Title
Adoption of Resolution Authorizing the Issuance of City of Alameda Community Facilities District (CFD) No. 13-1 (Alameda Landing Public Improvements) 2021 Special Tax Subordinate Bonds in an Amount Not to Exceed $24,585,000, and Approve Related Documents and Actions. (Finance)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The City Council formed the City of Alameda Community Facilities District No. 13-1 (Alameda Landing Public Improvements) (“CFD”) to finance certain public improvements in connection with the Alameda Landing development. In March of 2016, the City of Alameda (“City”) issued $15,415,000 of special tax bonds (“2016 Bonds”) for the CFD, and proceeds of the 2016 Bonds were used to acquire some of the authorized public improvements from Catellus Alameda Development, LLC (“Catellus”) pursuant to an Acquisition Agreement between the City and Catellus. The City is authorized to issue an additional $24,585,000 of special tax bonds for the CFD. Catellus has requested that the City issue the additional bonds (“2021 Bonds”) for the CFD in order to pay the costs of public improvements being constructed by Catellus in connection with the continuing development of Alameda Landing. The attached Resolution authorizes the issuance of the 2021 Bonds, payable from annual special taxes levied on property in the CFD, and approves related documents and actions.
BACKGROUND
Pursuant to a Disposition and Development Agreement entered into in December of 2006, among the City, the Successor Agency to the Community Improvement Commission of the City (“Successor Agency”) and Catellus, in 2014 the City formed the CFD and determined that the City could issue up to $20,000,000 in special tax bonds for the CFD to finance public improvements constructed by Catellus in connection with the development of Alameda Landing. At the time of formation of the CFD, the City and Catellus entered into an Acquisition Agreement whereby the City agreed to use the proceeds of special taxes levied on property in the CFD and proceeds of bonds issued by the City for the CFD to acquire public improvements constructed by Catellus and otherwise eligible to be financed by the CFD. In April of 2015, the City Council approved the annexation of 40 acres in Annexation Area 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.
TRI Pointe Homes, Inc. acquired property in the CFD from the Successor Agency in 2013-2015 and has constructed 91 single-family homes and 162 multifamily residential units in the area of the CFD. In March of 2016, the City issued the 2016 Bonds and used the proceeds of the 2016 Bonds to acquire public improvements constructed by Catellus pursuant to the Acquisition Agreement.
Catellus has been developing the Annexation Area of Alameda Landing in three phases, proceeding with the construction of public improvements authorized to be funded by the CFD in order for each phase to then be sold to a homebuilder. In that regard, in August of 2020, Pulte Home Company, LLC (“Pulte”) acquired 7.5 acres of property in the CFD from the Successor Agency. Pulte acquired an additional 6.0 acres in June of this year and is anticipating acquiring 3.7 acres more in April of 2022. It is expected that Pulte will ultimately construct 357 residential units on its property.
To assure funds are available for the CFD to acquire the public improvements from Catellus when completed, Catellus has requested that the City issue the remaining special tax bonds authorized to be issued on a subordinate basis to the 2016 Bonds. Staff is recommending that the City Council authorize the issuance of 2021 Bonds for the CFD.
DISCUSSION
Staff is recommending that the City Council authorize the issuance of the 2021 Bonds for the CFD in an amount not to exceed $24,585,000. Based on the Acquisition Agreement, proceeds of the 2021 Bonds will be used to 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. The 2021 Bond proceeds will also be used to fund a bond reserve fund, a cash flow reserve, and pay the cost of issuance of the 2021 Bonds (e.g., bond counsel fees, fiscal agent fees, printing expenses, appraisal fees, etc.). The 2016 Bonds and the 2021 Bonds will be repaid from annual levies of special taxes on the land owners in the CFD (primarily 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. Based upon a sample tax bill for a single family detached home of over 2,000 building square feet, the expected effective tax rate for a typical future homeowner would approximately be 1.851%.
The 2021 Bonds are expected to have a term of approximately 30 years, and certain financial estimates related to the 2021 Bonds are set forth in Exhibit A to the Resolution authorizing their issuance. The 2021 Bonds will be structured to produce debt service coverage for the 2016 Bonds and the 2021 Bonds of approximately 110% (special tax revenues/debt service) throughout the life of the 2021 Bond issue. The true interest cost for the 2021 Bonds cannot exceed 4.50%. If this item is approved by the City Council in early September, the 2021 Bonds are expected to be sold in mid-September of this year.
Stifel Nicolaus & Company Incorporated (Stifel), the Underwriter for the 2021 Bonds, has prepared a Bond Purchase Agreement for the transaction. The Bond Purchase Agreement describes all of the terms of the 2021 Bonds and attorney opinions needed in connection with the sale and closing of the 2021 Bonds. The document represents an agreement between Stifel and the City setting forth the final terms, prices and conditions upon which Stifel will purchase the 2021 Bonds from the City.
In addition, City staff has worked with the City’s bond counsel and disclosure counsel to prepare and review the following documents in connection with the proposed financing:
The Fiscal Agent Agreement sets forth the terms of the 2021 Bonds and the obligations of the City with respect to the administration of the CFD. The Fiscal Agent Agreement provides that the pledge of the special taxes to repay the 2021 Bonds is subordinate to the pledge of the special taxes to the repayment of the 2016 Bonds, and that all obligations of the City with respect to the 2021 Bonds and the CFD are limited obligations of the City, payable solely from the special taxes levied on properties in the CFD and bond proceeds.
The Preliminary Official Statement is the document used to market the 2021 Bonds to potential bond investors. It sets forth information for investors to make decisions to invest in the 2021 Bonds. The Preliminary Official Statement contains information concerning the City, the CFD, the property in the CFD and the property owners, and the 2021 Bonds, including the purpose for which the 2021 Bonds are being issued and the terms of the 2021 Bonds. Attached as Appendix H to the Preliminary Official Statement is an Appraisal Report provided by Integra Realty Services with respect to the value of the property in the District not yet improved with completed homes.
The Continuing Disclosure Agreement (included as Appendix E to the Preliminary Official Statement) provides for the City to give 2021 Bond investors’ annual information regarding the CFD and the 2021 Bonds, as well as notices of certain events that could impact the investment quality of the 2021 Bonds. The City’s Special Tax Administrator will assist City staff in assembling the required annual disclosures.
The Supplemental Agreement No. 1 to the Fiscal Agent Agreement amends the Fiscal Agent Agreement pursuant to which the 2016 Bonds were issued, to provide that proceeds of special taxes levied on the property in the District each year, after satisfaction of all requirements with respect to the 2016 Bonds, will be remitted to the fiscal agent for the 2021 Bonds to be used to pay the debt service on the 2021 Bonds.
Staff recommends that the City Council authorize the issuance of the 2021 Bonds to pay Catellus for the costs of the public improvements being constructed in the Annexation Area.
ALTERNATIVES
The City Council could consider the following alternative actions:
• Approve the Resolution authorizing the issuance of the 2021 Bonds.
• Amend the parameters of the 2021 Bond issue as reflected in the resolution and as may be directed by the City Council.
• Delay the issuance of the 2021 Bonds.
FINANCIAL IMPACT
There is no impact on the City’s General Fund from the issuance of the 2021 Bonds. The annual costs to administer the CFD, the 2016 Bonds and the 2021 Bonds issued for the CFD will be paid for 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. The payment of underwriting and appraisal costs, as well as portions of the legal and special tax consultant services, will be paid from proceeds of the 2021 Bonds.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The Alameda Municipal Code currently contains, in Section 3-70, the City of Alameda Special Tax Financing Improvement Code pursuant to which the CFD was formed, the 2016 Bonds were issued and the proposed 2021 Bonds are to be issued.
ENVIRONMENTAL REVIEW
On December 5, 2006, the City Council certified the Final Environmental Impact Report for the Alameda Landing Mixed Use Development Project (a Supplement to the 2000 Catellus Mixed-Use Development Project EIR) in accordance with the California Environmental Quality Act (CEQA) (State Clearinghouse #2006012091) and subsequent addenda. The CFD, and the issuance of the 2021 Bonds, are consistent with and implement the prior approvals and will not result in any new or substantially more severe environmental impacts than were previously identified in the Supplemental EIR and addenda.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Adopt a Resolution authorizing the issuance of special tax 2021 Bonds in an amount not to exceed $24,585,000 for the Community Facilities District at Alameda Landing; approve certain documents in connection with the sale and issuance of the Bonds; and authorize the City Manager to execute the documents and take all related actions in connection with the sale and issuance of the 2021 Bonds.
CITY MANAGER RECOMMENDATION
The City Manager recommends adoption of a Resolution authorizing the issuance of a special tax 2021 Bonds in an amount not to exceed $24,585,000.
Respectfully submitted,
Annie To, Finance Director
Exhibits:
1. Fiscal Agent Agreement
2. Bond Purchase Agreement
3. Preliminary Official Statement with Continuing Disclosure Agreement attached as Appendix E
4. Supplemental Agreement No. 1 to Fiscal Agent Agreement
cc: Eric Levitt, City Manager
Gerry Beaudin, Assistant City Manager