HomeMy WebLinkAbout2000-08-22 - AGENDA REPORTS - VALENCIA TOWN CENTER (2)CITY OF SANTA CLARITA
AGENDAREPORT
City Manager Approval
Item to be presented by: Steve St
NEW BUSINESS
DATE: August 22, 21000
SUBJECT: VALENCIA TOWN CENTER DEFEASANCE
DEPARTMENT: Administrative Services
RECOMMENDED ACTION
City Council adopt resolution, approving the defeasance of its special tax bonds,
Series A, Valencia Town Center CFD 92-1, approving an escrow agreement and
authorizing the taking of certain other actions subject to City Attorney approval and
contingent upon final determination of property sale and its outcome whether it is to
be prepaid or the bonds are defeased.
BACKGROUND
In 1992, the Santa Clarita City Council formed and established the Community
Facilities District No. 92-1 to fund the construction of public improvements around
the area of the Valencia Town Center. This was done pursuant to the terms and
provisions of the Mello -Roos Community Facilities District Law of 1982.
On October 22, 1992, the district set up for the Valencia Town Center issued special
Tax Revenue Bonds, Series A, in the original aggregate principal amount of
$20,000,000, all pursuant to the Act and Resolution No. CFD 92-1-4, as amended on
September 22, 1992. The bonds are currently outstanding in the principal amount
of $16,720,000.
Since the original issuance of debt, Newhall Land has chosen to sell the Valencia
Town Center Mall. However, the proposed buyer prefers to acquire the asset
without the Community Facilities District 92-1 hen on the property. The City was
recently contacted in order to explore the necessary steps to prepay the outstanding
bond debt. This process is outlined in the defeasance section of the onigmal
resolution of issuance.
What defeasance means is that the debt will be paid off early at the first possible
date allowed according to a schedule in the original bond documenta. This is
referred to as a call date. The first opportunity to do this will be November 15, 2002.
Part of the process is accomplished by depositing funds into an escrow account. This
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VALENCIA TOWN CENTER PREPAYMENT
August 22, 2000
will ensure that bondholders will be paid when the first call date arrives after the
sale of the Valencia Town Center. By doing this the Valencia Town Center property
is released from the lien that is held against it by having outstanding bonds.
On June 20, 2000, Newhall Land submitted a payment to the City in the amount of
$31,500 in order to pay for the cost associated with a prepayment or defeasance of
their special tax hen on the Valencia Town Center. The Administrative Services
Department initiated the process with the City's financial advisors, Kelling,
Northcross, and Nobriga. Fulbright and Jaworski, will be serving as bond counsel in
handling all the necessary legal documents needed to complete the defeasance or
prepayment.
Staff is asking Council to approve an escrow agreement that will allow funds to be
deposited and later used to pay the bondholders early. This will occur on November
15, 2002 as outlined in the original bond documents. For legal purposes once the
funds are deposited in the escrow account the bonds will be considered "defeased"
and there will no longer be a lien against the Valencia Town Center property.
ALTEENA= ACTION
City Council may choose not to approve the escrow agreement associated with
prepayment of the bonds associated with the Valencia Town Center.
Other action as determined by the City Council.
FISCAL IMPACT
Newhall Land has deposited $31,500 with the City to cover expenses related to the
prepayment of the Valencia Town Center bonds. The City will not pay any
additional costs. Newhall Land is responsible for all costs incurred from the
defeasance.
ATTACHMENTS
Resolution Approving Escrow Agreement
Escrow Deposit and Trust Agreement (Available in City Clerk's reading file.)
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