City Council Chambers City of Menifee 29844 Haun Road Finance Committee Menifee, CA 92586 Meeting Agenda
Lesa Sobek, Committee Member Friday, March 18, 2022 Dean Deines, Committee Member 9:30 AM Regular Meeting
AGENDA
1. CALL TO ORDER
2. ROLL CALL
3. PRESENTATIONS – None
4. PUBLIC COMMENTS
5. APPROVAL OF MEETING MINUTES
5.1 None
6. DISCUSSION ITEMS
6.1 Proposed Construction Financing by BLC Fleming LLC for the Legado Residential Development
Recommended Action:
1. Review and discuss the proposed construction financing plan for the Legado Master Planned Community development utilizing bond issuance financing, as it relates to the r equirement for the City’s approval to proceed with bond issuance; and
2. Recommend submittal to City Council at its meeting on April 6, 2022 for review.
7. STAFF COMMENTS
8. COMMITTEE REPORTS/COMMENTS ON COMMITTEE ACTIVITIES
9. FUTURE AGENDA ITEMS
10. ADJOURNMENT
Decorum Policy Notes
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Agenda Materials
Materials related to an item on this Agenda, including those submitted to the Committee after distribution of the agenda packet, are available for public inspection by contacting the City Clerk, at (951) 672-6777 during normal business hours.
Compliance with the Americans with Disabilities Act
If you need special assistance to participate in this meeting, you should contact Sarah Manwaring, City Clerk, at (951) 672-6777. Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to assure accessibility to this meeting.
CITY OF MENIFEE
SUBJECT: Proposed Construction Financing by BLC Fleming LLC for the Legado Residential Development
MEETING DATE: March 18, 2022
TO: Finance Committee
PREPARED BY: Rochelle Clayton, Assistant City Manager
RECOMMENDED ACTION
1. Review and discuss the pro posed construction financing plan for the Legado Master Planned Co mmunity development utilizing bond issuance financing, as it re lates to the requirement for the City’s approval to proceed with bond issuance; and
2. Recommend submittal to City Council at its meeting on April 6, 2022 for review.
DISCUSSION
BLC Fleming, LLC (“Owner”) is the Owner of Legado, Tentative Tract Map N os. 37408 & 37409 (“TTM 37408 & 37409”), which consists of 1,022 lots on approximately 304 gross acres of vacant residential property. The property is located east of Encanto Dr, south of Rouse Rd, west of Antelope Rd, and north of Chambers Ave.
The Owner has requested that the City assist it in its financing plan due to the requirements of the state of origin for financing. In this case , Wisconsin Public Financing Authority (“PFA”) has cited that pursuant to Sections 66.0301, 66.0303 and 66.0304 of the Wisconsin Statutes , the governing body of th e local jurisdiction must provide a let ter of approval to proceed with the issuance of taxable bonds to finance the construction of the Legado development.
The Owner’s financial team, Launch Development Finan ce Advisors (“DFA”), prepared a bond financing outline to provide information on this financing mechanism for City review.
ATTACHMENTS
1. Public Finance Authority – Bond Financing Outline
2. Sections 66.0301, 66.0303 and 66.0304 of the Wisconsin Statutes
1 BLC Fleming LLC – Legado – Menifee, California
Public Finance Authority – Bond Financing Outline
March 10, 2022
Prepared by: Launch Development Finance Advisors - CA , LLC 100 Spectrum Center Drive, Suite 1400, Irvine, CA
www.launch-dfa.com
2 CITY OF MENIFEE
LEGADO
PUBLIC FINANCE AUTHORITY
PROPOSED FINANCING OUTLINE
Introduction
The purpose of the Proposed Financing Outline (“Outline”) is to provide background information to representatives of the City of Menifee (“City”) in relation to the BLC Fleming, LLC (the “Developer” and/or “Borrower”) securing construction financing for the Legado master planned community (the “Project”) located within the incorporated boundaries of the City.
The Public Finance Authority (“PFA”) is anticipated to be the issuing authority (the “Authority”) of the Bonds (as herein defined). The Bonds will be secured by first deed of trust (“DOT”) on the Project’s for sale residential lots.
In order to move forward with the financing outlined herein and, pursuant to the Joint Exercise of Powers Law of Wisconsin governmental code (the “Act”) in which the PFA is domiciled, the highest ranking administer of the City in which the Project is located must acknowledge the ability of the PFA to undertake the financing (“Undertaking”). The approval of the Undertaking is only done to satisfy Wisconsin government code and is neither an opinion nor endorsement of the proposed financing.
In no way is the City responsible or obligated, either directly or indirectly, with respect to the terms, sales, issuance, security or payment of the Bonds. Furthermore, the City is NOT a party to financing or the PFA, and will not be asked to provide any opinions, disclosures or certificates related to the Bond issuance.
With the exception of the proposed financing being a bond rather than a construction loan, the proposed financing structure impacts the city no differently than if a construction loan was obtained from a bank and secured by a DOT. Similar to a construction loan, the Bond will be secured by a DOT on the property and similar to a construction loan, as lots are sold to merchant builders, the DOT encumbrances will be paid off and released from the DOT.
The proposed Bond financing will neither interfere with the establishment of any proposed community facilities district(s) (“CFD”) that may be established in the future, nor will the Bond impact the ability to issue and CFD bonds that may be utilized in conjunction with the development of the Project. The Bond indenture is structured to allow for the automatic subordination of the Bond’s security position to any and all jurisdictional property taxes rates, assessments and/or special tax levies that may exist currently or in the future.
The major benefit of the proposed financing structure over typical bank provided construction loans is that the borrowing term for the Bonds is much more favorable than that of a construction loan. The Bond term on the proposed financing is approximately 10 to 15 years with a 30 year amortization 3 period while institutional construction lenders typically require a 3 year term. The benefit of using “long term” debt financing to finance “long term” development projects cannot be overstated. This type of financing could be an additional financing tool in the City’s financial toolbox to assist the private sector to obtain efficient development capital to allow for the continued growth of the City.
In order to provide the City with the information related to the proposed Bond financing, the following information has been provided.
Outline of the Proposed Bond Financing
1) Borrower: BLC Fleming LLC
2) Estimated Gross Bond Amount: Not to exceed $100 million (To be issued over time) 3) Proposed Project and Financing
a) General Information
Project Background
The Project is a n approximate 33 1-acre development located in the City . Upon completion the Project is anticipated to include the following land uses.
A location map and conceptual land use plan have been included as Exhibit A.
Project Entitlement Status
The Project currently has the following major entitlements.
Legado Specific Plan (No. 2017 -187) – Provides the development of a maximum of 1,061 units; 225,000 square feet of freeway oriented commercial us es; 12.9-acre Description Acres Units
Phase A Residential 78.60 508
Future Residential Phases 77.49 514
Commercial 20.13
ROW 91.62
Detention Basin 19.91
Water Quality Basin 7.39
Open Space 35.87
Total 331.01 1,022
Source: BLC Fleming LLC
4 community park and 7.9 acres of linear and pocket parks. Adopted by City Council on June 17, 2020.
Tentative Tract Map (No. 37408) – Provides a subdivision of approximately 149. 6 gross acres into 475 single-family residential lots. Adopted by City Council on June 3, 2020.
Tentative Tract Map (No. 37409) – Provides a subdivision of approximately 159.1 gross acres into 547 single-family residential lots. Adopted by City Council on June 3, 2020.
Tentative Tract Map (No. 37391) – Provides for a large lot sub-division of the Project’s approximate 331 acres into twenty -six parcels for park, commercial, roadway and financing purposes. Adopted by City Council on June 3, 2020.
Environmental Impact Report – Environmental Impact Report prepared in accordance with CEQA certified by the City Council on June 17, 2020.
Legado Development Agreement – Approved by the City Council on June 4, 2020 and recorded in the official records of the County of Riverside via recording number 2020- 0282073.
Project Costs
To date, the Borrower has invested approximately $24 million for land acquisition and pre-development activities. The build-out of the Project will require approximately $14.2 million related to entitlement s, engineering, and indirects as well as an additional $71.9 million to fund backbone infrastructure to develop the residential and commercial parcels into a “ Blue Top” status. An additional $ 38.6 million will be required to bring the parcels to a finished lot status.
With the provision of the PFA authorization letter by the City Manager, it is anticipated that approximately $50 to $75 million of Project infrastructure, including water, sewer, storm drain, arterial roads as well as related costs will be financed over time with Bond proceeds. The PFA authorization letter is included in Exhibit B.
A listing of Project costs is included in Exhibit C. A location map of infrastructure has been included as Exhibit D.
5 b) Financing Structure
i) The Bonds will be secured by a first DOT on the for sale residential lands which make up the Project. The 20 acres of commercial acreage, rights-of-way, public parks and/or other public lands will not be encumbered by the DOT.
The Bond proceeds will be utilized to finance the construction of a portion of Project costs. Upon the completion and inspection of the public infrastructure, the public infrastructure will be dedicated to City and/or other public entities and/or agencies for on-going ownership, operations, and maintenance.
It is expected that the Borrower will lots to merchant builders at which time the first DOT securing the Bonds related to such lots will be released via a Partial Release and Reconveyance (or similar mechanism) issued on the lots purchased by the merchant builders.
c) Additional information related to the proposed Bond structure
i) It is anticipated that the Bond will be sold via a limited public offering to one or more institutional investors and/or accredited investors.
ii) Anticipated minimum denominations: $100,000.
iii) Proposed Bond Maturity – The Bonds will have a 30-year amortization schedule with a term of 10 to 15 years (Estimate).
iv) The Bonds will be taxable bonds.
v) Expected Rating, if any: None – Bonds will not be rated.
vi) Fixed or Variable Rate Bonds – Fixed Rate Taxable Bonds 6.0% to 6.5% (Estimate)
d) Financing Team
i) Financing Team is outlined in Exhibit E.
6 e) Proposed Financing Schedule
Ref. # Description Date
1 City
Provides PFA Letter Month 1
2 PFA Financing Request Submitted Month 1
3 Financing Team Assembled Month 1
4 Appraisal/ Market Study Ordered Month 1
5 Bond Documents Prepared Month 2
6 PLOM Prepared Month 3
7 Form of Documents Approved by PFA Month 4
8 PLOM Posted Month 5
9 Bonds Priced Month 5
10 Bonds Closed Month 6
7 EXHIBIT A
Vicinity Map / Location Map and Conceptual Master Plan
8 PHASE LOT DESCRIPTION
COUNT
A INFRASTRUCTURE
1 500 RESIDENTIAL
B INFRASTRUCTURE
2 231 RESIDENTIAL
C INFRASTRUCTURE
3 330 RESIDENTIAL/COMMERCIAL
9 10
EXHIBIT B
PFA Authorization Letter
11 March 10, 2022
Public Finance Authority
22 E. Mifflin Street, Suite 900
Madison, Wisconsin 53703
Re: Legado
You have informed me of the following facts:
1. The Public Finance Authority (the "Authority") is authorized pursuant to the provisions o f S ections 66.0301, 66.0303 and 66.0304 of the Wisconsin Statutes, commonly known as the "Joint Exercise of Powers Law" (the "Act"), and the terms of an Amended and Restated Joint Exercise of Powers Agreement Relating to the Public Finance Authority, dated as of September 28, 2010 (the "Joint Exercise Agreement"), to issue revenue bonds in accordance with the Act for the purpose of financing various types of projects within or outside of the State of Wisconsin.
2. The Authority has been requested to issue up to $100 million of bonds, notes or other obligations in one or more series (the "Bonds") to provide part of the financing for Legado project costs (the "Project") located within the City of Menifee, California (the "City") more particu larly described or referred to in that ce rtain Legado Development Agreement recorded by the County of Riverside on June 30, 2020, record number 2020 - 0282073.
3. Section 66.0304(11)(a) of the Act provides:
[The Authority] may not issue bonds to finance a capital improvement project in any state or territory of the United States unless a political subdivision within whose boundaries the project is to be located has approved the financing of the project . . . An approval under this paragraph may be made by the governing body of the political subdivision or . . . by the highest-ranking executive or administrator of the political subdivision.
4. Compliance by the City with Section 66.0304(11)(a) of the Act does not constitute an endorsement of the Bonds or the P roject, or a commitment by the City, or a ny other governmental body, to provide any other approvals that may be required in connection with the Project, or an undertaking of any responsibility of any kind with respect to the Bonds.
I am the highest- ranking executive or administrator of the City of M enifee, California within whose boundaries the Project is located. In conformity with and solely for purposes of satisfying the requirements of Section 66.0304(11)(a) of the Act, I hereby provide this letter as e vidence of approval of the financing by t he Authority of the Project in compliance with Section 66.0304(11)(a) of the Act, but in no other way provide any 12 opinion or endorsement with respect to the issuance of the Bonds. This letter shall not be referred to in connection with the marketing and sa le of the Bonds, and the City shall have no responsibility or liability of any kind, direct or indirect, with respect to the terms, sale, issuance, security or payment of the Bonds, which shall be the sole responsibility of the Authority.
Sincerely,
____________________________________
Armando G. Villa
City Manager
13 EXHIBIT C
Estimated Project Costs
14 Estimated Project Costs
Description Total (1)
Equity Investment
Land Purchase 13,597,358$
Fea
sibility & Entitlement: 3,500,985$
Final Engineering: 3,853,281$
Indirects: 3,139,049$
Original Cash Investment 24,090,672$
Infrastructure Costs
Feasibility & Entitlement:
Planning & Design 44$
Environmental 1,759$
Misc. Consultants 70,138$
Subtotal 71,941$
Final Engineering:
Final Engineering - Thru Grading Permit Only 317,399$
All Infrastructure & PA Phases: 3,737,878$
Infrastructure 2,809,802$
Offsites 233,657$
Intracts 3,013,701$
Subtotal 10,112,438$
Backbone & Infrastructure:
Off-Tract Soft Costs: 652,440$
Off-Tract Hard Costs: 4,841,973$
Phase Soft Costs: 8,593,701$
Phase Hard Costs: 52,166,311$
Soft Cost Contingency: 429,685$
Hard Cost Contingency: 5,216,631$
Subtotal 71,900,741$
Intract Infrastructure
Intract Soft Costs: 5,129,912$
Intract Hard Costs: 30,205,727$
Soft Cost Contingency: 256,496$
Hard Cost Contingency: 3,020,573$
Subtotal 38,612,707$
Indirects:
Insurance 306,200$
Property Taxes 385,505$
General Conditions (4.00%) 1,416,533$
GC Fee (2.00%) 708,267$
General And Administrative 960,000$
Audits 110,000$
Legal General 134,400$
Subtotal 4,020,905$
Total 124,718,732$
Source: BLC Flemming, LLC
Footnotes:
(1) Costs are in terms of 2022 dollars and are likely to increase over time due to inflation.
15 Exhibit D
Location Map of Infrastructure
16 UNITSAC
RESIDENTIAL
VILLAGE - WEST
PA1 50' x 100' 73 9.96
PA2 60' x 100' 49 7.62
PA3 55' x 100' 115 16.35
PA4 70' x 100' 42 8.07
PA5 70' x 100 17 3.22
PA6 50' x 100 99 12.95
PA7 60' x 100 80 12.49
SUBTOTAL 475 70.66
VILLAGE - EAST
PA8 50' x 100' 86 10.87
PA9 70' x 100' 67 13.21
PA10 55' x 100' 59 9.30
PA11 55' x 100 84 13.21
PA12 70' x 100 49 8.88
PA13 50' x 100 81 10.95
PA14 70' x 100 51 8.99
PA15 55' x 100 70 10.02
SUBTOTAL 547 85.43
COMMERCIAL 20.13
DETENTION BASIN18.91
WATER QUALITY BASIN 7.39
PASEO LEGADO (PUBLIC) 4.29
LANDSCAPE SPACE 7.86
COMMUNITY PARK (PUBLIC) 12.88
OPEN SPACE
CONSERVATION 6.32
STREETS 91.62
RECREATION CENTER (PRIVATE) 1.89
WEST PARK (PUBLIC) 1.41 EAST PARK (PUBLIC) 2.22 TOTAL 1,022 331.01
NOTE: PUBLIC PARK = 20.80 AC
17 EXHIBIT E
Proposed Financing Team
18 BLC FLEMING LLC - LEGADO
PROPOSED FINANCING TEAM – AS OF MARCH 8, 2022
CONDUIT ISSUER
Wisconsin Public Finance Authority (“PFA”)
ISSUER’S COUNSEL
Von Briesen & Roper, S.C.
BORROWER
BLC Fleming LLC
BORROWER’S REAL ESTATE COUNSEL
Stuart Kane LLP
BOND COUNSEL
Ballard Spahr
DEVELOPER CONSULTANT/ADMINISTRATIVE
SERVICES
Launch Development Finance Advisors
UNDERWITER
Piper Sandler & Co
UNDERWITER/DISCLOSURE COUNSEL
Nixon Peabody
APPRAISAL
Integra Realty Resources
MARKET STUDY
Clarity Real Estate Advisors
TRUSTEE
Wilmington Trust, N.A.
THIRD-PARTY CONSTRUCTION INSPECTIONS
QTATIVE Development Solutions
PRINTER
Mountain Financial Printing
19 Wisconsin Legislature: 66.0301
SUBCHAPTER III
INTERGOVERNMENTAL COOPERATION
66.0301 Intergovernmental cooperation.
(1)
(a) Except as provided in pars. (b) and (c), in this section “municipality" means the state or any department or agency thereof, or any city, village, town, county, or school district, the opportunity schools and partnership programs under subch. IX of ch. 115 and subch. II of ch. 119, the superintendent of schools opportunity schools and partnership program under s. 119.33, or any public library system, public inland lake protection and rehabilitation district, sanitary district, farm drainage district, metropolitan sewerage district, sewer utility district, solid waste management system created under s. 59.70 (2), local exposition district created under subch. II of ch. 229, local professional baseball park district created under subch. III of ch. 229, local professional football stadium district created under subch. IV of ch. 229, local cultural arts district created under subch. V of ch. 229, long-term care district under s. 46.2895, water utility district, mosquito control district, municipal electric company, county or city transit commission, commission created by contract under this section, taxation district, regional planning commission, housing authority created under s. 66.1201, redevelopment authority created under s. 66.1333, community development authority created under s. 66.1335, or city-county health department. (b) If the purpose of the intergovernmental cooperation is the establishment of a joint transit commission, “municipality" means any city, village, town or county. (c) For purposes of sub. (6), “municipality" means any city, village, or town. (2) Subject to s. 59.794 (2), and in addition to the provisions of any other statutes specifically authorizing cooperation between municipalities, unless those statutes specifically exclude action under this section, any municipality may contract with other municipalities and with federally recognized Indian tribes and bands in this state, for the receipt or furnishing of services or the joint exercise of any power or duty required or authorized by law. If municipal or tribal parties to a contract have varying powers or duties under the law, each may act under the contract to the extent of its lawful powers and duties. A contract under this subsection may bind the contracting parties for the length of time specified in the contract. This section shall be interpreted liberally in favor of cooperative action between municipalities and between municipalities and Indian tribes and bands in this state. If a municipality is required to establish or maintain an agency, department, commission, or any other office or position to carry out a municipal responsibility, and the municipality joins with another municipality by entering into an intergovernmental cooperation contract under this subsection to jointly carry out the responsibility, the jointly established or maintained agency, department, commission, or any other office or position to which the contract applies fulfills, subject to sub. (7), the municipality's obligation to establish or maintain such entities or positions until the contract entered into under this subsection expires or is terminated by the parties. In addition, if 2 or more municipalities enter into an intergovernmental cooperation contract and create a commission under this section to jointly or regionally administer a function or project, the commission shall be considered, subject to sub. (7), to be a single entity that represents, and may act on behalf of, the joint interests of the signatories to the contract entered into under this section. (3) Any contract under sub. (2) may provide a plan for administration of the function or project, which may include but is not limited to provisions as to proration of the expenses involved, deposit and disbursement of funds appropriated, submission and approval of budgets, creation of a commission, selection and removal of commissioners, and formation and letting of contracts. (4) A commission created by contract under sub. (2) may finance the acquisition, development, remodeling, construction and equipment of land, buildings and facilities for regional projects under s. 66.0621.
Participating municipalities acting jointly or separately may finance the projects, or an agreed share of the cost of the projects, under ch. 67.
(5) No commission created by contract under sub. (2) may, directly or indirectly, do any of the following:
20 (a) Acquire, construct or lease facilities used or useful in the business of a public utility engaged in production, transmission, delivery or furnishing of heat, light, power, natural gas or communications service, by any method except those set forth under this chapter or ch. 196, 197 or 198. (b) Establish, lay out, construct, improve, discontinue, relocate, widen or maintain any road or highway outside the corporate limits of a village or city or acquire lands for those purposes except upon approval of the department of transportation and the county board of the county and the town board of the town in which the road is to be located.
(6)
(a) Any 2 municipalities whose boundaries are immediately adjacent at any point may enter into a written agreement determining all or a portion of the common boundary line between the municipalities. An agreement under this subsection may include only the provisions authorized under this section and s. 66.0305, and one or more of the following:
1. That specified boundary lines apply on the effective date of the agreement.
2. That specified boundary line changes shall occur during the term of the agreement and the approximate dates by which the changes shall occur.
3. That specified boundary line changes may occur during the term of the agreement and the approximate dates by which the changes may occur.
4. That a required boundary line change under subd. 2. or an optional boundary line change under subd. 3. is subject to the occurrence of conditions set forth in the agreement.
5. That specified boundary lines may not be changed during the term of the agreement. (b) The maximum term of an agreement under this subsection is 10 years. When an agreement expires, all provisions of the agreement expire, except that any boundary determined under the agreement remains in effect until subsequently changed.
(c)
1. Before an agreement under this subsection may take effect, and subject to par. (e), it must be approved by the governing body of each municipality by the adoption of a resolution. Before each municipality may adopt a resolution, each shall hold a public hearing on the agreement or both municipalities shall hold a joint public hearing on the agreement. Before the public hearing may be held, each municipality shall give notice of the pending agreement and public hearing by publishing a class 1 notice, under ch. 985, and by giving notice to each property owner whose property is currently located in that municipality and in, or immediately adjacent to, the territory whose jurisdiction will change. Notice shall be given at least 20 days before the public hearing and notice to property owners shall be made by certified mail.
2. An agreement under this subsection is subject to a referendum of the electors residing within the territory whose jurisdiction is subject to change as a result of the agreement. After each municipality approves the agreement by adoption of a resolution, each municipality shall publish the agreement in the territory whose jurisdiction is subject to change as a result of the agreement as a class 1 notice, under ch. 985. A referendum shall be held if, within 30 days after the publication of the agreement, a petition for a referendum conforming to the requirements of s. 8.40, signed by at least 20 percent of the electors residing within the territory whose jurisdiction is subject to change as a result of the agreement is filed, in accordance with s. 8.37, with the clerk of each municipality that is a party to the agreement. The referendum shall be conducted jointly by the municipalities and shall otherwise be conducted as are annexation referenda. If the agreement is approved in the referendum, it may take effect. If the agreement is not approved in the referendum, it may not take effect. (d) An agreement under this subsection may provide that, during the term of the agreement, no other procedure for altering a municipality's boundaries may be used to alter a boundary that is affected by the agreement, except an annexation conducted under s. 281.43 (1m), regardless of whether the boundary is proposed to be maintained or changed or is allowed to be changed under the agreement. After the agreement has expired, the boundary may be altered.
21 (e) A boundary change included in an agreement under this subsection shall be accomplished by the enactment of an ordinance by the governing body designated to do so in the agreement. The filing and recording requirements under s. 66.0217 (9) (a), as they apply to cities and villages under s. 66.0217 (9) (a), apply to municipalities under this subsection. The requirements for the secretary of administration under s. 66.0217 (9) (b), as they apply under that section, apply to the secretary of administration when he or she receives an ordinance that is filed under this subsection. (f) No action to contest the validity of an agreement under this subsection may be commenced after 60 days from the date the agreement becomes effective.
(g) This subsection is the exclusive authority under this section for entering into an agreement that determines all or a portion of the common boundary line between municipalities. (h) An agreement under this section that has been entered into before January 19, 2008, that affects the location of a boundary between municipalities, is not invalid as lacking authority under this section to affect the location of the boundary.
(7) With regard to a contract entered into under sub. (2) between 2 or more counties, which relates to the provision of services or facilities under a contract with an officer or agency of the state, the contract may not take effect unless it is approved in writing by the officer or chief of the agency that has authority over the contract for the provision of services or facilities. The contract must be approved or disapproved in writing by the officer or chief of the agency with regard to the matters within the scope of the contract for the provision of services or facilities within 90 days after receipt of the contract. Any disapproval shall detail the specific respects in which the proposed contract fails to demonstrate that the signatories intend to fulfill their contractual responsibilities or obligations. If the officer or chief of the agency fails to approve or disapprove of the contract entered into under sub. (2) within 90 days after receipt, the contract shall be considered approved by the officer or chief of the agency.
History: 1999 a. 150 ss. 348, 349, 352, 353; 1999 a. 167 s. 38; 2001 a. 16, 30; 2007 a. 20, 43; 2009 a. 28, 112; 2011 a. 32; 2013 a. 14; 2015 a. 55; 2017 a. 59.
Cross-reference: See also s. PI 14.01, Wis. adm. code.
The plain language of sub. (6) does not limit the scope of boundary changes to only “modest" changes. The statutes provide multiple methods for altering municipal boundary lines. There is nothing absurd about the fact that the legislature might permit intergovernmental cooperation agreements to include major boundary changes without agency approval or a public referendum — at least no more absurd than the fact that a “minor" boundary change may be accomplished without agency approval or a public referendum. City of Kaukauna v. Village of Harrison, 2015 WI App 73, 365 Wis. 2d 181, 870 N.W.2d 680, 14-2828.
Sub. (6) (c) 1. does not expressly specify what information must be contained in the notices that are published and sent by certified mail. In contrast, numerous other statutes contained within ch. 66 establish specific content requirements for public notice. The legislature knows how to require specific public notice of proposed boundary changes; it chose not to do so in sub. (6) (c) 1. City of Kaukauna v. Village of Harrison, 2015 WI App 73, 365 Wis. 2d 181, 870 N.W.2d 680, 14-2828.
Counties may enter into joint agreements to collectively furnish and fund nursing home services if the agreements do not violate federal and state Medicaid statutes and regulations prohibiting supplementation. Assessments resulting from such agreements that are computed without reference to and are not attributable to purchase of services contracts involving particular Medicaid patients would not be considered supplementation. Assessments that are computed with reference to or are attributable to purchase of services contracts involving particular Medicaid patients are not permissible. The validity of hybrid assessments that do not fit solely within either one of those two categories must be determined on a case-by-case basis. OAG 4-09.
66.0303 Municipal interstate cooperation.
(1) In this section, “municipality" has the meaning given in s. 66.0301 (1) (a), except that with regard to agreements described in s. 66.0304, “municipality" includes a political subdivision, as defined in s. 66.0304 (1) (f).
(2) A municipality may contract with municipalities of another state or with federally recognized American Indian tribes or bands located in another state for the receipt or furnishing of services or the joint exercise of any power or duty required or authorized by statute to the extent that laws of the other state or of the United States permit the joint exercise.
(3)
(a) Except as provided in par. (b) and s. 66.0825 (18), an agreement made under this section shall, prior to and as a condition precedent to taking effect, be submitted to the attorney general who shall determine 22 whether the agreement is in proper form and compatible with the laws of this state. The attorney general shall approve any agreement submitted under this paragraph unless the attorney general finds that it does not meet the conditions set forth in this section and details in writing addressed to the concerned municipal governing bodies the specific respects in which the proposed agreement fails to meet the requirements of law. Failure to disapprove an agreement submitted under this paragraph within 90 days of its submission constitutes approval. The attorney general, upon submission of an agreement, shall transmit a copy of the agreement to the governor who shall consult with any state department or agency affected by the agreement. The governor shall forward to the attorney general any comments the governor may have concerning the agreement.
(b) An agreement under this section between a municipality of this state and a municipality of another state that relates to the receipt, furnishing, or joint exercise of fire fighting or emergency medical services need not be submitted to or approved by the attorney general before the agreement may take effect. (4) An agreement entered into under this section has the status of an interstate compact, but in any case or controversy involving performance or interpretation of or liability under the agreement, the municipalities party to the agreement are real parties in interest and the state may commence an action to recoup or otherwise make itself whole for any damages or liability which it may incur by reason of being joined as a party. The action by the state may be maintained against any municipality whose act or omission caused or contributed to the incurring of damage or liability by the state.
History: 1999 a. 150 ss. 77, 355; 2001 a. 109; 2005 a. 198; 2009 a. 205, 378, 379.
66.0304 Conduit revenue bonds.
(1) DEFINITIONS. In this section:
(a) “Agreement" means a contract entered into under this section by the political subdivisions which form a commission. The contract may be amended according to the terms of the contract, and the amended contract remains an agreement.
(b) “Bond" means any bond, note or other obligation issued or entered into or acquired under this section, including any refunding bond or certificate of participation or lease-purchase, installment sale, or other financing agreement.
(c) “Commission" means an entity created by two or more political subdivisions, who contract with each other under s. 66.0301 (2) or 66.0303 (2), for the purpose of issuing bonds under this section. (d) “Member" means a party to an agreement.
(e) “Participant" means any public or private entity or unincorporated association, including a federally recognized Indian tribe or band, that contracts with a commission for the purpose of financing or refinancing a project that is owned, sponsored, or controlled by the public or private entity or unincorporated association.
(f) “Political subdivision" means any city, village, town, or county in this state or any city, village, town, county, district, authority, agency, commission, or other similar governmental entity in another state or office, department, authority, or agency of any such other state or territory of the United States. (g) “Project" means any capital improvement, purchase of receivables, property, assets, commodities, bonds or other revenue streams or related assets, working capital program, or liability or other insurance program, located within or outside of this state.
(ge) “Public official" means an individual who holds, or has held, a local public office, as that term is defined in s. 19.42 (7w), for a political subdivision in this state. (h) “Revenue" means all moneys and fees received from any source by a commission. (2) ATTORNEY GENERAL REVIEW.
(a) Before an agreement may take effect, the proposed agreement shall be submitted to the attorney general who shall determine whether the agreement is in proper form and compatible with the laws of this state.
Subject to sub. (3) (d), the attorney general shall approve any agreement submitted under this subsection unless the attorney general finds that it does not meet the conditions set forth in this section and details in 23 writing addressed to the concerned political subdivisions' governing bodies the specific respects in which the proposed agreement fails to meet the requirements of law. Failure to disapprove an agreement submitted under this subsection within 90 days of its submission constitutes approval. The attorney general, upon submission of an agreement, shall transmit a copy of the agreement to the governor, who may consult with any state department or agency. The governor shall forward to the attorney general any comments the governor may have concerning the agreement. (b) No approval is required under this subsection for an amendment to an agreement to take effect, unless the amendment is to add a member or unless otherwise required by the terms of the agreement. A commission may not be dissolved under sub. (4m) without the approval of the attorney general, who shall certify to the commission and the participants that the dissolution resolution provides for the payment of any outstanding bonds or other obligations of the commission. (3) CREATION AND ORGANIZATION.
(a) Two or more political subdivisions may create a commission for the purpose of issuing bonds by entering into an agreement to do so under s. 66.0301 (2) or 66.0303 (2), except that upon its creation all of the initial members of a commission shall be political subdivisions that are located in this state. A commission that is created as provided in this section is a unit of government, and a body corporate and politic, that is separate and distinct from, and independent of, the state and the political subdivisions which are parties to the agreement.
(b) A commission shall be governed by a board, the members of which shall be appointed under the terms of the agreement. A majority of the board members shall be public officials or current or former employees of a political subdivision that is located in this state. Board members may be reimbursed for their actual and necessary expenses incurred in performing their duties to the extent provided in the agreement or the bylaws of the commission.
(c) An additional political subdivision may become a member of a commission, and a member may withdraw from a commission, as provided in the agreement. For an agreement to be valid, at least one commission member shall be a political subdivision that is located in this state and a commission shall consist of at least 2 political subdivisions. A commission may not take any action under this paragraph that would invalidate an agreement.
(d) No commission may be created under this section unless its agreement is submitted to the attorney general, under sub. (2), before October 1, 2010. Only one commission may be formed under this section. If more than one agreement is submitted to the attorney general before October 1, 2010, the attorney general must give preference to the agreement that submits with its documents a demonstration of support for its agreement from at least one statewide organization located in this state which represents the interests of political subdivisions and has political subdivisions among its membership. (4) POWERS OF A COMMISSION. A commission has all of the powers necessary or convenient to carry out the purposes and provisions of this section. In addition to all other powers granted by this section, a commission may do any of the following:
(a) Adopt bylaws for the regulation of its affairs and the conduct of its business. (b) Sue and be sued in its own name, plead and be impleaded. (c) Acquire, buy, sell, lease as lessor or lessee, encumber, mortgage, hypothecate, pledge, assign, or transfer any property or interest in property that is located within or outside of this state. (d) Enter into contracts related to the issuance of bonds. (e) Issue bonds or refunding bonds, subject to sub. (5), to finance or refinance a project, including funding a reserve fund or capitalized interest, payment of costs of issuance and other costs related to the financing or refinancing, or credit enhancement, and enter into agreements related to the issuance of bonds, including liquidity and credit facilities, remarketing agreements, insurance policies, guaranty agreements, letter of credit or reimbursement agreements, indexing agreements, interest rate swap agreements, currency exchange agreements, commodity swap agreements, and other hedge agreements and any other 24 like agreements, in each case with such payment, interest rate, currency security, remedy, and other terms and conditions as the commission determines.
(f) Employ or appoint agents, employees, finance professionals, and special advisers as the commission finds necessary and fix their compensation.
(g) Accept gifts, loans, or other aid.
(h) Establish and collect fees, plus administrative expenses, from participants who benefit from the commission's services, or services provided by an outside entity, and distribute the fees and expenses as provided in the agreement.
(i) Make loans to, lease property from or to, or enter into any other kind of an agreement with a participant or other entity, in connection with financing or refinancing a project. (j) Mortgage, pledge, or otherwise encumber the commission's property or its interest in projects. (k) Assign or pledge any portion of its interests in projects, mortgages, deeds of trust, indentures of mortgage or trust, leases, purchase or sale agreements or other financing agreements, or similar instruments, bonds, notes, and security interests in property, of a participant, or contracts entered into or acquired in connection with bonds.
(L) Issue, obtain, or aid in obtaining, from any person, any insurance or guarantee to, or for, the payment or repayment of interest or principal, or both, on any loan, lease, bond, or other obligation evidencing or securing such a loan, lease, bond, or obligation that is entered into under this section. (m) Apply on its own behalf or on behalf of a participant to any unit of government for an allocation of volume cap, tax credit, subsidy, grant, loan, credit enhancement, or any other federal, state, or local program in connection with the financing or refinancing of a project. (n) Invest any bond proceeds or any money held for payment or security of the bonds, or any contract entered into under this section, in any securities or obligations permitted by the resolution, trust agreement, indenture, or other agreement providing for issuance of the bonds or the contract. (o) At the request of a participant, combine and pledge revenues of multiple projects for repayment of one or more series of bonds issued under this section.
(p) Purchase bonds issued by or on behalf of, or held by, any participant, any state or a department, authority, or agency of the state, or any political subdivision. Bonds purchased under this paragraph may be held by the commission or sold, in whole or in part, separately or together with other bonds issued by the commission.
(4m) DISSOLUTION OF A COMMISSION. Subject to sub. (2) (b) and subject to providing for the payment of its bonds, including interest on the bonds, and the performance of its other contractual obligations, a commission may be dissolved, by resolution, as provided in the agreement. If the commission is dissolved, the property of the commission shall be transferred to the political subdivisions who are parties to the agreement creating the commission as provided in the agreement. (5) ISSUANCE OF BONDS.
(a) A commission may not issue bonds unless the issuance is first authorized by a bond resolution. A bond issued under this section shall meet all of the following requirements:
1. The face of the bond shall include the date of issuance and the date of maturity.
2. The face of the bond shall include the statements required under subs. (9) (c) and (11) (d).
3. The date of maturity may not exceed 50 years from the date of issuance.
4. The bond shall bear a rate of interest, either fixed or variable, specified by the resolution. Any variable rate of interest shall be made subject to a maximum rate.
5. Interest and principal shall be paid at the time and place specified in the resolution.
6. Bonds in a single issue may be composed of a single denomination or 2 or more denominations, as provided in the resolution.
25 7. The bond shall be payable in lawful money of the United States or, if provided in the resolution, another currency.
8. Bonds shall be registered as provided in the resolution.
9. Bonds shall be in the form, and executed in the manner, provided in the resolution. (am) Notwithstanding par. (a), as an alternative to specifying the matters required to be specified in the bond resolution under par. (a), the resolution may specify members of the board or officers or employees of the commission, by name or position, to whom the commission delegates authority to determine which of the matters under specified par. (a), and any other matters that the commission deems appropriate, for inclusion in the trust agreement, indenture, or other agreement providing for issuance of the bonds as finally executed. A resolution under this paragraph shall specify at least all of the following:
1. The maximum principal amount of bonds to be issued.
2. The maximum term of the bonds.
3. The maximum interest rate to be borne by the bonds.
(b) A bond issued under this section may include, or be subject to, any of the following:
1. Early mandatory or optional redemption or purchase in lieu of redemption or tender, as provided in the resolution.
2. A provision providing a right to tender.
3. A trust agreement or indenture containing any terms, conditions, and covenants that the commission determines to be necessary or appropriate, but such terms, conditions, and covenants may not be in conflict with the resolution.
(c) The commission may purchase any bond issued under this section. Subject to the terms of any agreement with the bondholders, the commission may hold, pledge, resell, or cancel any bond purchased under this paragraph, except that a purchase under this paragraph may not effect an extinguishment of a bond unless the commission cancels the bond or otherwise certifies its intention that the bond be extinguished. (d) The proceeds of a bond issued under this section may be used for one or more projects located within or outside of this state.
(e) The commission shall send notification to the department of revenue, on a form prescribed by the department, whenever a bond is issued under this section. (6) SALE OF BONDS.
(a) The sale of bonds under this section shall be conducted as provided in the bond resolution. (b) A sale may be public or private. Bonds may be sold at the price or prices, and upon the conditions, determined by the commission. The commission shall give due consideration to the recommendations of the participants in the project when determining the conditions of sale. (c) Bonds that are sold under this section may be serial bonds or term bonds, or both. (d) If at the time of sale definitive bonds are not available, the commission may issue interim certificates exchangeable for definitive bonds.
(e) The commission shall disclose to any person who purchases a tax-exempt bond issued under this section that the interest received on such a bond is exempt from taxation, as provided in ss. 71.05 (1) (c)
10., 71.26 (1m) (k), 71.36 (1m), and 71.45 (1t) (k).
(7) BOND SECURITY.
(a) The commission may secure bonds by a trust agreement or indenture by and between the commission and one or more corporate trustees. A bond resolution, trust agreement, or indenture may contain provisions for pledging properties, revenues, and other collateral; holding and disbursing funds; protecting and enforcing the rights and remedies of bondholders; restricting individual rights of action by bondholders; and amendments, and any other provisions the commission determines to be reasonable and proper for the security of the bondholders or contracts entered into under this section in connection with the bonds. 26 (b) A pledge of property, revenues, or other collateral by a commission to secure the payment of the principal or redemption price of, or interest on, any bonds, or any reimbursement or similar agreement with any provider of credit enhancement for bonds, or any swap or other agreement entered into in connection with bonds, is binding on the parties and on any successors. The collateral shall immediately be subject to the pledge, and the pledge shall constitute a lien and security interest which shall attach immediately to the collateral and be effective, binding, and enforceable against the pledgor, its successors, purchasers of the collateral, creditors, and all others, to the extent set forth, and in accordance with, the pledge document irrespective of whether those parties have notice of the pledge and without the need for any physical delivery, recordation, filing, or further act.
(8) NO PERSONAL LIABILITY. No board member of the commission is liable personally on the bonds or subject to any personal liability or accountability by reason of the issuance of the bonds, unless the personal liability or accountability is the result of willful misconduct. (9) BONDS NOT PUBLIC DEBT.
(a) Unless otherwise expressly provided in the bond resolution, each issue of bonds by the commission shall be the limited obligation of the commission payable solely from amounts received by the commission from revenues derived from the project to be financed or refinanced or from any contract entered into or investment made in connection with the bonds and pledged to the payment of the bonds. (b) The state and the political subdivisions who are parties to the agreement creating a commission under this section are not liable on bonds or any other contract entered into under this section, or for any other debt, obligation, or liability of the commission, whether in tort, contract, or otherwise. (c) The bonds are not a debt of the state or the political subdivisions contracting to create a commission under this section. A bond issue under this section does not obligate the state or a political subdivision to levy any tax or make any appropriation for payment of the bonds. All bonds issued by a commission are payable solely from the funds pledged for their payment in accordance with the bond resolution or trust agreement or indenture providing for their issuance. All bonds shall contain, on their face, a statement regarding the obligations of the state, the political subdivisions who are parties to the agreement creating the commission, and the commission as set forth in this paragraph. (10) AUDITS, FISCAL YEAR.
(a) The board of a commission shall adopt a calendar year as its fiscal year for accounting purposes. The board shall annually prepare a budget for the commission.
(b) A commission shall maintain an accounting system in accordance with generally accepted accounting principles and shall have its financial statements and debt covenants audited annually by an independent certified public accountant, except that the commission by a unanimous vote may decide to have an audit performed under this paragraph every 2 years.
(c) A copy of the budget and audit shall be sent to the governing body of each political subdivision which is a party to the agreement that created the commission and filed with the secretary of administration and the legislative audit bureau.
(11) LIMITATIONS.
(a) A commission may not issue bonds to finance a capital improvement project in any state or territory of the United States unless a political subdivision within whose boundaries the project is to be located has approved the financing of the project. A commission may not issue bonds to finance a capital improvement project in this state unless all of the political subdivisions within whose boundaries the project is to be located has approved the financing of the project. An approval under this paragraph may be made by the governing body of the political subdivision or, except for a 1st class city or a county in which a 1st class city is located, by the highest ranking executive or administrator of the political subdivision.
(b) This section provides a complete alternative method, to all other methods provided by law, to exercise the powers authorized in this section, including the issuance of bonds, the entering into of contracts related to those bonds, and the financing or refinancing of projects. 27 (bm) A project may be located outside of the United States or outside a territory of the United States if the borrower, including a co-borrower, of proceeds of bonds issued to finance or refinance the project in whole or in part is incorporated and has its principal place of business in the United States or a territory of the United States. To the extent that this paragraph applies to a borrower, it also applies to a participant if the participant is a nongovernmental entity.
(c) Any action brought to challenge the validity of the issuance of a bond under this section, or the enforceability of a contract entered into under this section, must be commenced in circuit court within 30 days of the commission adopting a resolution authorizing the issuance of the bond or the execution of the contract.
(d) Bonds issued under this section shall not be invalid for any irregularity or defect in the proceedings for their sale or issuance. The bonds shall contain a statement that they have been authorized and issued pursuant to the laws of this state. The statement shall be conclusive evidence of the validity of the bonds. (12) STATE PLEDGE. The state pledges to and agrees with the bondholders, and persons that enter into contracts with a commission under this section, that the state will not limit, impair, or alter the rights and powers vested in a commission by this section, including the rights and powers under sub. (4), before the commission has met and discharged the bonds, and any interest due on the bonds, and has fully performed its contracts, unless adequate provision is made by law for the protection of the bondholders or those entering into contracts with a commission. The commission may include this pledge in a contract with bondholders.
History: 2009 a. 205; 2011 a. 32, 239; 2013 a. 20.
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