MISSION VIEJO : Merrill Lynch Wins City Hall Finance Bid

A bid to finance much of the $5.1 million needed to build the city’s first permanent City Hall was accepted this week by city officials.

Officials selected Merrill Lynch of Los Angeles from among eight companies to finance $4.6 million in participation certificates. The certificates will pay for the purchase and renovation of a two-story office building at 24800 Chrisanta Drive that will become the 2-year-old city’s first permanent home.

City officials were pleased by Merrill Lynch’s interest rate offering of 6.92%.

“We had expected bids in the neighborhood of 7.2% to 7.4%, and had been figuring our costs based on 7.49%,” said City Manager Fred Sorsabal.

The difference will save the city about $440,000 in debt service costs over the next 20 years, he added.

Last week, the city received an “A” rating for the certificates from Standard and Poors, a financial rating firm.

Sorsabal said that rating was excellent, “especially considering this was the city’s first effort to obtain financing from the bond market.”

The $500,000 earmarked for the project not covered by the sale of the participation certificates will be raised through tax-exempt mini-certificates, a small-denomination investment that will made available to the citizens of Mission Viejo.

The mini-certificates plan “is a way to open up the process,” said Gary Kitahata, a vice president with Kelling, Northcross & Nobriga, a municipal financial consultant working with Mission Viejo on the City Hall project. “This is a way to get people more actively involved in the financing of the City Hall.”

The mini-certificate process eliminates brokerage fees by allowing citizens to buy the certificates over the counter at City Hall, or through the mail. They probably will be made available in $500 denominations rather than the minimum of $5,000 usually required by Merrill Lynch, Kitahata said.