STAFF REPORT
City of Lancaster
CC 15
5/7/2024
JC
Date:May 7, 2024
To: Mayor Parris and City Council Members
From:George N. Harris II, Director of Finance/IT
Subject:A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LANCASTER,
CALIFORNIA, DIRECTING THE CITY MANAGER TO TAKE ACTIONS
NECESSARY TO UNDERTAKE THE FINANCING OF CERTAIN CAPITAL IMPROVEMENTS.
Recommendation:
TAKE the following actions:
1. ADOPT City Council Resolution No. 24-____ entitled A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF LANCASTER, CALIFORNIA, DIRECTING THE CITY
MANAGER TO TAKE ACTIONS NECESSARY TO UNDERTAKE THE FINANCING OF CERTAIN CAPITAL IMPROVEMENTS.
Fiscal Impact:
All fees for the financing team are contingent upon successful financing and are paid out of the costs of issuance for the proposed 2024 Lease Revenue Bonds (the “Bonds”) so as not to impact the City of Lancaster’s (the “City”) General Fund. The only financing fee that would be non- contingent upon closing would be the credit rating fee after completion of the credit rating process.
Background:
The City has identified two significant projects that require funding: (1) the Multi-Agency Regional Resilience Center (the “MARRC Project”) and (2) the conversion of the City’s minor league baseball stadium into a soccer stadium for a new professional soccer team (the “Stadium Project”).
The City is planning to issue the Bonds to fund both projects and will engage the services of bond finance professionals to assist with the financing. NHA Advisors will serve as the City’s municipal advisor, Piper Sandler as underwriter, and Stradling Yocca Carlson & Rauth as bond and disclosure counsel.
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Review and Analysis:
MARRC Project:
The MARRC will serve as a fully functioning, large-scale, off-the-grid, resilient, and emergency evacuation center and event center. The proposed complex includes the construction of an emergency operations center and a culinary community kitchen. The MARRC Project is estimated to cost $81.5 million, which will be shared among several public agencies. Matching sources of funding identified to date include a $20.5 million grant awarded to the Antelope Valley Fair Authority from the California Department of Food and Agriculture (“CDFA”) Fairs and Expositions Branch. In addition, on November 2, 2023, the City of Palmdale and the Antelope Valley Fairgrounds Authority entered into an agreement whereby the City of Palmdale committed to contribute a total of $10 million to the project. In addition to these upfront contributions to the project, the Antelope Valley Union High School District (“AVUHSD”) has committed to annual contributions toward the debt service on the Bonds, totaling $10 million. Formal actions are pending regarding the County of Los Angeles and other agencies. It is expected that an additional $10-$30 Million will be contributed by other agencies. After factoring in these additional contributions from other agencies, the remaining contribution to the project from the City of Lancaster is set at a not-to-exceed amount of $50 Million under the terms of the Joint Use and Irrevocable License Agreement with the Antelope Valley Fairgrounds Authority, approved by the City Council on March 26, 2024.
Construction on the MARRC Project is expected to begin in early August 2024, with potential completion in late 2025.
Stadium Project:
The City will be converting its existing baseball stadium (previously used for the Lancaster Jet Hawks) into a 5,300-seat, soccer-specific stadium for professional and pre-professional soccer.
The Stadium Project is estimated to cost $12.5 million. Construction on the Stadium Project is expected to begin in early August 2024, with potential completion at the end of February 2025, in time for the start of the spring soccer season in March.
Plan of Finance:
The proceeds of the Bonds (combined with contributions from the City’s financial partners for the MARRC Project) are expected to provide sufficient funding for the MARRC Project and Stadium Project. The Bonds will be structured as lease revenue bonds, payable from lease payments made by the City to the Lancaster Financing Authority from all legally available funds pursuant to a lease agreement involving various City assets. City staff and the financing team are expecting to return to the Council at the June 11 City Council meeting, where the Council will formally approve the legal and disclosure documents related to the Bonds, and the financing team will provide details related to bond market conditions and estimated financial impacts of the financing.
The City requires the expertise and services of various consultants to assist with the Bonds. The City Manager intends to engage the following firms: (1) Stradling Yocca Carlson & Rauth for bond counsel and disclosure counsel services; (2) NHA Advisors LLC for municipal advisor services; and (3) Piper Sandler for underwriter services.
Next Steps:
City staff will work with the financing team to complete the process of issuing the Bonds. The following are some key tentative dates for the schedule of the financing:
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Schedule:
▪Mid/Late May: Credit Review with Rating Agencies
▪June 11: City Council approval of financing documents
▪Late June: Price Bonds (lock interest rates)
▪Mid-July: Closing (funds delivered to City/trustee)
Attachment:
City Council Resolution No. 24 -____