STAFF REPORT
Meeting Date:
OCTOBER 28, 2025
CONSENT
17 SUBJECT: APPROVAL OF BOND PURCHASE METHOD FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET)
RECOMMENDATION: It is recommended that the City Council:
1. Approve the use of a public bond issuance as the financing method for Underground Utility Assessment District 2021-1 (West Street), based on the October 13, 2025, recommendation of the Financing Analysis Working Group; and
2. Determine that the recommended action is not a project subject to the California Environmental Quality Act pursuant to Section 15378(b)(4) of the CEQA Guidelines
SUMMARY OF THE MATTER
This report recommends that the City Council approve the use of a public bond issuance to finance Underground Utility Assessment District 2021-1 (West Street), consistent with the recommendation made by the Financing Analysis Working Group at its October 13, 2025 meeting.
This action follows prior City Council direction to evaluate financing alternatives and establish a preferred approach for the district. The recommended public issuance reflects the committee’s analysis of cost, risk, and long-term flexibility. A separate staff report will return to Council with final bond documents and resolutions for approval.
The recommended action has been reviewed under the California Environmental Quality Act (CEQA) and is not considered a project pursuant to CEQA Guidelines Section 15378(b)(4).
DISCUSSION
On May 20, 2025, the City Council directed staff to evaluate bond financing options for Underground Utility Assessment District 2021-1 (West Street) in collaboration with the City’s assessment district finance team, including Fieldman, Rolapp & Associates (municipal advisor) and Oppenheimer & Co. Inc. (underwriter). On August 12, 2025, the Council formed a Financing Analysis Working Group composed of Councilmembers Whalen and Kempf, Finance Director Michelle Bannigan, City Treasurer Laura Parisi, and former Investment Advisory Committee member Steve Brown.
The group considered five potential financing methods. Two options, IBank financing and private placement, were removed from consideration due to ineligibility and market limitations. The remaining three options: (1) public bond issuance; (2) City purchase at market rate; and (3) City purchase at a belowmarket rate, were analyzed in detail and compared across cost, investment impact, and administrative factors.
The working group convened on October 13, 2025, to review the comparative analysis and unanimously recommended proceeding with a public bond issuance. This method reflects the City’s successful
CONSIDERATION OF BOND PURCHASE METHOD FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET)
October 14, 2025
experience with similar undergrounding districts, avoids long-term capital lockup, and provides full transparency through a public offering process.
As the City anticipates the formation of a larger undergrounding district, staff also intends to return in spring 2026 with a study session to support development of a formal policy framework. Future policy considerations may include criteria for City bond purchases, contribution thresholds above the base 10 percent, and evaluation methods for discounted interest rates.
A summary of the financial comparison is provided in Attachment 1. Related staff reports from prior City Council meetings are provided as Attachments 2 through 4 for reference.
FINANCIAL ANALYSIS
The recommended actions have no financial impact at this time. City staff will return to City Council in the near future for approval of public offering municipal bonds to fund the project. Appropriations related to the project, authorization to make advanced payments to utility companies, and authorization to use the Utility Underground Assessment Deferment Loan Program will be presented at that time.
ENVIRONMENTAL ANALYSIS
The recommended action, to review financing options and provide policy direction, does not constitute a “project” under the California Environmental Quality Act (CEQA), as defined by Section 15378(b)(4) of the CEQA Guidelines. It involves organizational or administrative activities of government that will not result in a direct or reasonably foreseeable indirect physical change in the environment. Any future construction activity associated with utility undergrounding will be subject to separate environmental review and CEQA documentation prior to implementation.
ATTACHMENTS
1. Financing Options Evaluated by Staff (Pgs. 3-5)
2. July 22 Staff Report
https://lagunabeachcity.granicus.com/MetaViewer.php?view_id=3&clip_id=2726&meta_id=229756
3. August 12 Staff Report creating Financing Working Group https://lagunabeachcity.granicus.com/MetaViewer.php?view_id=3&clip_id=2742&meta_id=231515
4. September 23 Staff Report – Forming the District
https://lagunabeachcity.granicus.com/MetaViewer.php?view_id=3&clip_id=2783&meta_id=235948 Submitted By: Mark McAvoy Approved: .David A Kiff
Mark McAvoy, Director of Public
Works & Utilities
Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Pierre Sawaya, Capital Program Manager Michelle Bannigan, Finance Director Laura Parisi, City Treasurer