Featured Municipal Bond Issue, Week of January 1, 2018: The Successor Agency to the Anaheim Redevelopment Agency – Tax Allocation Refunding Bonds – $115 Million 

This week’s featured bond comes from the State of California. The Successor Agency to the Anaheim Redevelopment Agency is issuing $115 million in tax allocation bonds the week of January 1, 2018. These tax allocation bonds are being issued in two series; Series 2018A is $110 million in bonds that are considered tax-exempt for federal income tax purposes, while for Series 2018B, interest on the bonds is considered federally taxable. The bond proceeds will be used to refund outstanding principal on tax allocation bonds issued in 2007, and 2010 by the now defunct Anaheim Redevelopment Agency. The 2007 bonds will be refunded on a current basis, to be paid on February 5, 2018, while the 2010 bonds will be paid as due on or before February 1, 2020, with redemption price of then-outstanding 2010 bonds plus accrued interest being paid on February 1, 2020.

All 400+ redevelopment agencies in the State of California were dissolved as of February 1, 2012, per State Assembly Bill No X1 26, which was upheld in subsequent litigation. As a part of this dissolution act, the City of Anaheim became the Successor Agency. However the Successor Agency and the City are separate legal entities, and neither the assets or liabilities of the former redevelopment agencies will become assets or liabilities of the City government. The City Council acts as the governing board of the Successor Agency. The Successor Agency is barred from participating in any new redevelopment activities, but is tasked with completing any approved enforceable obligations, including existing bonds, pass-through payments to local governments, and other obligations. The purpose of the Successor Agency is essentially to wind-down the previous activities of the Redevelopment Agency.

The 2018 bonds are secured by a pledge of, security interest in, and lien on certain Pledged Tax Revenues, which include all taxes that were eligible for allocation to the former Redevelopment Agency, excluding those set aside for obligations considered senior obligations to the 2018 bonds, including debt service on senior obligations and prior agreements, pass-through agreements, and amounts required to be paid to taxing agencies. Neither the City of Anaheim, Orange County, or State of California are liable for the payment of principal of or interest on these bonds.

Further details on the purposes, tax-status, and security, as well as other matters pertaining to these tax allocation bonds can be found in the preliminary official statement, available on MuniOS. Additional information on the California redevelopment agencies and successor agencies can be found in the preliminary official statement, as well as with the State of California Department of Finance.

The Successor Agency to the Anaheim Redevelopment Agency relates to the community of Anaheim, part of the Los Angeles-Long Beach-Anaheim, CA Metropolitan Area. As of October 2017 the Los Angeles metropolitan area has an unemployment rate of 4.1%, which is even with the national rate for October, and 0.4% lower than at the same time in 2016. The chart below (click to expand) shows the Los Angeles metropolitan area, State of California, and U.S. unemployment rates for the past ten years. MuniNet provides this data and more, easily accessible, for all 50 states and each Metropolitan Statistical Area in the country, in our Employment Database.Anaheim

Revenues for the Successor Agency are provided from tax increment revenues from property tax revenues in a constituent area. As a general principal, tax increment financing is the setting aside of future growth in property tax revenues from a base year towards urban development or other authorized purposes, like infrastructure. In California’s case, local governments continued to receive the base revenues, and any additional revenues from property tax revenue growth in constituent areas were dedicated to Redevelopment Agencies. This funding structure is still in place for the Successor Agency to fulfill the obligations of the previous Redevelopment Agency.
Below are two tables specifying pertinent revenues (click on either table to expand). The first table shows the historical assessed and incremental property tax values from the 2008-2009 to the 2017-2018 fiscal years. Based in part on this information, the second table displays the projected assessed values, and the projected pledged tax revenues available to the Successor Agency, assuming no annual growth.

 by Jeffrey L Garceau