TO: LINDA REICH, CITY MANAGER
FROM: KIM SAO, DIRECTOR OF FINANCE
SUBJECT
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Issuance of Bonds for Community Facilities District 2003-3 Improvement Area 11.
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RECOMMENDATION
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Adopt Resolution No. 2025-081 of the City Council of the City of Chino, acting as the legislative body for Community Facilities District No. 2003-3 of the City of Chino (the “District”), on behalf of Improvement Area No. 11 therein (“Improvement area No. 11”), 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 Improvement Area No. 11, 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 TH The Preserve Chino LLC (“Trumark”) and TPG AG EHC Ill (CCS) CA 4, LP (“Century” and, together with Trumark, the “Merchant Builders”), the City Council initiated proceedings to form Improvement Area No. 11 on October 1, 2024 with the adoption of Resolution Nos. 2024-049 and 2024-050 (the “Resolutions of Intention”). The Resolutions of Intention called for a public hearing on the formation of Improvement Area No. 11 on November 5, 2024. Following the noticed public hearing, the City Council formed Improvement Area No. 11 with the adoption of Resolution Nos. 2024-054 and 2024-055 and held an election on November 5, 2024, at which election the Merchant Builders, the qualified electors within Improvement Area No. 11, approved the establishment of Improvement Area No. 11, the Rate and Method of Apportionment for Improvement Area No. 11, and the issuance of Bonds by the District in an amount not to exceed $15,000,000. On November 19, 2024, the City Council approved Ordinance No. 2024-012, which authorizes the levy of the special taxes within Improvement Area No. 11 in accordance with the Mello-Roos Act and the formation proceedings for Improvement Area No. 11 that secure the payment of principal and interest with respect to the Bonds.
The property within Improvement Area No. 11 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. Improvement Area No. 11 is comprised of approximately 21.31 gross acres (or approximately 15.71 net taxable acres) of land located at The Preserve at Chino near Pine Avenue in the City.
Improvement Area No. 11 contains two taxable residential communities, Legacy and Heritage, which consist of detached single-family residences within Zone 1 and Zone 2 of Improvement Area No. 11, respectively.
Zone 1 of Improvement Area No. 11 consists of the Heritage neighborhood being developed by Century that are planned for a total of 59 detached single-family residences. As of October 15, 2025, of the 59 detached single-family residences planned for the Heritage neighborhood, individual homeowners owned 19 single family residences and Century owned 18 completed single-family residences, 7 single-family residences under construction, and 15 lots. As of October 15, 2025, 2 of the 25 single family residences completed or under construction and owned by Century were in escrow.
Zone 2 of Improvement Area No. 11 consists of the Legacy neighborhood being developed by Trumark that are planned for a total of 55 detached single-family residences. As of October 15, 2025, of the 55 detached single-family residences planned for the Legacy neighborhood, individual homeowners owned 14 single-family residences and Trumark owned 8 completed single-family residences, 24 single-family residences under construction, and 9 lots. As of October 15, 2025, 14 of the 32 single-family residences completed or under construction and owned by Trumark were in escrow.
The Merchant Builders are 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).
Chino Development Corporation, a California corporation, and Chino Preserve Development Corporation, a California corporation (collectively, the “Master Developer”) is the primary land developer within the Preserve, including within Improvement Area No. 11. The City and the Master Developer have entered into an Acquisition Agreement, dated as of May 18, 2004 (the “Acquisition Agreement”), which provides, among other things, the means by which the Master 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.
The costs of the Facilities that are not reimbursed or paid with Bond proceeds may be reimbursed or paid with (i) any portion of Special Taxes levied to pay the costs of the acquisition or construction of the Facilities on a pay-as-you-go basis; provided that such levy does not cause an increase in the levy of Special Taxes on Approved Property or Undeveloped Property, as more particularly described in the Rate and Method of Apportionment, (ii) funds from the Surplus Taxes Fund created under the Acquisition Agreement, (iii) other bonds of the District, if and when issued.
Pursuant to the Acquisition Agreement, Special Taxes within Improvement Area No. 11 shall be levied on Developed Property at the Assigned Special Tax rates set forth in the Rate and Method of Apportionment until the Master Developer has been fully reimbursed for the costs of the Facilities, as more fully described in the Preliminary Official Statement.
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 on behalf of Improvement Area No. 11.
The estimated Cost of Issuance (COI) and Underwriter’s Discount for the proposed $15 million Community Facilities District No. 2003-3 Bonds total approximately $480,547.50 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. 2025-081 of the City Council of the City of Chino, acting as the legislative body of Community Facilities District No. 2003-3 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 Improvement Area No. 11 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 Improvement Area No. 11;
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 Improvement Area No. 11 and its special tax levy and annual report, and to provide notice of certain events regarding Improvement Area No. 11 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 Improvement Area No. 11.
7. Market Absorption study is intended to establish how long it will take for the homes within the District to be sold to individual property owners. This report is considered a prudent due diligence effort for the City and District and it will benefit the Underwriter when selling the Bonds to investors.
Copies of these documents are available for review in the Finance Department. It is anticipated the Bonds will be sold and closed by December 18.
Attachments: Resolution No. 2025-081
Preliminary Official Statement
Bond Purchase Agreement
Fiscal Agent Agreement