© PFM 1
Overview of Proposed Financing
City of Culver City – Series 2026 Lease Revenue Bonds
The City proposes to issue two series of bonds totaling up to approximately $35.9 million (including costs of issuance and capitalized interest), to be sold to Barclays Bank PLC through a direct purchase – meaning the bonds are sold directly to a single bank rather than to the general public. Taxable Bonds (~$27.5M): Proceeds will reimburse the City for prior expenditures on the Jubilio affordable housing project, capitalized interest, and costs of issuance. Because these funds reimburse costs already incurred on non-tax-exempt purposes, bond counsel has indicated the need for a taxable issuance.
Tax-Exempt Bonds (~$8.3M): Proceeds, of which include $543k of premium, will fund various City capital projects, capitalized interest, and costs of issuance. Because these bonds finance government purposes, the interest is exempt from federal income tax, which generally results in lower borrowing costs for the City.
City indicated a required closing date of on or before June 30, 2026 (targeting June 4, 2026). © PFM 2
Financing Strategy: How the City Selected its Approach
Public sale vs. direct purchase
Public Sale Direct Purchase
Bonds marketed to many investors through
an underwriter; competitive bidding process
sets the interest rate
Bonds sold directly to one institutional bank;
rate negotiated on pricing day based on
prevailing market rates
Typically, lower interest rates for large, well-
known issuers with strong credit
Faster execution – streamlined documentation,
no public marketing period required
Requires a full Official Statement (detailed
disclosure document) before marketing
bonds
Disclosure requirements either waived or
required post-closing (60 – 90 days)
Longer sale timing and involves higher
upfront transaction costs
Rate includes a "direct purchase premium"
Subject to market rate risk during the
marketing period
Particularly well-suited for cities with mixed-
purpose financings (taxable + tax-exempt)
under ~$50M
City Staff and the financing team conducted interviews with two direct placement options and three underwriting firms to consider all sale options.
City Staff and financing team evaluated the options, and due to the desire for timely execution, a direct purchase with Barclays was determined to offer the best balance of speed, flexibility, and cost for Culver City at this time.
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History of JPA in Culver City and California Cities
Past and Future Utilization
What is a Joint Powers Authority (JPA)?
• Separate legal entity formed by the City (and, in this case, the City’sHousing Authority) • Created under state law to exercise shared powers for specific purposes and additional bonding authority
• Formed by written agreement, approving resolutions by the parties, and certain filings with the State Prior JPA Experience
• The City previously formed and utilized a JPA through an agreement with the City’sredevelopment agency
• The Culver City Redevelopment Financing Authority
• That JPA’sauthority is limited to redevelopment and tax-increment-funded projects The new JPA is proposed to provide broader financing options for City needs beyond redevelopment • To be named the Culver City Public Finance Authority
• Powers will include support for a wider range of public facility and infrastructure financings • Provides additional options for financing City projects • Offers access to financing structures not available directly to the City (e.g., lease revenue bonds) © PFM 4
History of JPA in Culver City and California Cities (continued) Past and Future Utilization
Main terms
• The City Council serves as the ex officio governing board for the JPA • All major decisions are made by the City Council in its capacity as the governing board • JPA operations are integrated with existing City administrative processes • The JPA's liabilities are expressly limited to the terms and obligations set forth in contracts approved by the governing board
Bypasses Certain Legal Constraints
• Can avoid requirements such as voter approval for some types of debt • Enables lease-leaseback or installment sale arrangements for public projects • Streamlined Process
• Allows the City to move more quickly on urgent or complex financings • Provides a dedicated platform for specialized financing needs Ongoing Benefits
• Maintains flexibility for future financings or refinancing • JPA remains available as a long-term tool for City-only projects © PFM 5
The JPA Structure
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Legal Structure: the JPA and Lease Financing Framework
Why a Joint Powers Authority is used
The JPA issues lease revenue bonds to fund infrastructure or facility projects • The City makes lease payments for the use of the project, which repay the bonds • Structure avoids the need for voter approval for general fund obligations and supports timely project delivery
Principal Documents and Terms
• Approving Resolutions of City and JPA
• Ground Lease
• Lease Agreement
• Trust Agreement/Indenture
• Official Statement
• Continuing Disclosure Agreement
Main terms
• Financing amount, interest rates
• Repayment schedule, prepayment/refinancing options
• Lease payment conditions and covenant to budget and appropriate, subject to rental abatement © PFM 7
Legal Structure: the JPA and Lease Financing Framework (continued) Why a Joint Powers Authority is used
Ongoing Utility
• JPA remains available as a flexible tool for future financings and refinancing needs • Streamlines capital planning and funding processes
Market Acceptance
• This financing structure is a well-established feature of California public finance practice • The use of JPAs and lease revenue bonds for local agency financings has been expressly approved by the California Supreme Court
• Investor focus is on the City’s credit quality and project importance Broad Financing Authority
• JPA can support a wide range of needs: public facilities, equipment, energy projects, public safety upgrades, and refinancing of prior obligations
• The JPA agreement is subject to amendment and remains flexible with respect to purpose, governance, and the addition of new members
• Once bonds are issued, no amendments may impair the security for the bonds © PFM 8
Key terms of the Barclays Direct Purchase
Taxable bonds, Tax-Exempt Bonds, and How Interest Rates are Set Taxable Bonds Tax-Exempt Bonds
Purpose: Affordable Housing Reimbursement and
Economic Development
City Capital Projects
Par Amount: $27,540,000 $8,310,000 (plus ~$543k of premium) Final Maturity: January 1, 2057 (30-years) January 1, 2056 (30-years) First Payment: 1/1/2028 1/1/2028
Indicative Yield*: 4.82% - 5.87% 3.14% - 5.00%
Prepayment Options: Make-Whole Call 10-year par call
A "make-whole call" means the City can repay these bonds early, but must compensate the bondholder for lost interest (e.g. makes the bondholder economically “whole”).
A "10-year par call" means the City may repay these bonds at the outstanding par amount, with no penalty, beginning
approximately 10 years after closing.
City Bond rating required: Barclays requires a minimum rating of Aa3 (Moody's) or AA- (S&P) before closing. The City plans to engage S&P.
The bonds are priced two days before closing. They are based on market rates for similar bonds on that date, plus a "direct purchase premium" (approximately 0.30%–0.40%). PFM will review market rates with City Staff before the yield is finalized.
The offering document will be delivered no more than 90-days post-close. *Indicative based, based on market rates, credit spreads, and direct purchase spreads as of May 30, 2026
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Net Debt Service Schedule
The indicative debt service (City
lease payment schedule) is
provided to the right.
Capitalized interest will fund
payments for two years, meaning
the first lease payment due from the
City to the JPA will be January 1,
2028.
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Summary of Results in Today’s Market
Indicative Debt Service – rates as of March 30, 2026 (subject to change at pricing) Current Timeline
April 13: City Council considers JPA Formation and Term Sheet Execution April 27: City Council considers to approve financing and JPA Organizational meeting (5-day min. notice) May 12: S&P Rating Received
June 2: Price Bonds
June 4: Close and Fund Bonds
September 2: Delivery of final Official Statement
Par Amount Final
Maturity
Indicative
Yields
True Interest
Cost (TIC)
Taxable $27,540,000 1/1/2057 4.82 - 6.01% 5.87%
Tax-Exempt $8,310,000 (plus
~$543k of premium) 1/1/2057 2.56 – 4.87% 4.47%
Total $35,850,000 5.54%
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Disclosure requirements and ongoing obligations
What the City commits to after the bonds close
Continuing Disclosure: At Closing, the City will enter into a continuing disclosure agreement to provide annual information concerning the City and its financial status. Additionally, the City will agree to provide updates if certain material financial events occur within ten days of their occurrence. The City should consider working with a dissemination agent to assist with this process. Post Closing Deliverables:
• Confirming Offering Memorandum: Within 90 days of closing the bonds, the JPA will deliver to Barclays a memorandum with detailed financial information regarding the City, the JPA, and the bonds, and certificates of the City and JPA confirming the accuracy of the information therein. The memorandum will include information regarding the essential terms of the bonds and information regarding the City's current operations and finances.
• Post Issuance Tax Compliance: Following the issuance of tax-exempt bonds, the JPA and the City must adhere to certain post-issuance compliance procedures to preserve the tax-exempt status of the tax-exempt bonds throughout their term. These procedures generally include ongoing monitoring of the use of tax-exempt bond proceeds to ensure compliance with applicable provisions of the Internal Revenue Code, including restrictions on private business use, requirements for timely expenditure of proceeds, and limitations on the investment of unexpended proceeds to avoid arbitrage violations. The City should designate a compliance officer or team responsible for maintaining accurate records, conducting periodic reviews of financed facilities, and tracking all allocations of tax-exempt bond proceeds and any changes in the use of bond-financed property. © PFM 12