Redevelopment Successor
Agency Report
City Council Meeting: January 13, 2026
Agenda Item: 11.A
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To: Redevelopment Successor Agency
From: Oscar Santiago, Director, Finance Department
Subject: Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 2026 (refinancing of the 2006 TABs and the 2011 TABs) Recommended Action
Staff recommends that the Successor Agency:
1. Adopt the attached Resolution Authorizing Issuance of Tax Allocation Refunding Bonds and approving the related documents and other actions in connection with the issuance of Tax Allocation Refunding Bonds (Attachments A, B, C, D and E).
2. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
Summary
Staff is requesting that the Successor Agency to the Redevelopment Agency of the City of Santa Monica (Successor Agency) adopt the attached Resolution (Attachment A) approving the issuance of tax allocation refunding bonds in one or more series (2026 Bonds) for the purpose of refunding all or a portion of the prior Series 2006 and Series 2011 Bonds (together, Prior Bonds). The Prior Bonds are currently outstanding in the amount of $56,925,000. This transaction would take advantage of a reduction in interest rates since the Prior Bonds were issued.
If approved, the refinance is expected to result in gross savings of around $12.2 million over the life of the issuance, which is equivalent to a net present value savings of approximately $7.0 million. This will equate to an average annual reduction in total debt service payments of approximately $763,263 per year.
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This reduction in annual debt service payments will result in freed up property tax monies available for redistribution to affected taxing entities, which will result in the City realizing a cost savings of around $106,000 per year. The net proceeds of the issuance of the proposed 2026 Bonds would be used to refund the Prior Bonds and to pay the costs incurred in connection with the issuance of the 2026 Bonds.
Background
Pursuant to Assembly Bill No. 1X 26, as modified by Assembly Bill No. 1484 and as further modified by Senate Bill No. 107, which added Parts 1.8 and 1.85 to Division 24 of the Health and Safety Code (Dissolution Act), the former Redevelopment Agency for the City of Santa Monica (Former Agency) was dissolved on February 1, 2012 and the Successor Agency to the Redevelopment Agency for the City of Santa Monica (Successor Agency) was vested with all authority, rights, powers, duties and obligations of the Former Agency.
Health and Safety Code Section 34177.5(a)(1) authorizes successor agencies to refinance outstanding debt obligations to produce debt service savings. A successor agency is generally not permitted to issue bonds that would increase the overall indebtedness of the successor agency or provide additional proceeds to be expended, but it can issue bonds to refund prior debt obligations and effectuate debt service savings. In such circumstances, the successor agency’s debt service payments will be reduced, generating additional revenues as residual Redevelopment Property Tax Trust Fund moneys to all taxing entities within the redevelopment project area. Successor Agency staff has identified such an opportunity which is presented in this report.
In December 1999, the Former Agency issued tax-exempt tax allocation bonds for redevelopment purposes. In March 2006, the Former Agency approved the issuance of Earthquake Recovery Redevelopment Project 2006 Tax Allocation Bonds, Series A and Series B (2006 Bonds), to refund the 1999 Bonds and take advantage of a reduction in 3 of 7
interest rates since the bonds were first issued. In May 2011, the Former Agency approved the issuance of Earthquake Recovery Redevelopment Project 2011 Tax Allocation Bonds (2011 Bonds) to help fund priority redevelopment projects.
Presently, the 2006 Bonds and 2011 Bonds (Prior Bonds) are outstanding in the aggregate principal amount of $56,925,000 and are eligible for prepayment on any date at par plus accrued interest, without premium. The final maturity for the Prior Bonds is July 1, 2042. Staff has determined, in consultation with the Successor Agency’s Municipal Advisor, that the current market conditions are favorable for the issuance of refunding bonds to refund and defease the Prior Bonds for debt service savings pursuant to Health and Safety Code Section 34177.5(a)(1).
The Successor Agency Board is asked to approve the issuance by the Successor Agency of tax allocation refunding bonds (2026 Bonds) in one or more series to refund all or a portion of the Prior Bonds for debt service savings in accordance with the Dissolution Act and to approve forms of various bond documents and related actions.
The resolution includes a not to exceed par amount of $58,000,000 to allow for potential changes in market conditions, bond structure, or financing assumptions before the bonds are priced and sold.
If the Successor Agency Board approves the proposed financing, the Los Angeles County Third Supervisorial District Consolidated Oversight Board (Oversight Board) will consider approving the proposed financing at its meeting on February 10, 2026. If the Oversight Board approves the issuance of the 2026 Bonds, then the Oversight Board action will be subject to approval by the Department of Finance (“DOF”). Pursuant to Health and Safety Code Section 34177.5(f), DOF has up to 65 days to review the Oversight Board’s action, which is expected to conclude in late April 2026. Around that time, staff will return to the Successor Agency Board for approval of the Preliminary Official Statement and Continuing Disclosure Certificate related to the 2026 Bonds. 4 of 7
Discussion
The proposed 2026 Bonds are estimated to have a par amount of $51.5 million and a final maturity of July 1, 2042. Final interest rates and the resulting savings will not be determined until the 2026 Bonds are marketed to potential investors and the Successor Agency’s receives an offer to purchase the 2026 Bonds from the underwriter in the form of a bond purchase agreement and the Successor Agency accepts the offer. This process is often referred to as the “pricing” of the bonds. The Successor Agency is responsible for ensuring that the requirements of the Dissolution Act, including the debt service savings requirement, are met when the 2026 Bonds are priced. Debt service for the 2026 Bonds will be supported by a pledge of all property tax revenues deposited into the Successor Agency’s Redevelopment Property Tax Trust Fund, after payment of pass-through obligations and certain other obligations of the Successor Agency.
The Dissolution Act permits successor agencies to refund outstanding bonds and other obligations of a former redevelopment agency, subject to the approval of the successor agency, Oversight Board and the California Department of Finance. Because the impact of the refunding would be to reduce the interest costs associated with the Prior Bonds, it is anticipated that DOF will not object to the action.
As shown in the Municipal Advisor Report attached hereto as Attachment E, based on market conditions as of December 8, 2025, it is anticipated that a current refunding of the Prior Bonds will produce net present value savings of approximately $7.0 million over the life of the indebtedness and an annual average reduction in bond payments of $763,000 between 2027 and 2042. However, the total level of savings will depend upon market conditions at the time the 2026 Bonds are priced.
Table1: Summary of Savings Results for the 2026 Bonds*
Net Present Value Savings ($) $6,969,245
Net Present Value Savings (% of Par Value Refunded) 12.2% Avg. Annual Savings (Bond Year 2027-2042) $763,000
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Total Debt Service Savings $12,216,710
*Estimated savings are based on market rates as of December 8, 2025; subject to change.
Presently, the average annual debt service for the Prior Bonds through 2042 is $4,926,000. After the refunding, using market conditions as of December 8, 2025, the average annual debt service is $4,163,000. The reduction in annual debt service payments frees up additional property tax revenues for distribution to affected taxing entities. Below is a summary of the potential savings each taxing entity would receive through their allocated redevelopment property tax trust fund (RPTTF) distribution, based on total debt service savings of $12.2 million.
Table 2: Savings Distribution
Total Gross Average Annual
Dollar Savings Dollar Savings
From Bond Sizing Dated December 8, 2025 $12,216,710 $763,263 City of Santa Monica 13.93% $1,702,033 $106,338
Santa Monica-Malibu USD 17.26% 2,109,143 131,773
Los Angeles County (inc. Fire & Flood) 41.67% 5,090,230 318,022 Santa Monica CCD 4.26% 519,948 32,485
ERAF (State) 22.21% 2,713,679 169,542
Los Angeles County Office of Education 0.49% 59,494 3,717 Other 0.19% 23,519 1,469
Staff recommends adoption of the attached Resolution (Attachment A). The Resolution approves all documents and actions needed for the issuance of the 2026 Bonds, including the following substantially final form financing documents together with any changes or additions deemed advisable and approved by any Authorized Officer:
• Indenture of Trust between the Successor Agency and the Trustee (U.S. Bank), which sets forth the material terms and provisions relating to the 2026 Bonds and whereby the Trustee agrees to certain rights and duties related to the 2026 Bonds.
• Form of Escrow Agreement between the Successor Agency and the Escrow Agent (U.S. Bank), containing terms by which the Escrow Agent will hold the 6 of 7
2026 Bond proceeds on behalf of the owners of the Prior Bonds to pay and discharge these Bonds on the redemption date, and give proper notice to the owners.
• Bond Purchase Agreement between the Successor Agency and the Underwriter of the 2026 Bonds (Stifel, Nicolaus & Company, Incorporated), pursuant to terms and provisions of which the 2026 Bonds will be sold with a negotiated method of sale, such terms and provisions including an underwriter’s discount not to exceed
0.70% of the principal amount of the 2026 Bonds.
It is anticipated that staff will return to the Successor Agency for approval of the Preliminary Official Statement and Continuing Disclosure Certificate related to the 2026 Bonds in March 2026. The Preliminary Official Statement and Continuing Disclosure Certificate will be required to market and sell the 2026 Bonds.
Environmental Review
The authorization of the issuance of tax allocation refunding Bonds are exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines. The proposal is covered by the common sense exemption which states that CEQA does not apply, “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” If enacted, the issuance of tax allocation refunding Bonds would create revenue and promote equity for the City.
Therefore, it can be seen with certainty that actions would not result in adverse physical impacts on the environment, and as such, is categorically exempt from CEQA Financial Impacts and Budget Actions
As illustrated in table 1 above, an estimated $7.0 million in net present value savings and $12.2 million in total debt service savings would be generated by refinancing the Prior Bonds. Savings would be distributed among various taxing entities, including the City. It is estimated that the refinancing will result in an average annual increase of $106,000 in property tax revenues to the City.
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In accordance with California Government Code Section 5852.1, good faith estimates of certain financial aspects of the 2026 Bonds are provided with respect to the 2026 Bonds as an attachment to the Resolution.
Other accounts required to record transactions related to the bond issuance and debt service payments are listed in the table below. Any necessary budget changes will be incorporated into the budget after the bonds are issued and exact amounts are known.
The following transactions would be required to effectuate the bond refunding transaction.
Description Account Est. Amount
2026 RDA Refunding Bonds 43.2xxxxx $58,000,000
2011 RDA Bonds
2006 RDA Refunding Bonds
43.227351
43.227341
($15,875,000)
($41,050,000)
Bond Issuance Costs 43800004.5xxxxx $750,000
RPTTF residuals 01800004.400070 $106,000
Prepared By: Oscar Santiago, Director
Approved Forwarded to Council
Attachments:
A. Attachment A - Successor Agency Resolution
B. Attachment B - Indenture of Trust
C. Attachment C - Form Escrow Agreement
D. Attachment D - Bond Purchase Agreement
E. Attachment E - Municipal Advisor Report