AGENDA ITEM NO. 17
CITY OF HAWTHORNE
City Council
AGENDA BILL
For the meeting of April 23, 2024
Originating Department: City Manager
City Manager: __________
Vontray Norris
SUBJECT:
Proposed Funding Option for Capital Improvement Projects RECOMMENDED MOTION:
Staff Recommends that the City Council authorize staff to execute an agreement with Ramirez and Company.
DISCUSSION:
The City of Hawthorne (the “City”) is planning significant investments in infrastructure to address deferred maintenance and enhance services for residents. After conducting a statewide survey on funding practices, city staff recommends issuing approximately $25 million in Lease Revenue Bonds (“LRBs”) to support a portion of the Capital Improvement Projects (“CIP”).
The City’s CIP encompasses a wide range of projects with an estimated total cost of $[42.8 million]. Key projects include improvements to major boulevards, highway enhancements, and upgrades to public facilities. To finance these, the city will utilize various sources, including local return dollars, federal and state grants, American Rescue Plan Act (ARPA) funds, and the General Fund. The multi-phase City Hall Expansion and Civic Park project will include a new three-story 10,500 square foot expansion building connecting the existing City Hall, an underground parking structure with over 160 parking spaces, a 95,000 square foot landscaped civic center park and the existing 9,700 square foot Bank of America building converted into a public retail hall.
The project will be done in four phases. The first phase will be the underground parking structure, with construction expected to begin in September 2024 and is estimated to take 8 months to complete. After the completion of the parking, the next phase will take place, which includes the Civic Park that will be above the parking and the City Hall expansion building. Following that will be the conversion of the Bank of America building into a public retail hall and finally, the interior renovations for the existing City Hall.
For the issuance of the LRBs, the City has engaged Ramirez, a seasoned investment bank with extensive
experience in municipal bonds. Their track record includes the successful management of $121.8 million pension obligation bonds for the City in September 2019, which refinanced the City’s unfunded accrued actuarial liability with the California Public Employees’ Retirement System. Due to Ramirez’s experience with the City and their strong qualifications, staff believes they are best qualified to lead the proposed financing.
LRBs will enable the City to preserve reserves while facing potential economic challenges, with a borrowing cost seen as favorable. Staff is working on strategies to potentially improve the City’s credit rating, which would further reduce borrowing costs. A preliminary schedule aims for fund acquisition by July 2024, following a detailed timeline that includes the selection of a financing team, document preparation, and the formal approval process.
The proposed issuance of Lease Revenue Bonds is a strategic move to finance critical infrastructure projects in the City, leveraging the City’s improved financial position and the expertise of a reputable financing team with relevant experience. This approach aims to balance immediate infrastructure needs with long-term fiscal sustainability and economic resilience.
ECONOMIC DEVELOPMENT STRATEGIC PLAN:
1.1 Make ED part of every City decision. Will include alignment of Capital Improvement Plan (CIP) to ED goals and identify goals and objectives of this plan on CC agenda items.
FISCAL IMPACT:
$25 million in Lease Revenue Bonds
NOTICING PROCEDURES:
72 hours posted notice pursuant to the Ralph M. Brown Act ATTACHMENT(S):
1. Proposed Funding Option for Capital Improvement Projects