Special Notice / Hearing: None__
Vote Required: 4/5ths
To: Honorable Board of Supervisors
From: Michael P. Callagy, County Executive
Roberto Manchia, County Chief Financial Officer
Subject: Defeasance of the 2016 Refunding Lease Revenue Bonds, Series A
RECOMMENDATION:
title
Recommendation to:
A) Adopt a resolution authorizing:
1. The County Executive, or designee(s), acting in consultation with the County Attorney, to take all necessary and advisable steps to defease the Refunding Lease Revenue Bonds, 2016 Series A (Youth Services Campus), including but not limited to establishing an escrow account, purchasing securities for the escrow, and executing any related agreements, notices, approvals, or documents to effectuate the defeasance and to give effect to this resolution; and
2. The allocation and use of one-time sources, such as Reserves, in the amount of up to $77,000,000, to effectuate the defeasance; and
B) Approve an Appropriation Transfer Request (ATR) in the amount of $77,000,000 from Reserves to Non-Departmental Services for the cost of the defeasance.
body
BACKGROUND:
The County has from time to time approved the issuance and sale by the San Mateo County Joint Powers Financing Authority (the "JPFA") of lease revenue bonds to finance critical capital projects and public infrastructure.
A defeasance is a process by which an issuer satisfies a debt by escrowing monies sufficient to make debt service payments as they come due until the first available redemption date or maturity date, whichever comes first. At a high level, to defease debt service remaining on outstanding lease revenue bonds, the County would purchase a portfolio of securities through an escrow account to pay the bond debt service through the first optional redemption date. Once the escrow is funded, the defeased bonds are no longer outstanding debt and the bondholders look to the escrow for payment.
Defeasance can be beneficial to the County as a way to ...
Click here for full text