Title
Summary: Approve Technical Modifications to the 2003 Variable Rate Bonds for Alameda Point
Adoption of Resolution Electing to Substitute the Remarketing Agent, Approving the Form and Authorizing Execution of a Remarketing Agent Agreement with the Successor Remarketing Agent, Relating to the $9,080,000 Alameda Public Financing Authority (APFA) Variable Rate Demand Revenue Bonds (Alameda Point Improvement Project), 2003 Series A, and the $4,360,000 Alameda Public Financing Authority Taxable Variable Rate Demand Revenue Bonds (Alameda Point Improvement Project), 2003 Series B, and Approving Official Actions. [APFA] (Finance 2410)
Body
To: Honorable Chair and Members of the Alameda Public Financing Authority
From: David L. Rudat, Interim Executive Director
EXECUTIVE SUMMARY
Adopt a Resolution approving substitution of the Remarketing Agent and authorizing execution of a Remarketing Agent Agreement with the successor Remarketing Agent, relating to the $9,080,000 Alameda Public Financing Authority Variable Rate Demand Revenue Bonds (Alameda Point Improvement Project), 2003 Series A, and the $4,360,000 Alameda Public Financing Authority Taxable Variable Rate Demand Revenue Bonds (Alameda Point Improvement Project), 2003 Series B.
BACKGROUND
The Alameda Public Financing Authority (the Authority) issued a total of approximately $12.4 million in variable rate bonds related to Alameda Point in 2003. The source of repayment for these bonds is the lease revenue received from properties managed by the City's Base Reuse Department. Because the bonds are variable rate bonds, the interest rate resets weekly. On each reset date, investors have the option to sell their bonds to the market. The remarketing agent handles the reset and bond resale process. The Remarketing Agent for the 2003 variable rate bonds (the Bonds), Mitsubishi UFJ Financial Group (MUFG), previously known as Mitsubishi UFJ Securities (USA), Inc., has informed the Authority that they will no longer provide remarketing agent services. As a result, MUFG is seeking to terminate the agreement with the Authority. The Authority has decided to replace MUFG, existing remarketing agent for the Bonds, with Morgan Stanley.
DISCUSSION
MUFG is the provider of remarketing services and a letter of credit for the 2003 variable rate bonds related to Alameda Point. In June 2018, MUFG informed the City that it will no longer provide remarketing services nationwide. City staff and consultants have been working to prepare the necessary documents to substitute the remarketing agent. Morgan Stanley agreed to take over and provide remarketing services to the City with the same agreement terms as MUFG. Remarketing Agreement with Morgan Stanley is included as Exhibit 1. MUFG will continue providing the letter of credit to the Authority.
FINANCIAL IMPACT
The fee to be charged by the new remarketing agent will remain the same at 0.100%. These fees as well as the repayment of the bonds are budgeted and paid out of the Base Reuse Debt Service Fund. There is no impact on the General Fund from the replacement of the remarketing agent.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is in conformance with the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
This activity is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to section 15378 (b)(4) of the CEQA Guidelines, because it involves governmental fiscal activities (issuance of bonds), which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
RECOMMENDATION
Adopt a Resolution electing to substitute the remarketing agent, approving the form and authorizing execution of a remarketing agent agreement with the successor remarketing agent, relating to the $9,080,000 Alameda Public Financing Authority Variable Rate Demand Revenue Bonds (Alameda Point Improvement Project), 2003 Series A, and the $4,360,000 Alameda Public Financing Authority Taxable Variable Rate Demand Revenue Bonds (Alameda Point Improvement Project), 2003 Series B, and approving official actions
Respectfully submitted,
Elena Adair, Finance Director
Exhibit:
1. Remarketing Agreement