DATE:
May 17, 2022
TO:
Mayor and Council Members
FROM:
Nils Bentsen, City Manager
BY:
Rachel Molina, Assistant City Manager
Casey Brooksher, Director of Administrative Services
SUBJECT:
Bond Opportunities for Land Development (BOLD)
RECOMMENDED ACTION
It is recommended that the City Council hold a public hearing to receive comments regarding the California Municipal Finance Authority (CMFA) Bond Opportunities for Land Development (BOLD); and adopt Resolution No. 2022-23, authorizing the City to join the CMFA; and adopt Resolution No. 2022-24 for the City to allow development projects within the City to participate in the BOLD Program.
BACKGROUND
CMFA is a joint powers authority (“JPA”) whose members consist of numerous cities and other local agencies throughout California. CMFA can issue municipal bonds for the purpose of financing the acquisition and/or construction of public facilities to be owned by CMFA’s members and other local agencies. Participation is at no cost to members. CMFA shares a portion of its bond issuance fee directly with the member(s) it issues on behalf of and also contributes to charities throughout the State.
The “BOLD” program (acronym for Bond Opportunities for Land Development) is a program offered by the California Municipal Finance Authority (“CMFA”) to provide its members a means to accommodate community facilities district (“CFD”) formation and bonding within their jurisdiction. By participating in the program, formation of the CFD, administration and bonding is handled by CMFA and the City’s involvement can be minimized.
ISSUES/ANALYSIS
The Mello-Roos Community Facilities Act offers financing flexibility commonly used by cities, schools and other local agencies throughout the State to generate funds for the acquisition and/or construction of public facilities, including as relates to development fees used for public facilities. Although CFDs formed through the BOLD Program would be located within the City’s jurisdiction, involvement of the City is flexible and minimal. The program offers developers the opportunity to finance public infrastructure, as well as impact fees associated with new development, through tax-exempt bonds payable from special taxes levied by the CFD on property within the CFD, a typical financing method for new home developments in California.
The BOLD program is facilitated through bond professionals chosen by CMFA with specialized expertise in CFD bond issuance and sales – bond counsel, underwriter and other advisors as needed – all ranked among the top firms in the field. As such, the City does not designate the financing team, however should the City desire to use its own financial advisor to review the BOLD program application and/or other program documents, it may do so, with all related costs payable from bond proceeds.
When bonds are issued through CMFA, City involvement is limited to use of the program and, prior to actual issuance of bonds, entering into an agreement to acquire the public facilities or reimburse the impact fees to be paid for with the bond proceeds. CMFA authorizes and issues the bonds in its name and awards the sale of the bonds to the bond underwriter per the underwriter’s credit requirements; CMFA’s financing team provides the bond documentation and the Official Statement through its bond counsel.
Upon issuance of bonds through the BOLD program, proceeds are available as a funding source for direct payment of impact fees or to otherwise reimburse developer costs for public facilities associated with new development. The proceeds are held by a bond trustee and are not directly paid to the developer but are available as directed by the City and to be set forth in an acquisition agreement, joint community facilities agreement or similar agreement applicable to the particular bond sale.
FISCAL IMPACT
There is no fiscal impact for the approval of the City to join CMFA or authorizing the use of BOLD. The City is not liable to repay the bonds issued by CMFA or the special taxes imposed on the participating properties within any CFD formed through the BOLD Program, and the City has no contractual relationship with bond owners or the bond trustee.
ALTERNATIVE(S)
Provide alternative direction to staff.
ATTACHMENT(S)
Resolution No 2022-23 Joining California Municipal Finance Authority Resolution No. 2022-24 Authorizing Use of the Bond Opportunities For Land Development (BOLD) Program Page PAGE 2 of NUMPAGES 2
Staff Report to the Mayor and Council Members
Bond Opportunities for Land Development (BOLD)
May 17, 2022
City of Hesperia
STAFF REPORT