Palo Alto residents will have a chance to buy city-issued bonds later this month as part of the city's effort to refinance the bonds it issued in a decade ago to pay for downtown parking garages.
The council on Monday, Feb. 13, authorized the sale to the public of $33.48 million in parking-assessment bonds, which were originally issued in 2001 and 2002 to finance parking garages in and around University Avenue. The city is refinancing these bonds to take advantage of what staff called a "historic low" in interest rates.
Joe Saccio, assistant director of Administrative Services Department, wrote in a report that "based on current market interest rates, the net present value savings resulting from the refinancing could exceed 5 percent of the outstanding principal amount of the 2011 and 2002 bonds."
The council voted 8-0 Monday, with Karen Holman absent, to authorize the bond sale.
While the bonds will be available to the general public, Palo Alto residents will get first dibs. The bonds are expected to go on sale to investors and the general public on Feb. 28 at 8 a.m., but Palo Alto residents can place advance orders now.
The bonds are rated BBB by Standard & Poor's and are tax exempt. Minimum investment is $5,000 and additional investment can be made in $5,000 increments, according to Deputy Administrative Services Director Joe Saccio. They will be sold by De La Rosa & Co. and will have maturity dates from 2012 to 2030.
Anyone interested in purchasing the bonds can get more information by visiting www.cityofpaloalto.org/buypabonds or calling De La Rosa at 1-866-361-3300.
Comments
Another Palo Alto neighborhood
on Feb 15, 2012 at 9:50 am
on Feb 15, 2012 at 9:50 am
Wonder if the City will be making the results of the "buy local" bond marketing effort by City Hall? Will the names, and body purchase amounts, become public domain information?
Another Palo Alto neighborhood
on Feb 15, 2012 at 9:57 am
on Feb 15, 2012 at 9:57 am
How about putting some pay per hour machines in all the garages and lots so that we can pay for part day or all day parking and keep local residents happy!
Greenmeadow
on Feb 15, 2012 at 10:19 am
on Feb 15, 2012 at 10:19 am
I took a look at the prospectus. Is it true that Palo Alto was incorporated in 1984?!?!?! HAs to be a typo, right?
Issuer Information
The City of Palo Alto is located in northern Santa Clara County (the “County”), approximately 35 miles south of the City of San Francisco. The City has a current population of approximately 64,500. It is part of the San Francisco Bay metropolitan area. Partly due to the presence of Stanford University, which is adjacent to the City, the City is considered the birthplace of the high technology industry that has made the County famous worldwide as Silicon Valley.
The City was incorporated in 1984. Its first Charter was granted by the State of California in 1909, and the City continues to operate as a charter city. Municipal operations are conducted under the Council-Manager form of government. The nine City Council Members are elected at large for four-year staggered terms. The Mayor presides over all City Council meetings. The City Manager is responsible for the operations of all municipal functions, except the offices of the City Attorney, City Clerk, and City Auditor. These officials are appointed by, and report directly to, the City Council.
-- end --
Midtown
on Feb 15, 2012 at 10:41 am
on Feb 15, 2012 at 10:41 am
"Palo Alto residents can place advance orders now."
After scanning all that lawyerese I don't see any price/yield in the article or the link, just a reference to setting the price in the future. Would anybody be dumb enough to buy without a yield set, or am I too dumb to find it?
South of Midtown
on Feb 15, 2012 at 10:42 am
on Feb 15, 2012 at 10:42 am
Did Palo Alto's 1984 incorporation get past council back then too? How come this wasn't in the newspapers? Maybe because the Daily Post wasn't around then, and the other newspapers considered it a non-issue?
So now, everyone can be surprised! Not just our council, and the City manager's office could be surprised by this recent development, (like all the other issues that surprise them, such as the library) but everyone that lives in and loves Palo Alto can be surprised.
Thanks for bringing this news to us, south PA resident. Better late, than never.
So it is the City Manager's office that is responsible for ALL of the city's municipal functions? Hmmm.
Downtown North
on Feb 15, 2012 at 11:56 am
on Feb 15, 2012 at 11:56 am
Yes, the "incorporated 1984" was a typo on the web page, it's been fixed now.
The bond pricing or yield will be established on Feb. 22nd.
Downtown North
on Feb 15, 2012 at 12:16 pm
on Feb 15, 2012 at 12:16 pm
I want to add that if you call Arielle Jacobs from De La Rosa & Company at 866-361-3300 she can provide the likely yield on the bonds on Feb. 22nd. Based on this you have the option to place an advance order. She'll also explain what happens if the actual yield is different.
Midtown
on Feb 15, 2012 at 12:32 pm
on Feb 15, 2012 at 12:32 pm
Does anyone know where these bonds are prioritized in payouts, relative to the underfunded pension plan and underfunded retiree medical for the city employees?
Adobe-Meadow
on Feb 15, 2012 at 1:59 pm
on Feb 15, 2012 at 1:59 pm
Not buying. This city is not run well enough in my opinion.
Downtown North
on Feb 15, 2012 at 6:03 pm
on Feb 15, 2012 at 6:03 pm
These bonds are not general obligation of the City nor secured by the general taxing power of the City. It's secured and paid by assessments on the 213 parcels in the University Ave. (Downtown) Parking Assessment District. The Preliminary Official Statement (starting on Page 10) will describle the security for the bonds, which can be found at www.cityofpaloalto.org/buypabonds
Barron Park
on Feb 15, 2012 at 8:00 pm
on Feb 15, 2012 at 8:00 pm
Beware the municide...
Web Link
qq
Another Palo Alto neighborhood
on Feb 15, 2012 at 9:20 pm
on Feb 15, 2012 at 9:20 pm
> Does anyone know where these bonds are prioritized in payouts,
> relative to the underfunded pension plan and underfunded retiree
> medical for the city employees?
Interesting question, and after GM, a necessary one.
President Obama called the GM bond holders “speculators” when GM was thrashing around before the Taxpayer bailout. He made it very clear that he didn’t think much of those particular individuals, and entities holding GM bonds.
The following video reminds us of how the rules of investing were turned upside down to favor the UAW—
Modica: Is GM Bailout Model for Crushing Bondholders?
Web Link
The Palo Alto City Council endorsed Obama 9-0, and has never disapproved of his treatment of the GM Bondholders. So, how will Obama's trashing of the GM bondholders play out in some future financial downturn here in Palo Alto for these Parking Lot bondholders?
Another Palo Alto neighborhood
on Feb 16, 2012 at 11:21 am
on Feb 16, 2012 at 11:21 am
Since bond defaults/credit default swaps have become common household words around the world since the onslaught of the sub-prime crisis--what provisions has the City of Palo Alto made in its bond offering documentation to deal with possible default situations?
If no such provisions exists--why not?
Downtown North
on Feb 16, 2012 at 11:44 am
on Feb 16, 2012 at 11:44 am
Starting on page 25 of the Preliminary Official Statement (again that can be found at www.cityofpaloalto.org/buypabonds) under "Special Risk Factors" talks about use of Reserve Funds and Foreclosure and Sale Proceedings in the event of non payment of assessments. In addtion, starting page 10 of the same document talks about the "Security for the Bonds"
Another Palo Alto neighborhood
on Feb 16, 2012 at 12:38 pm
on Feb 16, 2012 at 12:38 pm
Not too long ago, Assistant City Attorney Donald Larkin, during one of the many persecutions of a sidewalk-sitting, free-loading, neer-do-well that: "you can't believe anything on the City's web-site" (or words to that effect).
So, the following needs to be considered fully:
----
Financial Information
Notice and Disclaimer
This website provides general financial information about the City of Palo Alto (the “City”) and its outstanding bonds and other obligations. The information is provided for quick reference only and is not an offer to sell or a solicitation of an offer to buy the City’s bonds.
It is not a summary or a compilation of all information relevant to any particular financial transactions, bonds or other obligations. It does not purport to include every item that may be relevant, nor does it purport to present full and fair disclosure with respect to any financial transactions, bonds or other obligations related to the City within the meaning of applicable securities laws and regulations.
----
By the way, there is a Tarun listed on one of the web-pages, that seems to be an employee not only of the City of Palo Alto, but the Finance Department:
Tarun Narayan
Senior Financial Analyst
Phone: 650-329-2362
E-mail: Tarun.Narayan@cityofpaloalto.org
---
If the Tarun posting on this thread is the same person, it is a shame he did not identify himself completely, rather than just as someone from "Downtown North".
Oh .. one more thing .. don't seem to see any page numbers associated with the pages at the link provided. Are they there, or is there a link to a .pdf that has been missed by people who might be reading casually?
Adobe-Meadow
on Feb 16, 2012 at 12:48 pm
on Feb 16, 2012 at 12:48 pm
Tarun, thank you for doing a nice job of informing the readers here of the opportunity. Don't let any criticism, express or implied, get to you - it's just part of the culture here. You've been very helpful.
Adobe-Meadow
on Feb 16, 2012 at 12:52 pm
on Feb 16, 2012 at 12:52 pm
As I'm sure Tarun will point out, the doc s/he references is the Preliminary Official Statement, which is available on the site. Since they appear to want you to read and acknowledge their disclaimers before accessing, you probably should go through the link Tarun provided. You can then access the link to the Statement.
Crescent Park
on Feb 16, 2012 at 2:22 pm
on Feb 16, 2012 at 2:22 pm
The BBB rating is one notch above junk bonds. (Web Link
What happened to the city's AAA credit rating that the council incumbents always brag about in every election? They always say its an illustration of how well they're been running the city.
Crescent Park
on Feb 16, 2012 at 2:27 pm
on Feb 16, 2012 at 2:27 pm
One more thing ... these bonds will probably be purchased by a bank. The bank will be able to borrow money from the Fed at less than 1%, then use that money to buy Palo Alto's bonds, which will yield 3% to 4%. The bank will rake in a lot of profit thanks to the Federal Reserve. It's a way of subsidizing banks and local governments that borrow money by selling bonds. The Fed literally has the power to create money, and it doing so to fatten the profits of banks and help out the muni bond market. Of course creating money like this dilutes the value of the dollar, which explains in part why food, gasoline and gold costs so much more.
Downtown North
on Feb 16, 2012 at 4:50 pm
on Feb 16, 2012 at 4:50 pm
Yes, I'm a City employee and my contact information is listed on the City's bond web page. My responses are limited to providing factual information and/or directing you to where you can find answers to your bond questions.
The City of Palo Alto's General Obligation Bond rating by both Standard and Poor's (S&P) and Moody's is AAA and Aaa, respectively. Most of the City's Utility bonds have a AAA rating by S&P and Aa2 or Aa3 by Moody's. This bond is a Parking Assessment bond that is backed by assessments on 213 parcels in the University Avenue Parking Asessment District (both the rating report and the Preliminary Official Statement will provide the details for this bond issuance).
These bonds are not general obligation of the City nor secured by the general taxing power of the City.
South of Midtown
on Feb 16, 2012 at 6:40 pm
on Feb 16, 2012 at 6:40 pm
It's refreshing to see a City Employee just relaying facts, and being upfront about an issue for the public benefit. Your input has been appreciated in this forum by this reader! Thank you, Tarun.
Charleston Meadows
on Feb 17, 2012 at 10:37 pm
on Feb 17, 2012 at 10:37 pm
Not buying if they are spending it on music Halls and videogame parlors for the schools.
Charleston Gardens
on Feb 21, 2012 at 3:49 pm
on Feb 21, 2012 at 3:49 pm
This seems pretty straight forward. I am pleased that they are letting residents purchase before the institutional investors. I called the contact given in the article, and she was very helpful. She has my order on the list they will start executing at 6:30 tomorrow morning.
This bond offering is a "refinance" at lower interest rates, of the bonds that paid for the University Avenue area parking facilities.