Agenda Item   

AGENDA STAFF REPORT

 

                                                                                                                        ASR Control  17-000365

 

MEETING DATE:

04/25/17

legal entity taking action:

Board of Supervisors

board of supervisors district(s):

1

SUBMITTING Agency/Department:

County Executive Office   (Approved)

Department contact person(s):

Scott Mayer (714) 834-3046 

 

 

Shane Silsby (714) 667-9700

 

 

Subject:  Civic Center Facilities Strategic Plan and Building 16

 

      ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Resolution(s) and Ordinance(s)

Public Hearing

 

 

3 Votes Board Majority

 

 

 

    Budgeted: N/A

Current Year Cost: N/A

Annual Cost: N/A

 

 

 

    Staffing Impact:

No

# of Positions:

Sole Source: N/A

    Current Fiscal Year Revenue: N/A

  Funding Source: N/A

County Audit in last 3 years: No

 

 

    Prior Board Action: 3/22/2016 #32SE, 6/23/2015 #S77C, 4/23/2013 #37, 8/21/2012 #37

 

RECOMMENDED ACTION(S):

 

 

1.

Adopt attached Resolution:

·         Certifying Final Environmental Impact Report  No. 626 for the County of Orange Civic Center Facilities Strategic Plan;

·         Adopting Statement of Facts, Findings and Statement of Overriding Considerations for Final Environmental Impact Report No. 626;

·         Adopting Mitigation Monitoring and Reporting Program for Final Environmental Impact Report  No. 626, and;

·         Approving the County of Orange Civic Center Facilities Strategic Plan and the construction of Building 16 consistent with the County of Orange Civic Center Facilities Strategic Plan.

 

2.

Find that Final Environmental Impact Report No. 626 reflects the independent judgment of the County of Orange and satisfies the requirements of CEQA for the construction of Building 16 consistent with the County of Orange Civic Center Facilities Strategic Plan and the formation of Capital Facilities Development Corporation.

 

3.

Authorize the Chief Real Estate Officer or designee to execute documents necessary for construction of Building 16, including, but not limited to, lot line adjustments and necessary permits from the City of Santa Ana or the County.

 

4.

Read the title of the Ordinance “An Ordinance of the Board of Supervisors of the County of Orange Authorizing the Execution and Delivery of a Facility Lease, a Ground Lease and Other Documents and Matters Related Thereto.”

 

5.

 

Order further reading of the Ordinance to be waived.

6.

Conduct a Public Hearing.

7.

Consider the matter.

8.

Direct Ordinance to be placed on the agenda of the next regularly scheduled Board of Supervisors meeting for adoption.

 

9.

At the next regularly scheduled meeting, consider the matter, and adopt the Ordinance.

 

 

 

 

 

SUMMARY:

 

Adoption of the Recommended Actions approves the County of Orange Civic Center Facilities Strategic Plan, the construction of a new Building 16 within the Civic Center, the lease and leaseback of the Building 16 property, and establishment of a nonprofit corporation as it relates to the financing of Building 16 and the Civic Center Facilities Strategic Plan. 

 

 

 

BACKGROUND INFORMATION:

 

On August 21, 2012, the Board of Supervisors (Board) selected Griffin Structures Inc. (Griffin) as the potential primary developer of the Building 16 site.  On April 23, 2013, the Board adopted an ordinance approving a public/private partnership with Griffin to complete a comprehensive Civic Center Facilities Strategic Plan Study (Civic Center Master Plan) for the Orange County Civic Center area and, specifically, to complete a Building 16 Development Master Plan Study.  On June 23, 2015, the Board approved an amendment to the contract with Griffin to further develop and finalize the Civic Center Master Plan Study. On February 24, 2016, the Board received a presentation on the Facilities Strategic Plan and, on March 22, 2016, approved a Program Management and Design Agreement with Griffin for the planning and design phase services for a new Building 16 within the Orange County Civic Center (Civic Center).  

 

The actions presented for consideration at this time would: 1) certify Final Environmental Impact Report No. 626 (FEIR No. 626), which analyzes the potential environmental effects of the Facilities Strategic Plan and of Building 16; 2) approve the Facilities Strategic Plan; 3) implement the public/private partnership with Griffin to develop Building 16 through the approval of the formation of Capital Facilities Development Corporation (Corporation); 4) approve business terms in a Development Agreement between Griffin and the Corporation for the construction of Building 16; and 5) take actions required for public financing.

 

County of Orange Civic Center Facilities Strategic Plan

 

The Facilities Strategic Plan involves the +/- 11-acre County “superblock” (bounded by Ross Street, Civic Center Drive, Broadway and Santa Ana Boulevard), as well as County satellite buildings within the vicinity of the Civic Center.  Key goals of the Facilities Strategic Plan are to improve the delivery of County services to the community by grouping similar and related services; to improve efficiencies through these departmental adjacencies; reduce energy costs by capitalizing on the Central Utilities Facility; and to improve space usage which will result in lower long-term operating and maintenance costs for the County.  To accomplish these goals, the Facilities Strategic Plan anticipates the renovation of several existing facilities and the replacement of several older facilities with new construction.  These activities would result in the replacement of older facilities with 390,000 square feet of newly constructed government office uses within the Facilities Strategic Plan area.  The Facilities Strategic Plan also anticipates the sale of several County owned buildings, which would result in a net decrease of 400,000 square feet of older owned properties in the Civic Center. Implementation would occur in four phases over approximately 18 years.  Phase 1 activity spans from 2016 to 2021 and includes replacement of the existing Building 16 with new facilities, demolition of Building 11, construction of a County conference and events center and renovation of the H.G. Osborne Building.  The complete Facilities Strategic Plan, which contains a total of four possible phases, is attached for the Board’s review and approval.

 

Building 16 Implementation

 

Building 16 is proposed as a six-story, approximately 251,000-square foot office building located on Ross Street north of Santa Ana Boulevard.  The building will include a one-stop public counter and a single story, approximately 6,600-square foot event/conference center (Building 18), which is planned for use by both the County and the public, and will also serve as an Emergency Administration Center when needed to serve the County.  With approval of the actions presented, construction is targeted to begin in fall 2017, with completion slated for January 2020.  The building will be constructed by Griffin pursuant to a Development Agreement with the Corporation (the formation of which is addressed below), who will lease the property from the County and lease the building back to the County.

 

Public Financing – Lease Revenue Bonds

 

The Corporation will be formed as a nonprofit public benefit corporation for the purpose of facilitating financings, acquisitions of property, and other financial and property related transactions, by or for the benefit of the County of Orange.  The Corporation is governed by a three member Board of Directors consisting of the County Chief Executive Officer, Chief Real Estate Officer and Director of OC Public Works.  Since the County owns the land on which Building 16 will be constructed, the County will enter into a Ground Lease with the Corporation.  In order to finance the Building 16 project, the California Municipal Finance Authority (of which the County is a member), will issue tax-exempt bonds, to be designated as the “California Municipal Finance Authority Lease Revenue Bonds, Series 2017A (Orange County Civic Center Infrastructure Improvement Program – Phase I).”  The California Municipal Finance Authority will loan the bond proceeds, which will be utilized to construct Building 16, to the Corporation pursuant to a Loan Agreement. 

 

The Corporation will enter into a Facility Lease with the County in which the Corporation will undertake the Building 16 project and lease the new Building 16 to the County. The base rental payments by the County under the Facility Lease will be used to repay the loan to the California Municipal Finance Authority, which pays the debt service on the Bonds to the bank trustee.

 

The Development Agreement is between Griffin, the developer, and the Corporation.  The Corporation will oversee the financing and construction of the Building 16 project.

 

The estimated par amount of the proposed California Municipal Finance Authority Lease Revenue Bonds, Series 2017A (Orange County Civic Center Infrastructure Improvement Program – Phase I) Bonds (Bonds) is $158.4 million.

 

Sources and uses of bond proceeds are estimated as follows:

 

Sources:

Par Amount

$158,380,000

 

Premium

19,644,602

 

 

 

 

Total Sources:

$178,024,602

 

 

 

Uses:

Project Fund

$152,924,256

 

Capitalized Interest Fund

23,839,841

 

Cost of Bond Issuance 

1,255,953

 

Contingency

4,552

 

 

 

 

Total Uses:

$178,024,602

 

Public Finance staff recommends a 30-year debt service schedule, with an optional redemption provision after 10 years.  The true interest cost is estimated to be 4.05%.  Estimated annual base rental payments/debt service is $10.8 million, for a total cost of $315.3 million.  An estimated $23,839,841 in interest cost will be capitalized through July 2020, six months beyond the expected construction period.  Base rental payments will commence once the County takes occupancy of the building and the Certificate of Substantial Completion is accepted.  Current year estimated $1.25 million cost of bond issuance will be paid from bond proceeds.

 

Credit Ratings

 

Presentations to Standard and Poor’s Global Ratings and Fitch Ratings are scheduled for the week of April 17, 2017, with formal ratings to be received prior to issuance in June 2017.

 

Financing Documents

 

Following is a description of the financing documents attached.

 

Ordinance of the Board of Supervisors – Ordinance to be adopted by the Board of Supervisors, which identifies the legal authority for the issuance of bonds, authorizes the maximum amount of bonds to be issued by the authority, approves the Ground Lease, the Facility Lease and Appendix A of the Preliminary Official Statement. Adoption of the Ordinance by the Board of Supervisors will also form the Corporation.

 

Ground Lease – An agreement between the County of Orange and the Corporation, which sets forth the terms and conditions relating to the lease of the Building 16 site between the County of Orange and the Corporation.

 

Facility Lease – An agreement between the County of Orange and the Corporation, which sets forth the terms and conditions of the use of certain real property, improvements, and facilities to be to be constructed, acquired, and equipped by the Corporation, including Building 16.

 

Development Agreement– An agreement between the Corporation and Griffin whereby Griffin is engaged to develop, administer, and manage the design, permitting, and construction of the Building 16 project, including pursuant to a guaranteed maximum construction price, approved construction drawings, and an approved project schedule.

 

Articles of Incorporation – Document that establishes the Corporation.

 

Bylaws of the Corporation – Document that describes the purpose and directors of the Corporation and sets forth its governance.

 

Loan Agreement – An agreement between the California Municipal Finance Authority, as issuer, and the Corporation, which sets forth the general terms and conditions of the loan financing, loan repayment, and construction draws.

 

Indenture – An agreement between the California Municipal Finance Authority, as issuer, and Trustee (Zions Bank) pursuant to which the bonds will be issued and which sets forth the general terms and conditions and requirements governing the Bonds.

 

Preliminary Official Statement (POS) – Discloses material information pertaining to the issuance of the Bonds, including purpose, collateralization, repayment process, and financial, economic, and demographic characteristics of the County.  The POS provides potential investors an opportunity to review data about the County (Appendix A) to determine the credit quality of the Bonds.

 

Continuing Disclosure Certificate – Provides documentation to bondholders and credit rating agencies of the County’s certification that it will report material events that may affect the rating or payment of the Bonds and contents required in the Continuing Disclosure Annual Report.

 

Bond Purchase Agreement – An agreement that defines the terms and conditions under which the underwriters will purchase the Bonds.  The agreement states the principal amount of the Bonds, the interest rate, and maturity dates.

 

 

 

FINANCIAL IMPACT:

 

Issuing the California Municipal Finance Authority, Lease Revenue Bonds, Series 2017A, (Orange County Infrastructure Improvement Program – Phase I) in the amount of $158.4 million for 30 years will cost approximately $10.8 million annual base rental payments/debt service, for a total cost of $315.3 million.  The financing allows for an optional redemption after 10 years, and execution of this option will be evaluated during the County's annual Strategic Financial Planning process.

 

The source of base rental payments/debt service will be the occupant County departments:  Orange County Public Works, Orange County Waste and Recycling, the Treasurer-Tax Collector, and departments to be determined.  The allocation of base rental payments/debt service, by department, will be based upon square foot usage and is expected to be over 65% paid from non-general fund (NGF) sources.

 

The table below illustrates the anticipated user department rent allocation and general fund (GF) share.

Annual Base Rental Payment/Debt Service

$10,814,000

 

County Department - Occupant

Square Foot

Percent

Base Rent Allocation

 

 

 

 

OC Public Works – GF Base Budget

50,722

19.96

2,157,934

OC Public Works - NGF

56,183

22.10

2,390,230

Treasurer-Tax Collector - GF

31,840

12.53

1,354,600

OC Waste & Recycling - NGF

18,644

7.33

793,190

CEO-Real Estate - GF

8,944

3.52

380,513

TBD - GF

36,920

14.52

1,570,724

TBD - NGF

30,326

11.93

1,290,189

 

 

 

 

One Stop Shop/Conference Center - GF

7,720

3.04

328,455

One Stop Shop/Conference Center - NGF

12,885

5.07

548,164

 

 

 

 

Total Allocation

254,184

100.00%

$10,814,000

 

 

 

 

General Fund Allocation

85,424

33.61

3,634,293

Non-General Fund Allocation/GF Base Budget

168,760

66.39

7,179,707

Total Allocation

254,184

100.00%

$10,814,000

 

 

 

STAFFING IMPACT:

 

N/A

 

REVIEWING AGENCIES:

 

OC Public Works

 

ATTACHMENT(S):

 

Attachment A - Environmental Impact Report No. 626
Attachment A - Volume II Technical Appendices is on file with the office of the Clerk of the Board.
Attachment B - FEIR/Comments & Responses to Comments
Attachment C - Resolution
Attachment D - Civic Center Facilities Strategic Plan
Attachment E - Ordinance
Attachment F - Ground Lease Agreement
Attachment G - Facility Lease Agreement
Attachment H - Development Agreement (Exhibit E of Facility Lease)
Attachment I - Capital Facilities Development Corporation Articles of Incorporation
Attachment J - Capital Facilities Development Corporation Bylaws
Attachment K - Loan Agreement
Attachment L - Indenture
Attachment M - Preliminary Official Statement
Attachment N - Appendix A
Attachment O - Continuing Disclosure Certificate
Attachment P - Bond Purchase Agreement
Attachment Q - Word Version of Attachment C Resolution