STAFF REPORT
Meeting Date:
December 9, 2025
BUSINESS
25 SUBJECT: RESOLUTIONS AND APPROPRIATIONS RELATED TO SALE OF BONDS FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET) RECOMMENDATION: It is recommended that the City Council:
1. Adopt the attached Resolution titled, “A RESOLUTION OF THE CITY OF LAGUNA BEACH,
CALIFORNIA, DETERMINING UNPAID ASSESSMENTS IN UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1 (WEST STREET) AND THE MANNER OF PAYMENT THEREOF AND LISTING BONDS ISSUED ON THE SECURITY THEREOF”;
2. Adopt the attached Resolution titled, “A RESOLUTION OF THE CITY OF LAGUNA BEACH,
CALIFORNIA, AUTHORIZING THE ISSUANCE OF CITY OF LAGUNA BEACH UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1 (WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS, AWARDING THE SALE OF SUCH
BONDS, APPROVING FISCAL AGENT AGREEMENT, OFFICIAL STATEMENT, BOND
PURCHASE AGREEMENT, AND CONTINUING DISCLOSURE CERTIFICATE AND
AUTHORIZING THE CITY MANAGER, OR ASSISTANT CITY MANAGER TO NEGOTIATE THE TERMS OF THE PURCHASE OF THE BONDS”;
3. Approve the purchase of Underground Utility Assessment District 2021-1 (West Street) public offering municipal serial bonds at a 25-year term with an estimated true interest cost of 4.71%;
4. Authorize the City Manager to award a task order to Accenture in the amount of $143,700 for construction management and inspection services, and approve project-related expenses and change orders for additional construction inspection services that may be required in an amount not-toexceed $15,000;
5. Appropriate $6,580,699 for construction and other related expenses within Underground Utility Assessment District 2021-1 (West Street), increase revenues by the same amount, and authorize the City Manager to expend all appropriated funds; and
6. Authorize the City Manager to enter into necessary utility company agreements and make advance payments to the utility companies for their construction services for a total amount of $2,075,840.
SUMMARY OF THE MATTER
On September 23, 2025, the City Council approved the formation of Underground Utility Assessment District 2021-1 (West Street). To move forward with constructing the improvements, staff recommends the sale of bonds under the provisions of the Improvement Bond Act of 1915 and other applicable laws and regulations. To issue bonds, the City Council must adopt the attached two resolutions, included as Attachment 1, and appropriate funding for construction and related expenses. The resolutions have been prepared and approved by the City’s Bond Counsel, Best Best & Krieger, LLP, in coordination with the City’s municipal advisor, Fieldman Rolapp & Associates, Inc., and the bond underwriter, Oppenheimer & Co. Inc. Construction improvements are scheduled to begin in February 2026, and it is recommended that a task order be issued to Accenture for construction management and inspection services to manage the
RESOLUTIONS AND APPROPRIATIONS RELATED TO SALE OF BONDS FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET) December 9, 2025
construction phase of the project. Lastly, to protect project costs from future inflation, it is recommended that advance payments to the utility companies for construction services be authorized.
DISCUSSION
Bond Financing Method
On October 28, 2025, the City Council approved the use of a public bond issuance as the financing method for this assessment district. A public offering will be marketed to external investors including full disclosure, underwriting, and investor outreach. A 25-year bond term resembles the recently completed bond sales for the Diamond Street AD 2013-2 and Woods Cove AD 2014-2 projects. The public offering has an estimated “all in” interest rate of 5.18%, which includes all costs associated with the issuance of bonds and the bond discount.
The Fiscal Agent Agreement is included as Attachment 2, and establishes the terms and conditions under which the bonds will be issued, and the bonds and certain other funds and accounts held in connection with the bonds will be administered.
The Preliminary Official Statement (POS), included as Attachment 3, is the document that will be used by the underwriter to market the bonds to potential investors. The POS is to be released before the bond sale and provides information on bond terms and conditions. A memorandum prepared by disclosure counsel summarizing the duties and responsibilities of the City Council with respect to the POS is included as Attachment 4. The Bond Purchase Agreement (BPA), included as Attachment 5, contains the provisions relating to the purchase, sale, and delivery agreement of the bonds between the City and Oppenheimer & Co. Inc., the underwriter of the bonds. The forms of the Fiscal Agent Agreement, POS, Continuing Disclosure Certificate (attached as an appendix to the POS), and the BPA are referenced in the proposed resolutions. The Bond Details, which include the sources and uses of funds, are listed in Attachment 6.
Pursuant to the requirements of Section 5852.1 of the California Government Code, set forth below are good faith estimates as of November 20, 2025.
True Interest Cost 4.71%
Finance Charge $238,299
Proceeds $3,467,714
Total Payment Amount $6,767,000
The good faith estimate is included as Attachment 7.
Project Accounting
Bonds totaling $3,890,000 are proposed to be sold to Oppenheimer & Co. Inc. by January 27, 2026, to finance a portion of the costs of construction of the utility undergrounding improvements within the Assessment District. Additional revenues were received through property owner prepayments and City contributions totaling $2,525,125. Originally, there were 100 assessed parcels with assessments totaling $5,233,077 in the Assessment District. Of those, 23 parcels, including parcels owned by the City of Laguna Beach and South Coast Water District, chose to pre-pay their assessments in the total amount of $1,110,053.
RESOLUTIONS AND APPROPRIATIONS RELATED TO SALE OF BONDS FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET) December 9, 2025
The City also contributed $707,536 as a General Benefit and $707,536 as a separate City Contribution. In total, $6,580,699 in revenue will be received as summarized in the left column of Table 1 below. The estimated appropriations needed to complete the project are listed in the right column on Table 1.
Table 1 – Estimated Project Accounting
REVENUES APPROPRIATIONS
Bond Proceeds: $ 3,890,000 Construction: $ 5,808,679 (3) Premium: $ 165,574 Incidental Expenses
Prepayments: $ 1,110,053 Assessment Engineering: $ 35,460 General Benefit: $ 707,536 (1) Surveying: $ 5,000
City Contribution: $ 707,536 (2) Construction Inspection: $ 143,700 City Administration: $ 40,000 (4)
Bond Issuance
Fiscal Agent: $ 5,000
Fiscal Agent’s Counsel: $ 7,000
Assessment District Admin. $ 10,000
Printing/Filing Fees: $ 5,000
Incidental Contingencies: $ 7,675 (5)
Disclosure Counsel: $ 37,500
Bond Counsel: $ 35,000
Financial Advisor: $ 42,500
Underwriter’s Discount: $ 48,625
Bond Reserve $ 233,400 (6)
Capitalized Interest $ 116,160 (7)
Approximate Total revenues: $ 6,580,699 Approximate Total appropriations: $ 6,580,699 Notes for Table 1
(1) “General Benefit” cost is a contribution by the City toward the project from the Street Light and Utility Fund and from the Wildfire Mitigation and Fire Safety Fund previously appropriated on September 23, 2025.
(2) “City Contribution” cost is an additional contribution from the Wildfire Mitigation and Fire Safety Fund previously appropriated on September 23, 2025.
(3) “Construction” includes contractor costs, construction contingencies, and utility costs (SDG&E, Frontier, Cox, and Crown Castle).
(4) “City Administration” is for the City’s estimated cost of administering construction. (5) “Incidental Contingencies” includes additional proceeds and is adjusted to account for rounding of the Bond Proceed amount.
(6) “Bond Reserve” is 6% of the Bond Proceed amount.
(7) “Capitalized Interest” is the funded interest through September 2, 2026.
RESOLUTIONS AND APPROPRIATIONS RELATED TO SALE OF BONDS FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET) December 9, 2025
Utility Costs
Due to inflationary construction costs, staff requested utility companies to provide up-to-date costs to construct the project. The following costs were provided by the utilities and are included in the total construction appropriation listed in Table 1 above.
SDG&E Cost $1,563,477
Cox Cost $117,611
Frontier Cost $331,000
Crown Castle Cost $63,752
Total Utilities Cost $2,075,840
Staff recommend payments be made to the utilities in advance of construction to lock in these current costs and enable the utility companies to procure materials and provide timely construction services when the City’s contractor begins work, presumably in February 2026.
Construction Inspection and Management
The West Street project requires full-time inspection and part-time construction management services to ensure public safety and adherence to the contract documents throughout construction. Staff solicited proposals from Psomas, Accenture, and Ninyo & Moore who are all on the City’s On-Call Consultant list.
Accenture was determined to be the highest rated firm due to cost competitiveness and experience with utility undergrounding projects. Accenture is providing construction inspection and management for the Woods Cove AD 2014-2 project, currently in construction, and has familiarity with the project contractor, the City’s contract requirements, and public interfacing with the local community.
It is recommended that a task order be awarded to Accenture (On-Call Consultant Contract No. 23-64) in the amount of $143,700 for the West Street project. Although Accenture is on the City’s approved On-Call Consultants list, task orders exceeding $75,000 must be approved by the City Council. In addition to the task order amount, it is recommended to authorize the City Manager to approve change orders for additional construction inspection/construction management services that may be required in an amount not-to-exceed $15,000 for the project.
Utility Underground Assessment Deferment Program
The Deferment Loan Program was revised and adopted by the City Council on July 8, 2025. Changes included authorizing the City Manager to provide discretionary approval for applicants of the program who do not meet the age requirements but otherwise meet all the requirements of the program such as income and asset requirements. While one applicant showed interest in applying for the program, a formal application was not submitted to staff for evaluation. As a result, the Deferment Loan Program will not be utilized for this assessment district.
FINANCIAL ANALYSIS
An appropriation of $6,580,699 is recommended from the Bond Proceeds Fund after the sale of bonds is complete and increase revenues by the same amount as outlined in Table 1. An appropriation for the Deferment Loan Program is not required as no property owners applied to the program.
RESOLUTIONS AND APPROPRIATIONS RELATED TO SALE OF BONDS FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET) December 9, 2025
ENVIRONMENTAL ANALYSIS
At the March 20, 2024 Planning Commission meeting, the City previously conducted environmental review for the proposed undergrounding project and determined that the project was exempt under the California Environmental Quality Act pursuant to CEQA Guidelines Section 15301(b), which authorizes an exemption for “existing facilities providing electric power with no expansion of use”; Sections 15302(c) and (d) for the “replacement or reconstruction of existing utility systems involving negligible or no expansion of capacity, and conversion of overhead electric utility distribution system facilities to underground”; and Section 15303(d) involving “new construction of small utility facilities or structures.” More detailed environmental analysis can be found in that March 20, 2024, Planning Commission approval.
ATTACHMENTS
1. Resolutions (Pgs. 6-17)
2. Fiscal Agent Agreement (Pgs. 18-65)
3. Preliminary Official Statement with form of Continuing Disclosure Certificate as App. D (Pgs. 66-141)
4. Disclosure Responsibility Memo (Pg. 142)
5. Bond Purchase Agreement (Pgs. 143-163)
6. Bond Details (Pgs. 164-170)
7. Good Faith Estimate (Pg. 171)
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 Thomas Perez, City Engineer Michelle Bannigan, Finance Director
Laura Parisi, City Treasurer