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March 22, 1999
STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Elizabeth Stoddard, Director of Administrative Services
SUBJECT: FORMAL SETTLEMENT AGREEMENT IN THE STULL V. BANK
OF AMERICA LITIGATION
SUMMARY OF REQUEST:
City Council 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.
Agenda Item
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.
Elizabetl}'Stoddard
DirectoAdministrative Services
Noted nd ap roved:
Keith R. Till
City Manager