Title
Adoption of Resolution Authorizing the Issuance of City of Alameda Community Facilities District (CFD) No. 13-1 (Alameda Landing Public Improvements) 2016 Special Tax Bonds in an Amount not to Exceed $18,000,000; Approve Certain Documents in Connection with the Sale and Issuance of the Bonds; and, Authorize the Interim City Manager or Her Designee to Execute the Documents and Take All Related Actions in Connection With the Sale and Issuance of the Bonds. (Community Development 256)
Body
To: Honorable Mayor and Members of the City Council
From: Elizabeth D. Warmerdam, Interim City Manager
Re: Adopt a Resolution Authorizing the Issuance of Special Tax Bonds in an Amount not to Exceed $18,000,000 for the Community Facilities District (“CFD”) at Alameda Landing; Approve Certain Documents in Connection with the Sale and Issuance of the Bonds; and, Authorize the Interim City Manager, the City Manager or Her Designee to Execute the Documents and Take All Related Actions in Connection With the Sale and Issuance of the Bonds
BACKGROUND
Pursuant to the 2006 Alameda Disposition and Development Agreement (DDA), in January 2014, the City Council formed the City of Alameda Community Facilities District (“CFD”) No. 13-1 (Alameda Landing Public Improvements), and determined that the City could issue, for the CFD, up to $20,000,000 in bonds to finance certain public facilities that have been constructed by Catellus Alameda Development, LLC (“Catellus”) in connection with the development of Phase 1 of Alameda Landing. In April 2015, the City Council approved the annexation of the 40 acres in Phase 2 of Alameda Landing into the CFD; added to the facilities authorized to be financed by the CFD; and increased the bonded indebtedness limit of the CFD to $40,000,000. When Council took its actions in April 2015, it was informed that the initial series of bonds was expected to be issued in late 2015 or early 2016.
DISCUSSION
The City Council is now requested to consider authorizing the issuance of the initial series of Community Facilities District No. 13-1 Special Tax Bonds in an amount not to exceed $18,000,000. Based on the previously approved Acquisition Agreement, these bonds will reimburse Catellus for constructing public improvements at Alameda Landing, including public streets and public utilities, which have been accepted by and transferred to the City, in an amount not to exceed $17.2 million. Bond proceeds will also be used to fund a bond reserve fund, pay capitalized interest, and pay the cost of issuance (e.g., bond counsel fees, fiscal agent fees, printing expenses, etc.). The 2016 Bonds will be repaid from annual levies of special taxes on the land owners in the CFD (residential home owners). These taxes will be levied according to the Rate and Method of Apportionment of Special Taxes that was previously approved by the City Council.
The Series 2016 Bonds are currently estimated to be issued in the amount of $16,500,000. The 2016 Bonds will have a term of 30 years and annual debt service is projected to range from approximately $410,000 in 2016, to an estimated $1,550,000 in 2046. The Bonds will be structured to produce debt service coverage of approximately 110% (special tax revenues/debt service) throughout the life of the issue. The maximum net interest cost for the bonds cannot exceed 6%. It is anticipated that the initial rate will be 4.5%. If approved, the Series 2016 Bonds are expected to be sold in the first quarter of 2016.
City staff issued a Request for Proposals (RFP) for underwriter services for this transaction and received three responses. Stifel Nicolaus and Company Incorporated was selected based on the strength of its proposal, the firm’s recent experience with CFD financings in California, and its proposed fees. The underwriter’s compensation on the 2016 Bonds will not exceed $10.50 per bond (which will be $7.50 per bond plus expenses). Other transaction costs are estimated at $250,000. All transaction costs will be paid from the proceeds of the Bonds.
The Underwriter prepared a Bond Purchase Agreement for the Series 2016 Bonds (Exhibit B of the Resolution). The Bond Purchase Agreement describes all of the certificates and attorney opinion needed in connection with the closing of the sale of the Series 2016 Bonds. It specifies the conditions to the Underwriter’s obligation to accept delivery of the Series 2016 Bonds.
In addition, the staff worked with the City’s disclosure counsel to prepare and review the following documents in connection with the proposed financing:
The Fiscal Agent Agreement (Exhibit A of the Resolution) sets forth the terms of the Series 2016 Bonds, and the obligations of the City with respect to the administration of the CFD. The Fiscal Agent Agreement expressly provides that the Series 2016 Bonds and all obligations of the City with respect to the CFD are limited obligations of the City, payable solely from the special taxes levied on properties in the CFD and bond parcels.
The Preliminary Official Statement (POS, Exhibit C of the Resolution) is the document used to market the Series 2016 Bonds to potential bond investors. It sets forth the information needed for investors to make decisions to invest in the Series 2016 Bonds. The POS contains information concerning the City, the CFD, the property in the CFD and the property owners, and the 2016 Special Tax Bonds, including estimated sources and uses of funds, the purpose for which the 2016 Bonds are being used and the terms of the 2016 Bonds.
The Continuing Disclosure Agreement (included as an appendix to the POS) provides for the City to give Series 2016 Bond investors’ annual information regarding the CFD, as well as notices of certain events that could impact the investment quality of the Series 2016 Bonds. The City’s Special Tax Administrator will assist City staff in assembling the required annual disclosures.
Staff recommends that the City Council authorize the issuance of CFD 2016 Special Tax Bonds to reimburse Catellus for public improvements at Alameda Landing that were previously accepted by the City.
FINANCIAL IMPACT
There is no impact on the City’s General Fund from the issuance of these bonds. The annual costs to administer the CFD and any bonds issued for the CFD will be paid for only from annual special taxes to be accounted for in a special fund and to be levied on property within the boundaries of the CFD, which includes only the land for residential development within Alameda Landing Phase 1. The payment of underwriting and financial advisory costs, as well as portions of the legal and special tax consultant services will be paid from proceeds of the 2016 Special Tax Bonds. Ancillary costs are reimbursed by Catellus pursuant to the Alameda Landing Disposition and Development Agreement (DDA).
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The DDA provides that if Catellus requests formation of a CFD, the City will cooperate with establishing the CFD. All expenses related to formation of the CFD are Catellus’ obligation. The CFD was formed in 2014 pursuant to the City’s Municipal Code, as was the authorization to issue bonds.
ENVIRONMENTAL REVIEW
Previously, the City Council certified an Environmental Impact Report for the Alameda Landing Mixed Use Project, a supplement to the 2000 Catellus Mixed-Use Development Project EIR. In January 2012, the City, through its Planning Board, approved a Third Addendum to the Alameda Landing Mixed Use Development Project EIR that evaluated the potential significant environmental impact of, among things, the public improvements that were subsequently constructed. This proposed action, the issuing of bonds to reimburse Catellus for funds it has already expended to construct the improvements previously evaluated in the Third Addendum, is not a project under CEQA in that it is the creation of a government financing mechanism or other government fiscal activity which does not involve any commitment to any specific project, other than one that has already been evaluated under CEQA, which may result in a potentially significant physical impact on the environment. CEQA Guidelines, Section 15378(a)(b).
RECOMMENDATION
Adopt a Resolution authorizing the issuance of Special Tax Bonds in an amount not to exceed $18,000,000 for the Community Facilities District (“CFD”) at Alameda Landing; approve certain documents in connection with the sale and issuance of the bonds; and, authorize the Interim City Manager, the City Manager or her designee to execute the documents and take all related actions in connection with the sale and issuance of the bonds.
Respectfully submitted,
Debbie Potter, Community Development Director
Financial Impact section reviewed,
Elena Adair, Finance Director