The issuance of the Refunding Bonds at current market rates is expected to save over $25 million in debt service payments over the next 19 years. The savings will be distributed among the various taxing entities within the former redevelopment project areas.
In 1999, 2003 and 2007, the County of Contra Costa Public Financing Authority (the "Authority") issued bonds for the benefit of the former County of Contra Costa Redevelopment Agency (the "RDA"). The bond debt service is paid from the revenue of 12 tax increment loans made to the former redevelopment project areas (Contra Costa Centre, North Richmond, Bay Point, Rodeo, and Montalvin Manor) from bond proceeds.
Staff to the Successor Agency to the RDA (the "Successor Agency"), with assistance from the County's municipal advisor, Montague DeRose and Associates, determined that, due to prevailing market conditions, it is in the best interest of the Successor Agency to refund the existing bonds with the issuance of two series of refunding bonds (the "Refunding Bonds"). The proposed refunding is expected to save approximately $25 million in debt service payments over the next 19 years. This is a savings of 14.2 percent, which is significantly greater than the 3 percent savings required by the County's Debt Management Policy for Tax Allocation Bonds. The debt service savings will be distributed to the various taxing entities within the former redevelopment project areas.
The refunding will consolidate the outstanding bonds and underlying loans resulting in a significant reduction of the monitoring and reporting burden on County staff.
In addition to this recommended action of the Authority, the Finance Committee is recommending parallel actions from the Governing Board of the Successor Agency (see April 25, 2017 agenda item D.6.) If approved by the Successor Agency, the Successor Agency Oversight Board will considered authorizing the issuance of the Refunding Bonds at its May 4, 2017 meeting. The State Department of Finance must review and approve the transaction before staff can return to the Successor Agency for approval of the final bond sale transaction and associated documents. This is expected to be the only action required by the Authority.
The Successor Agency will be unable to issue the Refunding Bonds and thereby increase revenue to the taxing entities in the former redevelopment project areas.