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OCII authorizes up to $300 million refunding of successor‑agency bonds to save on debt service
Summary
The Commission approved a final authorization for OCII to issue two series of tax-allocation refunding bonds not to exceed $300 million, a transaction staff says could generate about $10.5 million in present‑value debt‑service savings and lower the draw on property tax. The Redevelopment Financing Authority approved related redemption agreements.
The Commission on Community Investment and Infrastructure voted Dec. 2 to authorize the issuance of two series of tax‑allocation refunding bonds in a combined principal amount not to exceed $300,000,000 to refinance successor‑agency obligations.
"Given current market conditions, it will help us reduce our debt and save money, reduce our draw on property tax," Director Bohe said, introducing the item. Senior financial analyst John Daigle told the Commission the transaction would refund roughly $151 million of outstanding bonds by issuing about $146 million of new bonds, producing approximately $10.5 million in present‑value debt‑service savings and gross savings of about $15.4 million.
Daigle described the documents the Commission was being asked to approve: preliminary and final official statements, a continuing disclosure certificate and three‑party redemption agreements that must be executed among OCII, the Financing Authority and escrow trustees. He said the escrow trustees for the refunded bonds would remain the current trustees (Bank of New York or U.S. Bank) and that staff was targeting bond pricing the week of Dec. 11 and a closing near the end of December, with the refunded bonds callable on Feb. 1, 2015.
Public commenters raised questions about historic obligations in Southeast neighborhoods and urged the Commission to ensure community impacts were addressed; staff said those concerns could be taken up separately and would not affect the legal mechanics of the refunding.
The Commission approved the resolution authorizing the refunding and related documents. After the Commission recessed and reconvened as the Redevelopment Financing Authority, the Authority approved the companion resolution to execute the redemption agreements necessary to complete the transaction.
