PURPOSE

The purpose of this report is to request authorization to 1) issue up to $23 million in Burbank Public Financing Authority (Authority), Revenue Bonds 2003 Series C (City Centre Redevelopment Project), to purchase in lieu of redemption $21.285 million of the 1993 Series Tax Allocation Bonds and 2) issue up to $11 million in Authority, Revenue Bonds 2003 Series D (Golden State Redevelopment Project), to purchase in lieu redemption Golden State Redevelopment Project $8.53 million of the 1993 Series A Tax Allocation Bonds.

BACKGROUND

On June 17, 2003, the Agency authorized the appointment of a Financing Team as it related to the potential of refunding the 1993 City Centre Tax Allocation Bonds as well as the remaining amount of the 1993 Golden State tax allocation bonds.  Tax Allocation bonds for the Golden State Project Area was most recently issued in 2003 in the amount of $87.265 million.  The 2003 tax allocation bonds were in-part issued to purchase in lieu of redemption $50.24 million of the 1993 tax allocation bonds.  For tax reasons $8.53 million remain outstanding and are eligible to be refunded no earlier than September 1, 2003.  

The last City Centre Project Area bond issuance was the $23,945,000 City Centre Redevelopment Project Tax Allocation Bonds, 1993 Series A.

Due to prevailing financial market conditions, it is in the best interests of the Agency to realize interest rate savings by refinancing a portion of the Golden State Bonds, and to refinance all of the City Centre Bonds. In connection therewith, it has been proposed that the Authority purchase the applicable bonds in lieu of redemption. In order for the Authority to raise funds necessary to provide for such purchase, refinancing and financing, the Authority purposes to authorize the issuance of its revenue bonds. The proceeds of the Authority Bonds will be used 1) to purchase the outstanding City Centre Agency Bonds in lieu of redemption, and 2) to purchase a portion of the Golden State Agency Bonds in lieu of redemption.

ANALYSIS

A detailed cash flow for the refundings have been prepared by the Underwriter, E.J. De La Rosa & Co., Inc., and reviewed by the Financing Team.  A discussion of the refundings for each project is follows:

BOND STRUCTURE � CITY CENTRE

Current market conditions have been deteriorating; however, Staff believes that it is prudent to authorize the refinancing in the event the municipal bond market will yield a minimum net present value savings related to the refinancing of 3%.  Current market conditions generates a 3.1% net present value savings which represents net present value savings of $678,000 and equates to an average annual debt service savings of $51,000.  The first payment date would be made December 1, 2003 with final maturity scheduled for December 1, 2023.  The purchase in lieu of redemption financing structure was selected to allow the Agency to retain economic benefit of the current reserve fund investment agreement which is earning 5.97% interest as well as the current maturity date of the 1993 bonds of December 1, 2023.  The Authority�s obligations under the bonds are secured by the debt service payments of the Redevelopment Agency of the City of Burbank City Centre Redevelopment Project Tax Allocation Bonds, 1993 Series A.   Annual debt service savings related to the existing debt service for the 1993 bonds compared to debt service payments on the Authority bonds will be rebated back to the City Centre Project on an annual basis by the Authority.

A series of bond documents has been prepared by Bond Counsel, Quint & Thimmig LLP including the Preliminary Official Statement and Second Supplemental Indenture of Trust other documents (Exhibit A). 

Standard and Poor�s and Moody�s Investor Services have been requested to provide a bond rating.  Bond insurance is expected to be obtained from AMBAC Insurance or XL Capital.

Current market conditions will dictate the timing the bonds will be priced and will dictate the ultimate savings related to the bonds.  Should the market conditions not generate a minimum of 3% net present value savings; the bonds will not be issued.

BOND STRUCTURE � GOLDEN STATE

Current market conditions have been deteriorating; however, Staff believes that it is prudent to authorize the refinancing in the event the municipal bond market will generate a minimum net present value savings of 3%.  Current market conditions generates a 3.7% net present value savings which represents net present value savings of $315,000 and equates to an average annual debt service savings of $92,700.  The first payment date would be made December 1, 2003 with final maturity scheduled for December 1, 2008.  The purchase in lieu of redemption financing structure was selected to allow the Agency to retain economic benefit of the current reserve fund investment agreement which is earning 6.8% interest.  The Authority�s obligations under the bonds are secured by the debt service payments of the Redevelopment Agency of the City of Burbank Golden State Redevelopment Project Tax Allocation Bonds, 1993 Series A.  Annual debt service savings related to the existing debt service for the 1993 bonds compared to debt service payments on the Authority bonds will be rebated back to the City Centre Project on an annual basis by the Authority.

A series of bond documents has been prepared by Bond Counsel, Quint & Thimmig LLP including the Preliminary Official Statement and Second Supplemental Indenture of Trust other documents (Exhibit B).

Standard and Poor�s and Moody�s Investor Services have been requested to provide a bond rating.  Bond insurance is expected to be obtained from AMBAC Insurance.

Current market conditions will dictate the timing the bonds will be priced and will dictate the ultimate savings related to the bonds.  Should the market conditions not generate a minimum of 3% net present value savings; the bonds will not be issued.

FISCAL IMPACT

The proposed purchase in lieu of redemption anticipates a total net present value savings of $678,000 related to the City Centre Project and $315,000 related to the Golden State Project.  The anticipated net present value savings will change pending final pricing of the purchase in lieu of redemption bonds.  Compensation for the Financing Team will be paid as part of the bond issuance costs. 

RECOMMENDATION

Staff recommends that the Burbank Public Financing Authority, Redevelopment Agency and City Council adopt the proposed resolutions.

CITY CENTRE:

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

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

2.         Adoption of proposed Redevelopment Agency resolution entitled:

A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING, AND AUTHORIZING AND DIRECTING EXECUTION OF CERTAIN BOND FINANCING DOCMENTS RELATED TO THE REFINANCING OF REDEVELOPMENT ACTIVITIES WITHIN ITS CITY CENTRE REDEVELOPMENT PROJECT AREA AND AUTHORIZING AND DIRECTING ACTIONS WITH RESPECT THERETO (CITY CENTRE PROJECT AREA).

3.         Adoption of proposed City Council resolution entitled:

A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK MAKING FINADINGS WITH RESPECT TO AND APPROVING THE ISSUANCE OF BONDS BY THE BURBANK PUBLIC FINANCING AUTHROITY (CITY CENTRE PROJECT AREA).

GOLDEN STATE:

1.         Adoption of proposed Burbank Public Financing Authority resolution entitled: A RESOLUTION OF THE BURBANK PUBLIC FINANCING AUTHORITY AUTHORIZING ISSUANCE OF REVENUE BONDS, APPROVING, AND AUTHORIZING AND DIRECTING EXECUTION OF CERTAIN FINANCING DOCUMENTS AND AUTHORIZING AND DIRECTING ACTIONS WITH RESPECT THERETO (GOLDEN STATE PROJECT AREA).

2.         Adoption of proposed Redevelopment Agency resolution entitled:

A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING AND AUTHORIZING AND DIRECTING EXECUTION OF CERTAIN BOND FINANCING DOCUMENTS RELATED TO THE REFINANCING OF REDEVELOPMENT ACTIVITIES WITHIN THE AGENCY�S GOLDEN STATE REDEVELOPMENT PROJECT AREA AND AUTHORIZING AND DIRECTING ACTIONS WITH RESPECT THERETO (GOLDEN STATE PROJECT AREA).

3.         Adoption of proposed City Council resolution entitled:

A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK MAKING FINDINGS WITH RESPECT TO AND APPROVING THE ISSUANCE OF BONDS BY THE BURBANK PUBLIC FINANCING AUTHORITY, APPROVING THE ISSUANCE OF BONDS BY THE BURBANK PUBLIC FINANCING AUTHORITY (GOLDEN STATE PROJECT AREA).

Exhibit A -      City Centre Draft Bond Documents, including Preliminary Official Statement

Exhibit B -      Golden State Draft Bond Documents, including Preliminary Official Statement

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