STAFF REPORT
City of Lancaster
Lancaster Financing Authority
JPH 1
1/27/2026
TN
Date: January 27, 2026
To: Mayor and Chairman Parris and City Council Members and Board Members From: Trolis Niebla, City Manager
George N. Harris II, Senior Director/Treasurer – Administrative Services Subject: A Resolution of the City Council of the City of Lancaster, authorizing the issuance of Lancaster Financing Authority Lease Revenue Bonds in an aggregate principal amount of not-to-exceed $28,000,000 and authorizing the execution of necessary documents and certificates and related actions.
A Resolution of the Lancaster Financing Authority, authorizing the issuance of Lancaster Financing Authority Lease Revenue Bonds in an aggregate principal amount of not-to-exceed $28,000,000 and authorizing the execution of necessary documents and certificates and related actions.
Recommendations:
Take the following actions:
ACTING AS THE CITY COUNCIL:
1. Hold a Public Hearing
2. ADOPT Resolution No. ____ entitled “A Resolution of the City Council of the City of Lancaster, authorizing the issuance of Lancaster Financing Authority Lease Revenue Bonds in an aggregate principal amount of not-to-exceed $28,000,000 and authorizing the execution of necessary documents and certificates and related actions”.
ACTING AS THE LANCASTER FINANCING AUTHORITY:
3. ADOPT Resolution No. ____ entitled “A Resolution of the Lancaster Financing Authority authorizing the issuance of Lancaster Financing Authority Lease Revenue Bonds in an aggregate principal amount of not-to-exceed $28,000,000 and authorizing the execution of necessary documents and certificates and related actions”.
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G.C. Section 84308: No
Fiscal Impact:
Based on reasonably conservative assumptions for current market rates, the proposed Lease Revenue Bonds, Series 2026A (the “2026 Bonds”) debt service will remain level for 30 years at approximately $1.62 million annually in lease payments from fiscal years 2026-27 through 2055-
56. These estimated annual debt service payments are subject to change based on market interest rate movements up until the bonds price and the interest rates are locked in. The costs of issuance for the 2026 Bonds will be paid out of the financing and so there will be no budgetary impact in fiscal year 2025-26 directly due to the issuance costs of the bonds.
Background:
The City has identified the need for financing the acquisition, construction and installation of certain capital improvements, including but not limited to the Multi-Agency Regional Resiliency Center, construction of the Avenue J Pocket Park, improvements to American Heroes Park and Jane Reynolds Park, certain other parks and recreation improvements within the City, certain public art projects located within the City, certain street and traffic improvements within the City, and other improvements, facilities and equipment (collectively, the “Projects”).
The City requires the expertise and services of various consultants to assist with the Bonds and has engaged with Stradling Yocca Carlson & Rauth, for bond counsel and disclosure counsel services; NHA Advisors LLC, for municipal advisor services; and Piper Sandler, for underwriter services.
This is the same financing team that was utilized to execute the 2024 Bonds that funded portions of the MARRC, Stadium and PARCS projects.
At this evening’s meeting, City staff are requesting the City Council approve the issuance of the 2026 Bonds and accompanying legal and disclosure documents.
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 construction of an emergency operations center and a culinary community kitchen. The City previously issued Lease Revenue Bonds in July 2024 to fund the construction of the project, in combination with monies from additional agencies such as the Antelope Valley Fair Authority, the City of Palmdale, and the Antelope Valley Union High School District. The 2026 Bonds are intended to finance additional remaining costs of construction and improvements of the MARRC.
Avenue J Pocket Park:
The Avenue J Pocket Park project will create a new 2.9-acre neighborhood park that expands access to safe, high-quality outdoor recreation in an underserved area of the city. Improvements include drought-tolerant landscaping, a shaded playground, a lighted walking path with benches, a shaded plaza and picnic area, outdoor fitness stations, open space for passive recreation, signage, and perimeter fencing. These amenities will promote physical activity, social interaction, and overall community well-being while minimizing long-term maintenance and water use.
The City has been awarded $2,460,097 from the Land and Water Conservation Fund (LWCF) toward project development; however, the total estimated project cost is $5,460,097. Additional funding is required to fully construct the park and deliver the intended public benefits. In 2 2
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accordance with LWCF requirements, the project must be completed and open to the public by July 21, 2030.
Park Fencing Projects:
The Park Fencing Projects will install full perimeter fencing at American Heroes Park and Jane Reynolds Park to enhance public safety, security, and park management. The project includes approximately 4,835 linear feet of 10-foot-tall wrought iron fencing, along with pedestrian and vehicle access gates that support controlled entry during park operating hours. The new fencing will deter vandalism and unauthorized access, protect park amenities, and create a safer environment for families and visitors, ensuring these community assets remain accessible and well-maintained.
Bond Structure:
The City intends to finance $25 million of the capital projects listed above with the 2026 Bonds.
The 2026 Bonds will be payable from lease payments made by the City to the Lancaster Financing Authority (the “Authority”) pursuant to a lease agreement involving various City assets. This structure is secured by a General Fund appropriations pledge and is the same structure used by the City’s 2024 Lease Revenue Bonds. The City must include enough assets in the lease agreement to cover the outstanding par amount of bonds for both the 2024 Bonds and the upcoming 2026 Bonds.
Based on the calculations in the table below, additional assets required to cover both issuances are estimated at $8.9 million ($86.8 million of estimated aggregate par LESS $77.9 million of 2024 leased assets). The City intends to utilize Eastside Park and the Midtown Recreation Center (formerly Desert Christian High School) as additional assets, which have an estimated total value of $11 million.
Asset Value Requirement Calculation
Outstanding 2024 LRBs Par: $62,440,000
Estimated 2026 LRB Par: $24,360,000
Total Par: $86,800,000
2024 Leased Assets: $77,865,336
Additional Asset Value Required: $8,934664
Additional Leased Assets:
Asset* Description Constructed Size
(Sq. Ft.)
Estimated
Value
Eastside Park Park 1984 17,650 $6,026,091
Midtown Recreation
Center
Community center w/
main building and
four modular
buildings
1974 32,135 $4,950,000
Total Insured Value $10,976,091
*Final list of assets subject to completing title review and seismic assessment. Accordingly, the foregoing asset selection is subject to change.
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The 2026 Bonds will be issued on a tax-exempt basis. The 2026 Bonds will be supported by a level annual lease payment structure and will have a 30-year final maturity on May 1, 2056.
Additionally, the Bonds will have a 10-year optional redemption at par, allowing the City to pay off or refinance the Bonds early at no penalty. Debt service will remain level for 30 years at approximately $1.62 million annually in lease payments from fiscal years 2026-27 through 2055-
56. Financing Documents:
The following documents are being presented for approval:
Authorizing Resolutions: The authorizing resolutions approve the form of the legal documents for the 2026 Bonds. The resolutions also authorize the execution of the legal documents for the 2026 Bonds, provided the final pricing of the 2026 Bonds is within not- to-exceed parameters identified therein. These not-to-exceed parameters authorize City staff to issue the bonds, provided the final par and interest rates are equal to or less than the following: (1) the par amount of the 2026 Bonds cannot exceed $28,000,000; (2) the underwriter’s discount cannot exceed 0.7% of the total par amount of the 2026 Bonds; (3) the maximum true interest cost cannot exceed 5.5%; and (4) the final maturity cannot exceed May 1, 2056.
First Amendment to Ground Lease: This is an agreement between the City and the Authority in which the City leases the Leased Assets to the Authority, providing the mechanism from which the Authority may sublease the Leased Assets back to the City pursuant to a Lease Agreement. This document supplements and amends the 2024 Ground Lease to provide for the issuance of the 2026 Bonds.
First Amendment to Lease Agreement: This agreement provides for the leasing of the Leased Assets back from the Authority to the City in exchange for semi-annual lease payments that equal the debt service on the 2024 and 2026A Bonds. The City’s General Fund will make the lease payments over the term of the Lease Agreement. This document supplements and amends the 2024 Lease Agreement to provide for the issuance of the 2026 Bonds.
First Amendment to Assignment Agreement: This is an agreement between the Authority and the Trustee providing the mechanism by which the Authority assigns its rights, title, and interest in and to the Lease Agreement (as amended in the First Amendment to the Ground Lease) and Ground Lease (as amended in the First Amendment to the Lease Agreement) to the Trustee. This document supplements and amends the 2024 Assignment Agreement to provide for the issuance of the 2026 Bonds. First Supplemental Indenture: The Indenture formalizes the relationship between the Lancaster Financing Authority, City of Lancaster, and U.S. Bank Trust Company, National Association (“U.S. Bank”) as Trustee for the 2026 Bonds. The First Supplemental Indenture amends the 2024 Indenture and describes the terms of the 2026 Bonds, including the payment terms and schedule, prepayment options, other covenants related to the 2026 Bonds, and other administrative items.
Preliminary Official Statement: A preliminary official statement (“POS”) has been prepared to provide material information to investors regarding the terms and security of 2 2
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the 2026 Bonds. The POS is required to contain all information a reasonable investor should know about the City’s General Fund, financials, budget, risks, operations, and policies before making the decision whether to purchase the 2026 Bonds. The POS also includes descriptions of the legal and financial aspects of the 2026 Bonds, as well as a summary of the various related legal documents. Certain information which will not be known until the pricing of the 2026 Bonds (such as the final principal amount, the interest rates and the redemption dates) and this information is either left blank or noted as “preliminary, subject to change” in the POS. The Underwriter will use the POS to market the 2026 Bonds to potential investors. Once the 2026 Bonds have been priced, the final pricing information will be inserted into the POS, thereby converting it to an Official Statement. The Underwriter will then distribute the Final Official Statement to the individuals and institutions that placed orders to buy the 2026 Bonds from the Underwriter. Continuing Disclosure Agreement: Under the Continuing Disclosure Agreement, the City will agree to provide an annual report containing certain information relevant to the security of the 2026 Bonds, to be filed on the EMMA system (the internet-based information repository maintained by the Municipal Securities Rule Making Board for municipal bonds issued in the United States) to make such information available to the investors. The City will also agree to disclose and make filings upon the occurrence of enumerated significant events (e.g., a change in trustee, a rating change, or a missed debt payment on the 2026 Bonds).
Bond Purchase Agreement: Pursuant to the Bond Purchase Agreement (“BPA”), the Underwriter (Piper Sandler) will agree to buy the 2026 Bonds at specified prices and interest rates, subject to satisfaction of certain requirements, such as the City’s execution and delivery of the indentures and delivery of closing certificates and opinions. The BPA will be presented to the authorized officers of the City for approval and execution on the pricing date after the Underwriter has completed the offering to the investors and the pricing of the 2026 Bonds. The Resolution specifies the maximum underwriter’s discount and other financing parameters that must be met before moving forward on the transaction.
Good Faith Estimates:
NHA Advisors, LLC (the City’s municipal advisor) and Piper Sandler (the City’s underwriter) have provided good faith estimates on the cost of the financing, as required by California Government Code Section 5852.1. These estimates are based on current market rates. True Interest Cost of the 2026 Bonds. Assuming an aggregate principal amount of $24,360,000 of the 2026 Bonds are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the true interest cost of the 2026 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the 2026 Bonds, is 4.83%
Finance Charge of the 2026 Bonds. Assuming an aggregate principal amount of $24,360,000 of the 2026 Bonds are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the finance charge of the 2026 Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the 2026 Bonds), is approximately $701,608. Amount of Proceeds to be Received. Assuming an aggregate principal amount of 2 2
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$24,360,000 of the 2026 Bonds are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the amount of proceeds expected to be received by the Authority for sale of the 2026 Bonds less the finance charge of the 2026 Bonds described above and any reserves or capitalized interest paid or funded with proceeds of the 2026 Bonds, is $25,001,308.
Total Payment Amount. Assuming an aggregate principal amount of $24,360,000 of the 2026 Bonds are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the total payment amount, which means the sum total of all payments the Authority will make to pay debt service on the 2026 Bonds plus the finance charge of the Bonds described above not paid with the proceeds of the 2026 Bonds, calculated to the final maturity of the 2026 Bonds, is $48,638,949.
The foregoing information constitutes good faith estimates only. The actual interest cost, finance charges, amount of proceeds and total payment amount may vary from the estimates above due to variations from these estimates in the timing of the sale of the 2026 Bonds, the amount of 2026 2026 Bonds sold, the amortization of the 2026 Bonds sold and market interest rates at the time of each sale. The date of sale and the amount of 2026 Bonds sold will be determined based on the need for project funds and other factors. The actual interest rates at which the 2026 Bonds will be sold will depend on the bond market at the time of each sale. The actual amortization of the 2026 Bonds will also depend, in part, on market interest rates at the time of sale. Market interest rates are affected by economic and other factors beyond the City’s and the Authority’s control.
Next Steps:
After tonight’s anticipated approval, City staff will work with the financing team to complete the issuance of the 2026 Bonds. The following are tentative dates for the remaining key events of the financing. The dates of pricing and closing may change based on market conditions, though it is the City’s intention to close the financing prior to April 1, 2026 given construction timelines for the projects being funded.
Schedule:
January 27: City Council and Financing Authority Board Approve Financing February: FY 2025 Audited Financial Statements Approved and Credit Rating Process March 10: Price 2026 Bonds (lock interest rates)
March 24: Closing (funds delivered to City/Trustee)
Attachment:
1. City Council Resolution No. ____
2. Financing Authority Board Resolution No. ____
3. First Amendment to Ground Lease
4. First Amendment to Lease Agreement
5. First Amendment to Assignment Agreement
6. First Supplemental Indenture
7. Preliminary Official Statement
8. Continuing Disclosure Agreement (Included as Appendix E to the Preliminary Official Statement)
9. Bond Purchase Agreement