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HomeMy WebLinkAboutAgenda Packet 10/21/2004 �'_ Suite 2200,345 California St.,San Francisco,CA 94104 _� ff 1 Q , Tel:415 984-5i61 I Toll Free:Boo 247-7834 I Fax:415 984-5159 1 October 21, 2004 ' Ms. Amy Doppelt FitchRatings 650 California Street, 8t' Floor San Francisco, CA 94108 ' Dear Ms. Doppelt: ' It is truly a pleasure to present this credit package for the Atascadero Community Development Agency (the "Agency"). The Agency is looking to issue its first series of tax allocation bonds in the upcoming weeks and this package outlines the proposed structure and credit strength of these bonds. We look forward to your response by November 2, if at all possible. Following this letter is a full power-point presentation on the key credit strengths of the financing as well as full documentation for the financing. Summary of Key Credit Points ' The Atascadero Project Area presents a number of excellent credit strengths, including: ' ➢ A diverse tax base with over 56% of the assessed value coming from residential uses; ' ➢ The twenty (20) largest assesses total under 17% of the Project Area's assessed value and the single largest is less than 2.40%; ➢ The Project Area is 1,110 acres and stretches the length of the City; ➢ The Project Area is predominantly composed of one and two story buildings ' that are the most seismically stable; ➢ The assessed value growth over the last four years has averaged 11.1% and ' has been consistent each year; ➢ All standard revenue sharing pass through payments (there is one special school revenue sharing provision for less than $25,000 which may not be subordinate) are expected to be subordinate to the bonds. The Atascadero Project Area is relatively new, being formed in 1999. This year is ' the fourth year of tax increment revenue generation. The Project Area base value is approximately $281.6 million and-the current assessed value is $433.3 million. This is obviously very substantial growth for a four-year old project. While there has been ' limited new construction within the Project Area, a substantial level of this growth has come from property re-sales and reassessments. ' Ms. Allison Kingsley 9 Y Page 2 of 4 The City of Atascadero ' Atascadero is a community of 26,400 people located in the Central California coastal region. The community was founded in the early 1900s and incorporated as a City in 1979. The community encompasses a typical mix of industrial, commercial and residential land uses, though the overall mix is skewed toward a high number of single- family homes, most valued at over $400,000. The community is viewed as both a favorable town for raising a family as well as an excellent retirement community. The near proximity to San Luis Obispo and the large State College in the San Luis Obispo community also makes Atascadero an excellent location for those involved in the educational community. ' The Redevelopment Program - the Atascadero Community Development Agency ' The Atascadero Community Development Program was formally adopted in 1999 and is a standard California redevelopment program. The Project Area encompasses 1,110 acres in the central and commercial parts of the community as well as certain older residential neighborhoods. A breakdown of the land uses by assessed value is included in this package. It is believed that much of the assessed value growth of the last four years has come from residential property re-sales and improvements. ' Purpose of this Financing The proceeds of this financing will be utilized to fund various public improvements throughout the Project Area. A part of the proceeds may be utilized to fund the rehabilitation of the new, temporary city hall facility, but most of the proceeds will be focused towards physical improvements of the community. These improvements will range from street and bridge construction to park and community building enhancements. ' Seismic Issues With the exception of the new Carlton Hotel (still under construction and four stories), the Project Area is almost exclusively one and two story construction. The two major construction types are stick-built smaller and medium sized buildings and larger, concrete and steel retail and commercial buildings. In the recent earthquakes to the ' north, the Project Area has seen no substantive damage to any buildings that were privately owned (there was major damage to the 90+ year old City Hall). In the major earthquake of December 2003 In Paso Robles, as noted above, there was no ' substantive damage to property within the Project Area and within the entire City only two single-family homes were lost. The preponderance of damage to private property was focused on collapsed chimneys. ' While the recent seismic activity within this region of Central California has grabbed a lot of headlines, the actual damage to private property within Atascadero has been very minimal. The City building inspector and other City staff are available to discuss this issue as a part of the credit analysis. Community Redevelopment Agency of the City of Atascadero ' Ms.Allison Kingsley 9 Y Page 3 of 4 ' Debt Service Coverage & Credit Strength The Project Area shows very diverse ownership (less than 17% in the top twenty property owners) and solid growth over the last four years since formation. The assessed value today is $433.3 million, and the 1999 base is $281.6. Total tax ' increments for this year, which are pledged to the bonds, are $1.5 million, less the 20% Housing Set Aside and non-subordinated pass-throughs, for a net of $1.2 million. Maximum annual debt service is expected to be approximately $850,000. ' We are proposing an additional bonds test of 125%. This financing, with the inclusion of bond overrides and supplemental revenues, actually shows debt service ' coverage of 174%. We are open to consideration of a higher additional bonds test coverage level so long as it is a decreasing test that would drop to the 125% level once assessed value is reasonably higher than the current level. ' One key factor to bear in mind when reviewing the Atascadero redevelopment credit (and most other California redevelopment credits) is that the assessed value is ' very low compared to the actual values. At its most extreme example in Atascadero, the average assessed value for single family homes is roughly $166,000 per home, while it would be practically impossible to find more than a very small handful of homes ' within the Project Area valued at under $300,000. City Staff and the financing team have consulted with local realtors and we have been told that the average home value within the Project Area is in the $400,000 range with some homes selling for much more ' than that level. Condominiums, which have an average assessed value of $129,000 are also undervalues, as there are practically no units available for under $200,000 and the average value would be closer to $275,000. ' Debt Service Coverage ' Net Increment Total Pledged Revenues Revenues Revenues from 1% Levy $ 1,517,718 $ 1,517,718 Overrides == 153,226 Supplemental (1) 175,616 Gross Revenue $ 1,517,718 $ 1,846,560 ' Less: Housing Set-Aside 303,544 303,544 ' Less: Non-Subordinated Basic Aid Pass-Through (19,004) (19,004) Less: SB 2557 County Admin (39,081) (39,081) ' Pledged Revenue $ 1,156,089 $ 1,484,931 Maximum Annual Debt Service $ 852,375 $ 852,375 Debt Service Coverage 1.36x 1.74x (1)2004-05 Supplemental Revenue is assumed to be equal to 2003-04 Supplemental Revenue Community Redevelopment Agency of the City of Atascadero ' Ms. Allison Kingsley Page 4 of 4 The project area time limits are: ' Date Redevelopment Plan Adopted July 13, 1999 Last Date to Incur New Debt July 13, 2019 ' Last Date for Redevelopment Activity July 13, 2029 Last Date to Receive Tax Increment July 13, 2044 ' Use of Synthetic Fixed Rate Structures This first Atascadero financing is being structured with very straightforward fixed rate level debt. There is no Escrow Fund or Housing pledge. However, as we are increasingly seeing structures that successfully utilize interest rate swaps from variable ' to fixed as a means to lower financing costs, it is our desire to preserve that option for future financings. The financing team is still working on language that will be sent to you shortly that will provide, in the additional bonds test and elsewhere, for the use of ' synthetic fixed rate financings in subsequent parity issues. We look forward to your comments on this approach. ' The Credit Presentations A full credit package is attached to this letter. Our firm would welcome the ' opportunity to meet with you in San Francisco or Atascadero to present the Project Area and to answer your questions. We are applying for both bond ratings and municipal bond insurance. Though the project area is new, all other factors are very favorable. ' We look forward to discussing this financing with you. 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446,487.71 446,487.71 - (446,487.71) 09/01/2006 - 562,012.50 562,012.50 - (562,012.50) - 09/01/2007 - - 562,012.50 562,012.50 - (562,012.50) - 09/01/2008 - - 562,012.50 562,012.50 - - 562,012.50 09/01/2009 290,000.00 2.700% 562,012.50 852,012.50 - - 852,012.50 09/01/2010 295,000.00 3.000% 554,182.50 849,182.50 - - 849,182.50 09/01/2011 305,000.00 3.200% 545,332.50 850,332.50 - - 850,332.50 09/01/2012 315,000.00 3.350% 535,572.50 850,572.50 - - 850,572.50 09/01/2013 325,000.00 3.550% 525,020.00 850,020.00 - - 850,020.00 09/01/2014 335,000.00 3.700% 513,482.50 848,482.50 - - 848,482.50 09/01/2015 350,000.00 3.800% 501,087.50 851,087.50 - - 851,087.50 09/01/2016 360,000.00 3.900% 487,787.50 847,787.50 - - 847,787.50 09/01/2017 375,000.00 4.050% 473,747.50 848,747.50 - - 848,747.50 09/01/2018 390,000.00 4.150% 458,560.00 848,560.00 - - 848,560.00 09/01/2019 410,000.00 4.250% 442,375.00 852,375.00 - - 852,375.00 09/01/2020 425,000.00 4.300% 424,950.00 849,950.00 - - 849,950.00 09/01/2021 445,000.00 4.400% 406,675.00 851,675.00 - - 851,675.00 09/01/2022 465,000.00 4.500% 387,095.00 852,095.00 - - 852,095.00 09/01/2023 485,000.00 4.550% 366,170.00 851,170.00 - - 851,170.00 09/01/2024 505,000.00 4.550% 344,102.50 849,102.50 - - 849,102.50 09/01/2025 530,000.00 4.800% 321,125.00 851,125.00 - - 851,125.00 09/01/2026 555,000.00 4.800% 295,685.00 850,685.00 - - 850,685.00 09/01/2027 580,000.00 4.800% 269,045.00 849,045.00 - - 849,045.00 09/01/2028 610,000.00 4.800% 241,205.00 851,205.00 - - 851,205.00 09/01/2029 640,000.00 4.900% 211,925.00 851,925.00 - - 851,925.00 09/01/2030 670,000.00 4.900% 180,565.00 850,565.00 - - 850,565.00 09/01/2031 700,000.00 4.900% 147,735.00 847,735.00 - - 847,735.00 09/01/2032 735,000.00 4.900% 113,435.00 848,435.00 - - 848,435.00 09/01/2033 770,000.00 4.900% 77,420.00 847,420.00 - - 847,420.00 09/01/2034 810,000.00 4.900% 39,690.00 849,690.00 (852,375.00) - _2,685.00)_ Total $12,675,000.00 - $11,558,507.71 $24,233,507.71 (852,375.00) (1,570,512.71) $21,810,620.00 Series 2004102904 (New C 1 SINGLE PURPOSE 1 10/29/2004 12:40 PM TABLE 1 ATASCADERO REDEVELOPMENT AGENCY ' Calculation of Pledged Revenues Assuming 4% Growth 11 7 7 Prepared by Piper Jaffray if 10129/2004 Total Tax SB 2557 ' Plan Increment Unitary Housing Set County Admin Basic Aid Year Year Assessed Value Incremental Value Revenues Revenue Aside Collection Pass -Through Net Revenues 2005 5 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 ' 2006 6 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2007 7 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2008 8 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 ' 2009 2010 9 10 433,311,316 433,311,316 151,716,110 151,716,110 1,517,161 1,517,161 556 556 303,544 303,544 39,081 39,081 19,004 19,004 1,156,089 1,156,089 2011 11 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2012 12 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2013 13 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2014 14 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2015 15 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2016 16 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2017 17 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2018 18 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 ' 2019 19 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2020 20 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2021 21 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2022 22 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 ' 2023 23 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2024 24 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2025 25 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2026 2027 26 27 433,311,316 433,311,316 151,716,110 151,716,110 1,517,161 1,517,161 556 556 303,544 303,544 39,081 39,081 19,004 19,004 1,156,089 1,156,089 2028 28 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2029 29 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2030 30 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2031 31 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2032 32 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2033 33 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 2034 34 433,311,316 151,716,110 1,517,161 556 303,544 39,081 19,004 1,156,089 ' Total 46,649,021 17,250 9,333,143 1,189,450 570,120 35,573,002 0= Actual Values "RDA Plan Adopted July, 1999 (FY 2000). Plan expiration June, 2050 (FY 2050 - incl. 1 yr. ERAF extension). ' (1) Original Frozen Base equals $281,249,711, changes to $281,595,206 in FT 2004. (2) Forecast period (FY 2005-2050) assumes 1% tax rate and does not include Supplemental Revenues. (3) AB 1290 Pass Throughs step up from 20% of increment in Plan Year 1, to 16.8% of additional increment in Plan Year 11 (using Plan Year 10 as Base Year) and 11.2% of additional increment in Plan Year 31 (using Plan Year 20 as Base Year). ' (4) SB 2557 County Admin. Fees estimated at 2.575% of Gross Tax Increment. This is based on an average of the last 4 years. 11 7 7 Prepared by Piper Jaffray if 10129/2004 11 TABLE 2 ATASCADERO REDEVELOPMENT AGENCY ' Calculation of Available Revenues for Debt Service � I 11 Il 11 Prepared by Piper Jaffray 12 10/29/2004 Fiscal Plan AB 1290 ERAF Payment Available Year Year Net Revenues Revenue Sharing (1) Revenues 2005 5 1,156,089 303,544 15,177 837,368 ' 2006 2007 6 7 1,156,089 1,156,089 303,544 303,544 15,177 15,177 837,368 837,368 2008 8 1,156,089 303,544 852,545 2009 9 1,156,089 303,544 - 852,545 2010 10 1,156,089 303,544 - 852,545 2011 11 1,156,089 303,544 852,545 2012 12 1,156,089 303,544 _ 852,545 2013 13 1,156,089 303,544 - 852,545 2014 14 1,156,089 303,544 - 852,545 2015 15 1,156,089 303,544 - 852,545 ' 2016 16 1,156,089 303,544 852,545 2017 17 1,156,089 303,544 - 852,545 2018 18 1,156,089 303,544 - 852,545 2019 19 1,156,089 303,544 - 852,545 ' 2020 20 1,156,089 303,544 852,545 2021 21 1,156,089 303,544 852,545 2022 22 1,156,089 303,544 - 852,545 ' 2023 2024 23 24 1,156,089 1,156,089 303,544 303,544 - 852,545 852,545 2025 25 1,156,089 303,544 852,545 2026 26 1,156,089 303,544 - 852,545 2027 27 1,156,089 303,544 - 852,545 2028 28 1,156,089 303,544 - 852,545 ' 2029 29 1,156,089 303,544 852,545 2030 30 1,156,089 303,544 - 852,545 2031 31 1,156,089 303,544 - 852,545 2032 32 1,156,089 303,544 852,545- ' 2033 33 1,156,089 303,544 _ 852,545 2034 34 1,156,089 303,544 - 852,545 Total 35,573,002 9,333,254 45,532 25,530,827 (1) ERAF is estimated to be 5%. Although, according to San Luis Obispo County, to date the Agency has no been subject to the ERAF adjustment. � I 11 Il 11 Prepared by Piper Jaffray 12 10/29/2004 TABLE 3 ATASCADERO REDEVELOPMENT AGENCY Maximum Annual Debt Service Based on the Lesser of 1.25x Pledged Revenues and 1.0x Available Revenues Total 35,573,002 27,746,131 25,530,827 25,530,827 22,662,995 Prepared by Piper Jaffray 13 10/29/2004 Max Annual Debt Maximum Projected Fiscal Plan Pledged Service @ 1.25x Available Annual Debt 2004 Debt Debt Service Year Year Revenues Coverage Revenues Service Service Coverage 2005 5 1,156,089 924,871 837,368 837,368 - - 2006 6 1,156,089 924,871 837,368 837,368 - - 2007 7 1,156,089 924,871 837,368 837,368 - - 2008 8 1,156,089 924,871 852,545 852,545 562,013 2.06 2009 9 1,156,089 924,871 852,545 852,545 852,013 1.36 2010 10 1,156,089 924,871 852,545 852,545 849,183 1.36 2011 11 1,156,089 924,871 852,545 852,545 850,333 1.36 2012 12 1,156,089 924,871 852,545 852,545 850,573 1.36 2013 13 1,156,089 924,871 852,545 852,545 850,020 1.36 2014 14 1,156,089 924,871 852,545 852,545 848,483 1.36 2015 15 1,156,089 924,871 852,545 852,545 851,088 1.36 2016 16 1,156,089 924,871 852,545 852,545 847,788 1.36 2017 17 1,156,089 924,871 852,545 852,545 848,748 1.36 2018 18 1,156,089 924,871 852,545 852,545 848,560 1.36 2019 19 1,156,089 924,871 852,545 852,545 852,375 1.36 2020 20 1,156,089 924,871 852,545 852,545 849,950 1.36 2021 21 1,156,089 924,871 852,545 852,545 851,675 1.36 2022 22 1,156,089 924,871 852,545 852,545 852,095 1.36 2023 23 1,156,089 924,871 852,545 852,545 851,170 1.36 2024 24 1,156,089 924,871 852,545 852,545 849,103 1.36 2025 25 1,156,089 924,871 852,545 852,545 851,125 1.36 2026 26 1,156,089 924,871 852,545 852,545 850,685 1.36 2027 27 1,156,089 924,871 852,545 852,545 849,045 1.36 2028 28 1,156,089 924,871 852,545 852,545 851,205 1.36 2029 29 1,156,089 924,871 852,545 852,545 851,925 1.36 2030 30 1,156,089 924,871 852,545 852,545 850,565 1.36 2031 31 1,156,089 924,871 852,545 852,545 847,735 1.36 2032 32 1,156,089 924,871 852,545 852,545 848,435 1.36 2033 33 1,156,089 924,871 852,545 852,545 847,420 1.36 2034 34 1,156,089 924,871 852,545 852,545 849,690 1.36 Total 35,573,002 27,746,131 25,530,827 25,530,827 22,662,995 Prepared by Piper Jaffray 13 10/29/2004 Ms. Melanie Arner PiperJaffray 345 California St., Suite 2200 San Francisco, CA 94104-2606 October 12, 2004 ATASCADERO REDEVELOPMENT PROJECT Largest 2004-05 Local Secured Taxpayers (1) 2004-05 Local Secured Assessed Valuation: $408,284,463 JC:($400) 2004-05 % of Property Owner Primary Land Use Assessed Valuation Total 1 1. Albertson Inc. Shopping Center $ 9,544,283 2.34% 2. Von Companies Inc. Shopping Center 7,016,219 1.72 3. Denver Garden Co. LLC Commercial Store 6,493,619 1.59 4. Carlton Hotel Investments LLC Hotel 5,731,697 1.40 5. 420 LP Shopping Center 5,542,494 1.36 6. El Camino Associates Shopping Center 3,668,376 0.90 7. Paresh Patel Motel 3,083,788 0.76 8. Robert Shannon Residential 2,500,000 0.61 9. Atascadero Real Property LLC Commercial - Automotive 2,446,340 0.60 10. Santa Lucia National Bank Financial Building 2,399,831 0.59 11. Charter Communication Communication 2,270,142 0.56 12. Kennedy Athletic Club of Atascadero Sports and Fitness Club 2,238,000 0.55 13. EHA-Atascadero LLC Commercial Store 2,237,683 0.55 14. Linda Williams, Trustee Mobile Home Park 2,102,606 0.51 15. James P. and Frances J. Jones Apartments 2,027,499 0.50 16. Safeway Inc. Shopping Center 2,013,665 0.49 17. Donald D. Messer Commercial - Restaurant 1,972,999 0.48 18. Atascadero Mutual Water Company Water Utility 1,814,017 0.44 19. Colony Homes LLC . Residential Lots 1,775,673 0.43 20. Camino-Curbaril Associates LP Shopping Center 1,738,925 0.43 $68,617,856 16.81% (1) 2004-05 Local Secured Assessed Valuation: $408,284,463 JC:($400) Ms. Denise Rabe PiperJaffray 345 California St., Suite 2200 San Francisco, CA 94104-2606 October 19, 2004 ATASCADERO REDEVELOPMENT PROJECT Assessed Valuation and Parcels by Land Use 2004-05 % of No. of Assessed Valuation (1) Total Parcels Non -Residential: Commercial $142,824,808 34.98% 402 Vacant Commercial 13,270,681 3.25 75 Industrial 14,944,869 3.66 39 Vacant Industrial 80,721 0.02 2 Recreational 4,073,696 1.00 7 Government/Social/Institutional 1,772,433 0.43 55 Miscellaneous 135,447 0.03 5 Subtotal Non -Residential $177,102,655 43.38% 585 Residential: Single Family Residence $165,387,430 40.51% 990 Condominium/Townhouse 18,969,261 4.65 147 Mobile Home 1,707,933 0.42 54 Mobile Home Park 2,266,774 0.56 3 2-4 Residential Units 23,261,746 5.70 109 5+ Residential Units/Apartments 15,533,193 3.80 31 Vacant Residential 4,055,471 0.99 48 Subtotal Residential $231,181,808 56.62% 1,382 Total $408,284,463 100.00% 1,967 (1) Local Secured Assessed Valuation; excluding tax-exempt property. JC:($150) % of Total 20.44% 3.81 1.98 0.10 0.36 2.80 0.25 29.74% 50.33% 7.47 2.75 0.15 5.54 1.58 2.44 70.26% 100.00%