TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Bruce Moe, Finance Director
SUBJECT:Title
Three Year Extension of Existing Letter of Credit with Union Bank to Facilitate Variable Rate Debt for the Marine Avenue Sports Fields (Finance Director Moe).
APPROVE
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Recommended Action
RECOMMENDATION:
The Finance Subcommittee and City staff recommend that the City Council approve a three-year extension to the existing letter of credit (LC) with Union Bank to facilitate the variable rate debt for the Marine Avenue Sports Fields. This recommendation is also supported by the City's Financial Advisor, Mark Young of KNN Public Finance.
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FISCAL IMPLICATIONS:
Then annual cost for the Letter of Credit is 100 basis points of the outstanding debt ($6.9 million), or approximately $69,000 in FY 2015-2016.
BACKGROUND:
In Fiscal Year 2000-2001, the City entered into a Sale/Leaseback transaction with the Beach Cities Health District (BCHD). This transaction was a result of the City purchasing from TRW (now Northrop Grumman) seven acres of property located near the corner of Marine and Aviation within the City of Manhattan Beach. The City subsequently sold the property to BCHD with an exclusive agreement to lease back six of the seven acres. The lease authorized BCHD to spend funds up to $2.5 million to construct recreational facilities on the property. These improvements were completed in Fiscal Year 2000-2001.
In Fiscal Year 2001-2002, the City issued variable rate Certificates of Participation (COPs) to refinance the Sports Fields and reduce borrowing costs. The proceeds were used to pay in full all principal and interest obligations under the aforementioned lease with BCHD. The term of the financing is thirty years (fully amortized principal and interest) based on a variable rate which is calculated for budgeting purposes at a conservative ...
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