1. Building Acquisition Financing 400 East Main Street Public Hearing Stockton City Council/ Stockton Public Financing Authority November 6, 2007 Agenda Item 9.02

2. Background October 2, 2007: City entered into a purchase agreement to acquire 400 East Main Street from Washington Mutual for $35 millionOctober 2, 2007: City entered into a purchase agreement to acquire 400 East Main Street from Washington Mutual for $35 million October 2007: City begins due diligence inspections and document preparationOctober 2007: City begins due diligence inspections and document preparation

3. Building Details Constructed in 1988Constructed in 1988 246,541 usable square feet, 8 floors246,541 usable square feet, 8 floors 518 parking spaces beneath building518 parking spaces beneath building Currently 86% leasedCurrently 86% leased –186,000 square feet by Washington Mutual – 25,000 square feet by State, Verizon Wireless State, Verizon Wireless

4. Building Status Floor Year Vacant 1 Varies; 2012 22008 32012 42007 52009 62009 72011 82009

5. Benefits Locks in cost of office space needs at $140 per square feet versus $500 per square feetLocks in cost of office space needs at $140 per square feet versus $500 per square feet –Saves the City up to $90 million in future capital costs Provides City with safe modern office spaceProvides City with safe modern office space –Creates adjacencies between operations –Efficiency savings will likely exceed the City’s annual debt service for the building Generates cash flow from existing tenants while City transitions operations into buildingGenerates cash flow from existing tenants while City transitions operations into building Opportunity to consider potential alternate uses for the Civic Center buildingsOpportunity to consider potential alternate uses for the Civic Center buildings Assists in downtown revitalization by ensuring the property remains fully occupiedAssists in downtown revitalization by ensuring the property remains fully occupied

6. Financing Structure Variable rate demand lease revenue bondsVariable rate demand lease revenue bonds –Tax-exempt Series A –Taxable Series B 40-year Term40-year Term Aggregate issue not to exceed $48 millionAggregate issue not to exceed $48 million

7. Financing Structure Benefits Taxable series allows City to lease back portions of the building for private tenantsTaxable series allows City to lease back portions of the building for private tenants Variable interest rate (3.65% - 5.27%) will save approximately $450,000 annuallyVariable interest rate (3.65% - 5.27%) will save approximately $450,000 annually Reduced debt service obligation while the City transitions into the buildingReduced debt service obligation while the City transitions into the building Ensures risks are appropriate for the City and are adequately mitigatedEnsures risks are appropriate for the City and are adequately mitigated

8. Bond Proceeds Gross Bond Issue not to exceed $48MGross Bond Issue not to exceed $48M –Current estimate is $44.7M Bond Issue Net Bond Proceeds estimated at $40MNet Bond Proceeds estimated at $40M Bond Issuance $44,745,000 Underwriter’s Discount ($178,980) Cost of Issuance ($258,329) Insurance($929,808) Reserve Account ($3,377,883) Net Proceeds $40,000,000

9. Public Financing Authority Recommendation Adopt a resolution: Authorizing the issuance and sale of lease revenue bonds in the maximum principal amount of $48,000,000 to finance the acquisition of an approximately 250,000 square-foot, eight-story existing office building located at 400 East Main Street in Stockton, including a 518-space underground parking garage; andAuthorizing the issuance and sale of lease revenue bonds in the maximum principal amount of $48,000,000 to finance the acquisition of an approximately 250,000 square-foot, eight-story existing office building located at 400 East Main Street in Stockton, including a 518-space underground parking garage; and Approving related documents and official actions.Approving related documents and official actions.

10. City Council Recommendation Adopt a resolution: Approving proceedings to finance the acquisition of an approximately 250,000 square-foot, eight- story existing office building located at 400 East Main Street in Stockton, including a 518-space underground parking garage;Approving proceedings to finance the acquisition of an approximately 250,000 square-foot, eight- story existing office building located at 400 East Main Street in Stockton, including a 518-space underground parking garage; Approving the issuance and sale of lease revenue bonds for such purposes; andApproving the issuance and sale of lease revenue bonds for such purposes; and Approving related documents and official actions.Approving related documents and official actions.