Title
Successor Agency to the Redevelopment Agency of the City of San Leandro 2018 Tax Allocation Refunding Bonds
Staffreport
SUMMARY AND RECOMMENDATION
Staff recommends that City Council and the Successor Agency to the Redevelopment Agency of the City of San Leandro approve the resolutions and documents required to issue the Successor Agency to the Redevelopment Agency of the City of San Leandro 2018 Tax Allocation Refunding Bonds (Refunding Bonds). The proposed Refunding Bonds will be issued to refund $22,860,000 of currently outstanding Redevelopment Agency of the City of San Leandro Alameda County-City of San Leandro Redevelopment Project Tax Allocation Bonds, Series 2008 (2008 TABs). The par, or face value of the Refunding Bonds will not exceed $23 million and they will mature in 2038, which is the existing final maturity of the 2008 TABs. Annual debt service on the Refunding Bonds will not exceed the annual debt service currently payable on the outstanding 2008 TABs.
DISCUSSION
In July 2008 the City issued $27,530,000 of the 2008 TABs to fund certain redevelopment activities of benefit to property within the project area. Until the next scheduled principal payment on 9/1/18, there will be $22,860,000 of the 2008 TABs outstanding. The City has an opportunity to refinance the 2008 TABs now and realize substantial savings in annual debt service payments. Based on municipal bond market rates effective 10/31/17, staff estimates that refinancing the 2008 TABs could result in almost $8.5 million total nominal savings over the life of the 2008 TABs. The present value (PV) of these future savings, discounting the nominal savings by the estimated arbitrage yield of 2.86%, is $4.5 million. This results in net present value (NPV) savings of about 19.7% when taken as a percentage of the par value of the 2008 TABs to be refunded. The general rule of thumb is that the minimum NPV savings should be at least 3-5% of refunded par.
City staff emphasizes that thes...
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