08/21/18
ADOPTION OF A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CORONADO DECLARING ITS INTENTION TO REIMBURSE CERTAIN COSTS AND
EXPENSES INCURRED IN CONNECTION WITH VARIOUS CAPITAL PROJECTS PRIOR TO THE ISSUANCE OF THE 2018 TAX ALLOCATION REFUNDING BONDS
BY THE SUCCESSOR AGENCY TO THE COMMUNITY DEVELOPMENT AGENCY
OF THE CITY OF CORONADO
RECOMMENDATION: Adopt “A Resolution of the City Council of the City of Coronado Declaring Its Intention to Reimburse Certain Costs and Expenses Incurred in Connection with Various Capital Projects Prior to the Issuance of the 2018 Tax Allocation Refunding Bonds by the Successor Agency to the Community Development Agency of the City of Coronado.” FISCAL IMPACT: On June 20, 2018, the Successor Agency to the Community Development Agency of the City of Coronado obtained approval from the Oversight Board to issue $145,000,000 in tax exempt tax allocation refunding bonds (“TARB”). A portion of the TARB ($32,753,000) will repay the City its share of bond proceeds (“City Share of Proceeds”) which is the remaining balance of the loans made from the City to the Successor Agency. The City Share of Proceeds will be used to supplant other funds which would have otherwise been used as the funding source to pay for the projects as listed in Exhibit B. The tax exempt status of the interest on the City Share of Proceeds is contingent on the spending of proceeds on the projects as listed in Exhibit B along with the investment of the remaining balance of the City Share of Proceeds in municipal obligations the interest of which is excludable from federal taxation. The projects included in Exhibit B have been reviewed by Bond Tax Counsel and found to be in compliance with tax exemption requirements. Because the City desires to pay for and reimburse itself for a portion of the project costs ($1,000,000) prior to the issuance of the refunding bonds (up to 60-days prior to adoption of the resolution and up to the time the TARB is issued), the City must adopt a resolution stating the intention to reimburse itself from bond proceeds.
CITY COUNCIL AUTHORITY: Adoption of the Resolution of Intent is a legislative action.
Legislative actions tend to express a public purpose and make provisions for the ways and means of accomplishing the purpose. Legislative actions involve the exercise of discretion governed by considerations of public welfare, in which case, the City Council is deemed to have “paramount authority” in such decisions.
PUBLIC NOTICE: None required for this action.
CALIFORNIA ENVIRONMENTAL QUALITY ACT: This is not a project as defined by CEQA.
BACKGROUND: The sale of the Tax Allocation Refunding Bonds was previously approved by the Successor Agency to the Community Development Agency. The primary purpose of this resolution is to allow for the reimbursement from a non-taxable bond issue of capital project costs incurred before the issuance of tax exempt municipal bonds. Tax exempt bonds (bonds that provide income tax advantages to the holder) are typically issued at a lower interest cost than taxable bonds. In order to comply with Treasury Regulation § 1.150-2 of the Internal Revenue Service relating to the qualification for reimbursement from the bond proceeds, an inducement (reimbursement) resolution needs to be passed no later than 60 days after any eligible costs are incurred by the bond issuer. It is anticipated that there will be approximately $1,000,000 of costs incurred on the projects as listed in Exhibit B within the 60- day window designated under Treasury Regulations.
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ANALYSIS: The City Share of Proceeds from the issuance of the TARB will be used to supplant the funding which would otherwise be used for the projects listed in Exhibit B. Three examples of projects listed therein are as follows: 1) undergrounding of utilities; 2) The wastewater recycling plant to be located at the Golf Course; and 3) a public parking facility. The list of projects is restrictive and cannot be changed at a later date. It is anticipated and required (for Federal taxation purposes) that the City Share of Proceeds ($32,753,000) be depleted entirely by the time that the TARB are paid off (estimated to be FY 2027). Primarily, the purpose of this resolution is to approve reimbursement of project costs from bond proceeds which are being used to repay loans made by the City of Coronado to the Coronado Redevelopment Agency. This resolution will provide the opportunity for the City of Coronado to reimburse itself for expenditures made up to 60 days prior to the date of the resolution.
The City will have expended approximately $1,000,000 on qualified capital projects within the 60- day time period as prescribed within tax regulations.
ALTERNATIVE: To not approve the resolution and therefore not reimburse the City of Coronado for approximately $1,000,000 from TARB proceeds for capital project costs incurred within the last 60-days.
Submitted by Administrative Services/Krueger
Attachment: Resolution
CM ACM AS CA CC CD CE F L P PSE R/G
BK TR JK JNC MLC NA NA NA NA NA NA NA
188 Attachment 1
Resolution ___
RESOLUTION NO. _____
ADOPTION OF A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CORONADO DECLARING ITS INTENTION TO REIMBURSE CERTAIN COSTS AND
EXPENSES INCURRED IN CONNECTION WITH VARIOUS CAPITAL PROJECTS PRIOR TO THE ISSUANCE OF THE 2018 TAX ALLOCATION REFUNDING
BONDS BY THE SUCCESSOR AGENCY TO THE COMMUNITY DEVELOPMENT
AGENCY OF THE CITY OF CORONADO
WHEREAS, California Health and Safety Code (the “Code”) section 34177.5(a), enacted by AB 1484, authorizes each redevelopment successor agency to refund outstanding bonds or other indebtedness of the former redevelopment agency provided that (i) the total interest cost to maturity on the refunding bonds or other indebtedness plus the principal amount of the refunding bonds or other indebtedness shall not exceed the total remaining interest cost to maturity on the bonds or other indebtedness to be refunded plus the remaining principal of the bonds or other indebtedness to be refunded, and (ii) the principal amount of the refunding bonds or other indebtedness shall not exceed the amount required to defease the refunded bonds or other indebtedness, to establish customary debt service reserves, and to pay related costs of issuance; and WHEREAS, from time to time, the Community Development Agency of the City of Coronado previously incurred indebtedness, including loans made by the City of Coronado (the “City”) which have been determined in judicial proceedings to be enforceable obligations, and which have been recognized by the California Department of Finance as enforceable obligations. The City loans to be refunded are listed on Exhibit A hereto (collectively, the “City Loans”); and WHEREAS, to achieve debt service savings and refund all of the outstanding City Loans, the Successor Agency to the Community Development Agency of the City of Coronado (the “Successor Agency”) has previously approved the issuance of its Successor Agency to the Community Development Agency of the City of Coronado Tax Allocation Refunding Bonds, Series 2018A (the “2018A Bonds”) and Successor Agency to the Community Development Agency of the City of Coronado Tax Allocation Refunding Bonds, Series 2018B (Federally Taxable) (the “2018B Bonds”, and, together with the 2018A Bonds, the “2018 Bonds”) by Resolution No. 8945, adopted June 19, 2018 (the “Resolution”); and
WHEREAS, as required by Code section 34177.5(f), the Successor Agency obtained approval from the Oversight Board by resolution of the Oversight Board adopted on June 20, 2018, to issue the 2018 Bonds; and
WHEREAS, a portion of the proceeds of the 2018A Bonds will be applied to refund the City Loans which will cause the amounts due under the City Loans to be repaid to the City on or about the date of issuance of the 2018 Bonds; and
WHEREAS, the portion of the proceeds of the Bonds that will be applied to refund the Loan Agreements is referred to herein as the “City Share of Proceeds”; and WHEREAS, the tax-exempt status of the interest on that portion of the 2018 Bonds that will be applied to refund the City Loans is contingent on investing the City Share of Proceeds in municipal 189 Attachment 1
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obligations the interest on which is excludable from gross income for federal income tax purposes under Section 103(a) of the Internal Revenue Code of 1986, as amended, and not treated as an item of tax preference under Section 57(a)(5)(C) of the Internal Revenue Code of 1986, as amended, which are legal investments pursuant to Section 53601 of the Government Code of the State of California; and
WHEREAS, the City wishes to finance the costs of acquiring, constructing and installing certain public facilities and improvements, as provided in Exhibit B hereto and incorporated herein (the “Projects”), from the City Share of Proceeds; and
WHEREAS, the City desires to pay certain costs with respect to the Projects prior to the receipt of the City Share of Proceeds from available moneys of the City and to reimburse itself for such costs from a portion of the City Share of Proceeds.
NOW, THEREFORE, BE IT RESOLVED that the City of Coronado hereby finds, resolves, and determines as follows:
Section 1. The foregoing recitals are true and correct.
Section 2. The City reasonably expects, and hereby states its intention, to reimburse itself for Project costs incurred prior to the receipt of the City Share of Proceeds with a portion of the City Share of Proceeds. Exhibit A describes either the general character, type, purpose, and function of the Project or the fund or account from which Project costs are to be paid and the general functional purpose of the fund or account.
Section 3. The reasonably expected maximum amount of the City Share of Proceeds that is anticipated to be used for such reimbursement is $32,753,000.
Section 4. Except as described in Section 8 below, this resolution is being adopted not later than 60 days after the payment of the original expenditures (the “Expenditures Date or Dates”).
Section 5. Except as described in Section 8 below, the expected date of issue of the 2018 Bonds will be within 18 months of the later of: (a) the Expenditure Date or Dates; or (b) the date that the Project is placed in service; provided that the reimbursement may not be made more than three years after the Expenditure Date or Dates.
Section 6. The portion of the City Share of Proceeds to be used to reimburse the City for Project costs are not expected to be used, within one year of reimbursement, directly or indirectly to pay debt service with respect to any obligation (other than to pay current debt service coming due within the next succeeding one year period on any tax-exempt obligation of the City) or to be held as a reasonably required reserve or replacement fund with respect to an obligation of the City or any entity related in any manner to the City, or to reimburse any expenditure that was originally paid with the proceeds of any obligation, or to replace funds that are or will be used in such manner.
Section 7. This resolution is consistent with the budgetary and financial circumstances of the City as of the date hereof. No moneys from sources other than the City Share of Proceeds are, or are reasonably expected to be, reserved, allocated on a long-term basis or otherwise set aside by the City (or any related party) pursuant to their budget or financial policies with respect to the Project costs. To the best of our knowledge, this City Council is not aware of the previous adoption of official 190 Attachment 1
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intents by the City that have been made as a matter of course for the purpose of reimbursing expenditures and for which tax-exempt obligations have not been issued.
Section 8. The limitations described in Sections 4 and 5 above do not apply to: (a) costs of issuance of the 2018A Bonds; (b) an amount not in excess of the lesser of $100,000 or five percent (5%) of the City Share of Proceeds from the 2018A Bonds; or (c) any preliminary expenditures, such as architectural, engineering, surveying, soil testing, and similar costs other than land acquisition, site preparation, and similar costs incident to commencement of construction, not in excess of twenty percent (20%) of the aggregate issue price of the portion of the 2018A Bonds that finances the Project for which the preliminary expenditures were incurred.
Section 9. This resolution is adopted as official action of the City in order to comply with Treasury Regulation § 1.150-2 and any other regulations of the Internal Revenue Service relating to the qualification for reimbursement of City expenditures incurred prior to the date of issue of the 2018 Bonds, is part of the City’s official proceedings, and will be available for inspection by the general public at the main administrative office of the City.
Section 10. This resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED this 21st day of August 2018, at a regularly scheduled meeting of the City Council of the City of Coronado by the following vote:
AYES:
NAYS:
ABSTAIN:
ABSENT:
Richard Bailey, Mayor
City of Coronado
Mary L. Clifford, CMC
City Clerk
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EXHIBIT A
CITY LOANS
1. Agreement entitled “Agreement Reentering into the December 7, 1993 City Hall Loan Agreement between the City of Coronado and the City of Coronado Acting in its Capacity as the Successor Agency to the Former Community Development Agency of the City of Coronado.”
2. Agreement entitled “Agreement Reentering into the June 18, 1996 Economic Development Loan Agreement between the City of Coronado and the City of Coronado Acting in its Capacity as the Successor Agency to the Former Community Development Agency of the City of Coronado.”
3. Agreement entitled “Agreement Reentering into the November 16, 1999 Glorietta Bay Lease Loan Agreement between the City of Coronado and the city of Coronado Acting in its Capacity as the Successor Agency to the Former Community Development Agency of the City of Coronado.”
4. Agreement entitled “Agreement Reentering into the November 19, 2002 Capital Projects Loan Agreement between the City of Coronado and the City of Coronado Acting in its Capacity as the Successor Agency to the Former Community Development Agency of the City of Coronado.”
5. Agreement entitled “Agreement Reentering into the October 1, 1996 and November 20, 2001 Library Expansion Loan Agreement between the City of Coronado and the city of Coronado Acting in its Capacity as the Successor Agency to the Former Community Development Agency of the City of Coronado.”
6. Agreement entitled “Agreement Reentering into the July 1, 1997 Pool Assessment Loan Agreement between the City of Coronado and the City of Coronado Acting in its Capacity as the Successor Agency to the Former Community Development Agency of the City of Coronado.”
7. Agreement entitled “Agreement Reentering into the March 6, 2001 Downtown Enhancement Project Phase II Loan Agreement between the City of Coronado and the City of Coronado Acting in its Capacity as the Successor Agency to the Former Community Development Agency of the City of Coronado.”
8. Agreement entitled “Agreement Reentering into the February 28, 2005 Capital Projects Loan Agreement between the City of Coronado and the City of Coronado Acting in its Capacity as the Successor Agency to the Former Community Development Agency of the City of Coronado.”
9. Agreement entitled “Agreement Reentering into the June 17, 2008 Capital Projects Loan Agreement between the City of Coronado and the City of Coronado Acting in its Capacity as the Successor Agency to the Former Community Development Agency of the City of Coronado.” 192 Attachment 1
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EXHIBIT B
DESCRIPTION OF THE PROJECTS
The following projects are to paid for from the proceeds of the tax exempt obligations:
Wastewater Recycling Plant-Using a design-build contracting method, construct a reclaimed water treatment facility and associated infrastructure in the vicinity of the Coronado Municipal Golf Course to treat Coronado wastewater to produce sufficient recycled water, meeting all appropriate standards and regulations, to irrigate the City’s Golf Course. Coincident to the construction of the reclaimed water facility will be required modifications to the Golf Course and possible opportunities to make economical and efficient Golf Course infrastructure improvements.
Citywide Undergrounding Capital Improvements-Consistent with the Land Use Element of the Coronado General Plan, the cost to trench and place underground conduit and install new cabling for each utility which currently has overhead wires located throughout the City of Coronado.
Public Parking Structure-Construction of a multi-level public parking facility to be located within the vicinity of the Hotel del Coronado.
Vehicle Equipment Replacements- The replacement of vehicle and equipment capital assets, which have been scheduled for retirement within the next nine years due to the attainment of the end of their useful life.
Computer Aided Dispatch (CAD) and Records Management System (RMS)- Replacement of the CAD/RMS system software including the building of integration path between the CAD and RMS modules.
Integrated Citywide Financial and Management Control System-Purchase of an Enterprise Resource Planning (ERP) system to replace the current unintegrated financial system.
Community Center Copper Clad Roofing System Repair-the removal of existing copper material roofing underlayment, repair of damaged roof and installation of new roofing underlayment.
Fire Services Dispatch System-Update of the fire dispatch equipment at the two firehouse locations.
Parker Pump Station Rehabilitation-Installation of a permanent generator, automatic transfer switch, exterior lights, frontage access fence to the U.S. Navy, oxygen sensors at the Parker Pump Station and any other necessary improvements to this facility.
Trinidad Pump Station Conversion and Upgrade-Conversion of existing dry pit silo station to a submersible wet-well station. This project includes placement of the pump station control system to an above ground location along with any other necessary improvements to this facility.
Transbay Pump Station evaluation and repair- evaluation and repair as needed of the failed wet-well liner, concrete walls, dry well pump room pipes, spools, assemblies, valves, and reconfiguration of pipe system as needed along with any other necessary improvements to this facility.
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Bulb-outs on SR-75-the installation of bulb-outs on Fourth Street at Avenues A and C and along the south side of Pomona Street and any other necessary improvements to this infrastructure.
Second and Orange Avenue Parklets- Design and construct large areas of brushed concrete including bus stop seating, raised planters and surface medallions and any other necessary improvements to this infrastructure.
Coronado Gateway Project-Landscaping and traffic calming improvements to be made to the Toll Plaza and surrounding right-of-way areas at the Coronado Bridge entrance area and any other necessary improvements to this infrastructure.
First Street Access Road-Installation of standard driveway entrances, landscaping and sidewalks to the First Street frontage road area at Avenues E and G and any other necessary improvements to this infrastructure.
Neighborhood Lighting and Street Improvements along Third and Fourth StreetsInstallation of decorative light standards, enhancement of landscaping, and addition of street furnishings along the Avenue of Heroes corridor and any other necessary improvements to this infrastructure.
Pomona Avenue Reconstruction and Underground Utility Design- the design for the reconstruction of Pomona Avenue including curb, gutter, sewer and roadway improvements and any other necessary improvements to this infrastructure.
SR-75 Cays Off-Ramp Improvements- installation of a submersible pump at the low elevation point of the SR-75 off ramp to prevent flooding in the travel lanes under the bridge and any other necessary improvements to this infrastructure.
Medians at SR-75 from RH Dana to Pomona Avenue- installation of improvements including removing asphalt and concrete and replacement with pavers and drought tolerant plant and any other necessary improvements to this infrastructure.
Pump Station Upgrades at the “Point”-replacement of various wet-wells, valve box hatches, construction of a three-inch suction bypass system/discharge line and grinder pumps and other necessary improvements to this facility.
Wastewater Main Replacement Program- identification and replacement of sewer mains and manholes throughout the City of Coronado.
Seaport/Transbay Manhole and Sewer Main Replacement-Inspection and rehabilitation of the backup Transbay sewer main and Seaport Manhole area along with any other necessary improvements to this infrastructure.
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