Bond Financing Options

BOND FINANCING OPTIONS

USING ASSESSMENTS

Legal basis for issuance of

Assessment Bonds 2

Special Assessment Districts

Improvement Act of 1911

Municipal Improvement Act of 1913

Used in combination with the Improvement Bond Act of 1915

Improvement Act of 1972

Business Improvement District Law of 1994

Bond Financing Options Using Assessments

Why do Public Agencies issue

Assessment District Bonds? 3

It is a tool to finance infrastructure and to have the costs paid by those who benefit from the

improvements

In other words, infrastructure provided without City general tax dollars or existing resident’s tax

dollars

And in most cases it allows the City to get more infrastructure sooner and at a lower costs than

if it was built under the City’s typically Capital Improvement Program and available funding sources


Usual Sequence of Events 4

1. Local Agency / Property Owner Petition Initiated

2. Actions Taken by Legislative Body

3. Legislative Body Commences Assessment Proceedings

4. Public Hearing

5. Assessment Balloting and “Majority Protest” (Proposition 218)

6. Final Actions Taken by Legislative Body

7. End of Cash Collection / Statue of Limitations

8. Bonds Issued

9. Annual Assessments levied to pay debt service on the Bonds

10. Project Costs Funded/Reimbursed

11. Public Agency administers the District until Bonds mature


5

Assessment District Bond

Issuance


Bond Issuance steps 6

How do we do it? 1. Financing team drafts financing, legal and financing

documents including:

Resolutions

Bond Indenture

Preliminary Official Statement/Official Statement (includes appraisal/Market Analysis/Engineer’s Report)

Continuing Disclosure Agreement

Bond Purchase Agreement

2. Issuer approves financing documents and present reports to

the policy makers

3. Issuer sells bonds to underwriter

4. Underwriter sells bonds to investors


Bond Issuance steps - continued

7

How do we do it? (continued)

5. Issuer receives $’s from investors in exchange for

bonds

5. Net proceeds used to pay for capital projects

6. Annual Assessments levied and collected to pay

debt service on the Bonds per Engineer’s Report


Financing Team Members 8

Public Agency – presents report, documents and

recommendations to the policy-makers for their

deliberation

Bond Counsel – prepares all required bond documents

and provides legal opinion

Financial Advisor – fiduciary responsibility to issuer to

protect their financial interests and provide

independent financial advice related to the issuance of

bonds

District Administrator – assists Issuer in preparing tables

for the disclosure documents and administering the

Assessment District Bond Financing Options Using Assessments

Financing Team Members continued

9

Appraiser – estimates value of assessed property subject to the assessment lien

Underwriter – buys the bonds from the issuer

and them sells them to investors

Disclosure Counsel – prepares bond sale

financing documents (Official Statement, Bond

Purchase Agreement, Continuing Disclosure Agreement)

Fiscal Agent – holds, invests and disburses funds

at direction of Issuer


Initial Bond Disclosure 10

Preliminary Official Statement

Tell the truth, the whole truth and nothing

but the truth

Requirements continue to evolve and are becoming more stringent


Administering the Assessment District Bonds

11

It is important to know your Assessment District

Make sure you ask a lot of questions and

get good answers from your Financing

Team

In most cases, the Public Agency is the

only one there for the full term of the

Assessment District Bonds


Basic Steps of Assessment District Bond Administration

12

Manage the Bond Funds

Meet the annual administrative

requirements

Customer Service with impacted property

owners and others

Delinquency Management

Continuing Disclosure

Investment of Bond Proceeds

Arbitrage Rebate Calculations


Are Governmental Agencies issuing

Assessment District Bonds? 13

Yes, on average over the last 10 years there have been approximately 49

Assessments Bonds issued in California

each year

The average dollar amount of Assessment

District Bonds sold in California over the last

10 years is approximately $335 Million per

year


Assessment District Issuance History for last 10 Years

14

45

7168

45

39

20

34

4546

76

0

10

20

30

40

50

60

70

80

$0

$100

$200

$300

$400

$500

$600

$700

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*

Nu

mb

er o

f A

sses

smen

t D

istr

icts

per

yea

r

Par

Am

oun

t (i

n M

illi

ons)

Assessment District Issuance History

Total Par Amount Number of AD's per year

Source: California Debt and Investment Advisory Commission

* In 2012, the Western Riverside Council of Governments (“WRCG”) issued 189 series of Residential Energy Conservation bonds across 22 sale dates. These 22 dates are shown as separate issuances and represent all series of bonds issued by WRCG.


Breakdown of CY 2012 Assessment District Bonds

15

Cities

23 issues

30.3%

Counties

24 issues

31.6%

Special

Districts

7 issues

9.2%

Joint Powers

Authority

22 issues

28.9%

Water supply,

storage,

distribution

$91.5 million

17.9%

Residential

Energy

Conservation

Improvements

$5.8 million

1.1%

Power

generation/

transmission

$18.9 million

3.7% Multiple

capital

improvements

$325.0 mlillion

63.4%

Other

$71.1 million

13.9%

CY 2012 Assessment

District Bonds by Issuers

CY 2012 Assessment

District Bonds by Purpose

Total par: $512.4 million

Source: California Debt and Investment Advisory Commission


~HELDMAN IROLAPP .=- & ASSOCIATES

Propeny Owner Petition Iniriated

District Actions by Legislative Body Legislative Body Conmtences Assessment

ProceedingsPil~ Adopt lt..e:ol~:Landowuec o(60"/. o (

t...Dd-.reawai'ft1931

Act requireme.ae

H ~:::n:: ~ 1. ApproWlc Boua.duy Yap• t· ·- · ·· """"""':

L..;.~~~...J .__2_. _~_·~_.~_·_...._· In_::_.:..._··_· ...._· -_ :._-;_· _::-_·_ ...~a.~:.~~ Adopt B.Holutio.a.:::

1. PrdilniD.sry ~ Ea.ciacu':: B.epon

Local Agency Initiated District

Adopt re:oluticm::: 1. Approrinc Boundary Map•

2 . Decbzinc lnte~• aad dUectinc p«pt~.~a~ o(eitber:

a . 1931 Act 1lepon b . Combined 1931/1913 Act lt.epon f"""Fii~ ·· ·1

by U\ple DUIIjoriry o(lqi::lati'ft body -l 1913 !-+

'--=-----------' l..~?.~.J*Tunme o(• dopnon of Bouncbry M~tp .ad R.e::olution of Intention vuie::

Usual Sequence of Events for 1913 Act Special Assessment

D istrict Mter P roposition 218

~!wUdpal improvement Act of1913 Conunencing -with Section 10000 of the Streets

and Highways Code)

1. Sd1 & d elin.r bond:: & «:ce iv<e bon d proc-eed :: 2. lnitU.t e con::trucrion or llc:qui::ition

File combined 1931/1913 Act R.epon

Actions by Legislative Body

1. Conduct 1931 Act Hnna.c 2.. Proceed aad dUect prepUiltion o(

1913 Ace 1lepon if:

a. No MajoDty prot e::t AND b . Either adequate l"AAue:: o r 4/ S vote

2. Senia.c Pub& HHriDc due

3. CslliDc (or c:on::trucrion bid:: 4.Malcinc~anenn

I,.................................. l Within 1S d:ly:: l 8ound:ll"Yl\bp! i.:: filed in th~

c o-;:;:,.~

·l·ll*,a:....., ..biU.&

Public Hearing

1. PreHsn e npeer>:: 1lepon

2. lt.ecein te:timo.ny

3 . Commence llcti.vi.tie:: t o lldntini:: t~r debt. le \1)" ~m.d collect ll::::c::::m ent:: ll.nd contp!y with c:onrinu;ine di::do::ur~ «:qui:rem~nt::

3. U DO DUIIjoriry prote:t, leci::l• tin body DUllY

• dopt re:oluciol:l con.&mUa.c a::w::::~nenu••

End of Cash Collections/ Statute of Limitations

2.. Authorize:: i::~u.ance o(bcmcb•••

3. Appro<ft: Prellzniau.ry O&ieUl St.atemeat and Co.atiauia.c

4 . Adopn re:.olutio.a •W11.1dia.c me c:on::tru.cti.o.a c:onuact

•••t91S Act Bond:: = Section 8500 ~ ,-----L------, 19U Act Bond::= S<ection 6400 ~

FRA100351

Not le.:.:: th :Ul JO

with th~

Sup erint c.ndcn t o( Sue~t::

1..~::e::~nten.t R.oll~md Di.:lrunt

recorded ll.ti.tb Supuintend~n.t of Stnct::

2. Dillf1"1lm 11.nd Notic~ of

.~::e::~nu·n.t reco rded with"' County lt<ecordu

3 . St:lte.nt~nt ofA.:.::e: ::.:ment m ll.ilcd

t o pro~rty ownu-; ~m.d pub lbhed (on c.c llll~~k Cor two ::ucce -:m~

week :: :lt :lt le :c.t S dlly:: :lplUt)

F~ldman, R.ob.pp & A.~~oeiue~ • 19900 Mac.Anhut Bttrd., Suitc 1100 • ~. CA 92612 • Pboc.e: 949.6®.7300 • Fu : 949.·H 4.S773 • - .fieldour..eom• C 2004

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Ll OR A

DEBT AND

INVESTMENT

A DV SO

COMMISSION

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Questions?


Bond Financing Options

Documents

Transcript of Bond Financing Options