View Report — Oakland City Council, July 15, 2025

City Council
July 15, 2025

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AGENDA REPORT

TO: Jestin D. Johnson
City Administrator
FROM: Finance Department

SUBJECT: Issuance and Sale of Special Tax
Bonds for City of Oakland Community
Facilities District No. 2023-1 (Brooklyn
Basin Facilities and Services)
DATE: July 1, 2025

City Administrator Approval Date:

RECOMMENDATION

Staff Recommends That The City Council Adopt A Resolution Making Certain Findings; Approving A Preliminary And Final Official Statement Related To The City Of Oakland Community Facilities District No. 2023-1 (Brooklyn Basin Facilities And Services) Special Tax Bonds, Series 2025; And Adopting Appropriate Findings Under The California Environmental Quality Act.

EXECUTIVE SUMMARY

The City of Oakland (City) has approved a development now known as Brooklyn Basin (and formerly known as the Oak-to-Ninth Avenue Mixed Use Development) on approximately 64.2 acres of land area (and 7.95 acres of water surface area) along the Oakland Estuary (Brooklyn Basin Project).

The City and Zarsion-OHP I, LLC, a California limited liability agreement (Developer), as successor by assignment from Oakland Harbor Partners, LLC, are parties to a Development Agreement, dated August 24, 2006, related to development of the Brooklyn Basin Project (as amended and assigned, the “Development Agreement). The most recent amendment of the Development Agreement is a Third Amendment to the Development Agreement, which was approved by Ordinance No. 13739 C.M.S. on May 16, 2023.

The City Council previously conducted proceedings under the Mello-Roos Community Facilities Act of 1982 (Act) to form City of Oakland Community Facilities District No. 2023-1 (Brooklyn Basin Facilities and Services) (CFD No. 2023-1) for the purpose of authorizing the levy of special taxes upon the land within the CFD No. 2023-1 and issuing bonds secured by certain of those special taxes for financing certain public improvements related to the Brooklyn Basin Project (Facilities) in the aggregate principal amount of $50,000,000. The special taxes levied in CFD No. 2023-1 include a Services Special Tax to fund operation and maintenance costs of public facilities serving the Brooklyn Basin Project and a Facilities Special Tax to provide funds for the acquisition by the City of public facilities serving the Brooklyn Basin Project.

Jestin Johnson (Jul 1, 2025 17:13 PDT)
Jul 1, 2025
Jestin D. Johnson, City Administrator
Subject: Issuance and Sale of Special Tax Bonds for City of Oakland Community Facilities District No. 2023-1 (Brooklyn Basin Facilities and Services) Date: July 1, 2025 Page 2

City Council
July 15, 2025

In connection with the formation of the CFD No. 2023-1, the City and the Developer executed an Acquisition Agreement Relating to: City of Oakland Community Facilities District No. 2023-1 (Brooklyn Basin Facilities and Services), dated as of February 1, 2024, pursuant to which the City may use proceeds of bonds issued by the City for CFD No. 2023-1 and Facilities Special Taxes to pay the purchase price for the Facilities constructed by the Developer. The City’s acquisition of the Facilities with proceeds of bonds and Facilities Special Taxes results in a reimbursement to the Developer of the costs of constructing the Facilities.

The Developer has asked the City to issue the first series of bonds for CFD No. 2023-1 to finance the acquisition of Facilities constructed by the Developer.

On July 16, 2024, in accordance with Section 219 of the City Charter, the City Council adopted Ordinance No. 13809 C.M.S., authorizing the issuance and sale of one or more series of special tax bonds for and on behalf of CFD 2023-1 (Bonds).

Also on July 16, 2024, the City Council adopted Resolution No. 90378 C.M.S., authorizing the issuance of the Bonds, and approving and authorizing related documents and actions.

The City initially intended to issue the Bonds in 2024, but issuance was delayed.

The proposed resolution would document findings required to comply with the Act and approve a preliminary and final Official Statement for the Bonds.

BACKGROUND / LEGISLATIVE HISTORY

Brooklyn Basin Project and the Related Development Agreement

In 2006, the City approved a development known as the Oak-to-Ninth Avenue Mixed Use Development on approximately 64.2 acres of land area (and 7.95 acres of water surface area) along the Oakland Estuary, which included up to 3,100 residential units, up to 200,000 square feet of commercial space, a minimum of 3,534 parking spaces, approximately 31 acres of open space, two renovated marinas, as well as shoreline improvements, new roads, and other infrastructure and improvements (Original Brooklyn Basin Project).

The City, as an original party and as successor to the Redevelopment Agency of the City of Oakland, and the Developer, as successor by assignment from Oakland Harbor Partners, LLC, are parties to the Development Agreement, dated August 24, 2006, approved by Ordinance No. 12760 C.M.S. adopted on July 18, 2006, related to development of the Original Brooklyn Basin Project. The most recent amendment of the Development Agreement is a Third Amendment to the Development Agreement, which was approved by Ordinance No. 13739 C.M.S. on May 16, 2023, together with related entitlements authorized by the City Council pursuant to Resolution No. 89707 C.M.S., Resolution No. 89708 C.M.S., Resolution No. 89709 C.M.S. each adopted on May 2, 2023, and Ordinance No. 13738 C.M.S. adopted on May 16, 2023.

The Original Brooklyn Basin Project, as updated by the Third Amendment to the Development Agreement and related entitlements, is referred to herein as the Brooklyn Basin Project.

Jestin D. Johnson, City Administrator
Subject: Issuance and Sale of Special Tax Bonds for City of Oakland Community Facilities District No. 2023-1 (Brooklyn Basin Facilities and Services) Date: July 1, 2025 Page 3

City Council
July 15, 2025

The Brooklyn Basin Project is divided into four (4) phases and twelve (12) parcels, as summarized below.

Summary of the Brooklyn Basin Project

Parcels
By Phase
Market Rate
Units
Affordable
Units
Total
Units
Development
Status

Phase I
Parcel A 254 254 Completed and occupied
Parcel B 241 241 Completed and occupied
Parcel C 241 241 Completed and occupied
Parcel F 211 211 Completed and occupied
Parcel G 371 371 Completed and under lease up
Subtotal 853 465 1,318

Phase II
Parcel D 243 243 Construction anticipated to start in 2029 Parcel E 191 191 Construction anticipated to start in 2029 Parcel H 382 3821 Construction anticipated to start in 2025 Parcel J 378 378 Completed and under lease up
Subtotal 1,194 1,194

Phase III
Parcel K 400 400 Construction to start approx. 2029
Parcel L 220 220 Construction to start approx. 2031
Subtotal 620 620

Phase IV
Parcel M 568 5682 Construction to start approx. 2031

Total 3,235 465 3,700

At this time, Phase I streets are open to the public (except for certain construction staging areas), and Phase 1 of Township Commons Park (formerly known as Shoreline Park) is constructed and open to the public. Phase 2 street and utility improvements are substantially complete.

Formation of Community Facilities Districts

The Development Agreement provides for the formation of a community facilities district to fund certain public services and permits the Developer to request the City to use any public financing method for public facilities.

Consistent with Section 4.4.4.4 of the Development Agreement, in September of 2017, the City Council established CFD No. 2017-1 to authorize the levy of special taxes upon the land within

1 Developer is considering a proposed 220-unit residential development on Parcel H. 2 Developer is considering an approximate 130-unit residential development on Parcel M.

City Council
July 15, 2025

CFD No. 2017-1 to pay for the operation and maintenance of certain public infrastructure serving the Brooklyn Basin Project. Parcels A, B, C, and F, referenced in the summary table above, are subject to special taxes levied in CFD No. 2017-1, although Parcels A and F are currently exempt from the CFD No. 2017-1 special tax because they are developed with affordable housing.

In 2023, the City established CFD No. 2023-1 to fund operation and maintenance costs of public facilities serving the Brooklyn Basin Project (through the levy of the Services Special Tax) and to provide funds for the acquisition by the City of public facilities serving the Brooklyn Basin Project (through the levy of the Facilities Special Tax). The City is authorized to sell bonds for CFD No. 2023-1 that would be payable from the CFD No. 2023-1 Facilities Special Tax. The parcels referenced in the summary table above, other than Parcels A, B, C, and F, are subject to special taxes levied in CFD No. 2023-1.

ANALYSIS AND POLICY ALTERNATIVES

Analysis

The Developer has asked the City to issue bonds for CFD No. 2023-1 (Bonds) to finance the acquisition of Facilities in accordance with the Acquisition Agreement. Debt service on the Bonds would be payable only from Facilities Special Taxes levied annually on taxable properties within CFD No. 2023-1 in the manner set forth in the Rate and Method of Apportionment of Special Tax (RMA) approved by the Council in connection with the formation of CFD No. 2023-

1. Only properties that have a Certificate of Occupancy, which are defined as “Developed Property” under the RMA, will be taxed to pay debt service on the Bonds. The Bonds will not have any impact on the City’s General Fund.

On July 16, 2024, in accordance with Section 219 of the City Charter, the City Council adopted Ordinance No. 13809 C.M.S, authorizing the issuance and sale of the Bonds.

Also, on July 16, 2024, the City Council adopted Resolution No. 90378 C.M.S ., authorizing the issuance of the Bonds, and approving and authorizing related documents and actions . The Brooklyn Basin Project, with financing assistance from CFD No. 2017- 1 and CFD No. 2023 -1, advances a number of City priorities: 1) development of much needed housing in the City, including affordable housing, consistent with the goals of the newly adopted General Plan Update Housing Element; 2) support for local hire and training programs; and 3) development and funding of vibrant, sustainable infrastructure.

The City initially intended to issue the Bonds in 2024, but issuance was delayed.

The proposed resolution would document findings required to comply with the Act and approve a preliminary and final Official Statement for the Bonds.

Based upon current market conditions as of late May, 2025, the Bonds are estimated to be issued in the approximate principal amount of $4.875 million and carry a true interest cost of approximately 5.78%. The expected costs of issuing the Bonds are $478,250, and the Bonds are expected to generate approximately $3.816 million of net proceeds to finance eligible Facilities.

City Council
July 15, 2025

The sum of all debt service payments on the Bonds through the scheduled final maturity date of September 1, 2055 is estimated to be approximately $10.8 million.

In Resolution No. 90378 C.M.S., the City Council referred to an appraisal of the taxable property in CFD 2023-1 as the basis for the conclusion that the proposed Bonds would meet the three-to- one (3:1) value-to-lien ratio requirements of the Act and the City’s “Amended and Restated Local Goals and Policies and Appraisal Standards for Community Facilities Districts” adopted by the City Council on June 17, 2015, by Resolution No. 85664 C.M.S . (Goals and Policies). Because of the delay in issuing the Bonds, the resulting passage of time since the appraisal was prepared, and the availability of tax year 2024 -25 assessed values, the City has determined not to update the appraisal prior to issuing the Bonds.

Based on the tax year 2024-25 assessed value of Parcels G and J within CFD 2023- 1 of $356,966,526, a maximum par amount of Bonds of $6,000,000, and overlapping tax and assessment debt of $9,609,966, the overall value- to-lien ratio of Parcels G and J within CFD 2023-1 is approximately 22.87 to 1.

The owners of Parcels G and J have filed assessment appeal applications with the County of Alameda requesting that the assessed values of Parcels G and J be reduced by 50%. These appeals are pending with the County of Alameda, and no assurances can be given as to the timing or result of the appeals. If the appeals were granted, the value-to-lien ratio described above would be reduced by a corresponding amount.

The City Council approved the various legal documents required for the issuance of the Bonds pursuant to Resolution No. 90378 C.M.S.. Because of the delay in the issuance of the Bonds, the City Council is being asked to approve:

• Resolution of the City Council making certain findings as described above and approving a Preliminary and Final Official Statement for the Bonds.

• Preliminary Official Statement ( Attachment A). The Official Statement is the primary disclosure document for investors in the Bonds. A Preliminary Official Statement will be circulated to potential investors prior to the pricing of the Bonds. After the Bonds have been priced, a Final Official Statement wi ll be circulated to investors; the Final Official Statement should be identical to the Preliminary Official Statement except for the addition of pricing information (principal amount, interest rates, redemption terms).

The Preliminary Official Statement describes the Facilities Special Taxes to be levied in CFD No. 2023-1 and the development plans and status for the property within CFD No. 2023-1, and information on the Developer, multifamily housing builders for CFD No. 2023- 1 (Vertical Builders) and, more specifically, the owners of the two parcels that currently constitute Developed Property under the Rate and Method : 260 BB Way Development LLC (Parcel G) and CV OW Parcel J Owner LLC (Parcel J) . The Preliminary Official Statement will also identify the tax year 2024 -25 assessed values of the taxable parcels in CFD No. 2023-1.

The Preliminary Official Statement is prepared by Jones Hall, serving the City as disclosure counsel for this transaction, with the assistance of the financing team, including Jestin D. Johnson, City Administrator
Subject: Issuance and Sale of Special Tax Bonds for City of Oakland Community Facilities District No. 2023-1 (Brooklyn Basin Facilities and Services) Date: July 1, 2025 Page 6

City Council
July 15, 2025

City staff, the Developer, the City’s municipal advisor, the underwriter of the Bonds , and the City’s special tax consultant.

The Preliminary Official Statement has been reviewed and approved for transmittal to the City Council by the City’s financing team. The distribution of the Preliminary Official Statement by the City is subject to federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require the Preliminary Official Statement to include all facts that would be material to an investor in the Bonds. Material information is information that there is a substantial likelihood that would have actual significance in the deliberations of the reasonable investor when deciding whether to buy or sell the bonds. If the City Council concludes that the Preliminary Official Statement includes all facts that would be material to an investor i n the Bonds , it must adopt a resolution that authorizes staff to execute a certificate to the effect that the Preliminary Official Statement has been “deemed final.”

The Securities and Exchange Commission (SEC), the agency with regulatory authority over the City’s compliance with the federal securities laws, has issued guidance as to the duties of the City Council with respect to its approval of the Preliminary Official Statement.

In its “Report of Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of the Board of Supervisors” (Release No. 36761 / January 24, 1996) (Release), the SEC stated that, if a member of the City Council has knowledge of any facts or circumstances that an investor would want to know about prior to investing in the Bonds, whether relating to their repayment, tax-exempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should endeavor to discover whether such facts are adequately disclosed in the Preliminary Official Statement. In t he Release, the SEC stated that the steps that a member of the City Council could take include becoming familiar with the Preliminary Official Statement and questioning staff and consultants about the disclosure of such facts.

The key sections of the Preliminary Official Statement are summarized below:

• “THE 2025 BONDS”: This section summarizes the key terms of the Bonds , including payment dates and redemption provisions.
• “SECURITY FOR THE 2025 BONDS ”: This section summarizes key security terms, including the City’s pledge of Facilities Special Tax revenues, its covenant to levy Facilities Special Taxes according to the RMA , and its covenant to foreclose on parcels that are delinquent in the payment of Facilities Special Taxes. The Bonds are a limited obligation of the City, payable only from Facilities Special Taxes levied in CFD No. 2023-1 and monies in the funds and accounts established under the Fiscal Agent Agreement described below. • “THE DISTRICT”: This section summarizes certain features of CFD No. 2023- 1, including the appraised value of taxable property, overlapping taxes, assessments, and debt and anticipated debt service coverage provided by maximum Facilities Special Taxes that may be levied under the RMA. • “THE BROOKLYN BASIN DEVELOPMENT” and “THE DEVELOPERS” :

These sections include information provided by the Developer, and describe the proposed development in CFD No. 2023-1 and its current status. • “BOND OWNERS’ RISKS”: This section highlights the primary risks Jestin D. Johnson, City Administrator
Subject: Issuance and Sale of Special Tax Bonds for City of Oakland Community Facilities District No. 2023-1 (Brooklyn Basin Facilities and Services) Date: July 1, 2025 Page 7

City Council
July 15, 2025

associated with the Bonds , including failure to complete the proposed development, natural disasters , and failure of property owners to pay their Facilities Special Taxes.
• “TAX MATTERS”: This section describes the tax-exempt nature of interest on the Bonds.

FISCAL IMPACT

There is no negative General Fund or fiscal impact to the City. The Bonds will be payable only from Facilities Special Taxes levied in CFD No. 2023-1.

Administrative Costs. CFD No. 2023-1 will be administered by the Oakland Public Works Department, with assistance from other City service areas as necessary and appropriate, including the Finance Department and Budget Bureau, among others.

The RMA for CFD No. 2023-1 provides for the levy of Facilities Special Taxes to pay for the City’s costs of administering CFD No. 2023-1.

Costs of Issuing the Bonds. The payment of underwriting compensation, and the issuance- related fees and expenses of the fiscal agent, the municipal advisor, bond/disclosure counsel, and special tax consultant will be paid from the proceeds of the Bonds.

PUBLIC OUTREACH / INTEREST

A notice of the proposed action was provided in accordance with City practices and the Ralph M. Brown Act to ensure that persons interested in the issuance of the Bonds would have an opportunity to be heard by the City Council.

COORDINATION

This report was prepared by the Finance Department in coordination with the Office of the City Attorney.

SUSTAINABLE OPPORTUNITIES

Economic: Issuance of the Bonds will facilitate the long-term economic development of the Brooklyn Basin Project, which includes 3,700 new residential units and 200,000 square feet of new ground floor commercial space, which will generate tax revenue for the City of Oakland.

Environmental: Issuance of the Bonds will result in the construction of high quality public infrastructure in the Brooklyn Basin Project. Together, CFD No. 2017-1 and CFD No. 2023-1 will ensure adequate operation and maintenance of public infrastructure for the Brooklyn Basin Project, including quality open space for Oakland residents.

City Council
July 15, 2025

Race & Equity: CFD No. 2023-1 is located in District 2 and will add additional open space and other public amenities to an ethnically diverse community in Oakland, one that has traditionally been underserved by public amenities.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)

The Brooklyn Basin Project was analyzed under the certified 2009 Brooklyn Basin Environmental Impact Report (2009 EIR), which is comprised of the following documents: Oak to Ninth Avenue Project Draft EIR, August 2005; Oak to Ninth Avenue Project, 2006 Addendum #1 to the Certified Environmental Impact Report, June 7, 2006; Oak to Ninth Avenue Project Final EIR, August 2006; Revisions to the Analysis in the Oak to Ninth Project EIR (SCH. No. 2004062013) Prepared to Comply with the Alameda County Superior Court Order Case No.

RG06-280345 and Case No. RG06-280471, November 2008; Oak to Ninth Avenue Project Responses to Comments on the Revisions, December 2008; and Resolution No. 81769 C.M.S., approved January 20, 2009.

In accordance with Public Resources Code Section 21166 and California Environmental Quality Act (CEQA) Guidelines Sections 15162 and 15163, the City examined whether the additional 600 units approved in the Third Amendment to Development Agreement would result in “substantial changes” that would trigger the need for a major modification to the previously certified 2009 EIR due to a new significant impact or a substantial increase in the severity of previously identified significant impacts. The City, as the Lead Agency, determined that a Supplemental Environmental Impact Report (SEIR) for the updated Brooklyn Basin Project would be required.

As further set forth in the City’s Resolution No. 89707 C.M.S., adopted on May 2, 2023, certifying the SEIR, the updated Brooklyn Basin Project did not result in any new or more severe potentially significant or significant and unavoidable impacts than analyzed in the previous 2009 EIR for the Original Brooklyn Basin Project.

Staff recommends that the City Council find and determine that the issuance of the Bonds are subject to the 2009 EIR for the Original Brooklyn Basin Project and the SEIR for the updated Brooklyn Basin Project and, because the issuance of the Bonds for CFD No. 2023-1 is not a substantive change to the Updated Brooklyn Basin Project, that no further environmental review is required. None of the circumstances that require a supplemental or subsequent EIR pursuant to CEQA Guidelines Sections 15162 or 15163 have occurred.

In addition, staff recommends that the City Council find and determine that the issuance of the Bonds for CFD No. 2023-1 is otherwise exempt from CEQA review under the following CEQA Guidelines sections: 15183 (projects consistent with a community plan, general plan or zoning), 15301 (existing facilities), and 15308 (actions by regulatory agencies for the protection of the environment), which individually and collectively form a basis for CEQA exemption.

City Council
July 15, 2025

ACTION REQUESTED OF THE CITY COUNCIL

Staff Recommends That The City Council Adopt A Resolution Making Certain Findings; Approving a Preliminary and Final Official Statement Related to the City of Oakland Community Facilities District No. 2023-1 (Brooklyn Basin Facilities and Services) Special Tax Bonds, Series 2025; And Adopting Appropriate Findings Under the California Environmental Quality Act.

For questions regarding this report, please contact David Jones, Treasury Administrator, at 510-238-6508.

Respectfully submitted,

Jestin Johnson, City Administrator
on behalf of Finance Department

Reviewed by:

David Jones, Treasury Administrator

Prepared by:

Dawn Hort, Assistant Treasury Administrator

Attachments (1):

Attachment A: Preliminary Official Statement

Jestin Johnson (Jul 1, 2025 17:13 PDT)

Oakland City CouncilJuly 15, 2025

Oakland City Council
July 15, 2025