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Time Set # 27.
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| Board of Supervisors |
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| Subject |
| Hold a public hearing and adopt resolution authorizing the issuance of the Yolo County Public Agencies Financing Authority 2017 Lease Revenue Bonds (Capital Projects) Series A; the sale of bonds and distribution of the official statement; and County officers to execute and deliver documents and provide general authorization to complete the issuance and delivery of the 2017 Lease Revenue Bonds. (No general fund impact) (Newens/Rinde) |
| Recommended Action |
- Hold a public hearing on the issuance of bonds by the Yolo County Public Agencies Financing Authority (Financing Authority) to finance various capital projects of the County;
- Make a finding that such issuance of bonds by the Financing Authority on a tax exempt basis will result in significant public benefits including improvements to County facilities and savings in effective interest rate;
- Adopt resolution authorizing the issuance of the bonds by the Financing Authority; the Notice of Intent to Sell Bonds; the Official Notice of Sale; the Trust Agreement; the Facilities Lease; the Site Lease; the Bond Purchase Agreement; the Preliminary Official Statement; the Continuing Disclosure Agreement; and certain other legal documents related to the issuance (Attachments A through I); and
- Appoint the Assistant County Administrator to act as a director of the board of Yolo County Public Agencies Financing Authority in lieu of the Auditor of the County.
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| Strategic Plan Goal(s) |
Operational Excellence
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| Reason for Recommended Action/Background |
In April, 2016 the County presented the Capital Improvement Plan Financing Proposal to the board and the project list was further refined through the 2017-2019 Capital Improvement Plan in October, 2016. The final project list was further narrowed in April, 2017 to only those projects ready for bond financing. Due diligence work has been performed on each of these projects for purpose of tax-exempt bond financing by County staff in coordination with Bond Counsel including the initiation and completion of the CEQA requirements.
In this transaction, the Board of Supervisors requests the Yolo County Public Agencies Financing Authority to issue Lease Revenue Bonds in an amount not to exceed $23 million to assist the County in financing public capital improvements including the (1) Monroe Detention Facility (approx. $6,700,000), (2) Leinberger Detention Facility (approx. $5,100,000), (3) Historic Courthouse Renovation (approx. $5,000,000), and (4) the Library Archives Remodel (approx. $2,000,000). For this purpose, the County will lease certain county facilities to the Authority including, but is not limited to, the Turner Library, Probation Administration, District Attorney Building, Davis Office Building, and the Boat and Evidence Building. The Authority will lease these facilities back to the County in exchange for base rental payments, which the Authority will use to pay debt service on the bonds.
The bonds shall be sold on or before June 6, 2018, shall mature no later than the date which is twenty (20) years from the date of the Bonds and shall bear interest at a fixed rate with a true interest cost not in excess of four percent (4.00%). From a historical perspective, interest rates are favorable and recent projections of debt service show an average interest rate on the bond of 3.9% which results in annual debt service of approximately $1,475,000. While the County's general fund will be obligated under the lease supporting the bonds, the repayment source for debt service is expected to be provided by the County's Accumulated Capital Outlay (ACO) Fund. The bonds will be sold through a competitive sale to the lowest true interest cost bidder, subject to all of the terms and conditions of the Official Notice of Sale describing the Bonds. The true interest cost of the Bonds shall not be in excess of four percent (4.00%). Should the bond sale not be possible through competitive bidding, the Board authorizes the Chief Financial Officer, in consultation with the Authority's officers and the financial consultant KNN to accomplish the sale through negotiation with an underwriter.
In order for the Authority to proceed with the issuance of the bonds, the County needs to conduct a public hearing and make a finding that the issuance of bonds by the Financing Authority on a tax exempt basis will have significant public benefits. The benefits of the tax exempt bond issuance include the improvement and modernization of the County facilities listed above and savings in effective interest rate due to the use of tax-exempt financing. In the original creation of the Authority in 1994, the directors of the Authority were the County Auditor, County Treasurer, and City of Davis Finance Director. As the County Auditor and Treasurer responsibilities have since been absorbed by the County's Chief Financial Officer, it is requested that the Board appoint the Assistant County Administrator as a director of the Authority in lieu of the County Auditor. The County Chief Financial Officer will remain a director of the Authority in the assigned role of County Treasurer. Upon approval by the Board of Supervisors, the Board of Directors of the Authority will meet to approve the Authority resolution effecting the bond sale.
The County Department of Financial Services has reviewed the issuance of the debt in accordance with the County Policy on Borrowing, Debt, and Obligations and determined that the issuance of debt will not cause the County to exceed the safe range of any of the County adopted debt ratios or have a significant negative impact on the County's financial sustainability. |
| Collaborations (including Board advisory groups and external partner agencies) |
The Department of Financial Services collaborated as a member of the County's Capital Improvement Committee (CIC) since formation in 2014 and through the creation of the capital improvement plan and plan of finance. The CIC is a cross-department effort including the County Administrators' Office, Department of Financial Services, and Department of General Services to proactively work on capital project development, financing, and construction throughout the County.
After the plan of finance was developed, this effort was handed off to the financing team to prepare the 2017 Lease Revenue Bonds which has included the County Administrators' Office, Department of Financial Services, General Services, County Counsel and outside support from KNN as the Municipal Financial Advisor, Orrick as Bond Counsel, and Stradling as Disclosure Counsel.
The County Debt Committee, comprised of a member of Board of Supervisors and one alternate, the County Administrator , County Counsel, the Chief Financial Officer and the Director of General Services, reviewed and approved the planned financing transaction in its meeting on May 12, 2017.
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| Fiscal Impact |
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| Source of Funds for this Expenditure |
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Explanation (Expenditure and/or Revenue) |
| Further explanation as needed: |
The Cost of Issuance will cover the $250,000 costs of paying the Municipal Financial Advisor, Bond Counsel, Disclosure counsel and $90,500 underwriter's fees. The costs are included in the borrowing and will be paid the Bond proceeds received in July, 2017 and will be included in the budget for 2017/2018.
The Accumulated Capital Outlay Fund is planned as the source for debt repayment. The debt service is budgeted for the first fiscal year of the bonds in the estimated amount of $865,514 and will be included in the fiscal year 2017-18 recommended budget. The amount of debt service for the initial year will be lower due to timing of project contributions and first principal payment starting in the second year. The estimated ongoing annual debt service starting 2018-19 will be $1,475,000 based on current projections, however may be slightly different upon the completion of the bond issuance transaction in June, 2017. |
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