CITY OF GONZALES
COMMUNITY CENTER COMPLEX FUNDING DISCUSSION
February 22, 2022
2 -
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
CDBG Funds
Grant (Teen
Inovation Center)
Estimated
Measure X
Funding
Range
Funding
Gap Range
Current Project Funding Resources
Project Cost Options:
$34.8 Million (A1 Base Community Center) or $42.8 Million (A1 Base + B2 Standalone Gymnasium)
Identified Funding Sources: Based on $34.8 Million Project Cost $810K of accumulated CDBG Funds
$5M grant has been secured
Additional grant money is being solicited
Loan/bond funding secured by Measure X
revenues
3 Measure X Funding
Measure X Revenues generate approximately $700,000 annually Measure X “sunsets” in FY 2044
In the current market a loan or bond funding secured by $700,000 annual revenues, results in varying proceeds depending on term of loan A funding with a final maturity beyond 2044 requires extension of Measure X Final Maturity: 2044 2052 2062 (USDA Loan)3
Funding Secured by Measure X 1, 2 $8,000,000 $9,700,000 $12,500,000 1 Based on debt service of $700k annually supported by Measure X revenues with no growth. 2 Based on estimated market rates as of February 2022 with interest rate buffer. 3 If USDA funding is approved.
4 Project Cost: $34.8M Project Cost: $42.8M
Final Maturity: 2044 2052 2062
(USDA Loan)3 2044 2052 2062 (USDA Loan)3
$34,800,000 $34,800,000 $34,800,000 $42,800,000 $42,800,000 $42,800,000 Secured Funding
Grant Funding (Teen Innovation Center) $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000 CDBG Funds 810,000 810,000 810,000 810,000 810,000 810,000 Subtotal Secured Funding $5,810,000 $5,810,000 $5,810,000 $5,810,000 $5,810,000 $5,810,000 Loan/Bond Funding
Funding Secured by Measure X 1, 2 $8,000,000 $9,700,000 $12,500,000 $8,000,000 $9,700,000 $12,500,000 Subtotal Loan/Bond Funding $8,000,000 $9,700,000 $12,500,000 $8,000,000 $9,700,000 $12,500,000 Total Secured and Loan Supported by Measure X
Revenues $13,810,000 $15,510,000 $18,310,000 $13,810,000 $15,510,000 $18,310,000 Estimated Funding Gap $20,990,000 $19,290,000 $16,490,000 $28,990,000 $27,290,000 $24,490,000 Assessing the Remaining Funding Gap
The remaining funding gap after estimated Measure X funding ranges from $16.5 million to $29 million depending on project cost option and final term of loan/bond funding 1 Estimated; Based on debt service of $700k annually supported by Measure X revenues with no growth. 2 Based on estimated market rates as of February 2022 with interest rate buffer. 3 If USDA funding is approved.
5 Project Cost: $34.8M Project Cost: $42.8M
Final Maturity: 2044 2052 2062
(USDA Loan)3 2044 2052 2062 (USDA Loan)3
Estimated Funding Gap $20,990,000 $19,290,000 $16,490,000 $28,990,000 $27,290,000 $24,490,000 To close the gap, the City is pursuing potential additional funding sources, including:
The City continues to pursue these additional funding sources, however, none are certain/secured
Potential Additional Funding Sources
State Library Grant $2,400,000
County Contribution 1,000,000
Energy Grants or PPA 1,500,000
State Parks Grant (Round 4) 2,000,000
Additional Capital Campaign Funding 10,000,000
Total Potential Additional Funding Sources $16,900,000
1 Estimated; Based on debt service of $700k annually supported by Measure X revenues with no growth. 2 Based on estimated market rates as of February 2022 with interest rate buffer. 3 If USDA funding is approved.
6 Other Avenues to Close the Funding Gap
Extension of Measure X to 2062 or beyond
Additional ½ cent sales tax measure to voters in June 2022 May require 2/3 vote
Could generate an additional $700k annually and produce additional funding of $8 to $12.5 million in the current market
Other General Fund revenues such as Measure K or impact fees 7 Financing Recommendation
Staff is Requesting Council Direction to Bring back for the March 7, 2022 Council meeting Consideration to place before the Voters:
Extending the sunset date of Measure X and Y to 2062 or beyond; and
An Additional ½ cent sales tax measure
8 Typical Financing Process
Develop
Financing
Plan
Assemble
Financing
Team
Structure
the
Financing
Draft Legal
Covenants
and
Disclosure
Documents
Credit
Evaluation
and
Rating
Process
Board
Approval
of
Financing
Bond Sale Bond
Closing
(Project
Funding)
We are here in the financing process
APPENDIX A
MARKET INFORMATION AND
BOND/LOAN FINANCING ASSUMPTIONS
10 Interest Rates
Interest rates are near
historical lows, but rates
have risen significantly
since mid-December
2021
Market projecting
multiple rate increases by
the Fed in 2022
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Historical 30-Year MMD
1.00%
1.20%
1.40%
1.60%
1.80%
2.00%
2.20%
11 Bond Assumptions & Summary of Results
Lease revenue bond utilizing new facility as “leased asset” security Three final maturity options analyzed
2044 (coincides with Measure X sunsets)
Extended final maturities of 30 and 40 years also analyzed 40 year assumes the City secures USDA funding
Level debt service payments
Per IRS rules, $0 Lease Payments (utilizing Pre-Funded Interest in transaction) between funding date and Occupancy (assume 18 months construction + 6 month post construction requirement)
Cash funded Reserve equal to 1 year’s payment (“Debt Service Reserve” or “DSR”) Estimated market rates as of February 2022 and based on final maturity