pages: CityCouncil/2010-06-24.pdf, 2
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CityCouncil | 2010-06-24 | 2 | Agency Refunding Revenue Bonds (Harbor Bay CFD and Marina Village AD), and Authorizing Actions in Connection Therewith." Adopted. Councilmember/Authority Member Gilmore stated two series of bonds would be issued because the bond rating did not come back favorably; one would be a senior series and the other would be a subordinate series; inquired whether the cost would be more if two series were issued; further inquired whether the subordinate series would be riskier and whether someone would want to buy the bonds. Mark Holmstedt, Westhoff, Cone & Holmstedt (WCH), responded that he is not happy with the rating; stated the rating is BBB, which is not a bad rating for a land-secured bond; Harbor Bay Community Facilities District (CFD) No.1 has 630 homes; everyone has been paying taxes; the area has been built out for a number of years; the senior bonds would correspond to the CFD; the subordinate bonds would correspond to Marina Village Assessment District 89-1 (AD); revenues come from both districts; a default would not hurt the other district; the CFD is rated A-; the AD bonds have four years left; a debt service reserve fund has been established to ensure that if the top three taxpayers all default for two years, the bonds would still be paid; a foreclosure proceeding could take place to ensure payment; that he thinks people should feel good about both series; the AD district has never had a full payment delinquency for longer than a year; one taxpayer had a small delinquency up until a week ago; the matter has been cured; that he would expect a little bit better rate on the A- bonds; the cost would not be more for issuing two series. Councilmember/Authority Member Gilmore stated the City might get a better rating by splitting the bond. Mr. Holmstedt stated last week, one bonding service rated the transaction BBB for one bond; Standard & Poor's (S&P) does not agree; the transaction was restructured; the CFD bonds are different than an assessment district in that more taxes pay the bonds, which is considered to be a higher credit quality; the Marina Village District has a very heavy ownership concentration; three of the highest taxpayers control 78% of all taxes; having the three taxpayers default would create a problem and is the reason for the lower rating. The Interim City Manager/Executive Director stated the CFD fairs better and the AD fairs no worse by splitting the bond. Mr. Holmstedt stated bidders would be allowed to bid on one or both bonds; a notice was sent a week ago regarding the forthcoming transaction; a number of major Wall Street firms are interested in bidding on the bonds; major insurance companies are looking towards reinvesting the bonds; that he expects to receive strong bids next week. Councilmember/Authority Member Tam inquired whether Marina Village brought down Special Joint Meeting Alameda City Council, Alameda Public Financing Authority, Alameda Ruse 2 and Redevelopment Authority, and Community Improvement Commission June 24, 2010 | CityCouncil/2010-06-24.pdf |