TO: LINDA REICH, CITY MANAGER
FROM: KIM SAO, DIRECTOR OF FINANCE
SUBJECT
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Issuance of Bonds for Community Facilities District (CFD) 2023-1 (Sage Cedar).
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RECOMMENDATION
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Adopt Resolution No. 2026-045 of the City Council of the City of Chino, acting as the legislative body for Community Facilities District No. 2023-1 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”).
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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 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; 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 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
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BACKGROUND
After receiving a petition from ARROYO CAP II-1, LLC ( the “Merchant Builder”), the City Council initiated proceedings to form the District on April 18, 2023 with the adoption of Resolution Nos. 2023-023 and 2023-024 (the “Resolutions of Intention”). The Resolutions of Intention called for a public hearing on the formation of the District on June 6, 2023. Following the noticed public hearing, the City Council formed the District with the adoption of Resolution Nos. 2023-029 and 2023-030 and held an election on June 6, 2023 at which election the Merchant Builder, the qualified electors within the District, approved the establishment of the District, the Rate and Method of Apportionment, and the issuance of Bonds by the District in an amount not to exceed $17,000,000. On June 20, 2023 the City Council approved Ordinance No. 2023-013, which authorized 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 23.60 gross acres (or approximately 18.46 net taxable acres) of land located at The Preserve at Chino near Pine Avenue in the City.
The District is planned for the development of 188 single-family attached condominium units being developed by The Developer is developing the District in two neighborhoods: “Sage Court” and “Cedar Row.” The Sage Court neighborhood is planned to be developed into 112 single-family attached condominiums. The Cedar Row neighborhood is planned to be developed into 76 single-family attached condominiums.
As of June 1, 2026, of the 188 single-family attached condominiums planned to be developed within the District, 125 completed condominiums had been conveyed to individual homeowners and 63 completed condominiums were completed and owned by Tri Pointe. As of June 1, 2026, 19 of the remaining condominiums owned by the Developer were in escrow to individual homebuyers. Furthermore, as of June 1, 2026, Tri Pointe had obtained all building permits required to complete the development within the District
The Developer 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).
The City and the Developer have entered into an Acquisition Agreement, dated as of April 18, 2023 (the “Acquisition Agreement”), which provides, among other things, the means by which the Developer will construct the Facilities to be acquired with the proceeds of the Bonds and other bonds issued by the District on behalf of the Improvement Areas therein.
The Facilities eligible to be financed with the proceeds of the Bonds consist of backbone infrastructure needed for new development, such as roadway, bridge, sewer, water, reclaimed water, dry utilities, storm drain, street and parkway landscaping, curb and gutter, medians, median landscaping, traffic signals, entry signage, parks, trails, fire facilities, library facilities and public community facilities, and appurtenances and appurtenant work, and development impact fees that are used by the City to construct infrastructure.
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 the District.
The estimated Cost of Issuance (COI) and Underwriter’s Discount for the proposed $11.295 million Community Facilities District No. 2023-1 Bonds total approximately $467,482.50 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.
The following documents have been prepared for the District’s approval and are available for review in the Finance Department:
1. Resolution No. 2026-045 of the City Council of the City of Chino, acting as the legislative body of Community Facilities District No. 2023-1 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;
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;
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 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 and closed by July 30, 2026.
Attachments: Resolution No. 2026-045
Boundary Map
Bond Counsel Agreement