City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2025-00780 4/8/2025 Item 9.
City Participation in the Bond Opportunities for Land Development Program [Noticed 03/28/2025]
File ID: 2025-00780
Location: Citywide
Recommendation: Conduct a public hearing and upon conclusion, adopt a Resolution 1) authorizing the City to participate in the California Municipal Finance Authority’s (CMFA) Bond Opportunities for Land Development Program (BOLD Program); 2) authorizing the CMFA to accept applications from property owners, conduct proceedings and levy special taxes within the City of Sacramento pursuant to the Mello-Roos Community Act of 1982, as amended; and 3) authorizing related actions to implement the BOLD Program in the City of Sacramento.
Contact: Eric Frederick, Special Districts Manager, (916) 808-5129, [email protected], Department of Finance
Presenter: Eric Frederick, Special Districts Manager, (916) 808-5129, [email protected], Department of Finance
Attachments:
1-Description/Analysis
2-Resolution
Description/Analysis
Issue Detail: Streamline Sacramento, a 2025 initiative spearheaded by Mayor McCarty and Councilmember Pluckebaum, was established to identify improvements to the City’s development approval process with the overarching goal of increasing the supply and decreasing the cost of housing. During a Streamline Sacramento meeting on February 27, 2025, the development community recommended that the City participate in the BOLD Program. The recommendation was added to the Streamline Sacramento Potential Actions Table and now staff is requesting authorization from Council to participate in the BOLD Program.
The Bold Program is an economic-development tool used throughout the State to finance public infrastructure required for new development. The BOLD Program is offered by CMFA, a joint powers agency that works on behalf of its members to facilitate economic development in local communities
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throughout the State. The City is already a member of CMFA.
CMFA recognizes that new residential development often challenges the mission of municipalities to provide infrastructure and schools, since new development triggers the need to construct, acquire, or otherwise provide additional public facilities to accommodate that growth. BOLD offers a means to finance new or continuing construction of infrastructure and public facilities through bonds CMFA issues as an alternative to issuance of land-secured bonds directly by a public entity. BOLD is designed to help local government municipalities, schools and land developers throughout the State work together to cost effectively finance public infrastructure projects and development fees.
Under the BOLD Program, bonds are issued by a community facilities district (CFD) formed by CMFA under the Mello-Roos Community Facilities Act of 1982 (California Government Code Section 53311 et seq.) (Act). The Act offers great financing flexibility and is commonly used by cities, schools and other local agencies throughout the State to generate funds for the payment of public facilities, including development fees for facilities.
The BOLD Program is handled by a team of bond industry professionals with significant experience in CFDs in the State. All have highly specialized expertise in CFD bond issuance and sales and are consistently ranked among the top firms in the field. In addition, if the City desires to use a municipal advisor of its own choosing to review the BOLD Program application and/or other program documents for each development project it may do so, with all related costs payable from bond proceeds. Specifically, the BOLD Program utilizes Jones Hall for bond counsel services, Goodwin Consulting for special tax consulting services, and Piper Sandler & Co. for underwriting services, all of whom have worked with the City in its own CFD financings.
Although the CFD would be formed within the City’s jurisdiction, little City involvement is required.
Council is only required to approve participation in the BOLD Program and form agreements (which agreements will be brought back to Council at a later date), and CMFA thereafter works with staff to ensure the program is meeting the City’s objectives. CMFA and its consultant team will form and approve each CFD, CMFA will issue bonds on behalf of the CFD, and levy and collect the special taxes each year. By working directly with developers, the BOLD Program facilitates financing for infrastructure and fee obligations of developers, covering a broad range of development cost obligations necessary for new development imposed by municipalities, including both facilities and/or impact fees. Using the BOLD Program alleviates local agency staff time constraints and allows staff to focus on other aspects of processing land development projects. Further details regarding the CFD formation and bond issuance process are provided below.
Determining Special Tax Rates
: Formation of each CFD requires the establishment of the annual special tax rates. The formula for computing special tax rates will be included in the resolutions to be adopted by CMFA as part of the CFD formation proceedings. Typically, the formula will include a basic, undeveloped land tax with an increase in rate and shifting of the tax to developed lands at
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building permit stage. Consistent with the City’s current practices, the total amount of taxes on developed land generally will not exceed 1.8% of its projected market value in its completed state.
Bond Issuance: Bonds are issued through CMFA, with little involvement from local agencies needed for the issuance process. CMFA will establish CFDs to acquire public facilities and the financing thereof. The City will enter into a joint community facilities agreement, acquisition agreement or similar agreement to receive the bond proceeds (forms of which will be brought back to Council at a later date for approval), and to meet the general requirements to maintain the tax exemption of interest on the bonds. CMFA adopts the resolutions needed to authorize and issue the special tax bonds and awards the sale to the bond underwriter.
Use of Bond Proceeds: Once the bond issuance occurs, bond proceeds are available to be disbursed. The proceeds are held by a bond trustee and available, as directed by the developer and approved by the local agency, to be used to meet obligations to the City and other local agencies according to the structure and timing required for development approvals. Pursuant to an acquisition agreement or similar document, the City will determine and agree to its role in inspecting and accepting infrastructure and/or payment of financed impact fees.
Underwriting for Bond Issuance
: The CFD may be formed early in the development process, with issuance of bonds at a later time or in multiple series. The following are the typical criteria for bond issuance, subject to modification by CMFA for any particular issuance:
· Minimum 4:1 value-to-debt ratio overlapping (assessed or appraised) · No discretionary approvals required for build-out of the portion of the CFD directly relating to the bond security
· Entitlements received that are necessary for phase to be bonded · Financing plan for backbone infrastructure complete or imminent and/or performance bond in place
Credit criteria will be reviewed by the underwriting team on a case-by-case basis to ensure reasonable interest rates at issuance. Additionally, similar credits can be pooled together into a single bond issue with pooling flexibility assuring the most cost-effective bond issuance for each project.
Annual Administration
: Administration of all aspects of the BOLD Program is handled by CMFA, without cost to or burden on the City. City staff time can and will be reimbursed by the participating developers upfront and by CMFA once bonds are issued.
Giving Back to Local Communities: CMFA shares a portion of its issuance fees directly with its member communities. In addition, a grant from a portion of the issuance fee is made to the California Foundation for Stronger Communities (CFSC) to fund charities designated by the member
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communities. A portion of the annual fees received by CMFA are in turn directed to charitable activities within its member communities. This unique commitment to give back directly to the communities in which they operate sets CMFA apart from other Joint Powers Authority conduit issuers.
Information for Bond Marketing: Tax-exempt municipal bonds are sold through an offering document known as an Official Statement, which describes to potential purchasers of the bonds the terms, security and repayment of the bonds and details about the property securing the bonds. Since, prior to home sales, the land is owned by the developer entity(ies), relevant information for the Official Statement needs to describe the developer and the development plan. The BOLD Program financing team will work with the developer to provide the required information and approve the final language to be provided to prospective bond buyers.
Disclosure of Special Tax to Home Buyers: California law requires developers to disclose to home buyers the lien of any CFD special tax which will be present on the purchased property. The form of disclosure is simple and becomes part of the various sale documents presented to buyers for signature prior to a home sale.
Policy Considerations: The BOLD Program supports the City’s goal of improving development related processes with the overarching goal of increasing the supply and decreasing the cost of housing by offering development projects a cost-effective way to finance public infrastructure projects and development fees.
Economic Impacts: None.
Environmental Considerations: This report concerns administrative activities and governmental fiscal activities that do not constitute a “project” under the California Environmental Quality Act (CEQA) Guidelines Sections 15378(b)(4) and 15378(b)(5). The proposed action in this report is therefore not a “project” subject to the provisions of CEQA (CEQA Guidelines Section 15060(c)(3)).
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: Participation in the BOLD Program would give the City another means to offer financing of impact fees and public infrastructure with competitive interest rates, lower financing costs, and minimal City staff costs. The City currently participates in the Statewide Community Infrastructure Program (SCIP) which offers similar financing options for the construction of public infrastructure and payment of development impact fees to the development community. City participation in the SCIP program was authorized by Council in 2017 (City Resolution No. 2017- 0136).
File ID: 2025-00780 4/8/2025 Item 9.
As part of the Streamline Sacramento initiative, the development community has expressed a desire for the City to adopt and implement the BOLD Program and it is an offering of CMFA that the City, as a member of CMFA, is entitled to utilize. The benefits to property owners that choose to participate in the BOLD Program include the following:
· Only those who choose to participate will have special taxes levied on their properties. · Low-cost, long-term, tax-exempt financing will be utilized instead of paying cash for public infrastructure and development impact fees, thus freeing up capital for other purposes. · Special taxes may be prepaid by property owners at any time. · Tax-exempt financing may be utilized by smaller projects that may otherwise struggle to absorb the costs of forming a CFD and issuing bonds on their own.
The benefits to the City for participating in the BOLD Program include the following:
· As in conventional CFD financings, the City is not liable to repay any bonds issued. · CMFA handles all CFD formation and administration duties, as well as all bond issuance and bond administration tasks.
· It offers the development community additional tax-exempt financing options that can be utilized by both small and large development projects, which will help increase the supply and decrease the cost of housing.
· It helps the development community with little impact to City operations because processes and procedures are already in place at the City to manage this type of program.
Staff recommends Council conduct the public hearing on the BOLD Program and, following its conclusion, adopt a resolution authorizing the BOLD Program within the City’s boundaries.
Financial Considerations: There is no impact to the General Fund if the City Council adopts this resolution. All costs and expenses related to the formation, issuance of bonds and ongoing administration for any CFD formed by the BOLD Program are the responsibility of CMFA and there is no liability or fiscal impact on the City. The City can be reimbursed for any staff time expended on the program, and BOLD Program financing will not affect the dollar amount of development impact fees to be collected for each project.
Local Business Enterprise (LBE): Not applicable.
RESOLUTION NO. 2025-
Adopted by the Sacramento City Council
April 8, 2025
Resolution Authorizing Use of the Bond Opportunities for Land Development Program and Authorizing the California Municipal Finance Authority to Accept Applications From Property Owners, Conduct Proceedings and Levy Special Taxes within the City of Sacramento Pursuant to the Mello-Roos Community Facilities Act of 1982, as Amended; and Authorizing Related Documents and Actions
BACKGROUND
A. The California Municipal Finance Authority (the “CMFA”) is a joint exercise of powers authority, the members of which include numerous cities, counties and other local agencies in the State of California (the “State”).
B. City of Sacramento (the “City”) is currently a member of CMFA in good standing.
C. The CMFA has established the Bond Opportunities for Land Development Program (the “BOLD Program”) to allow the financing of certain public facilities and/or certain development impact fees that finance public facilities (together, the “Improvements”) levied by local agencies in the State through the levy of special taxes under the Mello- Roos Community Facilities Act of 1982, as amended (the “Act”).
D. The CMFA from time to time may be requested by owners of land within the City to utilize the BOLD Program for the financing of Improvements related to new development within the City, which Improvements will be financed for acquisition by the City or to finance impact fees payable to the City in connection with new development.
E. The City desires to allow the owners of property within the City to participate in the BOLD Program (“Participating Developers”) and to allow the CMFA to conduct proceedings under the Act to form community facilities districts (“CFDs”) from time to time under the Act, to levy special taxes within such CFDs, and to issue bonds secured by such special taxes under the Act to finance the Improvements, provided that such Participating Developers vote in favor of the levy of such special taxes and bonded indebtedness.
F. Property owners within the jurisdiction of the City may in the future elect to be Participating Developers upon obtaining approval of the CMFA, and the CMFA may conduct proceedings under the Act to form CFDs, levy special taxes within such CFDs and issue bonds secured by such special taxes to finance Improvements.
G. The City will not be responsible for the conduct of any proceedings under the Act for the formation of any CFD, the levy or collection of special taxes for any CFD or any required remedial action in the case of delinquencies in any special tax payments, or the issuance, sale or administration of any bonds issued in connection with the BOLD Program.
H. The City finds that the BOLD program offered by the CMFA can provide significant public benefits, and in conformance with Government Code Section 6586.5 relating to the issuance of bonds by a joint powers authority of which the City is a member, notice was published at least five days prior to the adoption of this resolution at a public hearing, which was duly conducted by this City Council concerning the significant public benefits of the BOLD Program and the bond financing of the Improvements from time to time.
I. Bonds of BOLD Program CFDs are issued through CMFA, with no involvement of the City needed other than approving the use of the program and, prior to actual issuance of bonds, entering into an agreement to acquire the public facilities or fees to be paid for with the bond proceeds, and CMFA authorizes and issues the bonds in their name and awards their sale to the bond underwriter per the underwriter’s credit requirements.
J. CMFA’s financing team provides the bond documentation and the Official Statement for the bonds through its bond counsel.
K. By authorizing use of the BOLD Program in the City, the City will not be liable to repay the bonds issued by CMFA or the special taxes imposed on the participating properties and would have no contractual relationship with bond owners or the bond trustee.
L. Upon issuance of the bonds, proceeds are a funding source for direct payment of impact fees or to otherwise reimburse developer costs for public facilities associated with new development; once the bond issuance occurs, bond proceeds are available to be disbursed pursuant to a joint community facilities agreement and/or acquisition agreement between CMFA and the City for each project, the form of which will be brought to City Council for approval at a later date, and the bond proceeds are held by a bond trustee or fiscal agent and become available to a Participating Developer as directed by the City for use on public capital improvements benefitting the City.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1 The City Council finds and determines that the background statements A through L are true and correct.
Section 2 The use of the BOLD Program in connection with the financing of Improvements is hereby authorized and approved. The City Manager or the City Manager’s designees are hereby authorized and directed to allow BOLD Program participation to be available to property owners who are subject to the payment of fees for new development and/or who are conditioned to install public improvements in connection with new development.
Section 3 The City hereby finds and declares that the issuance of bonds by the CMFA in connection with the BOLD Program will provide significant public benefits, including without limitation, savings in effective interest rate, bond preparation, bond underwriting and bond issuance costs and the more efficient delivery of local agency services to residential and commercial development within the City.
Section 4 In connection with the issuance of bonds from time to time by the CMFA for the BOLD Program, a form of acquisition agreement, joint community facilities agreement or similar agreement will be required to be entered into, and the forms of such agreements will be brought to the City Council for approval at a later date. The City Council finds and declares that entrance into each such agreement will constitute a “joint community facilities agreement” for purposes of the Act and shall be beneficial to residents of the City. Any such agreement may include, directly or by reference, City standards, policies and procedures applicable to the financing of public facilities constructed by developers for acquisition by the City.
Section 5 The City Manager or the City Manager’s designees are hereby authorized and directed to allow and approve BOLD Program participation by requesting property owners that are required to install public improvements and/or the payment of fees in connection with new development in the City, including signing developer applications or other documents evidencing the official intent of the City to reimburse itself in connection with each project from the proceeds of tax-exempt obligations issued by CMFA as part of the BOLD Program, and to advise such owners requesting participation in BOLD that the City has approved the BOLD Program; provided, that the CMFA shall be responsible for providing applications and processing of documentation and related materials at its own expense.
Section 6 This Resolution shall take effect immediately upon its adoption. The City Clerk is hereby authorized and directed to transmit a certified copy of this resolution to the Secretary of CMFA.