00084119

Aliso Viejo Ranch Presentation

February 5, 2014
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Site Plan for Aliso Viejo Ranch Project

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Overview of Aliso Viejo Ranch Project

City is currently evaluating a potential development of a 7.7acre site located at 100 Park Avenue Preliminary conceptual plans include a recreation facility, a full gymnasium and supporting amenities

3 scenarios were identified in August 2013, only two of those scenarios are currently being considered for development of the Aliso Viejo Ranch and each scenario will be discussed along with estimated costs
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Scenario 1 - Complete the entire project at the estimated cost of $19.2 million to include a Community Building, Full Gymnasium and a Multipurpose room as detailed in the specifications of the project design Scenario 2 - Complete the project at the estimated cost of $19.8 million in two phases for cash flow purposes: Phase I - Complete the Community Building and the Gymnasium at an estimated cost of $14.4 million as detailed in the specifications of the project design Phase II - Complete the Multipurpose room at an estimated cost of $5.4 million as detailed in the specifications of the project design
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Overview of Build-Out Scenarios

Discussion of Credit Rating Agencies Guidelines

Debt Policy Guidelines for Strong Government Credits Description Debt Level Debt Service Burden Rapid debt amortization Rate structure Standard and Poors <$2,000 per capita and <3% debt to market value <8% of Total General Fund expenditures >65% within 10 years Annual Debt Service increase <20% Fitch Ratings < $2,000 per capita and <2% debt to market value <6% of General Fund expenditures >65% within 10 years Mostly fixed-rate (<15% variable rate)

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Optimal Debt Issuance Under Standard & Poors Categories

Description 8% of FY 13-14 GF Expenditures Par Amount Project Fund Average Annual Debt Service
(1)

30 Year Term $1,114,013 $17,545,000 $17,364,034 $1,101,890 $354.61 0.22% 23%

Debt Per Capita(2) Debt to Market Value 10-year Debt Amortization Rate
(1) (2) Assumes Aliso

(3)

Projected FY 2013-14 General Fund Expenditures of $13,925,159 (excluding LTD) provided by the City. Viejo population of 49,477 as of 1/1/2013 provided by the California Department of Finance. (3) Assumes Aliso Viejo FY 2013-14 AV of $7,860,254,707as reported by the OC Assessor.

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Optimal Debt Issuance Under Fitch Ratings Categories

Description 6% of FY 13-14 GF Expenditures Par Amount Project Fund Average Annual Debt Service
(1)

30 Year Term $835,510 $13,150,000 $12,977,084 $825,747 $265.78 0.17% 23%

Debt Per Capita(2) Debt to Market Value 10-year Debt Amortization Rate
(1) (2) Assumes Aliso

(3)

Projected FY 2013-14 General Fund Expenditures of $13,925,159 (excluding LTD) provided by the City. Viejo population of 49,477 as of 1/1/2013 provided by the California Department of Finance. (3) Assumes Aliso Viejo FY 2013-14 AV of $7,860,254,707as reported by the OC Assessor.

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What Can The City Afford?

Aliso Viejo Ranch Improvements
Scenario 1 (Community Building, full Gymnasium and a Multipurpose room) $19.2 M Description

Scenario 2 (Community Building, full Gymnasium and a Multi-purpose Room: Two-Phase Approach) $14.4M Phase I and $5.4M Phase II $10.5M $3.9M (Phase I) $260,000 Higher than recommended level

Project Cost

City Equity Contribution Financed Amount Annual Debt Service Projected Fund Balance in FY 2017-18

$10.5 M $8.7 M $565,000 Lower than recommended level

Based on current interest rates for a comparable type of credit with a term of 30 years and a level debt service profile. Assumes the City has paid off the outstanding 2006 COPs and maintains minimum recommended level of cash flow/operation and asset replacement reserves.

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Options available to fund the Project

Option 1 Issuance of debt to finance the whole Project of $19.2 million (Not Recommended)
Does not meet the Debt Affordability criteria Exceeds the amount of debt that can be supported by the General Fund

Option 2 Use existing City Reserves and Community Enhancement Funds to pay for the whole Project of $19.2 million (Not Recommended)
Will result in the depletion of the Citys reserves Will expose the City to financial and economic uncertainty

Option 3 - Use a combination of City Reserves, Community Enhancement Funds and debt to pay for the whole Project of $19.8 million in two phases (Recommended)
A combination of affordable amount of debt and a prudent use of reserves
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Basic Assumptions Used in the Analysis

1) Boys & Girls Club contracts for operations and provides janitorial, furniture, and operational costs 2) City maintains the facility and grounds but does not provide City staffing 3) Assumes no rental income from Community Building 4) Basic operations continue at the Family Resource Center with annual costs of $250,000 5) Asset Replacement Reserves are included at 50% of annual depreciation per recommended accounting standards and the Council Policy adopted by the City
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Basic Assumptions Used in the Analysis (Contd)

6) Assumes use of 90% of $3.4 million of Community Enhancement Funds

7) Forecast includes $50,000 of General Fund monies in matching funds for potential receipt of grants monies 8) Forecast does not assume any funding for wish list projects on the Citys Strategic Initiative list 9) Forecast includes funding for the Cattery in the amount of $199,100 from Community Enhancement Funds 10) Forecast does not include impacts of the recent negotiations by Orange County Sheriffs Department (OCSD)
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Estimated Fiscal Impact over next five years

Scenario 1

(1) Reflects cash flow required for daily operations as majority of the revenues are received by the City in December, January, May and June.

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Estimated Fiscal Impact over next five years

Scenario 2

(1) Reflects cash flow required for daily operations as majority of the revenues are received by the City in December, January, May and June.

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Questions

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