AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 22-000524
MEETING DATE:	10/04/22
legal entity taking action:	South Orange County Public Financing Authority
board of supervisors district(s):	5
SUBMITTING Agency/Department:	County Executive Office (Approved)
Department contact person(s):	Louis McClure (714) 834-5999
	Susie Ortiz (714) 834-3662

Subject: Approve in Concept Community Facilities District Refundings

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Resolution to Form

Discussion

3 Votes Board Majority

Budgeted: N/A

Current Year Cost: N/A

Annual Cost: N/A

Staffing Impact:

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: Bond Proceeds: 100%	County Audit in last 3 years: No

Prior Board Action: 1/14/2014 #16, 12/17/2013 #68

RECOMMENDED ACTION(S):

Request the Board of Supervisors, acting as the Board of Directors of the South Orange County Public Financing Authority:

1.	Approve in concept the proposed refunding of South Orange County Public Financing Authority Special Tax Revenue Refunding Bonds 2014 Series A.
2.	Approve the selection of Fieldman, Rolapp & Associates, Inc. as Municipal Advisor for the proposed refunding.
3.	Approve the selection of Stradling Yocca Carlson & Rauth, as Bond and Disclosure Counsel for the proposed refunding.
4.	Approve the selection of Hilltop Securities Inc. as underwriter for the proposed refunding.

Request the Board of Supervisors, acting as the Legislative Body of Community Facilities District No. 2004-1 of the County of Orange (Ladera Ranch):

5.	Approve in concept the proposed refunding of Community Facilities District No. 2004-1 of the County of Orange (Ladera Ranch) 2014 Special Tax Refunding Bonds Series A and B.
6.	Approve the selection of Fieldman, Rolapp & Associates, Inc. as Municipal Advisor for the proposed refunding.
7.	Approve the selection of Stradling Yocca Carlson & Rauth, as Bond and Disclosure Counsel for the proposed refunding.
8.	Approve the selection of Piper Sandler & Company as underwriter for the proposed refunding.

SUMMARY:

Approval of the recommended actions will allow the County Executive Office to analyze the refunding of bonds within certain Community Facilities Districts to generate savings in debt service and special taxes that will benefit the property owners within the Districts.

BACKGROUND INFORMATION:

County Executive Office (CEO) staff continually monitors the County’s outstanding bond debt to determine if certain bonds can be refunded for cost savings. The outstanding bonds listed below are currently callable and could generate a cost savings if refunded. The savings in debt service will reduce the special taxes paid by the property owners in each of the Community Facilities Districts (CFDs).

South Orange County Public Financing Authority Special Tax Revenue Refunding Bonds 2014 Series A

On December 17, 2013, your Board of Supervisors (Board), acting as the Board of Directors of the South Orange County Public Financing Authority (SOCPFA), approved the issuance of the Special Tax Revenue Refunding Bonds 2014 Series A. The 2014 bonds were a pooled transaction to refund the County of Orange (Ladera Ranch) CFDs No. 2002-1 and 2003-1 bonds which were issued to construct and acquire public facilities for the benefit of the CFDs. There is $48.5 million in outstanding bonds for SOCPFA Special Tax Revenue Refunding Bonds 2014 Series A.

Preliminary analysis indicates refunding the SOCPFA Special Tax Revenue Bonds 2014 Series A could generate a net present value savings of approximately $5 million or 10 percent. The average annual savings per parcel is estimated to be $370. The bonds will be paid off in August 2034.

Community Facilities District No. 2004-1

On January 14, 2014, the Board authorized the issuance of the Community Facilities District No. 2004-1 2014 Special Tax Refunding Bonds, which refunded the prior bonds issued to construct and acquire public facilities for the benefit of the CFD. There is $36.6 million in outstanding 2014 Series A bonds and $14.2 million for the 2014 Series B bonds.

Preliminary analysis indicates refunding the 2014 bonds could generate a net present value savings of approximately $3 million or 8 percent. The average annual savings per parcel is estimated to be $500. The bonds will be paid off in August 2034.

Selection of the Financing Team

CEO staff recommends the selection of Fieldman Rolapp & Associates, Inc. (Fieldman) as municipal advisor and Stradling Yocca Carlson & Rauth (Stradling) as bond and disclosure counsel for the proposed refundings. In January 2018, requests for proposals were issued for the purpose of selecting firms for general municipal advisor and bond and disclosure counsel services. Both Fieldman and Stradling have provided services for the vast majority of County CFD debt including the CFDs proposed to be refunded. The current contracts with Fieldman and Stradling allow for services related to financings. The services for the proposed refundings will be billed at the hourly rate in the respective contracts. The estimated not to exceed amount for municipal advisory services for each refunding is $35,000 for a private placement or $45,000 (plus $1,500 for expenses) if the bonds are sold in a public offering. The estimated not to exceed amount for bond and disclosure counsel services for each refunding is $35,000 for a private placement and $45,000 if the bonds are sold in a public offering.

CEO staff recommends the selection of Hilltop Securities Inc. and Piper Sandler and Company as underwriters for the proposed refundings. Both firms are on the County’s qualified panel of underwriters and have been providing the County with regular updates regarding refunding opportunities for the above CFD bonds. The firms have performed market analyses and obtained preliminary indicative rate information from private placement banks. If approved, the firms will perform additional analysis to determine whether a private placement or public sale will provide the most savings. The maximum compensation for both firms is estimated not to exceed $50,000 if the bonds are privately placed or a takedown of $3.50 per bond (approximately $178,000 for the CFD 2004-1 Series A and B bonds and $148,000 for the SOCPFA 2014 Series A bonds) if sold in a public offering.

Conclusion

Approval of the recommended actions will allow CEO staff to further analyze the refunding opportunities and return to your Board once details of the financings are determined and documents are substantially final. The Public Financing Advisory Committee considered this item at their September 15, 2022 meeting and CEO staff provided the results to your Honorable Board in writing.

FINANCIAL IMPACT:

The estimated savings to the property owners is net of the cost of issuing bonds.

STAFFING IMPACT:

N/A