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March 22, 1999
STAFF REPORT
TO: Honorable Chairman and Members of the Redevelopment Agency
FROM: Elizabeth Stoddard, Director of Administrative Services
SUBJECT: FORMAL SETTLEMENT AGREEMENT IN THE STULL V. BANK
OF AMERICA LITIGATION
SUMMARY OF REQUEST:
Redevelopment Agency Board approves a settlement agreement between the State of
California and all political subdivisions (City of Seal Beach) as plaintiffs and Bank of
America as defendant. This case involves City and Redevelopment Agency 1986 and 1991
Tax Allocation Bond debt issuance that used Bank of America Corporate Trust
Department.
DISCUSSION:
In 1995, an employee of Bank of America asserted that the Bank in its obligation as
Trustee failed to return unclaimed bond funds for debt issued by various entities. Bond
funds are normally returned to the issuers of the debt or the State of California because
bondholders fail to redeem bond coupons for principal and interest. Bank of America, as
Corporate Trustee, was obligated to return funds to the issuers or to the State of
California. As owners of unredeemed coupons of principal and interest became known,
they could file a claim with the issuer or the State and receive previously unclaimed
principal and interest.
Attached is a copy of the formal agreement.
RVA Agenda Item A
FISCAL IMPACT:
At this time staff is not able to definitely determine how much money will be recovered to
the City and Redevelopment Agency. The amount of money returned will depend upon
the size of the original bond issuance. During 1986 to 1992, the Redevelopment Agency
issued $6.9M in tax allocation bonds.
RECOMMENDATION:
Approve a formal settlement agreement with Bank of America to disburse funds to the
City and Redevelopment Agency held through the Corporate Trust Department.
\-t,jc • la
Elizabeth toddard '
Director Administrative Services
Noted nd ap roved:
Keith R. Till
City Manager