Finance and Management Committee July 11, 2023
AGENDA REPORTTO:Jestin D. JohnsonFROM:Erin Roseman City Administrator Director of FinanceSUBJECT: Oakland GO Bonds, Series 2023(Measures DD, KK, U)DATE:June 12, 2023 City Administrator Approval Date: RECOMMENDATION Staff Recommends That The City Council Adopt An Ordinance Providing For The Borrowing Of Funds And The Issuance And Sale Of General Obligation Bonds In An Amount Not To Exceed $165,000,000 And Approving Certain Related Matters. EXECUTIVE SUMMARY Adoption of the proposed ordinance will authorize the issuance and sale of one or more series of general obligation bonds (the "Bonds"), which may be taxable or tax exempt and have one or more maturities, per the Oakland Trust for Clean Water and Safe Parks Bond Ordinance, which was approved by more than two-thirds of the qualified voters of the City at the November 5, 2002 General Election (“Measure DD”); the 2016 Infrastructure Bond Ordinance, which was approved by the voters of the City of Oakland at the November 8, 2016 General Election (“Measure KK”); and the 2022 Affordable Housing and Infrastructure Bond Ordinance, which was approved by the voters of the City of Oakland at the November 8, 2022 General Election (“Measure U”); and the City of Oakland Affordable Housing and Infrastructure Bond Law Oakland Municipal Code Chapter 4.54 (the “Bond Act”). The Bonds will be issued in an aggregate principal amount not to exceed $165,000,000. The aggregate principal amounts of Bonds to be issued under each of Measure DD, Measure KK, and Measure U shall be finally determined by the City Administrator or the Director of Finance. The terms and provisions of the Bonds, the sale of the Bonds, and the forms of agreements relating to the Bonds, including but not limited to forms of an official notice of sale, bond purchase agreement, fiscal agent agreement or other related agreements, will be scheduled for consideration by the City Council at a later date. Proceeds of the Bonds will finance Streets and Roads Projects, Facilities Projects, and Affordable Housing Preservation Projects (the “Projects”) in an estimated amount of $165 million per the Proposed Fiscal Year 2023-2025 Policy Budget (the “Biennial Budget”), which is anticipated to be adopted by June 30, 2023. The Projects will be detailed in a separate resolution scheduled for City Council approval at a later date, and are also included in the Proposed Fiscal Year 2023-2025 Capital Improvement Program (the “CIP”), which is anticipated to be adopted with the Biennial Budget. Debt service on the Bonds is payable from ad valorem taxes levied upon all taxable property in the City.
Jestin Johnson (Jun 29, 2023 21:14 PDT)
Jun 29, 2023
Jestin Johnson, City AdministratorSubject: Oakland GO Bonds, Series 2023 (Measures, DD,KK, and U) Date: June 12, 2023 Page 2 Finance and Management Committee July 11, 2023
BACKGROUND / LEGISLATIVE HISTORYPursuant to Section 219 of the Charter of the City, an ordinance is required to authorize the borrowing of money. Measure DD, the Oakland Trust for Clean Water and Safe Parks is a $198,250,000 general obligation bond measure passed by Oakland voters in November 2002. Per Measure DD, the bonds may be issued to fund projects as follows: Lake Merritt and Water Quality Improvements $88,250,000 Estuary Waterfront Access, Parks and Clean-up $53,000,000 Lake Merritt to Estuary Connection Channel $27,000,000 Youth and Public Recreation Facilities $20,000,000 Creeks and Waterways Restoration $10,000,000Authorization Total $198,250,000 Measure KK authorizes the issuance of Infrastructure Bonds in an amount not to exceed $600 million to be used to acquire and make improvements to real property, such as improvement and rehabilitation of streets, City-maintained sidewalks and related infrastructure, renovation and rehabilitation of City facilities including libraries, public safety, recreation and other buildings, and acquisition, improvement, rehabilitation, preservation, construction and repair of affordable housing. Per Measure KK, the bonds may be issued to fund projects as follows: Streets and Roads Projects $350,000,000 Facilities Projects $150,000,000 Anti-Displacement and Affordable Housing Preservation Projects $100,000,000 Authorization Total $600,000,000 On November 8, 2022, qualified voters of the City approved Measure U, which authorized the issuance of Affordable Housing and Infrastructure Bonds in an amount not to exceed $850 million to fund affordable housing and housing preservation projects, transportation projects, and various city infrastructure. Per Measure U, the bonds may be issued to fund projects as follows: Affordable Housing Preservation Projects $350,000,000 Transportation Projects $290,000,000 Citywide Facility Preservation and Improvement Projects $210,000,000 Authorization Total $850,000,000 The City proposes to finance some of the projects described above with proceeds of the bonds issuance. Pursuant to Section 2(C) of Measure KK and Section 3(C) of Measure U, projects will be completed according to City Council established priorities, including those projects set forth Jestin Johnson, City AdministratorSubject: Oakland GO Bonds, Series 2023 (Measures, DD,KK, and U) Date: June 12, 2023 Page 3 Finance and Management Committee July 11, 2023
within the CIP, and additionally, the City Council will identify the Projects and various project details, as outlined in Measures KK and U, prior to each issuance. A summary of Measures DD and KK General Obligation Bond issuances is included as Table 1 below. Table 1a: Summary of General Obligation Bond (Measure DD) Issuance As of 6/30/2023 Bond Series Par Amount Purpose2003A (Tax-Exempt) $71,450,000 Parks & Facilities2009B (Tax-Exempt) $64,545,000 Parks & Facilities2017C (Tax-Exempt) $26,500,000 Parks & FacilitiesTotal: $162,495,000 Table 1b: Summary of General Obligation Bond (Measure KK) Issuance As of 6/30/2023 Bond Series Par Amount Purpose 2017A-1 (Tax-Exempt) $62,735,000 Streets & Facilities2017A-2 (Taxable) $55,120,000 Housing2020B-1 (Tax-Exempt) $140,010,000 Streets & Facilities2020B-2 (Taxable) $44,880,000 Housing2022C-1(Tax-Exempt) $198,645000 Streets & Facilities2022C-2 (Taxable) $13,670,000 Streets & FacilitiesTotal: $515,060,000A summary of unissued authorization is summarized in Table 2 below. Table 2: Summary of General Obligation Bond Authorization Issued and Unissued As of 6/30/2023 Measure Authorization Amount Issued Authorization Unissued Authorization Measure DD $198,250,000 $162,495,000 $35,755,000 Measure KK $600,000,000 $515,060,000 $84,940,000 Measure U $850,000,000 - $850,000,000 $1,648,250,000 $677,555,000 $970,695,000 Jestin Johnson, City AdministratorSubject: Oakland GO Bonds, Series 2023 (Measures, DD,KK, and U) Date: June 12, 2023 Page 4 Finance and Management Committee July 11, 2023
ANALYSIS AND POLICY ALTERNATIVES The ordinance will authorize the issuance and sale of the Bonds which are the fourth tranches of general obligation bonds issued per Measures DD and KK, and the first tranche of general obligation bonds issued per Measure U. The Bonds will be issued in an aggregate principal amount not to exceed $165,000,000 in one or more series, which may be taxable or tax exempt. The aggregate principal amounts of Bonds to be issued under each of Measure DD, Measure KK, and Measure U shall be finally determined by the City Administrator or the Director of Finance. The terms and provisions of the Bonds, the sale of the Bonds, and the forms of agreements relating to the Bonds, including but not limited to forms of an official notice of sale, bond purchase agreement, fiscal agent agreement or other related agreements, will be scheduled at a later date for consideration and approval by resolution of the City Council. A proposed financing schedule is included in the following Table 3. Table 3: Proposed Financing Schedule Date Activity July 18, 2023 1st reading of ordinance at City Council September 19, 2023 2nd reading of ordinance Adopt resolution to approve projects Adopt resolution to approve sale and financing documents Week of October 2, 2023 Pricing of the Bonds October 18 2023 Closing of the BondsProceeds of the Bonds will finance Projects in an estimated amount of $165 million per the Budget. The Projects will be approved by resolution of the City Council and are included in the CIP. An estimate of the amount issued per authorization is included in the following Table 4. An estimate of Project funding is included in the following Table 5. Table 4: Estimated Issuance per Authorization FY 2023/24Measure DD $-(1)Measure KK $54,000,000Measure U $111,000,000 Total $165,000,000(1) No funding is allocated to Measure DD for FY2023/24 but is included in this Ordinance to provide flexibility due to the timing of when this report was written and the Biennial Budget has not yet been adopted. Table 5: Estimated Series 2023 Projects Category Amount Streets, Sidewalks and Related Infrastructure $54,000,000City Facilities$36,200,000Affordable Housing and Infrastructure$74,800,000Total Project Funds: $165,000,000 Jestin Johnson, City AdministratorSubject: Oakland GO Bonds, Series 2023 (Measures, DD,KK, and U) Date: June 12, 2023 Page 5 Finance and Management Committee July 11, 2023
Principal and interest due (i.e. debt service) on the Bonds is payable from ad valorem taxes levied upon all taxable property in the City. FISCAL IMPACT The Bonds are payable from ad valorem taxes levied upon all taxable property in the City. The City Council is authorized and obligated to levy and collect annually ad valorem taxes in an amount sufficient to pay the principal and interest due on the Bonds (i.e. debt service). Fees related to the issuance of the Bonds will be paid from bond proceeds and contingent upon closing of the transaction. Proceeds of the Bonds will finance the Projects in an estimated amount of $165 million. This funding is included in the Budget. PUBLIC OUTREACH / INTEREST This item did not require public outreach other than the required posting on the City’s website. COORDINATION This report was prepared by the Finance Department in coordination with the Department of Transportation, Oakland Public Works Department, Department of Housing and Community Development, Information Technology Department and the Office of the City Attorney. SUSTAINABLE OPPORTUNITIES Economic: The capital improvement projects implemented under Measure DD, Measure KK, and Measure U will be required to comply with all Local and Small Local Business Enterprise (“L/SLBE”) and local hire programs with verification by the Department of the Workplace and Employment Standards. The Projects will improve roadways, sidewalks, parks, public buildings, storm drainage and other facilities to the economic benefit of the City. In addition, the affordable housing funds will be utilized to funds loans for the new construction, acquisition and other projects providing affordable and deeply affordable, restricted units for extremely low to moderate income households. Environmental: This item will provide funding to acquire and make improvements to real property such as improvement and rehabilitation of streets, sidewalks and related infrastructure and renovation and rehabilitation of City facilities including libraries, public safety, recreation and other buildings, as well as affordable and deeply affordable housing developments located near transit, services and employment. Projects receive priority for funding partially based on their ability to achieve high scores using Leadership in Energy & Environmental Design (“LEED”) or Alameda County’s Green Point Rating system. . Transportation and public works projects that invest in sustainable infrastructure and resilience strategies also receive priority for funding. In addition, projects receive priority for funding partially based on their ability to achieve high Jestin Johnson, City AdministratorSubject: Oakland GO Bonds, Series 2023 (Measures, DD,KK, and U) Date: June 12, 2023 Page 6 Finance and Management Committee July 11, 2023
scores using Leadership in Energy & Environmental Design (“LEED”) or Alameda County’s Green Point Rating system.Race and Equity: This item will provide funding to affordable housing developers to acquire and make improvements to real property such as acquisition, improvement, rehabilitation, preservation and construction. Additionally, universal access to reliable internet service is imperative to ensuring equitable connectivity across Oakland. Projects are reviewed and evaluated to determine how they meet the needs of Oakland’s most underserved communities in accordance with the bond requirements. In addition, transportation and public works projects that address safety and public health in priority communities are prioritized for funding. Equity is represented by both a standalone prioritization factor and as a sub-factor identifying disparities within other prioritization factors including Health and Safety, Existing Conditions, Environment and Improvement. ACTION REQUESTED OF THE CITY COUNCILStaff Requests That The City Council Adopt An Ordinance Providing For The Borrowing Of Funds And The Issuance And Sale Of General Obligation Bonds In An Amount Not To Exceed $165,000,000 And Approving Certain Related Matters. For questions regarding this report, please contact Erin Roseman, Director of Finance, at (510) 238-2026. Respectfully submitted, ERIN ROSEMAN Director of Finance, Finance Department Reviewed by: David Jones, Treasury Administrator Treasury Bureau Prepared by: Dawn Hort, Assistant Treasury Administrator Treasury Bureau