TO: LINDA REICH, CITY MANAGER
FROM: KIM SAO, DIRECTOR OF FINANCE
SUBJECT
title
Issuance of Bonds Community Facilities District 2022-1 (Falloncrest).
end
RECOMMENDATION
recommendation
Adopt Resolution No. 2025-049 of the City Council of the City of Chino, acting as the legislative body for Community Facilities District No. 2022-1 (Falloncrest) of the City of Chino (the “District”), approving the issuance of the bonds and the substantially final forms of the Preliminary Official Statement, Fiscal Agent Agreement, Bond Purchase Agreement, Continuing Disclosure Agreement, and Appraisal Report (collectively, the “Bond Documents”).
body
FISCAL IMPACT
The Preliminary Official Statement relates to limited obligation special tax bonds (the “Bonds”) of the District. The Bonds will be special obligations of the District, payable solely from special taxes levied on the taxable property within the District, and amounts held by the Fiscal Agent under the Fiscal Agent Agreement. There are no City of Chino funds pledged to the repayment of the Bonds. There is no financial impact to the City in the approval of the Bond Counsel Agreement as the cost is paid from the Bond proceeds of the District contingent upon the Bonds being issued.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Financial Stability
• Responsible Long-Range Planning
|
Revenue: |
Expenditure: |
|
Transfer In: |
Transfer Out: |
BACKGROUND
After receiving a petition from KB HOME Coastal, Inc. (“KB Home”), the City Council initiated proceedings to form the District on November 1, 2022 with the adoption of Resolution Nos. 2022-077 and 2022-078 (the “Resolutions of Intention”). The Resolutions of Intention called for a public hearing on the formation of the District on December 6, 2022. Following the noticed public hearing, the City Council formed the District with the adoption of Resolution Nos. 2022-083 and 2022-084 and held an election on December 6, 2022, at which election KB Home, the sole qualified elector within the District, approved the establishment of the District, the Rate and Method of Apportionment for the District, and the issuance of Bonds by the District in an amount not to exceed $13,000,000. On January 3, 2023, the City Council approved Ordinance No. 2022-019, which authorizes the levy of the special taxes within the District in accordance with the Mello-Roos Act and the formation proceedings for the District that secure the payment of principal and interest with respect to the Bonds.
The property within the District is part of the City’s Preserve Specific Plan (the “Specific Plan”), adopted on March 25, 2003 in conjunction with the City’s General Plan Amendment 2000-02, and as amended several times thereafter. The District is comprised of approximately 18.70 gross acres (or approximately 11.74 net taxable acres) of land located east of East Preserve Loop and north of Pine Avenue in the City.
KB Home is developing the District in two neighborhoods: “Monet at Contour” and “Rembrandt at Contour.” The Monet neighborhood is planned to be developed into 96 single-family detached condominiums. The Rembrandt neighborhood is planned to be developed into 101 single-family detached condominiums. As of May 15, 2025, of the 197 single-family detached condominiums planned to be developed within the District, 101 completed condominiums had been conveyed to individual homeowners, 40 condominiums (including 4 model condominiums), were completed and owned by KB Home, 34 condominiums were in various stages of construction and the land planned for the remaining 22 condominiums was in a finished lot condition.
KB Home is now ready for the District to issue the Bonds pursuant to the terms of the Bond Documents to finance the infrastructure cost relating to the Project. (see attached map).
ISSUES/ANALYSIS
Staff has retained Urban Futures as the City’s financial advisor; Raymond James, as the underwriter; Webb Municipal Finance as the special tax consultant; BTI Appraisal as the appraiser; BNY Mellon as the fiscal agent; and the law firm of Stradling, Yocca, Carlson & Rauth as bond and disclosure counsel. The financing team has prepared the necessary documents to implement the issuance of the special tax bonds of Community Facilities District No. 2022-1.
The estimated Cost of Issuance (COI) and Underwriter’s Discount for the approximate bond size of $12.4 million, not to exceed $13 million Community Facilities District 2022-1 (Falloncrest) Bonds, total approximately $452,400 and are to be paid from bond proceeds contingent upon successful bond issuance. These costs reflect the standard services required to structure, market, and close the bonds and do not result in a financial obligation to the City should the bonds not close.
This cost breakdown aligns with industry standards for land-secured financings of this scale and complexity. The Underwriter’s Discount of not to exceed 1.35% is well within market norms, covering compensation for bond distribution, market risk, and pricing services.
The following documents have been prepared for the District’s approval and are available for review in the Finance Department:
1. Resolution No. 2025-049 of the City Council of the City of Chino, acting as the legislative body of Community Facilities District No. 2022-1, of the City of Chino, authorizing the preparation and distribution of a Preliminary Official Statement for the District, appointing a Fiscal Agent, and taking certain other actions in connection therewith; and
2. The Preliminary Official Statement (P.O.S.) will serve as the District’s disclosure document, which summarizes the legal documents and discloses all material financial and demographic information relating to the District and the Bonds. The underwriter will use the P.O.S. to generate investor interest in the Bonds; and
3. The Fiscal Agent Agreement pursuant to which the Bonds will be issued and which establishes the District’s obligations and the Bondholder’s rights concerning the payment of the Bonds and the annual special tax levy and collection within the District; and
4. Bond Purchase Agreement that will serve as the commitment by the underwriter to purchase the Bonds and the commitment by the District to sell the Bonds on the closing date to the underwriter, on the terms contained therein; and
5. Continuing Disclosure Agreement that will serve as the District’s obligation to provide certain annual data regarding the District and its special tax levy and annual report, and to provide notice of certain events regarding the District to Bond investors and the marketplace; and
6. Appraisal Report is intended to be used to assist bond purchasers in reviewing the asset value of the taxable property within the District.
Copies of these documents are available for review in the Finance Department. It is anticipated that the Bonds will be sold on July 24th and closed by August 7th.
Attachments: Resolution No. 2025-049
Boundary Map