$90 Million in Raiders Bonds Sold by Irwindale

The City of Irwindale on Friday sold $90 million in taxable revenue bonds--to build the proposed Los Angeles Raiders football stadium--to a “major out-of-state bank” at a variable interest rate beginning at 7.23%, according to announcements by the city and its bond agents.

City spokesman Xavier Hermosillo said the bonds purchaser would not immediately be identified because “they don’t want to receive 1,000 press calls.”

“They have made an investment, and they don’t want to be second-guessed on it,” he said.

But, Hermosillo said, the purchaser’s name will be on public records that will be available at the Irwindale City Hall on Tuesday or Wednesday.

Alfred Shilling of Los Angeles, the bond underwriting counsel in the transaction, described the sale as “a private placement to a sophisticated investor.”

Shilling said that according to the purchase agreement, the bonds cannot be resold to the public before a Sept. 28 Los Angeles Superior Court hearing on whether to grant an injunction against the bond transaction and other aspects of the deal under which the Raiders will leave the Los Angeles Memorial Coliseum and build a stadium in in the San Gabriel Valley city of Irwindale.

“It’s not a registered bond issue,” Shilling said. “And therefore, there can be no sale to the public. It could be registered at a later date, but it could very well continue to be privately held.”

Shilling and the bond sellers, the Minneapolis-based firm of Miller & Schroeder, said that the 7.23% initial interest rate on the 30-year bonds is subject to being raised or lowered every 60 days.

The underwriting counsel said a fixed rate would probably be set after the first two 60-day periods.

This probably means, independent experts said, that the eventual interest rate on the bonds will be more in line with the 9.5% currently charged for 30-year U.S. Treasury bonds.

Shilling, however, said that the low initial rate reflects certain “business relations” of the purchasing bank. He would not elaborate.

Hermosillo explained that the purchaser “has a banking relationship with some of the people involved here in the City of Irwindale and elsewhere.” He said the bank was prepared to buy the bonds at a relatively low interest rate to advance these other relationships.

The lower the interest rate, the less money will have to be paid by Irwindale each year on the bonds. When the stadium is built, money to repay the bonds is to come out of stadium income. Before it is finished, the repayments are supposed to come, in part, out of the proceeds of a $10-million general obligation bond that will be on the Irwindale ballot in November.

Expressed Delight

Irwindale officials expressed delight that the bonds were sold, despite the recent introduction by Assemblyman Mike Roos (D-Los Angeles) of legislation to ban their sale and a failed attempt in a taxpayers suit by Los Angeles City Councilman Ernani Bernardi to obtain a temporary Superior Court restraining order against the sale.

On Wednesday night, in a sudden action attempting to preempt legislative or court action, the Irwindale City Council voted 3 to 0 to go ahead with the bond sale this week. Earlier, it had not been expected to take place for months because the stadium ground-breaking is nowhere near.

“We’re pleased at the sale,” said Irwindale negotiator and redevelopment expediter Fred Lyte on Friday. “That’s a major thing out of the way.”

Meanwhile, in Sacramento, Roos said that he will not proceed this year with legislation aimed at revamping the membership of the Coliseum Commission, which he has blamed for losing the Raiders to Irwindale.