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June 3, 2025
ITEM TITLE
Agreements/Amendment: Approve Agreements Between the City and Harrell & Company Advisors, LLC for Municipal Advisory Services; Stradling Yocca Carlson & Rauth, LLP for Bond and Disclosure Counsel; and Spicer Consulting Group, LLC for Special Tax Consultan
Report Number: 25-0103
Location: CFD 2001-1 IA B, CFD 12-I, CFD 13-I, CFD 07-I, CFD 2001-1 IA A & CFD 99-1.
Department: Finance
G.C. § 84308 Regulations Apply: Yes
Environmental Notice : The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines. Therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Recommended Action
Adopt resolutions approving agreements/amendment between the City and: A) Harrell & Company Advisors, LLC for Municipal Advisory Services, B) Stradling Yocca Carlson & Rauth , LLP for Bond and Disclosur e Counsel, and C) Spicer Consulting Group, LLC for Special Tax Consultant Services (First Amendment), all in connection with the Bond Refinancing of the Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 2015A , and the partial Bond Refinancing of the Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 2015B.
SUMMARY
The Chula Vista Municipal Financing Authority (the “Authority”) issued bonds in 2015 (the “2015 Authority Bonds”) to refinance special tax obligations of six of the City’s Community Facilities Districts. The Authority has the opportunity to refinance the 2015 Authority Bonds and reduce the special tax levies on homes within the subject Community Facilities Districts for the remaining life of the bonds (between 6 and 11 years).
The City wishes to procure the services of Harrell & Company Advisors, LLC as Municipal Advisor, Stradling Yocca Carlson & Rauth, LLP as Bond and Disclosure Counsel, and Spicer Consulting Group, LLC as Special Tax Consultant for this transaction . This selection is based on their expertise and familiarity with the City’s special tax obligations. In 2024, these consultants were part of the financing team that assisted the Authority P a g e | 2
with a similar refi nancing that saved 4,074 property owners on their property tax bill’s special tax assessments.
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the environment.
Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA.
Thus, no environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
DISCUSSION
Background
Between 1999 and 2006, the City issued six series of Special Tax Bonds relating to six of the City’s Community Facilities Districts (“CFDs”) to provide funding to construct and acquire various public improvements needed within the CFDs. In 2015, the City issued six series of Special Tax Refunding Bonds ( the “2015 CFD Bonds”) relating to the six CFDs to refinance the original obligations. The 2015 CFD Bonds were acquired by the Authority and used to secure repayment of the 2015 Authority Bonds. Using this financing structure allowed the City to pool the CFDs and market them as two bond issuances (2015A Series and 2015B Series) rather than six bond issuances being sold to the public.
The 2015 Authority Bonds are subject to an optional redemption by the Authority beginning September 1, 2025. Based on the current municipal bond market conditions, the 2015 Authority Bonds (and corresponding 2015 CFD Bonds) can be refinanced at lower rates. The refinancing will produce lower debt service, which translates into a lower tax rate for property owners i n the individual CFDs affected. Other factors that will contribute to the savings, in addition to the lower interest rates, include the ability to use cash on deposit with the trustee in a debt reserve fund for the 2015 Authority Bonds to reduce the borrowing amount, and other surplus cash accumulated in the individual CFD funds from interest earnings.
Currently, the 2015 CFD Bonds are outstanding as shown below:
Description Amount Maturity
CFD No. 2001-1 Improvement Area B Bonds $3,410,000 2036
CFD No. 12-I Bonds 6,615,000 2036
CFD No. 13-I Bonds 2,845,000 2036
CFD No. 07-I Bonds 9,190,000 2036
CFD 99-1 Bonds 12,100,000 2031
CFD 2001-1 Improvement Area A Bonds 3,735,000 2032
$37,895,000
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The refinancing structure mirrors the structure of the 2015 Authority Bonds. Each CFD will issue a series of Special Tax Refunding Bonds (2025 CFD Bonds ), and the Authority will issue one series of Bonds (2025 Authority Bonds) and use the proceeds to acquire the 2025 CFD Bonds.
Refinancing Analysis
Additional details concerning the 2025 Bonds will be presented to the City Council at a future meeting to approve the issuance of the 2025 Bonds. Guidance for refinancing of Authority debt is outlined in the City’s Debt Policy. The Debt Policy indicates refinancing will be considered with a minimum goal of 5% net present value savings of the principal amount of the refinanced bonds. The current analysis indicates a 7.2% net present value savings with a 3.42% yield on the bonds. Market conditions may change between this report and actual issuance.
Professional Services
In 2024, Harrell & Company Advisors, LLC, Stradling Yocca Carlson & Rauth, LLP and Spicer Consulting Group were part of the financing team that assisted the Authority with the 2024 Local Agency Bond Refinancing that saved 4,074 property owners on their property tax bill’s special tax assessments.
The Authority now has another refinancing opportunity and wishes to procure the services of Harrell & Company Advisors, LLC as Municipal Advisor, Stradling Yocca Carlson & Rauth, LLP as Bond and Disclosure Counsel, and Spicer Consulting Group, LLC as Special Tax Consultant for this transaction. This selection is based on their expertise and familiarity with the City’s bond transactions.
Harrell & Company Advisors, LLC, Stradling Yocca Carlson & Rauth, LLP and Spicer Consulting Group have demonstrated competence and qualification through knowledge and experience with the Authority’s bond financings as described above. Staff recommends that the City contract with the three firms to provide necessary services to refinance the 2015 Bonds and reduce the future special taxes levied on affected properties within the applicable CFD’s.
In accordance with Municipal Code Section 2.56.110(H)(2), Impractical or Impossible, when it is determined by the Purchasing Agent (for contracts with a maximum contract amount of $100,000 or less) or by resolution of the City Council (for contracts with a maximum contract amount in excess of $100,000) that the competitive bidding requirements are impractical, or impossible, or that City interests would be materially better served by applying a different purchasing procedure, the Purchasing Agent or City Council, respectively, may award the contract utilizing alternative proc edures consistent with best purchasing practices.
Based on the determination of the Purchasing Agent, s taff is recommending waiving the City’s selection process for professional services, for Harrell & Company Advisors, LLC, and Stradling Yocca Carlson & Rauth, LLP. The Municipal Advisor will structure the refunding Bonds. The Bond Counsel will draft the legal documents, and the Special Tax Consultant will provide data concerning special taxes and assessed values of property. The cost of these consultants will be paid from Bond proceeds.
The resolutions presented to the City Council approve the agreements with Harrell & Company Advisors, LLC and Stradling Yocca Carlson & Rauth, LLP, and the first amendment to the agreement with Spicer Consulting Group, LLC.
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DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council and has found that Councilmember Inzunza has real property holdings within 500 feet of the boundaries of CFD 99-1, which is the subject of Resolutions A, B, and C of this action. Consequently, pursuant to California Code Regulations Title 2, sections 18700 and 18702.2(a)(7), this item presents a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov’t Code § 87100, et seq.) for the above-identified member.
Staff is not independently aware and has not been informed by any City Councilmember, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
There is no current -year fiscal impact to the General Fund as a result of this action . All fees related to the refinancing of the 2015A and 2015B Bond Series paid under these agreements will be paid out of bond proceeds from the bond refinancing.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact as a result of this action.
ATTACHMENTS
1. Agreement with Harrell & Company Advisors, LLC
2. Harrell & Company Advisors Municipal Advisor Disclosures
3. Agreement with Stradling Yocca Carlson & Rauth, LLP
4. First Amendment to the Agreement with Spicer Consulting, LLC Staff Contact: Sarah Schoen, Finance Director/Treasurer