Malibu COPs Are Success

• Devices Sell Out within One Hour

BY BILL KOENEKER

Malibu city officials announced this week that the certificates of participation issued for the new City Hall sold within an hour at interest rates low enough to save taxpayers an estimated $3 million over the life of the financing.
The city, according to a press release, sold the nearly $20 million in COPs to finance the purchase and renovation of the recently acquired building.
“The high demand for these securities is recognition of the City of Malibu’s strong credit rating and diligent financial management,” said Mayor Andy Stern, in the official statement. “Many of the top 100 municipal bond investment funds placed orders for the certificates of participation for the new City Hall, as did specialized money managers and individuals retail investors throughout the state. We are gratified by these votes of confidence in the management of our city.”
Municipal officials said before the sale, Stone & Youngberg, the city’s underwriter for the securities, had estimated the city’s annual payments to investors in the COPs would be $1.41 million. Stern said the high demand for the COPs drove down the interest rates the city will have to pay.
He said the lower interest will save the city about $100,000 annually, or about $3 million over the 30-year life of the COPs.
Prior to the sale of the securities, the city had been given an AAA credit rating by Standard & Poor’s and an AA+ bond rating, its highest possible rating for the general appropriations lease financing used to purchase and renovate the new City Hall.
The city has been renting space in the existing City Hall and jumped at the chance to purchase the building next to it when it went on the auction block.
The city closed escrow on the new building on July 13 and sold the COPs on Aug. 20.
The city used its own funds to pay for the foreclosed property purchased at the auction and will ultimately use its annual rent savings of close to a million dollars per month to pay back the COPs.
The deal was acted upon swiftly, without controversy or litigation, and the entire city council and staff were praised for completing the transaction in record time.