AgdaPkt 2003-09-08 - Laserfiche WebLink

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9C -I. REPORT To the Board of Dftcb" of the City d Redwood City Put>ic Financing Autlt ft From the City Mara September 8, 2003 Subject Authorization of the Redwood City Public Financing Authority to purchase tax allocation bonds from the Redwood City Redevelopment Agency and re -sell such bonds to an underwriter for distribution to the public. Recommendation Approve a resolution authorizing and directing the execution of a bond purchase contract and directing related action in connection therewith. Background In December 2002 the City's Redevelopment Agency (the "Agency") entered into a disposition and development agreement with BHV Innisfree Ventures to develop a cinema and retail project (the "Project") on the Way -To -Go and adjacent parcels in downtown Redwood City. As part of this agreement, the Agency agreed to finance parking underneath the Project for approximately 580 public parking spaces, along with other public improvements. In January 2003 the City loaned the Agency $20 million to begin work on the Project and to begin assembling the land necessary for the Project. In addition to the Project, the Agency has identified other public projects deemed necessary or desirable at this time to promote the revitalization of the downtown area. They include renovation of the former County courthouse as well as the new Courthouse plaza and various downtown streetscape improvements. (See the staff report prepared for the Agency for more information on the proposed sale of bonds by the Agency to fund these projects.) Reason for Public Financing AuthorUy Action In order to maximize the amount of bonds that the Agency can sell and still comply with the terms of its outstanding bonds and other obligations secured by its tax increment, the City's financial advisor has recommended that the Agency issue capital appreciation bonds to fund a significant portion of its capital requirements. Capital appreciation bonds do not pay interest on a current basis. They are purchased by investors at a deep discount from their face value and pay principal and interest upon maturity. The demand for such bonds is not as great as for bonds that pay interest on a current basis. After consultation with the City's financial advisor, staff determined that it would be in the City's best financial interests to negotiate the sale of the Agency's bonds with the bond underwriting firm of Stone & Youngberg in order to assure the Agency of a successful bond sale. Redevelopment statutes do not allow the Agency to negotiate the sale of its tax allocation bonds; notwithstanding those statutes, the City's Public Financing Authority (the "PFA ") is empowered to purchase the Agency's bonds at a