DATE: 03/18/2026
TO: Honorable Mayor and City Council Members
FROM: Finance Department
2026-108
REQUEST FOR CITY COUNCIL ACTION
SUBJECT:
EARLY PAYMENT OF THE 2012 REFUNDING LEASE FINANCE AGREEMENT WITH
PNC BANK
EXECUTIVE SUMMARY:
This staff report asks the City Council to approve the early payment of the remaining outstanding balance of the 2012 Refunding Lease financing agreement with PNC Bank.
Early payment of this debt would allow the City to save $49,157.26 in accrued interest and reduce outstanding liabilities.
RECOMMENDED ACTION:
That the City Council:
a. Authorize the final payment of the principal and interest balance for the 2012 Refunding Lease financing agreement with PNC Bank in the amount of $2,085,964.55 during Fiscal Year 2026.
b. Authorize an appropriation in the amount of $2,085,964.55 from the General Fund to the Debt Service operating budget for the final payment of the 2012 Refunding Lease financing agreement with PNC Bank.
BACKGROUND & HISTORY:
On June 1, 2012, the City entered into the 2012 Refunding Lease financing agreement with PNC Bank, a private lender, in the amount of $25,265,511 to refund the Corona Public Financing Authority (CPFA) Lease Revenue 2002 Series B bonds originally issued in the amount of $35,000,000 to pay the costs of the design, construction and acquisition of the City Hall facility. The 2002 Series B bonds were refunded in entirety in September 2012. The 2012 Refunding Lease is payable over a fifteen-year period.
ANALYSIS:
The final principal and interest payment for the 2012 Refunding Lease agreement is slated to accrue during Fiscal Year 2027. The early payment of the lease agreement will allow the City to reduce the total long-term debt liability and position the City with a lower debt-to-equity ratio and potentially improve future bond rating scores. The current outstanding balance of the loan is $2,085,964.55 which includes $3,313.74 of accrued interest. The early payment of this loan will result in interest savings of $49,157.26 over the remaining life of the loan. There are no prepayment penalties or additional administrative costs associated with the early payment of this loan. Without the prepayment of this loan, the City will make the final lease payment during Fiscal Year 2027 in the amount of $2,135,122 which includes $52,471 of accrued interest.
FINANCIAL IMPACT:
Approval of the recommended actions will result in an appropriation in the amount of $2,085,964.55 from the General Fund to the Debt Service operating budget for the prepayment of the loan during Fiscal Year 2026, which was not included in the original FY 2026 adopted budget. The final principal and interest payment for the 2012 Refunding Lease agreement is slated to accrue during Fiscal Year 2027. The early payment of the lease agreement will allow the City to save $49,157.26 in accrued interest over the remaining life of the loan. There are no penalties or administrative costs associated with the early payment of this loan.
ENVIRONMENTAL ANALYSIS:
This action is exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which states that a project is exempt from CEQA if the activity is covered by the common sense exemption that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. This action is to approve a final outstanding balance payment, and there is no possibility that approval of the recommended actions will have a significant effect on the environment.
Therefore, no environmental analysis is required.
PREPARED BY: BRUCE FOLTZ, FINANCE DIRECTOR
REVIEWED BY: JUSTIN TUCKER, ASSISTANT CITY MANAGER