Assured Guarantee immediately said ‘No’. Build America Mutual did have extensive review, then said ‘No’.
1:32:00: Item 10. Special Tax Refunding Bond for Improvement Areas 3, 9, 10, 11, and 12A.
Martinez: I’ll be recusing myself as my property resides in that Area.
1:38:00: Mike Busch, representing the team as the Financial Advisor with UFI Financial Solutions. I’m joined with Brian Forebath from Stradling Yocca and Katie Koster from Piper Jaffray.
1:40:00 Busch: We knew that a Public Offering would be possible for these, would make economic sense when we decided to delay them and bring them forward the strategy we outlined to you last year seems to have been the accurate strategy. As the presentation indicates; the rates certainly are lower. There were two elements of that transaction that we were discussing going forward. One is whether or not we’d be able to get Bond Insurance for these Bonds. And the second was whether we’d get a Reserve on Surety so we wouldn’t have to put up a Cash Reserve, there would be a policy for that.
1:41:00 Busch: Unfortunately we were not able to secure Insurance or the Surety. As Mr. Parton alluded to; it has a lot to do with the size of the transaction. Not necessarily on the Par amount, but the individual improvement area under discussion. Under 3, 9, 10, 11, and 12A vary in size, some less than 70 units, so a much as 250 units. That was the issue with them – the number of homes. In addition; some of the outstanding balances on these are really small. I think only only has $450,000, there’s one that’s a little more than a Million, I think there’s one that’s $2 1/2 Million. So it takes five Improvement Areas to get to $6 Million basically. The ‘savings goal’ as presented in your CFD Goals and Policies is consistent with the Government Finance Officers Association of 3%. In fact the savings is a little more than that; it’s 5.1% that’s being presented to you tonight.
1:42:00 Busch: So we meet the savings goal. Unfortunately; the savings itself is not great. In fact we refer to it as ‘not significant’ as an economic benefit.
1:44:00 Busch: We did not acquire the Insurance. We talked to two agencies about buying Bond Insurance that would be a AA Rating that they would provide. The first, Assured Guarantee, immediately said ‘No’. They’re the big boys of the group. They insure most bonds in the United States. Right behind them is a firm called Build America Mutual. We did talk to them. They did have extensive review of it and assigned an analysis. I think we found out yesterday morning of their decision. So yesterday we had to scramble a little bit to see what we can do to make this a little better. Really the difference between the two of these is that Debt Service Reserve Fund. If you look at the TIC – True Interest Cost – not much different. Where the savings was going to come from, really, was that Reserve Fund being exchange for a Surety.