Agenda Item No: K.3
AGENDA REPORT
DATE: July 7, 2026
TO: Mayor and Council
FROM: David Gassaway, City Manager
SUBJECT: Resolution 2026-157 FN CFD Bonds One Lake (Planning Area 5)
Authorizing the Issuance and Sale of Special Tax Bonds for City of Fairfield Community Facilities District No. 2023-1 (One Lake Planning Area 5) with Respect to its Improvement Area No. 1, and Approving and Authorizing Related Documents and Actions
Funding Source: N/A
Contact: John Furtado, (707) 428-7629
RECOMMENDED ACTION
Adopt resolution.
STATEMENT OF ISSUE
City Council previously conducted proceedings under the Mello-Roos Community Facilities Act of 1982 (“Mello -Roos Act”) to form (i) “City of Fairfield Community Facilities District No. 2023 -1 (One Lake Planning Area 5)” (“CFD 2023 -1”) and (ii) “Improvement Area No. 1 of the City of Fairfield Community Facilities District No. 2023 -1 (One Lake Planning Area 5)” (“Improvement Area No. 1”).
After the original formation proceedings, the City undertook change proceedings for Improvement Area No. 1 in order to (among other things) adopt an Amended and Restated Rate and Method of Apportionment of Special Tax for Improvement Area No. 1 (“RMA”) and increase the bonded indebtedness limit for Improvement Area No. 1 from $90,000,000 to $100,000,000.
Staff recommends that the council adopt the attached resolution in order to authorize the sale of Special Tax Bonds, Series 2026A (“2026A Bonds”) for CFD 2023-1 with respect to Improvement Area No. 1 in an amount not to exceed $15,250,000 and approve related documents and actions, including the Preliminary Official Statement, Continuing Disclosure Certificate, First Supplement to Fiscal Agent Agreement, and Bond Purchase Agreement.
DISCUSSION
Background Information About the One Lake Project and the Related Development Agreement.
The property in Improvement Area No. 1 is part of a 358.5 -acre master -planned community known as “One Lake” (One Lake Project) b eing developed by One Lake Holding LLC, a Delaware limited liability company (Master Developer). The One Lake Project comprises the property known as Planning Area 4 and Planning Area 5 of the Fairfield Train Station Specific Plan, adopted by the council on July 26, 2011, as amended (Specific Plan).
The One Lake Project is being developed in numerous phases that are anticipated to ultimately consist of 1,937 single -family and multi -family homes and a 190 -unit apartment complex, with approximately 20,000 s quare feet of commercial/retail space. The Master Developer is not a homebuilder and is developing the property through the sale of finished lots to merchant builders.
Improvement Area No. 1 comprises the majority of Planning Area 5. Planning Area 4 is within a separate community facilities district previously formed by the City and known as the City of Fairfield Community Facilities District No. 2019-1 (One Lake) (“CFD No. 2019-1”).
Ownership and Development of Planning Area 5; Improvement Area No. 1.
The property within Improvement Area No. 1 is anticipated to be improved with 932 residential units, 12.77 acres of public parks, and public street improvements. The residential units are anticipated to consist of 816 single -family detached homes and 116 single-family detached courtyard cluster homes. As of June 1, 2026, the date of value of the Appraisal (as defined below), the property in Improvement Area No. 1 consisted of 120 completed homes, 41 lots with homes under construction, 52 parcels with bui lding permits pulled, 191 finished lots and 528 rough - graded lots.
As of June 1, 2026, the following merchant builders (“Merchant Builders”) and land -banking entities had acquired the following lots within Improvement Area No. 1:
• Lennar Homes of California, LLC, a California limited liability company (“Lennar Homes”), had acquired 131 lots within Neighborhood O and Neighborhood R. • Tri Pointe Homes Holdings (formerly known as TRI Pointe Homes, Inc.), a Delaware corporation, or an affiliate thereof (“Tri Pointe”), had acquired 20 lots in Neighborhood L and 20 lots in Neighborhood K-1.
• Century Communities of California, LLC, a Delaware limited liability company (“Century Communities”), had acquired all of the 69 lots in Neighborhood J. • KB Home North Bay LLC, a Delaware limited liability company (“KB Home”), closed escrow on all of the 85 lots in Neighborhood C.
• DRP CA4, LLC (“K. Hovnanian Land Bank”), as assignee of K. Hovanian Homes Northern California, Inc., a California corporation (“K. Hovnanian”), closed escrow on all of the 67 lots in Neighborhood A/B.
The Master Developer reports that it is continuing to market the other neighborhoods to merchant builders.
The ownership and development status of Improvement Area No. 1 as of June 1, 2026, is summarized below in the following table:
Property Owner/
Merchant Builder Number of Lots Development Type Development Status (1) Lennar Homes 52 Single Family Detached Finished Lots
Tri-Pointe 33 Courtyard Clusters Finished Lots
Century Communities 61 Single Family Detached Finished Lots K. Hovnanian (1) 67 Single Family Detached Finished Lots KB Home 85 Single Family Detached Finished Lots
Individual Homeowners 94 Both Completed Homes
Master Developer (2) 540 Both Rough Graded/Finished Lots 932
(1) All of these lots are currently held by the K. Hovnanian Land Bank. (2) Tri Pointe is scheduled to acquire the12 lots in neighborhood K-2 from the Master Developer on or about June 30, 2026.
Outstanding 2024A Bonds.
The City is authorized to levy special taxes and incur indebtedness for and on behalf of CFD 2023- 1 to finance the costs of infrastructure associated with the One Lake Project.
Pursuant to a Fiscal Agent Agreement, dated as of December 1, 2024 (“Master Fiscal Agent Agreement”), by and between the City and The Bank of New York Mellon Trust Company, N.A. (“Fiscal Agent”), council previously issued the following special tax bonds on behalf of CFD 2023- 1 with respect to Improvement Area No. 1 (“2024A Bonds”): $36,500,000 Improvement Area No. 1 of the City of Fairfield Community Facilities District No. 2023 -1 (One Lake Planning Area 5) Special Tax Bonds, Series 2024A.
Proposed 2026A Bonds.
The City will use the proceeds of the 2026A Bonds to acquire authorized public improvements from the Master Developer. Pursuant to the resolution, the effective interest rate on the 2026A Bonds cannot exceed 6.000%. Based on current market conditions , the 2026A Bonds are estimated to be issued in the amount of $14,040,000 and carry a true interest cost of approximately 5.160%.
Based on the appraisal completed by BBG, Inc., the value of the property in Improvement Area No. 1 has been determined to be not less than $203,805,000 as of June 1, 2026. The value to lien ratio (which compares the market value of the property in Improvement Area No. 1 to the principal amount of the 2024A Bonds, the proposed principal amount of the 2026A Bonds to be issued and the principal amount of bonds issued by overlapping community facilities districts and assessment districts) will be at least 3:1.
The financing is expected to close in August 2026. Debt service on the 2026A Bonds is payable only from special taxes levied annually on taxable properties within Improvement Area No. 1 of CFD 2023-1 in the manner set forth in RMA. The 2026A Bonds will not have any impact on the City’s General Fund.
Proposed Resolution and Related Documents.
In order to complete the financing, council is being asked to approve each of the following:
Resolution. Resolution of the City Council authorizing the issuance of bonds for CFD 2023- 1 with respect to Improvement Area No. 1 and approving related documents and actions.
Preliminary Official Statement. The Official Statement is the primary disclosure document for investors in the 2026A Bonds. A Preliminary Official Statement will be circulated to potential investors prior to the pricing of the 2026A Bonds. After the 2026A Bonds have been priced, a Final Official Statement will be circulated to investors; the Final Official Statement should be identical to the Preliminary Official Statement except for the addition of pricing information (principal amount, interest rates, redemption terms).
The Preliminary Official Statement describes the special taxes to be levied in the Improvement Area No. 1 and the ownership of and development plans and status for the property within Improvement Area No. 1. The Preliminary Official Statement will also include the appraisal of the taxable parcels in Improvement Area No. 1.
The Preliminary Official Statement is prepared by Jones Hall, serving the City as disclosure counsel for this transaction, with the assistance of the financin g team, including City staff; the Master Developer; the merchant builders; the City’s municipal advisor; Stifel Nicolaus and Company, Incorporated (“Underwriter”), the underwriter of the 2026A Bonds; and the City’s special tax consultant.
The Preliminary Official Statement has been reviewed and approved for transmittal to the council by the City’s financing team. The distribution of the Preliminary Official Statement by the City is subject to federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require the Preliminary Official Statement to include all facts that would be material to an investor in the 2026A Bonds. Material information is information that there is a substantial likelihood that would have actual significance in the deliberations of the reasonable investor when deciding whether to buy or sell the bonds. If the council concludes that the Preliminary Official Statement includes all facts that would be material to an investor in the 2026A Bonds, it must adopt a resolution that authorizes staff to execute a certificate to the effect that the Preliminary Official Statement has been “deemed final.”
The Securities and Exchange Commission (SEC), the agency with regulatory authority over the City’s compliance with the federal securities laws, has issued guidance as to the duties of the council with respect to its approval of the Preliminary Official Statement. In its “Report of Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of the Board of Supervisors” (Release No. 36761 / January 24, 1996) (“Release”), the SEC stated that, if a member of the council has knowledge of any facts or circumstances that an investor would want to know about pri or to investing in the 2026A Bonds, whether relating to their repayment, tax-exempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should endeavor to discover whether such facts are adequately disclosed in the Preliminary Official Statement. In the Release, the SEC stated that the steps that a member of the council could take include becoming familiar with the Preliminary Official Statement and questioning staff and consultants about the disclosure of such facts.
The key sections of the Preliminary Official Statement are summarized below:
“THE 2026 BONDS”: This section summarizes the key terms of the 2024 Bonds, including payment dates and redemption provisions.
“SECURITY FOR THE BONDS”: This section summarizes key security terms, including the City’s pledge of special tax revenues, its covenant to levy special taxes according to the RMA and its covenant to foreclose on parcels that are delinquent in the payment of special taxes. The 2026A Bonds are a limited obl igation of the City, payable only from special taxes levied in Improvement Area No.1 and monies in the funds and accounts established under the Fiscal Agent Agreement described below.
“THE DISTRICT AND IMPROVEMENT AREA NO. 1”: This section summarizes certa in features of Improvement Area No. 1, including the appraised value of taxable property, overlapping taxes, assessments and debt and anticipated debt service coverage provided by maximum special taxes that may be levied under the RMA.
“PROPERTY OWNERSHIP AND DEVELOPMENT STATUS”: This section includes information provided by the Master Developer and the merchant builders and describes the proposed development in Improvement Area No. 1 and its current status. “BOND OWNERS’ RISKS”: This section highlights the primary risks associated with the 2026A Bonds, including failure to complete the proposed development, natural disasters and failure of property owners to pay their special taxes.
“LEGAL MATTERS – Tax Exemption”: This section describes the tax-exempt nature of interest on the 2026A Bonds.
In addition to the Preliminary Official Statement, council is being asked to approve the following documents:
Continuing Disclosure Certificate . Under SEC Rule 15c2 -12, the Underwriter may only purchase the 2026A Bonds if it has determined that the City is obligated to provide continuing disclosure, including annual updates of the financial and operating data included in the Official Statement an d notices of certain specified events. The Master Developer and Lennar Homes each will also provide continuing disclosure on a semi - annual basis, and the Preliminary Official Statement describes the circumstances under which their disclosure obligations will terminate.
First Supplement to the Fiscal Agent Agreement . The First Supplement to Fiscal Agent Agreement (“First Supplement”) supplements the Master Fiscal Agent Agreement for the purpose of providing for the issuance of the2026A Bonds and the use of special taxes from Improvement Area No. 1 to pay debt service on the 2024A Bonds and the 2026A Bonds.
The special taxes will be levied on the regular County tax roll and collected by the County from each taxable parcel in Improvement Area No. 1. The County will remit these special taxes to the City. The City will remit them to the fiscal agent as provided for in the Fiscal Agent Agreement. The Fiscal Agent will use the revenues to (1) pay administrative costs of CFD 2023 -1 and (2) pay principal of and inte rest on the 2024A Bonds and the 2026A Bonds to the bond owners.
Bond Purchase Agreement. At the time the 2026A Bonds are sold, the City will enter into a Bond Purchase Agreement with the Underwriter, who will agree to underwrite the 2026A Bonds subject t o satisfaction of the conditions described in the Bond Purchase Agreement. The resolution provides the Underwriter’s discount on the purchase of the 2026A Bonds shall not exceed 1.800% of the par amount of the 2026A Bonds.
FINANCIAL IMPACT
There is no General Fund or fiscal impact to the City. The 2026A Bonds will be payable only from special taxes levies in Improvement Area No. 1.
PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION
N/A
ALTERNATIVE ACTION
The council may choose not to approve the attached resolution, in which case the 2026A Bonds would not be issued. However, pursuant to the Development Agreement, the City has agreed to cooperate with the Master Developer in forming CFD 2023 -1 and issuing indebtedness for CFD 2023-1.
COORDINATED WITH
City Attorney’s Office
STAFF CONTACT
John Furtado, Director of Finance
(707) 428-7629
[email protected]
ATTACHMENTS
Attachment 2: Proposed Resolution
Attachment 3: Appendix A Government Code Section 5852.1 Disclosure Attachment 4: Preliminary Official Statement, Including Continuing Disclosure Certificate as Appendix E
Attachment 5: Bond Purchase Agreement
Attachment 6: First Supplement to Fiscal Agent Agreement Attachment 7: Resolution 2023-35