2004-12-02
CITY OF ENCINITAS
MINUTES OF JOINT SPECIAL MEETING
ENCINITAS RANCH GOLF CORPORATION AND THE
ENCINITAS RANCH GOLF AUTHORITY
Lilac Room, Civic Center
THURSDAY. DECEMBER 2,2004 at 4:00 p.m.
CALL TO ORDER/ROLL CALL
Chairman Kaiser called the meeting to order at 4:06 p.m.
DIRECTORS PRESENT:
Edward Kaiser, Peter Cota-Robles, Cindy Jacob, Kerry
Miller and Chris Hazeltine (replacing Phil Cotton who has
been promoted to another Department) being all of the
Directors.
ALSO PRESENT:
Tom Johnsen, Fieldman, Rolapp & Associates (financial
advisor); Bill Madison, Jones Hall (bond Counsel); Bill
Huck, Stone & Youngberg (bond underwriter); John McNair
and Rod Linville, JC Resorts; Staff Leslie Browder and Jay
Lembach; Pat Drew, Recording Secretary
ORAL COMMUNICATION [3 minutes for each speaker. Maximum 15 minutes for
oral communication.]
None
AGENDIZED BUSINESS ITEMS
1. Presentation, Review and Approval of Final Documents Related to ERGA's Bond
Refinancing (Tom Johnsen)
Mr. Madison said there is a resolution for both the Board of Directors of the Joint Powers
Authority to approve the financing as well as the Board of Directors of the Corporation and
obviously it's a joint meeting because the Board is sitting in both capacities. The
refinancing that will be approved, should the Board adopt both resolutions, is what they call
a "parameters resolution." It specifies that the minimum level of savings is $800,000. The
1
authority to Directors and other members of staff will be to go ahead to execute all
documents necessary to complete financing so long as that minimum level of savings is
met. Mr. Madison said that in general the structure of the financing is identical to what it
was both in 1996 and when it was brought back in 2001 for refinancing. One aspect of the
financing was a structural change they made. This was that originally the financing
documents required monthly deposits of debt service, i.e. 1/1ih of the principal and 1/6th of
interest. It was requested by Leslie Browder and Jay Lembach that it be loosened up a bit,
that it would be more convenient to make semi-annual payments. The financing team
agreed that that was an appropriate change. In general they tried to keep the structure the
same. All of the consultants and the operator of the course have been involved in the
review of the documents, the Official Statement has been very carefully reviewed by City
staff in terms of the financial statements having to do with the golf course and in other
respects they had kept it identical to what was done originally. The resolution approves all
of the documents including the Preliminary Official Statement. They are planning to send
the POS, which is what is used to market bonds, to the printers tomorrow to sell mid
December and to close on or about December 29. An escrow will be created for the 1996
bonds which can't be called until September 2006.
Mr. Johnsen advised that if the ERGA Board and Corporation take the action anticipated
today the POS will go to the printer tomorrow and they would anticipate pricing the bonds
on Tuesday, December 14 and then there would be a closing. At the current market they
are in excess of $900,000 in savings, present value.
Mr. Huck said that Bill Madison is right in that when they underwrote the bonds back in
1996 there was no golf course, no operating history, no players to come off the green and
say what a great place it was. There aren't very many golf course revenue bonds sold into
the market place so that bond issue, because of the circumstances, was sold to a single
institutional investor, Alliance Capital Management, who have been very pleased at being
an investor over this period. They continue to watch the bonds but now there are many
years of successful experience operating the golf course and playing the golf course. It is
very consistent in increasing the trend in net revenues, a consistent level of play, a
reputation for quality, and of course the golf course continues to mature and prosper. As a
result of that, plus the fact that Encinitas is a name that while it is known and appreciated
and respected in the municipal bond market isn't seen very often in the bond market, they
are very confident that there will be strong retail investor awareness and interest in these
bonds. As a result they will not be required to sell them to a single institutional investor;
they will be able to market them broadly to a variety of investors to get the strongest
demand for them and therefore the lowest interest rate. He is confident the bonds will be
well received.
Director Miller moved, seconded by Director Cota-Robles, that the Board adopt a
resolution of the Board of Directors of the Encinitas Ranch Golf Authority
Authorizing the Issuance and Sale of Not to Exceed $12,000,000 Principal Amount of
Revenue Refunding Bonds, Approving Related Indenture of Trust, Termination
Agreement, Site Lease, Lease Agreement, Escrow Agreement, Official Statement and
2
Bond Purchase Agreement, and Authorizing Related Documents and Official Actions.
(see Resolution No. 2004-02 Attached) Approved 5-0
Director Miller moved, seconded by Director Jacob, that the Board Adopt a
Resolution of the Board of Directors of the Encinitas Ranch Golf Corporation
Approving Lease of Encinitas Ranch Golf Course with the Encinitas Ranch Golf
Authority, Authorizing Execution of Related Termination Agreement, Site Lease,
Lease Agreement and Assignment Agreement, and Related Documents and Matters
(see Resolution No. 2004-01) Approved 5-0
2. NEXT MEETING: Tuesday, December 14 at 3:00 p.m. at the Golf Course Clubhouse.
3. ADJOURNMENT
Chairman Kaiser adjourned the meeting at 4:22 p.m.
Respectfully submitted,
J_} ~
/5t-vc;....u:- (!*-~-
Patricia Drew, Board Secretary
~tl~.
Edward O. Kaiser, Chairman of the Board
3