Title
Adoption of Resolution Authorizing the Issuance of City of Alameda Community Facilities District (CFD) No. 22-1 (Alameda Marina) 2022 Special Tax Bonds, and Approving Related Documents and Actions. On July 10, 2018, the City Council certified the Final Environmental Impact Report (EIR) for the Alameda Marina Master Plan in accordance with the California Environmental Quality Act (CEQA) (State Clearinghouse No. 2016102064). The formation of a CFD and issuance of the 2022 Bonds only involves financing for improvements that are already the subject of relevant environmental approval and thus does not present any new environmental impacts or necessitate further environmental review. (Finance 10024051)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
In 2018, the City Council approved the Master Plan for the Alameda Marina project, which established the requirements for a mixed-use development at the Alameda Marina site (the “Development”). The Master Developer, Alameda Marina, LLC, requested the formation of a community facilities district (or “CFD”) to finance certain public infrastructure, including the construction of a seawall and specific improvements to Clement Avenue (the “Improvements”) as well as certain municipal services necessitated by the project as a condition of approval. In April 2022, the City of Alameda Community Facilities District No. 22-1 (Alameda Marina) (the “District” or the “CFD”) was formed by the City Council under the authority of the City of Alameda Special Tax Financing Improvement Code of the Alameda Municipal Code (the “Law”). Alameda Marina, LLC, has requested that the City of Alameda (City) issue the 2022 Special Tax Bonds (Green Bonds) (“the 2022 Bonds”) for the CFD in order to pay the associated costs to acquire the sea level rise resilience and adaptation improvements authorized to be funded by the District. The attached Resolution authorizes the issuance of the 2022 Bonds (payable from annual special taxes levied on property in the CFD) and approves related documents and actions.
BACKGROUND
The City Council has previously completed the necessary proceedings to establish the District. As part of those proceedings, on March 15, 2022, the City Council adopted Resolution No. 15871 stating its intention to establish the District and to levy the special tax within the District pursuant to the Law. Concurrently, the City, for and on behalf of the District, entered into an Acquisition and Funding Agreement with Alameda Marina, LLC, pursuant to which the City agreed to use proceeds of bonds issued for the District to pay costs of the construction by the Master Developer of the Improvements. On April 19, 2022, the City Council formed the District and adopted Resolution No. 15893, authorizing a special election with respect to the incurrence of indebtedness and the levy of the special tax. The then sole landowner in the District, and thereby the sole qualified elector for the District, voted in favor of the incurrence of up to $37 million principal amount of bonded indebtedness to finance the Improvements.
The District is part of a larger Development, which includes a total of approximately 44 acres along the Alameda/Oakland Estuary in the eastern portion of the city. The Alameda Marina Master Plan, approved by the City Council in 2018, governs the rehabilitation and improvement of a former working waterfront area, with zoning as mixed use planned development and multifamily residential. Currently, the Alameda Marina project is expected to be developed with 360 residential apartment units and eight (8) work/live units, 182 townhomes, and 250 condominium units, 103 of which total units are deed restricted as affordable. The Development will include 55,000 square feet of commercial space in one new building and seven rehabilitated buildings, and continues to include 530 boat slips, a 60-boat dry storage area, and a graving dock. Upon completion, the Development will also include 3.45 acres of parks, shoreline access, bike paths and an extension of the Bay Trail.
The District includes approximately 11 acres within the Development to be improved with a total of 182 townhomes in 31 buildings, including 25 Below Market Rate (BMR) Units that will not be subject to the levy of special taxes. The townhomes are being constructed by Landsea Construction LLC as the general contractor for LS-Alameda Marina LLC (the “Builder”), both of which are affiliated with Landsea Homes Corporation, a publicly traded homebuilder. The townhomes are being constructed in two product lines, including the Waterside units located in buildings on the waterfront with four floor plans ranging from 2,189 square feet to 2,744 square feet, 3-4 bedrooms, and 3.5 bathrooms, and the Island View units with views of the marina, with seven floor plans ranging from 1,459 square feet to 2,389 square feet, 2-3 bedrooms, and 2.5 to 3.5 bathrooms. The BMR Units are the subject of an Affordable Housing Agreement between the City and the Builder which requires that seven (7) townhomes be designated and deed restricted as very low, seven (7) as low, and 11 as moderate units, with sale prices limited as set forth in the Affordable Housing Agreement. Building permits have been issued by the City for three (3) of the buildings that are to include 18 of the townhomes, with construction underway and expected to be completed by the end of July 2023. The Builder expects that sales activities will commence in January 2023.
DISCUSSION
The 2022 Bonds
Proceeds of the 2022 Bonds will be used to acquire the sea level rise improvements constructed by Alameda Marina, LLC, as authorized to be funded by the District, to fund a Reserve Fund for the 2022 Bonds, to make a deposit to a Capitalized Interest Account to pay interest on the 2022 Bonds for a limited period of time, and to pay the costs of the issuance of the 2022 Bonds (e.g., bond and disclosure counsel fees, municipal advisor fees, fiscal agent fees, printing expenses, appraisal fees, etc.). The City is designating the 2022 Bonds as “green bonds” due to the benefits of the sea level rise resilience and adaptation improvements being financed with the net proceeds of the 2022 Bonds. The purpose of designating the 2022 Bonds as “green bonds” is to allow owners of the 2022 Bonds to invest directly in bonds that address the effects of climate change through the provision of resilient and adaptive improvements.
The 2022 Bonds, to be issued in a principal amount not to exceed $19,000,000, are expected to have a term of approximately 30 years, and certain financial estimates related to the 2022 Bonds are set forth in Exhibit A to the Resolution authorizing their issuance. The 2022 Bonds will be structured to produce debt service coverage for the 2022 Bonds of approximately 110% (net special tax revenues/debt service) throughout the life of the 2022 Bond issue. The true interest cost for the 2022 Bonds cannot exceed 7.00%. The 2022 Bonds will be repaid from annual levies of special taxes on the 157 townhomes that are not BMR Units being constructed in the District. 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 Maximum Assigned Special Taxes for Fiscal Year 2023-24 range from $5,607.96 for a townhome property less than 1,680 square feet to $8,100.84 for a townhome property greater than or equal to 2,680 square feet; special taxes will increase by two percent (2%) annually thereafter.
If this item is approved by the City Council, the 2022 Bonds are expected to be sold the week of December 12, 2022 and close the last week of December 2022.
Documents to be Approved
The Fiscal Agent Agreement (Exhibit 1) sets forth the terms of the 2022 Bonds, and the obligations of the City and the Fiscal Agent with respect to the 2022 Bonds. The Fiscal Agent Agreement provides that the 2022 Bonds are secured by a pledge of the special taxes, and that all obligations of the City with respect to the 2022 Bonds and the CFD are limited obligations of the City, payable solely from the special taxes levied on properties in the CFD, bond proceeds, and amounts held in funds established under the Fiscal Agent Agreement.
Stifel Nicolaus & Company Incorporated (Stifel), the Underwriter for the 2022 Bonds, and their counsel, have prepared a Bond Purchase Agreement (Exhibit 2) for the transaction. The Bond Purchase Agreement describes certain of the terms of the 2022 Bonds and attorney opinions needed in connection with the sale and closing of the 2022 Bonds. The document represents an agreement between Stifel and the City setting forth the final terms, prices and conditions, including an Underwriter’s discount not to exceed 1.75% upon which Stifel will purchase the 2022 Bonds from the City.
The Preliminary Official Statement (Exhibit 3) is the document used to market the 2022 Bonds to potential bond investors. The Preliminary Official Statement contains information concerning the City, the CFD, the property in the CFD, and the 2022 Bonds, including the purpose for which the 2022 Bonds are being issued and the terms of the 2022 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.
The Continuing Disclosure Agreement (included as Appendix E to the Preliminary Official Statement) provides for the City to give 2022 Bond investors’ annual information regarding the CFD and the 2022 Bonds, as well as notices of certain events that could impact the investment quality of the 2022 Bonds. The City’s Special Tax Administrator will assist City staff in assembling the required annual disclosures.
ALTERNATIVES
The City Council could consider the following alternative actions:
• Approve the resolution authorizing the issuance of the 2022 Bonds.
• Amend the parameters of the 2022 Bond issue as reflected in the resolution and as may be directed by the City Council.
• Delay the issuance of the 2022 Bonds.
FINANCIAL IMPACT
There is no impact on the City’s General Fund from the issuance of the 2022 Bonds. The annual costs to administer the CFD and the 2022 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 approximately 11 acres within the Development to be improved with a total of 182 townhomes, including 25 BMR Units that will not be subject to the levy of special taxes. The payment of underwriting and appraisal costs, as well as the legal and special tax consultant services will be paid from proceeds of the 2022 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 and the proposed 2022 Bonds are to be issued.
ENVIRONMENTAL REVIEW
On July 10, 2018, the City Council certified the Final Environmental Impact Report (EIR) for the Alameda Marina Master Plan in accordance with the California Environmental Quality Act (CEQA) (State Clearinghouse No. 2016102064). The formation of a CFD and issuance of the 2022 Bonds only involves financing for improvements that are already the subject of relevant environmental approval and thus does not present any new environmental impacts or necessitate further environmental review.
CLIMATE IMPACT
The City is designating the 2022 Bonds as “green bonds” due to the benefits of the sea level rise resilience and adaptation improvements being financed with the net proceeds of the 2022 Bonds. The purpose of designating the 2022 Bonds as “green bonds” is to allow owners of the 2022 Bonds to invest directly in bonds that address the effects of climate change through the provision of resilient and adaptive improvements.
RECOMMENDATION
Adopt a resolution authorizing the issuance of special tax 2022 Bonds in an amount not to exceed $19,000,000 for the Community Facilities District at Alameda Marina; approve certain documents in connection with the sale and issuance of the 2022 Bonds; and authorize the City Manager and the Finance Director to execute the documents and take all related actions in connection with the sale and issuance of the 2022 Bonds.
Respectfully submitted,
Margaret L. O’Brien, Finance Director
Exhibits:
1. Fiscal Agent Agreement
2. Bond Purchase Agreement
3. Preliminary Official Statement with Continuing Disclosure Agreement of the City attached as Appendix E
cc: Erin Smith, City Manager