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OCII authorizes up to $70 million in bonds for Mission Bay South
Summary
The Commission authorized resolution 52 2013 to allow issuance of tax allocation bonds up to $70,000,000 to reimburse infrastructure spending in the Mission Bay South project area, subject to oversight board and State Department of Finance review and subsequent Board of Supervisors approval.
The Commission on Community Investment and Infrastructure on Nov. 5 approved a resolution authorizing the successor agency to issue tax-allocation bonds for the Mission Bay South redevelopment project in an aggregate principal amount not to exceed $70,000,000.
Leo Levinson, Deputy Director for Finance and Administration, told commissioners the bond sale would reimburse infrastructure costs the developer has already advanced and that the financing must use a financing authority structure to permit a negotiated sale. "This proposal is to sell up to $70,000,000 of bonds for the Mission Bay South project area to reimburse infrastructure costs," Levinson said during the presentation.
Levinson said the financing team is proposing a negotiated sale through a financing authority because successor agencies have a special status under state law that limits direct negotiated sales. He described the bond indenture (trustee contract) and a three-way bond purchase contract among the Redevelopment Financing Authority, the successor agency (OCII), and the underwriters. Bond counsel and disclosure counsel were identified and underwriters were recommended following an RFP process.
Staff said the authorization to go "up to" $70 million is a capacity ceiling, not a promise to sell that amount: the original FY budget anticipated $58.6 million of bond sales and current ROPS (spending authority) covers $40 million. Levinson explained market conditions and assessed-valuation shifts drove the request for higher authorization; depending on interest rates the actual sale could be materially less than $70 million.
If approved today by the oversight board and the State Department of Finance, staff said they would return with the finalized public offering documents and the financing-authority approval; the Board of Supervisors must also approve increasing issuance authority to the $70 million ceiling. Commissioners posed technical questions about an "independent redevelopment consultant" role in the indenture; Levinson said the agency's fiscal advisor could fill that function and would evaluate whether events such as conversions of taxable parcels to tax-exempt status materially impair coverage ratios for bond repayment.
A motion to approve the form of the documents and authorize the next steps carried on a roll-call vote; the secretary announced "4 ayes, 1 absent." The Commission will forward the item to the oversight board, then to DOF for review before returning with final sale documents.
What happens next: staff will seek oversight-board concurrence and DOF review; if DOF and market conditions permit, the agency will finalize the terms and go to market. The Board of Supervisors must approve any increase in issuance authority beyond amounts already in the adopted budget.
