HomeMy Public PortalAbout20150506 - Agenda Packet - Board of Directors (BOD) - 15-11
SPECIAL MEETING
BOARD OF DIRECTORS OF THE
MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
330 Distel Circle
Los Altos, CA 94022
Wednesday, May 6, 2015
SPECIAL MEETING BEGINS AT 5:30
A G E N D A
5:30 SPECIAL MEETING OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA
REGIONAL OPEN SPACE DISTRICT – INFORMATIONAL PRESENTATION
ROLL CALL
1. Informational Presentation on General Obligation Bonds
Staff Contact: Ana Ruiz, AICP, Assistant General Manager
General Manager’s Recommendation: Receive an informational presentation on General
Obligation Bonds by Bond Counsel Chris Lynch and Municipal Advisor Sohail Bengali.
ADJOURN MEETING TO CLOSED SESSION
1. CONFERENCE WITH LABOR NEGOTIATORS (Government Code Section 54957.6)
Agency Designated Representatives: Steve Abbors, General Manager, Kevin Woodhouse,
Assistant General Manager, Sheryl Schaffner, General Counsel, Jack Hughes, Liebert Cassidy
Whitmore
Employee Organization: Field Employee Association
2. CONFERENCE WITH LEGAL COUNSEL (Government Code Section 54956.9)
Pending Litigation – One matter: Mahronich v. Presentation Center, et al.
ADJOURNMENT
In compliance with the Americans with Disabilities Act, if you need assistance to participate in this meeting,
please contact the District Clerk at (650) 691-1200. Notification 48 hours prior to the meeting will enable the
District to make reasonable arrangements to ensure accessibility to this meeting.
Written materials relating to an item on this Agenda that are considered to be a public record and are distributed
to Board members less than 72 hours prior to the meeting, will be available for public inspection at the District’s
Administrative Office located at 330 Distel Circle, Los Altos, California 94022.
Meeting 15-11
CERTIFICATION OF POSTING OF AGENDA
I, Maria Soria, Deputy District Clerk for the Midpeninsula Regional Open Space District (MROSD), declare that the foregoing agenda
for the Special and Regular Meetings of the MROSD Board of Directors was posted and available for review on May 1, 2015, at the
Administrative Offices of MROSD, 330 Distel Circle, Los Altos California, 94022. Agenda materials are also available on the
District’s website at http://www.openspace.org.
Signed May 1, 2015 at Los Altos, California.
R-15-78
Meeting 15-11
May 6, 2015
AGENDA ITEM 1
AGENDA ITEM
Informational Presentation on General Obligation Bonds
GENERAL MANAGER’S RECOMMENDATION
Receive an informational presentation on General Obligation Bonds by Bond Counsel Chris
Lynch and Municipal Advisor Sohail Bengali.
SUMMARY
The Midpeninsula Regional Open Space District (District) is preparing to issue the first tranche
of General Obligation Bonds to secure proceeds to begin funding Measure AA projects,
consistent with voter approval at the June 3, 2014 general election. The General Manager asked
the finance team to create an informational presentation that explains the financing process,
including the relevant responsibilities and obligations of the District and of each individual
Board member, to further prepare the Board for its responsibilities under Measure AA
implementation. The Board will receive this presentation at a special meeting to be held on May
6, 2015. This informational presentation precedes the May 13, 2015 Regular Board Meeting at
which time the Board of Directors will consider approving the financing and disclosure
documents required to issue the first tranche of Measure AA bonds.
DISCUSSION
On June 3, 2014, District voters approved a $300 Million General Obligation Bond to fund 25
Top Tier Vision Plan Projects over the course of 30 years. The District is now getting ready to
finalize the financial documentation required to proceed with the sale of the first tranche of
bonds, which is scheduled for end of July 2015. As part of this effort, the General Manager has
requested the District’s Bond Counsel and Municipal Adviser to provide a high-level
informational presentation to ensure that the Board of Directors and public are well informed of
the upcoming next steps and related obligations (see Attachment).
As a reminder, General Obligation Bonds are subject to securities law disclosure rules that
require issuers to ensure that, in connection with the issuance and sale of municipal securities to
the public, prospective purchasers are provided the information they need to make an informed
investment decision. In order to comply with these laws, the District is preparing a document
analogous to a corporate prospectus, called a “Preliminary Official Statement” that includes all
of the information, aside from pricing, that an investor would need in order to decide whether to
R-15-78 Page 2
purchase the offered bonds. This information includes statements about the security for the
bonds (in the case of the General Obligation Bonds, an ad valorem tax levied on taxable property
in the District’s boundaries), potential risks, the projects or programs to be financed, the rating
assigned to the General Obligation Bonds by the rating agencies, and the financial condition of
the District itself. This documentation must be fully complete in the sense that the investor
should not be expected to conduct any investigation beyond reading the document and any
publicly available materials incorporated by reference. This document, in the form of a
“Preliminary Official Statement”, as well as other financing documents, will be brought to the
Board on May 13, 2015 for review and approval. The Preliminary Official Statement will be
distributed to potential investors. Following the actual bond sale, the “Final Official Statement”
will be available for investors of the Bonds; the Final Official Statement will be identical to the
Preliminary Official Statement, except that it will include the final pricing information for the
bonds (principal amount, interest rates, maturity schedule et al.). Under federal and state
securities laws, the District, including the issuing staff and Board of Directors, are ultimately
legally responsible for the accuracy of statements of fact provided in these documents and, if the
disclosure provided has material misstatements or omissions, members of the staff and the Board
of Directors can face civil or even criminal penalties, depending, of course, on the nature of the
omissions and the underlying circumstances.
The District’s disclosure obligations and other important and pertinent information will be
discussed in greater detail as part of the informational presentation.
BOARD COMMITTEE REVIEW
This item was not previously reviewed by a Board Committee.
FISCAL IMPACT
As an informational report, this item results in no fiscal impact. Costs associated with the future
issuance of General Obligation Bonds will be paid by the bond proceeds.
PUBLIC NOTICE
Public notice was provided as required by the Brown Act.
CEQA COMPLIANCE
This informational item is not a project under the California Environmental Quality Act (CEQA).
NEXT STEPS
The Board of Directors will consider approval of the District’s financing documents, including
the Preliminary Official Statement, on May 13, 2015. These financing documents will then be
distributed to the rating agencies, who will establish the credit rating for the General Obligation
Bonds. The Preliminary Official Statement will then be distributed to investors. Bonds are
expected to go to sale at the end of July with proceeds delivered in mid-August.
R-15-78 Page 3
Attachment: Midpeninsula Regional Open Space District – Bonds 101 Powerpoint Slides
Responsible Manager:
Stephen E. Abbors, General Manager
Prepared by:
Ana Ruiz, AICP, Assistant General Manager
Contact person:
Same as above
Midpeninsula Regional Open
Space District – Bonds 101
Chris Lynch, Jones Hall
Sohail Bengali, BPFCapital LLC
May 6, 2015
1
Agenda
Available financing tools
Bond issuance process
Initial and Continuing Disclosure
Available Financing Tools
3
Promissory Notes
Public Resources Code §5544.2
–A district may acquire all necessary and proper lands and facilities, or any
portion thereof, by means of a plan to borrow money or by purchase on
contract.
–Indebtedness may not exceed an amount equal to the anticipated property tax
revenue allocations for the next five-year period.
– Indebtedness incurred on or after January 1, 2012 shall be repaid during a
period not to exceed 30 years
–Indebtedness authorized by this section is in addition to, and this section shall
not apply to, any bonded indebtedness authorized by vote of the electors.
4
Promissory Notes
Distinction between publicly-sold notes and
privately-placed notes
5
Promissory Notes
Outstanding promissory notes
–District’s annual debt service payment profile
6
Lease Revenue Bonds
Public Resources Code
–5563.5. Board of Directors may, without obtaining the consent of the voters,
lease real property for a term not exceeding 50 years. A lease entered into
pursuant to this section shall be authorized by a resolution adopted by the
affirmative votes of at least two-thirds of the members of the board, upon
making an express finding that the purpose of the lease is for park or open-
space purposes, or for an historic preservation, recreation, or agricultural
purpose which is compatible with public use and enjoyment of the real property.
Use of Midpeninsula Regional Open Space
District Financing Authority
2011 Lease Revenue Bonds
7
General Obligation Bonds
California Constitution Article XIIIA
–Article XIIIA, §1: authorizes bonds for the acquisition or improvement of real
property approved by two-thirds of the votes cast by the voters voting on the
proposition.
Public Resources Code
–§5568: authorizes bonds for the purpose of acquiring, constructing, or
completing any improvement or improvements authorized by this article, or for
the purpose of acquiring any land or other property necessary or useful therefor
Government Code
–§53506 et seq: bond law available to all public agencies issuing general
obligation bonds
8
General Obligation Bonds
Tax Levy under Public Resources Code
–§5568: authorizes bonds for the purpose of acquiring, constructing, or completing any
improvement or improvements authorized by this article, or for the purpose of acquiring any
land or other property necessary or useful therefor
–§5569. authorizes the levy and collection each year of a tax sufficient to pay principal of
and interest on bonds.
–§5571: board of supervisors of each county in which any part of the district is located,
shall, at the time of making the general tax levy in each year, levy a tax upon all the real and
personal property within the district and within their respective county at a rate sufficient to
meet the proportion of taxes necessary to be raised in the county for the purpose of paying
the principal and interest of the bonds. The amount of taxes to be raised in each county
shall be in the same proportion as the assessed valuation of the taxable property in the
district within the county is to the assessed valuation of all property in the district.
Bond Issuance Process
10
Debt (bond) Financing Process
Objectives of the debt issue
–New capital proceeds
–Refinancing for lower annual payments, net present value savings
Structure, format and options for the debt issue
–Nature of security: Notes vs. Lease vs. General Obligation Bonds
–“Issuer”: District vs. Authority
–Level debt payments profile, rising or declining profile
–Maturity of debt and amortization of principal
–Current interest vs. capital appreciation bonds
–Insured (credit enhanced) vs. un-enhanced bonds
–Credit ratings and rating agencies
Ratings process and the AAA category
Narrow current market spreads within very high grade ratings
–Callable bonds vs. non-callable bonds
–Negotiated vs. competitive sale formats
–Tax-exempt debt vs. taxable debt
11
Debt (bond) Financing Process…contd
The ‘Yield Curve”
12
Debt (bond) Financing Process…contd
Board approval of financing/documents by resolution
Distribution of Preliminary Official Statement
Competitive sale (official notice of sale, receipt of bids)
Negotiate sale (pre-pricing and pricing)
Sale date
Rating agencies
Distribution of Final Official Statement
Closing
Initial and Continuing Disclosure
14
Key Laws
Securities Act of 1933
(’33 Act)
Securities Exchange Act of 1934
(’34 Act)
SEC Rule 10b-5
SEC Rule 15c2-12
Dodd-Frank reforms
15
Securities Exchange Act of 1934
Anti-Fraud
–Section 10(b) & Rule 10b-5
Rule 15c2-12
16
Rule 15c2-12
Initial Disclosure
17
Rule 15c2-12
Continuing Disclosure
Annual reporting
Events reporting
X
18
Where they got it wrong
Orange County, California
Maricopa County, Arizona
City of Syracuse, New York
City of Miami, Florida
Massachusetts Turnpike Authority
City of San Diego, California
State of New Jersey
19
SEC Guidance
“Lessons Learned from San Diego,” Linda Chatman
Thomsen, Director, SEC Division of Enforcement (2007)
“I can tell you that the Enforcement Division believes there are five
critical lessons that municipalities should learn from our recent
actions”
–adopt written disclosure policies and procedures
–provide appropriate training to city officials and employees
–focus on the big picture issues facing the city
–disclose the bad with the good
–hire competent professionals
20
Common questions
1.Are members of the Board required to read every word of the
District’s disclosure documents?
2.Are members of the Board subject to personal liability under
federal securities laws?
21
Useful resource
Municipal Securities Rulemaking Board’s
22
Questions
Chris Lynch
clynch@joneshall.com
Sohail Bengali
sbengali@bpfcap.com