In accordance with Section 33679 of the California Health and Safety Code and Section 6586.5(a)(2) of the California Government Code, the purpose of this report is to request authorization of the Burbank Public Financing Authority (Authority) to issue up to $108.2 million in Burbank Redevelopment Agency (Agency) Tax Allocation Bonds � Golden State and South San Fernando Project Areas. Bond proceeds will be loaned to the Redevelopment Agency to finance redevelopment activities within the Golden State and South San Fernando Project Areas, to purchase existing 1993 outstanding bonds for the Golden State Project Area, fund debt service reserves and pay costs of issuance incurred.

Due to timing issues, and the need for additional structural considerations, staff had requested that this public hearing, originally noticed for December 17, 2002 be continued to January 14, 2003. This allowed all parties sufficient time to review and prepare any additional legal documents necessary for Authority consideration and public review.

On June 4, 2002, the Agency authorized the appointment of a Financing Team as it relates to the issuance of Revenue Bonds for the Golden State Redevelopment Project Area. On November 12, 2002, the Agency authorized the appointment of a Financing Team for the South San Fernando and City Centre Redevelopment Project Areas. The Financing Team as well as Agency staff and Financial Services staff have been in contact on a regular basis to review the financing plan and associated bond documents presented at this public hearing.

It is anticipated that the Authority will issue up to $108,200,000 in revenue bonds for the following purposes:

• Golden State Redevelopment Project not-to-exceed $102.2 million to fund cost of issuance, debt service reserve and the following:

1. The purchase in lieu of redemption of $50.5 million of Golden State Redevelopment Project Tax Allocation Bonds, 1993 Series A. This piece of the Authority revenue bonds issuance results in a total net present value savings of nearly $4.3 million which is an 8.4% savings and results in an average annual savings of $276,219.
2. $33.9 million in 2003 Golden State Redevelopment Project Funds to be used for redevelopment projects.

• South San Fernando Redevelopment Project not-to-exceed $6 million to fund cost of issuance, debt services reserve and $4.5 million to be used for redevelopment projects.

In order to preserve the advantage of maintaining the existing 2024 maturity date related to the Golden State 1993 bonds and to take advantage of existing low interest rates, the proposed refinancing mechanism is a purchase in lieu of redemption. Instead of a traditional defeasance at the December 1, 2003 call date, the Authority will call the bonds and continue to hold them as a bondholder would. The Authority will continue to collect debt service payments from the Golden State Redevelopment Project Area. The collected debt service is used for debt service for the 2003 revenue bonds. In the case of the Golden State bonds, the savings generated by the Authority will result in additional project funds, anticipated to be up to $4 million, which can be used for any City construction project.

Several projects have been identified by staff in relation to both the Golden State and South San Fernando Redevelopment Project Areas. Among the potential projects that bond proceeds could be used for in the Golden State Redevelopment Project Area are various streetscape improvement locations, utility undergrounding and a wayfinding sign program. Bond proceeds related to the South San Fernando Redevelopment Project Area are anticipated to be used for streetscape improvements, utility undergrounding or land acquisition for future development.

The Burbank Redevelopment Agency (Agency) Board adopted an ordinance on December 22, 1970 approving the Golden State Project Area (amended in 1973, 1987 and 1994) and related plan in order to eliminate and prevent the spread of blight and deterioration, and to promote the conservation, rehabilitation, renewal and redevelopment of the project area to the extent permitted by law and the Plan.

The Redevelopment Agency has been instrumental in the reuse and redevelopment of former Lockheed property and other former aerospace property, and with traffic improvements that have been recently completed in and around the project area:

BURBANK HILTON HOTEL AND CONVENTION CENTER - In 1988, the Agency purchased a 20-acre parcel, commonly know as the Building 85 Site to facilitate the construction a 250-room hotel (second tower) and a 40,000 square foot conference center. An additional two acres of the Building 85 site was used for parking facilities for the hotel and conference facilities.

1928 JEWELRY COMPANY - The Agency sold approximately 1.77 acres of the Building 85 Site to the 1928 Jewelry Company to accommodate the expansion of the company's existing facilities. The completed project includes a 21,532 square foot two-story office building and merchandise showroom and a 10,045 square foot garage.

MEDIA STUDIOS NORTH - The Agency entered into a Disposition and Development Agreement for the development of the remaining 10.5 acres of the Building 85 site. Developed by M. David Paul, once completed, the project will consist of 650,000 square feet of office including tenants Technicolor and Disney Animation. Phase IV includes the final 180,000 square feet and is expected to be completed within the next year.

BURBANK EMPIRE CENTER - This is a mixed-use project with retail, office, and hotels built on a 103-acre site formally held by the Lockheed Corporation (former B-1 site and Building 199). The project includes 600,000 sf of retail space - including Sears' new concept the Great Indoors; 600,000 sf of office space; two extended stay hotels - Extended Stay America and Courtyard by Marriott; and a new 160,000 sf Costco. Except for Phase II of the office building (165,000 sf), the project is complete. In addition to the Great Indoors, tenants include Target, Best Buy, Lowe's, Michael's, Marshall's, and several restaurants including Hometown Buffet, the Olive Garden, and Outback Steakhouse.

Two additional office/industrial projects in the Project Area are the recently completed Airport Plaza office building - a 155,000 sf building by Trammel Crow on Hollywood Way, and the Howard Industrial Park currently under construction at the old Weber Aircraft site on Ontario Street. Once completed, the Howard Industrial Park will include almost 225,000 square feet of new industrial space.

Plans for the former Lockheed A-1 North site include a approximate 2,200 space parking lot. The site will also include "travel amenity" retail such as a car wash and a car rental facility.

Finally, Agency staff assisted with the Empire Avenue Improvement Project, the Five Points Realignment Project, and other infrastructure projects. Agency staff will continue to focus on public improvement projects within the project area.

On June 17, 1997, Ordinance No. 3468 was passed by the Burbank City Council, which approved and adopted the Redevelopment Plan for the south San Fernando Redevelopment Project. The ordinance became effective on July 26, 1997. The purpose of establishing the Project Area was to revitalize the 467-acre Area and eliminate blight (both physical and economic). Other goals of the Redevelopment Plan included: to ensure cohesive design and development standards; to expand the commercial base of the Area; to promote economic development in the Project Area; to promote local job opportunities; and to recycle and/or develop underutilized parcels to accommodate higher and better economic uses while enhancing the City and Agency. Like all of Burbank�s redevelopment plans, the South San Fernando Redevelopment Plan also promotes the increase, improvement and preservation of the supply of housing affordable to very low, low and moderate income households.

In the five years since the inception of the South San Fernando Project Area, the Agency has diligently worked toward meeting its goals. Several projects have either been approved or are pending. A snapshot of some of these projects follows.

WESTWIND STUDIOS � The Agency provided Westwind with a $250,000 loan for the expansion of their campus at Alameda & Flower.

SOUTH SAN FERNANDO BOULEVARD STREETSCAPE PROJECT � This project includes streetscape improvements including a landscaped median, new street trees, pedestrian-oriented lighting and a possible public art component. Community meetings are being held in an effort to incorporate community feedback into the overall design process. Agency consideration of the project is anticipated by the end of FY 02-03.

BURBANK SENIOR ARTISTS COLONY � This approved project, located at the southeast corner of San Fernando Boulevard and Verdugo Avenue, is a 141-unit senior apartment complex. Under the terms of Disposition and Development Agreement 30% of the units will be available to low and very-low income households. The Agency provided a combined $3.25 million in public financing ($2.5 million in affordable housing funds and $750,000 in HOME funds). The Developer received financing commitments from the California Housing Financing Agency and California Debt Limitation Allocation Committee. Tenant relocation activities are currently underway and construction is anticipated to begin in the first quarter of 2003.

BURBANK ACCESSIBLE APARTMENTS � HOME funds totaling $400,000 were committed in FY 99-00 for the construction of an 180-unit, very-low income, independent living facility at 600 South San Fernando Boulevard. Other Agency assistance included the conveyance (at no cost) of the real property previously purchased by the Agency with $600,000 of affordable housing funds. United Cerebral Palsy is the developer and is working toward the completion of construction plans.

LANCE SITE � In 1995, the Agency purchased this nearly one-acre site at 722 South San Fernando Boulevard. To date a total of roughly $1.4 million in low-moderate housing funds have been spent. Currently the Agency is in negotiations with the Olson company for the development of 33 for-sale condominium units.

1102 ISABEL � This property has been vacant for years as the former plating business sustained severe fire damage in two separate fires. Recently, the United States Environmental Protection Agency, the City of Burbank and the Redevelopment Agency collaborated on the removal of all above-grade structures. The Agency will continue efforts to return this property to a productive status.

Other projects that the Agency is currently working on include: the South San Fernando Park; a new Home Depot; a utility undergrounding program and the redevelopment of Opportunity Site No. 10 (the 19-acre former Menasco site).

On March 16, 1993 a Joint Exercise of Powers Agreement was executed by and between the City of Burbank and the Redevelopment Agency in relation to the Burbank Public Financing Authority. This Agreement was made pursuant to the Joint Powers Law and provides for the financing of Public Capital Improvements, as well as the lending of funds by the Authority. Among the powers designated in the Agreement is the power to issue revenue bonds.

BOND STRUCTURE � GOLDEN STATE

The proposed revenue bonds related to Golden State have the following two components:

Following a lengthy preliminary study, the segment of Burbank Boulevard between the former Five Points intersection and the Western CL was selected for the "Pilot Streetscape Program." The project consultant, David Evans & Associates, has since been working with staff on various alternative treatments for the parkway areas of the street, in order to develop general cost estimates for both the design work and implementation. Those alternative concepts have been developed to the necessary level of detail, pending Council's review of the South San Fernando Streetscape plan. Staff will be incorporating any comments and direction that provides on the Council SSF plan, into the Burbank plan prior to presenting it to the Council for the go-ahead to start final design work.

3. The bonds have been structured so that the first interest payment would be made on June 1, 2003 with a final maturity scheduled for December 1, 2024. The combined (2003 plus remaining 1993 bonds) average annual gross debt service payment approximates $7,000,000.

BOND STRUCTURE � SOUTH SAN FERNANDO

The proposed revenue bonds related to South San Fernando is to generate approximately $4.55 million in project funds. Staff anticipates utilizing these funds for the proposed South San Fernando Boulevard Streetscape Project, possible opportunity property acquisitions, utility undergrounding, and other infrastructure improvements as outlined in the Redevelopment Plan.

The bonds have been structured so that the first interest payment would be made on June 1, 2003 with a final maturity scheduled for December 1, 2032. The average annual gross debt service payment approximates $347,000.

As indicated earlier, the Agency gave the authorization for the Financing Team to review the City Centre Redevelopment Project Tax Allocation Bonds, 1993 Series A to determine if a defeasance of this bond issue was financially feasible as part of the 2003 bond issue. The Financing Team determined that the net present value savings as well as the marginal savings associated with the defeasance was not advisable at this time. Staff anticipates reviewing the City Centre issue again in the Fall of 2003 to review the financial viability of a defeasance.

A detailed cashflow for each of the above parts of the bond issue has been prepared by the Underwriter, E.J. De La Rosa & Co., Inc., and reviewed by the Financing Team. The Agency�s obligations under the Loan Agreements are secured by tax increment of the Project Areas. A series of bond documents has been prepared by Bond Counsel, Quint & Thimmig LLP including the Preliminary Official Statement, Indenture and Loan Agreement (Exhibit A). Our Financial Advisor developed a Flow of Funds diagram to visually represent the bond structure (Exhibit B).

Rating agency presentations to representatives from Standard and Poor�s and Moody�s Investors Services took place on December 4 and 5, 2002. Staff presented an overview of Burbank, the Redevelopment Agency, with the specifics of the 2003 Financing. Each presentation concluded with a tour of the Project Areas to highlight the key taxpayers and the dynamics within each particular Project Area. An additional presentation was made to MBIA, a bond insurance company on December 4. Credit enhancement in the form of bond insurance has been secured for the Golden State Series A Authority Bonds from AMBAC Insurance.

The current trustee for the 1993 Golden State Tax Allocation Bonds is BNY Western Trust Company, which is the successor trustee to First Interstate Bank of California. As per the 1993 Indenture of Trust between the Agency and the Trustee, removal and substitution of a trustee is a permitted action. Due to the financial structure of the 2003 bond issuance through the Burbank Public Financing Authority, a determination has been made to remove BNY Western Trust Company and appoint Wells Fargo Bank, National Association, as successor trustee. Currently, Wells Fargo serves as trustee for several bond issues.

Issuance of the Burbank Public Financing Authority Revenue Bonds, 2003 Series A (Golden State Redevelopment Project) and 2003 Series B (South San Fernando Redevelopment Project) in a principal amount not to exceed $108.2 million will result in anticipated project funds of $33.9 million related to the Golden State Project Area, $4.5 million related to the South San Fernando Project Area, and up to $4 million of project funds which can be used for any City construction program, as well as funding of project area debt service reserve funds. In addition the 2003 bonds will result in $4.3 million net present value savings related to the Golden State Project Area. These numbers will change pending final pricing of the bonds and factors such as the bond rating and if credit enhancement is obtained via bond insurance. Compensation for the Financing Team will be paid as part of the bond issuance costs. Based on the revised financing calendar, bond pricing has been scheduled for late January with bond issuance anticipated for early February 2003.

Staff recommends that the Financing Authority, Redevelopment Agency and City Council adopt the proposed resolutions related to the Golden State Project Bonds.

1.  Adoption of proposed Burbank Public Financing Authority resolution entitled:

A RESOLUTION OF THE BURBANK PUBLIC FINANCING AUTHORITY AUTHORIZING ISSUANCE OF REVENUE BONDS, APPROVING, AUTHORIZING AND DIRECTING EXECUTION OF CERTAIN FINANCING DOCUMENTS, AND AUTHORIZING AND DIRECTING ACTIONS WITH RESPECT THERETO (GOLDEN STATE PROJECT AREA).

Exhibit B - Flow Chart Debt Structure

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