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Home My WebLink About1994-11-08 - AGENDA REPORTS - CAL ARTS EARTHQUAKE RECOVERY (2)NEW BUSINESS DATE: SUBJECT: DEPARTMENT: BACKGROUND AGENDA REPORT Executive Director Approv k November S, 1994 Cal Arts Earthquake Recovery Community Recovery Agency Item to be presented byv Steve Stark On August 31, John Fuller, Vice -President - Administration, Cal Arts, met with City staff to discuss earthquake damage at Cal Arts' facilities, and the possibility of the City's assisting Cal Arts in their earthquake recovery. Cal Arts had approximately $34M in damage to their facilities as a result of the Northridge earthquake. In addition to these costs, Cal Arts anticipates spending approximately $10M in seismic upgrades to the existing facilities. As you may be aware, on September 2, Cal Arts received $21.1M from FEMA for reimbursement of earthquake damages. Cal Arts now wants to sell tax exempt bonds of approximately $22M to be paid back through operating revenues of the college. The proceeds of the bond issue will be used to pay off a $9M line of credit (used for earthquake repairs), to pay the $10M in seismic upgrades, costs of issuance, and to set up a debt service reserve as required by the bond issue. Cal Arts, in conjunction with the Bank of America acting as bond underwriters, has requested that the City be the conduit agency for the issuance of tax exempt bonds. This means that both the City and Cal Arts' names would be on the bonds; however, the CRA would have no financial responsibility for payment of the bonds, nor would it affect the debt ratios of the CRA. The bonds would be AAA rated and insured Certificates of Participation to be paid from gross operating revenues of the college. This bond financing would be very similar to the July 1993 YMCA financing in which the City participated. RECOMMENDATION It is recommended that the Agency Board Members direct staff to proceed with the conduit bond financing. With the Agency Board Members' concurrence, this item will be presented for approval and adoption at the January 10, 1995, Community Recovery Agency meeting. APPROVED C0UNC1L=18nS.8gn:68:1dd Agenda Item: