Title
Agreements Pertaining to the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024 (Two-Thirds Vote Required Waiving the 10-day Posting Requirement) and Authorize the Issuance of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024 and Related Actions
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FileID
File ID: 2024-01922
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Location
Location: District 1, Represented by Councilmember Kaplan
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Recommendation
Recommendation: 1) Pass a Motion by two-thirds vote waiving the 10-day posting requirement of City Code section 4.04.020.C for the agreements pertaining to the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024; and 2) adopt a Resolution authorizing the following: a) the issuance of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024; b) the execution and delivery of a Master Indenture, a First Supplemental Indenture, a Bond Purchase Contract, an Official Statement, a Continuing Disclosure Certificate and an amendment to Jones Hall’s Agreement for Bond-Counsel Services; and c) certain related actions.
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Contact
Contact: Claudia Lara, Debt Analyst, (916) 808-2267, clara@cityofsacramento.org; Brian Wong, Debt Manager, (916) 808-5811, bwong@cityofsacramento.org, Office of the City Treasurer
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Presenter
Presenter: Claudia Lara, Debt Analyst, (916) 808-2267, clara@cityofsacramento.org, Office of the City Treasurer
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Attachments
Attachments:
1-Description/Analysis
2-Resolution
3-Master Indenture
4-First Supplemental Indenture
5-Bond Purchase Contract
6-Preliminary Official Statement
7-Continuing Disclosure Certificate
8-Amendment No. 1 to Agreement for Bond-Counsel Services
9-Appraisal Report prepared by Smith & Associates, Inc.
10- Appraisal Review Report prepared by BBG, Inc.
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Description/Analysis
IssueDetail
Issue Detail: Passing a Motion will waive the 10-day posting requirements of City Code section 4.04.020.C for the agreements pertaining to the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024 or similar designation (the Bonds). Staff is seeking this waiver of the posting requirement concerning the contracts being approved today, specifically the Bonds and the Bond Purchase Contract, the Master Indenture, and the First Supplemental Indenture for the Bonds because certain terms in the agreements will be subject to negotiation up until the day of the pricing of the Bonds.
Adoption of the recommended resolution will authorize the issuance of the Bonds and the execution and delivery of related documents. The Bonds will be issued in an amount not to exceed $40 million, and the proceeds will be used for the following purposes:
§ To finance the costs of acquisition and construction of certain authorized facilities including, but not limited to water, sewer, and storm drain improvements, roadways and traffic improvements, landscaping and park improvements, and school facilities, in addition to other improvements.
§ To fund a debt service reserve fund to secure repayment of the Bonds.
§ To pay costs of issuance.
§ To fund capitalized interest on a portion of the Bonds through December 1, 2026.
The Bonds will be issued as a public offering through a negotiated sale and will be secured under the Master Indenture by a pledge of the proceeds of the special tax levied on the taxable parcels within Improvement Area No. 2 (IA 2) of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) (CFD), net of priority administrative expenses and by a lien recorded upon those parcels.
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PolicyConsiderations
Policy Considerations: City Code section 4.04.020.C requires all agreements greater than $1 million be posted on the City’s website and made available to the public at least 10 days prior to the City Council acting on agreements meeting this criterion. The City Council may waive this requirement if two-thirds of its members vote to do so.
The Bonds are being issued in accordance with the Mello-Roos Community Facilities Act of 1982 (Government Code sections 53311 through 53368.3) (the Act), the approving vote of the qualified electors within IA 2, and the Master Indenture and the First Supplemental Indenture for the Bonds. The issuance of these Bonds is also consistent with the City’s Debt Management Policy in effect as of the date of this council report.
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EconomicImpacts
Economic Impacts: Not applicable.
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EnvironmentalConsiderations
Environmental Considerations:
California Environmental Quality Act (CEQA): The authorization to issue the Bonds, is a governmental fiscal activity that does not involve the approval of any physical development or activity that would have the potential for causing a significant effect on the environment. Approval is not a project requiring review under the CEQA. CEQA Guidelines sections 15378(b)(4) and 15060(c)(3).
The City prepared an environmental impact report (EIR) that evaluated the environmental effects of the Greenbriar Development Project (M05-046/P05-069). The EIR was certified by the City Council on January 29, 2008 (Resolution No. 2008-053). The City Council later certified the EIR and an addendum for modification to the previously approved project and next stage entitlements for the Greenbriar Development Project (P11-093) on May 30, 2017 (Resolution 2017-0207). The environmental impacts from public facilities that have been, or will be, constructed with the proceeds of the Bonds have been identified and evaluated in the EIR as required by California Environmental Quality Act (CEQA).
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Sustainability
Sustainability: Not applicable.
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Commission/Committee Action
Commission/Committee Action: Not applicable.
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RationaleforRecommendation
Rationale for Recommendation: The Bond Purchase Contract pertaining to the Bonds between the City of Sacramento and Piper Sandler & Co., the underwriter of the Bonds, and the Master Indenture and the First Supplemental Indenture for the Bonds are each agreements expected to involve more than $1 million. Staff is seeking this waiver of the posting requirement concerning the contracts being approved today, specifically the Bonds and the Bond Purchase Contract, the Master Indenture, and the First Supplemental Indenture for the Bonds because certain terms in the agreements will be subject to negotiation up until the day of the pricing of the Bonds.
Approval of the attached resolution authorizes the City Treasurer or his designee to take the actions necessary for the issuance of the Bonds and the execution of the related documents. Issuing the Bonds will generate tax-exempt bond proceeds for the acquisition and construction of authorized facilities, including authorized facilities to be financed by development-related impact fees payable in connection with the project to the City and other local agencies, thereby assisting the growth and development of the City generally and specifically within IA 2. Bond proceeds will be administered in accordance with the Acquisition and Shortfall Agreement (City Agreement No. 2019-1393) and Agreement to Reimburse Fees (City Agreement No. 2019-1394) inclusive of any supplemental agreements from Bond and Tax Proceeds between the City and The Greenbriar Project Owner, LLC (the Developer) (described herein), as well as various joint community facilities agreements between the City and other local agencies that may receive proceeds of the Bonds (described herein).
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FinancialConsiderations
Financial Considerations: While the City will issue the Bonds, neither the City’s General Fund nor any other legally available source of funds, aside from the special tax levied on taxable property within IA 2, will have any obligation to pay or ensure the full and timely repayment of debt service related to the Bonds.
Interest on the Bonds will be exempt from taxation. Consistent with the Internal Revenue Service regulations for tax-exempt bonds, the weighted average life of the Bonds will not exceed 120% of the average reasonably expected economic life of the authorized facilities funded by the Bonds.
The issuance of the Bonds represents the first series of special tax bonds issued pursuant to the authorization previously established for IA 2 in the amount of $67 million. Additional bonds are anticipated to be issued on a parity basis in the future as development progresses, subject to the requirements of the Master Indenture.
Terms of the Sale
The Bonds will be issued in an amount not to exceed $40 million to finance the acquisition and construction of certain authorized facilities. The true interest cost for the Bonds may not exceed 6.00% and is anticipated to be around 4.86% (based on current market rates as of November 8, 2024), and the underwriter’s discount may not exceed 1.15% of the principal amount of the Bonds. Good faith estimates of certain financial terms of the Bonds, as required by Government Code section 5852.1, are provided in the tables below.
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Estimated Sources and Uses of Funds |
|
|
|
Par Amount of Bonds |
$37,020,000.00 |
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Plus/Less Net Original Issue Premium / Discount |
969,062.15 |
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Total Sources |
$37,989,062.15 |
|
|
|
|
Use of Funds: |
|
|
Acquisition and Construction Fund |
$30,656,955.95 |
|
Debt Service Reserve Fund |
3,234,531.20 |
|
Villages with a Final Map - Capitalized Interest through March 1, 2026 |
1,355,745.00 |
|
Villages 4, 8, 12, 1B and 14B - Capitalized Interest through December 1, 2026 |
1,364,610.00 |
|
Costs of Issuance(1) |
1,377,220.00 |
|
Total Uses |
$37,989,062.15 |
|
|
|
|
(1) Includes Underwriter’s discount, bond counsel, disclosure counsel, special tax consultant, municipal advisor, and trustee fees; appraisal costs, printing costs, and other issuance costs. |
|
Estimates based on market conditions as of November 8, 2024. |
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Source: Piper Sandler & Co., the Underwriter of the Bonds |
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Estimated Bond Statistics |
|
Par Amount |
$37,020,000.00 |
|
True Interest Cost |
4.856933% |
|
Total Interest Payments to Final Maturity |
$39,832,461.25 |
|
Total Debt Service to Final Maturity |
$76,852,461.25 |
|
|
|
|
Estimates based on market conditions as of November 8, 2024. |
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Source: Piper Sandler & Co., the Underwriter of the Bonds |
Value to Lien
Under the Act and the California Debt and Investment Advisory Commission’s guidelines for issuing land-secured bonds, the ratio of property values within a community facilities district to the total tax and assessment burden on the district’s parcels-the “value-to-lien ratio”-must be at least 3:1. Here, the estimated value-to-lien ratio for the taxable property in IA 2 of the CFD (inclusive of the Bonds and certain overlapping debt) is 3.63:1, as determined by the appraiser, Smith and Associates, Inc.
Security for the Bonds
As noted above, payment of debt service on the Bonds is secured solely by a special tax on real property within IA 2, net of priority administrative expenses, and is solely the responsibility of the taxable property within IA 2. A standard debt service reserve fund will also be established for the Bonds.
Disclosure Documents for the Bonds
The Bonds will be marketed to potential investors using the Preliminary Official Statement, in substantially the form on file with the City Council. The Preliminary Official Statement is the primary offering document for the Bonds and under applicable federal securities laws, must be accurate and not omit material facts necessary for a potential investor to make an informed investment decision.
Approval of the attached resolution will approve the Preliminary Official Statement in substantially the form on file with the City Council, authorize the Treasurer to approve such changes to the Preliminary Official Statement that are in the best interests of the City, and authorize the Treasurer to execute a certificate to the effect that the Preliminary Official Statement has been “deemed final” as of the date it is released to potential investors.
The federal securities laws also require the underwriter of the Bonds to ensure that the City will provide annual updates of financial and operating data through the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system, and notices of certain significant events (e.g., rating change notices, unscheduled draws on reserve funds, change in trustee, etc.). The Continuing Disclosure Certificate, the form of which is attached to the Preliminary Official Statement as an appendix, will be executed by the City to assist the Underwriter in meeting this requirement.
Next Steps
Assuming City Council approval of the transaction, the Preliminary Official Statement for the Bonds will be posted to potential investors shortly thereafter. Subject to market conditions, pricing of the Bonds is scheduled for December 11, 2024, with closing/funding to occur on December 19, 2024.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): Not applicable.
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