TO: LINDA REICH, CITY MANAGER
FROM: ROB BURNS, DIRECTOR OF FINANCE
SUBJECT
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Issuance of Bonds Community Facilities District 2003-03 Improvement Area 10.
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RECOMMENDATION
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1) Adopt Resolution No. 2024-019 of the City Council of the City of Chino, acting as the legislative body for Community Facilities District No. 2003-03 IA10 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”); and 2) approve the Bond Counsel Agreement with Stradling, Yocca, Carlson & Rauth in the amount of $75,000.
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FISCAL IMPACT
1) 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 Community Facilities District No. 2003-03 IA10, 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; and 2) there is no financial impact to the City in the approval of the Bond Counsel Agreement as the cost is paid from the bond proceed when the bonds are 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
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BACKGROUND
Lewis Operating Corporation (Lewis) is the primary land developer in The Preserve. Lewis is currently developing their land with residential, commercial and community facilities. As part of the development of The Preserve, the City of Chino is requiring Lewis to build the necessary public infrastructure to serve the residents and businesses of the new project area. In order to help Lewis finance the cost of the required infrastructure improvements, the City has formed Community Facilities District (CFD) No. 2003-3.
On May 17, 2022, the City Council adopted Resolution No. 2022-027, establishing Improvement Area No. 10 in CFD No. 2003-3 and to authorize the Levy of Special Taxes. In addition, the City Council adopted Resolution No. 2022-025, declaring the City of Chino’s Intention to Incur Bonded Indebtedness for the proposed Improvement Area 10 of CFD No. 2003-3.
Lewis is now ready for the District to issue special tax bonds for the District pursuant to the terms of the Bond Documents to finance the infrastructure cost relating to the Project. Improvement Area No. 10, consists of separate geographical areas divided into two separate zones (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. 2003-03 IA10.
The following documents have been prepared for the District’s approval and are available for review in the Finance Department:
1. Resolution No. 2024-019 of the City Council of the City of Chino, acting as the legislative body of Community Facilities District No. 2003-03 IA10, 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;
2. The Preliminary Official Statement (P.O.S.) will serve as the District’s disclosure document, which summarizes the legal documents and discloses relevant financial and demographic information relating to the District. The underwriter will use the P.O.S. to generate investor interest in the Bonds;
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;
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 subject properties.
As referred to above, the City uses the services of Stradling Yocca Carlson & Rauth for Bond Counsel services and Disclosure Counsel services. The fee for these services is $50,000 and $25,000 respectively. This cost is paid from the bond proceeds at the time the bonds are issued. If bonds are not issued, Stradling Yocca Carlson & Rauth receives no fee.
Copies of these documents are available for review in the Finance Department. It is anticipated the Bonds will be sold and closed by the end of May 2024.
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Attachments: Resolution No. 2024-019
Boundary Map
Bond Council Agreement