Placentia City Council
AGENDA REPORT
TO: CITY COUNCIL
VIA: CITY ADMINISTRATOR
FROM: DEPUTY CITY ADMINISTRATOR / PUBLIC SERVICES & INFRASTRUCTURE DATE: SEPTEMBER 6, 2022
SUBJECT: STUDY SESSION: PROPOSED PLACENTIA PUBLIC SAFETY CENTER
FINANCING OPTIONS
FISCAL
IMPACT: EXPENSE: $10.9 to $20.8 MILLION DEPENDING ON SELECTED FINANCING
STRUCTURE
REVENUE: LEASE REVENUE BONDS TO FUND PROJECT
COSTS
SUMMARY:
On March 1, 2022, the City Council selected a preferred project alternative for the proposed Placentia Public Safety Center and directed Staff to complete the architectural and engineering design for the project. The City Council also directed Staff to return with a proposed financing structure to pay for the project, currently estimated at $11.4 million. Staff has identified three (3) potential financing structures for the City Council's consideration. All three options involve bond financing for a portion of or the entire project cost. Staff recommends the City Council select Option 1 as it provides for the largest Tong -term General Fund cost savings to the City. Should the City Council elect to move forward with the project, Staff will assemble a Bond Financing Team to structure a lease revenue bond and will return to the City Council in the near future with the bond documents for its consideration and approval to authorize a bond sale.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Receive and file the presentation; and
2. Select Option 1 as the preferred financing structure option; and
3. Direct Staff to assemble a Bond Financing Team to structure Lease Revenue Bonds to finance a portion or entire project cost; and
4. Direct Staff to return to the City Council with bond documents to authorize the bond sale.
3.a.
Sept. 6, 2022
City Council Agenda
September 6, 2022
DISCUSSION:
On March 1, 2022, the City Council received a presentation on the 35% complete preliminary design of the proposed Placentia Public Safety Center. The City Council selected a final preferred project that entails the construction of a two-story, 18,805 square foot building with a ground -level indoor shooting range and an engineered prefabricated Butler Building to house property and evidence collected by the Placentia Police Department. In addition, a new emergency communications center will be constructed on the second floor of the building. The building will also include a training/conference center, staff office space and outdoor storage units for City departments. The current construction cost for the project is estimated to be $11,417,165.
Following the City Council's selection of the preferred project, Staff began working with the project architect to complete construction plans and bid documents for the project. The City Council also directed Staff to return at a later date with a proposed project financing structure for the City Council's consideration. Staff has identified three (3) potential financing structures for the City Council's consideration. Two of the options include a combination of reserve funds, capital project funds and property sales to provide a down payment towards the cost of the project while issuing lease revenue bonds to cover the balance of the project cost. The third option entails bond financing for the entire amount of the project.
Option 1
Source of Funds
Unrestricted Fund Balance Reserves
Delay City Hall/PD HVAC Project FY 23-24
(CIP Fund)
Property Sales
Grand Total Down Payment
Grand Total Bond Amount
Option 2
Total
$3,000,000
$2,000,000
$550,000
$5,550,000
$5,900,000
Source of Funds Total
Unrestricted Fund Balance Reserves $3,000,000
Property Sales $550,000
Grand Total Down Payment $3,550,000
Grand Total Bond Amount $7,850,000
Option 3
Source of Funds
Bond for Full Project Amount
Total
$11,417,165
City Council Agenda
September 6, 2022
FISCAL IMPACT:
The total cost to finance a portion of or the total project amount depends on the financing structure selected which ranges from $10.4 million to $20.8 million as noted in the table below:
Estimated Estimated Total
Construction Estimated Total Bond Average Principal
Option Fund Costs of Issue Annual Debt and Interest
Issuance Proceeds Service (30 years)
1 $5,900,000 $325,000 $6,223,000 $360,000 $10,945,750
2 $7,850,000 $365,000 $8,214,000 $475,000 $14,440,750
3 $11,400,000 $435,000 $11,834,000 $685,000 $20,807,250 Prepared by:
Luis Esteve
Deputy Ci Administrator
Reviewed and ap
Damien R. Arrula
City Administrator
Attachment:
Presentation
Reviewed and approved:
Jenn er Lampman
Director of Finance