BOARD MEETING DATE: May 3, 2002
AGENDA NO. 37

Adopt Resolution Approving Third Supplemental Trust Agreement, Escrow Agreement, and Preliminary Official Statement for SCAQMD Building Corporation Bonds Relating to Diamond Bar Headquarters Facilities

SYNOPSIS: 

This item, in conjunction with the agenda item regarding the adoption of an Ordinance and approval of an Addendum to our Installment Purchase Agreement with the SCAQMD Building Corporation, is required to complete the refunding of the Building Corporation’s Installment Sale Revenue Refunding Bonds, Series 1992. Current bond market interest rates make a refinancing of the callable 1992 Series Bonds attractive at this time with an estimated annual savings of $70,000. This action is to adopt a Resolution approving the documents required to complete the refinancing.

COMMITTEE: 

Finance, April 19, 2002, Recommended for Approval

RECOMMENDED ACTION:

Adopt the attached Resolution approving the Third Supplemental Trust Agreement, the Escrow Agreement, and the Preliminary Official Statement.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

As noted in the staff recommendation regarding the Ordinance approving an addendum to the Installment Purchase Agreement which appears elsewhere on the agenda, the current bond market interest rates make a refinancing of the callable Series 1992 Refunding Bonds attractive at this time. Staff has also proposed that the debt be restructured as part of this refinancing to spread out the 2008 and 2009 budget savings (the result of the 1998 early redemption of the 2009 Term Bond from the proceeds from the sale of the El Monte property) over the remaining bond period.

Proposal

The documents recommended for approval in this Resolution are required to complete the refinancing. These documents establish the financial relationships necessary to administer the bond payments over the remaining 12 years of the bond term.

The Third Supplemental Trust Agreement is between U.S. Bank, N.A., the SCAQMD Building Corporation, and the SCAQMD. Under the Agreement, U.S. Bank is authorized to administer the Building Corporation’s bond payments to ensure proper disbursement to bond holders. The Escrow Agreement establishes the funding and maintenance of the refunding escrow fund as provided for in the Trust Agreement. The Preliminary Official Statement (attached and to be replaced eventually by a final official statement) will be used to market the refinancing bond issue. Official Statements are used to provide detailed financial information about an organization to prospective bond purchasers.

Resource Impacts

The recommended action along with the related recommendation appearing elsewhere on this agenda will result in estimated annual budget savings from the refinancing of $70,000. Additional estimated annual budget savings of $400,000 could be realized from restructuring the financing to spread out the savings from the 2009 Term Bond redemption.

Attachment

1. Resolution
2. Third Supplemental Trust Agreement
3. Escrow Agreement
4. Preliminary Official Statement

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