant Services ($45,000) and Municipal Advisor Services ($70,000). The total estimated costs of issuance also include credit rating fees, fiscal agent fees, printing fees and the underwriter’s commission ($195,000).
Additional details concerning the 202 4 Bonds will be presented to the City Council at a future meeting to approve the issuance of the 2024 Bonds. The Municipal Advisor has estimated the 2024 Bonds debt service based on current interest rates as of November 28, 2023 . Using those estimates, the existing homeowners should see a reduction of approximately 8.5% in their special tax that is included on their 2024-25 property tax bills. That generates an average reduction of approximately $80 per year for detached homes and $55 per year for attached homes compared to the special tax that was included on the homeowners’ 2023 -24 property tax bills, based on today’s bond market conditions. The savings also vary by home size and by individual CFD. Underwriter services are required for the issuance of the 2024 Bonds.
On September 29, 2023, the City issued RFP P09-2024 for Underwriter Services in connection with the 2024 Bonds. Hilltop Securities, JP Morgan, Piper Sandler, Raymond James & Associates, Inc., Samuel A. Ramirez & Co., Inc., Stern’s Brothers, and Stifel Nicolaus & Company, Inc. submitted proposals in response to the RFP.
The City’s selection committee members reviewed, scored, and discussed the firms based on qualification of personnel, adherence of firm’s proposal to RFP guidelines, resources available to perform tasks on time and within budget, firm experience directly related to contract, and total cost and justification. After comprehensive assessment, staff recommends approving the agreement with Raymond James & Associates, Inc., to provide Underwriter Services.
Staff is recommending the City enter into an agreement from January 9, 2024 through September 18, 2024.
The City reserves the right to procure the services of Raymond James & Associates, Inc. for any future bond issuances/bond refinancing to be completed through September 18, 2029. At which time the City will draft a new two-party agreement with the scope of services specific to said bond issuance for Council approval.
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DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council and has found that Mayor McCann has real property holdings within 500 feet of the boundaries of CFD 06 -I which is the subject of this action.
Consequently, pursuant to California Code of Regulations Title 2, sections 18700 and 18702.2 (a) (7), this item presents a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.) for the above-identified member.
CURRENT-YEAR FISCAL IMPACT
This agreement is funded by bond proceeds from the bond refinancing with a not -to-exceed amount of $107,565. There is no additional current-year fiscal impact anticipated as a result of this action.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact to the City as a result of this action.
ATTACHMENTS
1. Raymond James & Associates, Inc. Underwriter Services Agreement
2. RFP P09-2024 Underwriter Services
Staff Contact: Sarah Shoen, Director of Finance/Treasurer