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HomeMy WebLinkAbout2021.03.16 - Minutes - Study SessionCITY OF DIAMOND BAR MINUTES OF THE CITY COUNCIL STUDY SESSION MARCH 16, 2021 STUDY SESSION: M/Lyons called the Study Session to order at Mayor Lyons announced that consistent with COVID-19 regulations, all Council Members and staff participated via teleconference. There was no physical location for public attendance and the public was invited to join the meeting online or by phone at the numbers printed on the agenda. ROLL CALL: Council Members Andrew Chou, Stan Liu, Steve Tye Mayor Pro Tern Ruth Low, Mayor Nancy Lyons Staff participating telephonically: Dan Fox, City Manager; Dave DeBerry, City Attorney; Ryan McLean, Assistant City Manager; Anthony Santos, Assistant to the City Manager; Ryan Wright, Parks and Recreation Director; David Liu, Public Works Director; Dianna Honeywell, Director of Finance; Ken Desforges, Director of Information Services; Marsha Roa, Public Information Manager; Cecilia Arellano, Public Information Coordinator; Kristina Santana, City Clerk ► CONSIDERATION OF REFUNDING OPTIONS FOR THE DIAMOND BAR CENTER FIXED RATE BONDS. CM/Fox introduced Anna Sarabian, Principal, Fieldman Rolapp &Associates who provided a presentation and timeline for the refunding process. CM/Fox stated that no action is being asked of the Council; however, if there is consensus to move forward with the refunding, staff would proceed to prepare the necessary financing documents through the Public Finance Authority for final approval and implementation. Ms. Sarabian explained to C/Tye that the City's implied general bond obligation rating is AAA, the highest possible rating. C/Chou asked if the new bond would have the same callable date or would the new bond be non -callable. Ms. Sarabian responded that the City has about 12 years remaining on the note and typically, lenders require 10 years of call protection so the basic callable date on the bonds will be required. Fieldman Rolapp will evaluate whether a shorter call will require additional penalties and what it means in terms of savings. The minimum will be a 10-year par call. M/Lyons asked about loan fees and Ms. Sarabian said that the analysis included a conservative estimate of $255,000 in fees in the net value refunding savings of $1.33 million. OPT/Low asked where the estimated $255,000 in fees fell in the marketplace and Ms. Sarabian said she believed that $255,000 was a conservative realistic estimate with the average falling slightly south of that estimate. For the most MARCH 16, 2021 PAGE 2 CC STUDY SESSION part, the line items are generally standard, with the rating agency fee being driven by the size of the bonds (par) and that when the option is exercised, Diamond Bar will be on par with all other jurisdictions. u asked if at a certain point the City would be able to lock in the rate and Ms. Sarabian responded that if the City decided to pursue the refunding, Fieldman Rolapp will work with legal counsel to prepare the necessary financing and legal documents which will be presented to the rating agency to obtain the rating. Once the information is brought back to Council for approval of refunding and documentation, the underwriter will be able to free-market the bonds and when completed, the rate will be locked in with closing to occur about two weeks after pricing. Ms. Sarabian responded to C/Chou that Fieldman Rolapp is a registered Municipal Advisor and has fiduciary duty to the City only. Fieldman Rolapp is a non -broker dealer and does not represent the underwriters. C/Liu asked if there will be one or multiple bids for the refunding and Ms. Sarabian explained that there are two types of sales. One is negotiated with the underwriter who will pursue bonds at the price they offer and Fieldman Rolapp working with the City to ensure the best price reflected by the price of the market positions. Once the bonds are in place, the lender owns the bonds and sells them to retail and institutional investors with no risk to the City. A second type of sale is a "competitive" sale. In that environment competitive sales are very often used for general obligation bond credits and have been used for lease revenue bonds. Given this is a refunding and given the current environment, Fieldman Rolapp believes a negotiated sale would make better sense for the City. C/Liu asked if the Council would be voting on the negotiated rate or would it be determined after the Council approved the refunding. Ms. Sarabian explained that the City could determine the rate if it chose a private placement by reaching out to several banks such as Bank of America, Western Alliance or Compass Bank and in this case, the City would be provided one rate for each year left in the term. Bottom line is that Diamond Bar will get a much better result selling these bonds publicly. Public Comments: None Following discussion, Council concurred to proceed with the refunding. C/Tye expressed that in 2002 the City Council decided to float a bond to build the Diamond Bar Center which was a great decision that has inured to the benefit of the City and its residents. In 2011 the Council decided to refund the variable rate to a fixed rate to save money, and the City has an opportunity to save another $1.3 million dollars and not extend the life of the bonds which makes complete sense to him. MARCH 16, 2021 PAGE 3 CC STUDY SESSION OPT/Low, C/Liu, C/Chou and M/Lyons concurred with C/Tye and Council concurred to move forward with the refunding process as recommended. ADJOURNMENT: With no further business to come before the City Council, VI/Lyons recessed the Study Session at 6:11 p.m. to the Regular Meeting. Respectfully submitted: Kristina Santana, City Clerk The foregoing minutes are hereby approved this 6th day of April, 2021.