FROM:
Finance
SUBJECT:
Issuance of Special Tax Bonds for Community Facilities District No.113 (The Gardens Phase Two). End
Title
End
RECOMMENDATION:
Recommendation
Adopt Resolution No. 2026-092, of the City Council of the City of Fontana authorizing the issuance of City of Fontana Community Facilities District No. 113 (The Gardens Phase Two) Special Tax Bonds, Series 2026, in an aggregate principal amount of not to exceed $21,000,000, authorizing the execution and delivery of an Indenture, a Bond Purchase Agreement and a Continuing Disclosure Agreement, authorizing the distribution of an Official Statement in connection therewith and authorizing the execution of necessary documents and certificates and related actions.
End
COUNCIL GOALS:
• Practice sound fiscal management by developing long-term funding and debt management plans.
DISCUSSION:
On May 14, 2024, the City Council authorized the formation of City of Fontana Community Facilities District No. 113 (The Gardens Phase Two) (the District) and conducted a special election to levy a special tax within the District. This project consists of 388 residential lots located along the west side of Citrus Avenue, just south of Duncan Canyon Road, with homes being constructed by Risewell Homes and Richmond American Homes. The project is part of the master planned community known as “The Arboretum,” which is being developed by the North Fontana Investment Company, an affiliate of The Lewis Group of Companies (the Master Developer).
During the period in which the Acquisition and Funding Agreement was created, additional improvement costs were identified. The overall costs have increased by $19,089,501 for the street, sewer, storm drain, landscape, traffic signal, and rights-of-way components since the formation of the District, necessitating an amendment to the original Acquisition Agreement.
Proceeds of the Bonds will be used primarily to acquire public improvements constructed by the Master Developer or public improvements to be constructed by the City.
In order to issue the Bonds, it is necessary to execute documents and agreements relating to the District. The recommended action complies with the City’s debt management strategy.
The following documents, in their materially correct form, are attached hereto:
1. Authorizing Resolution;
2. Indenture;
3. Continuing Disclosure Agreement;
4. First Amendment to Acquisition Agreement;
5. Bond Purchase Agreement;
6. Preliminary Official Statement and;
7. Appraisal Report
Government Code Section 5852.1 requires the City to obtain and disclose a good faith estimate of certain information about the Bonds, including the true interest cost, the financing costs, the use of proceeds and the total payment amount, and the information is included in Exhibit A of the Authorizing Resolution.
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, a draft of which is attached to this staff report. After the Bonds have been priced, a Final Official Statement will 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 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 2026 Bonds. Material information is information that there is a substantial likelihood 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 in 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.
FISCAL IMPACT:
Most of the issuance costs are contingent upon the sale of the Bonds and will be paid from proceeds of the Bonds, the Special Taxes levied within the District, or from a deposit advanced by the Master Developer. Annual debt service and maintenance costs will be paid from special taxes levied on the landowners within the District.
MOTION:
Approve staff recommendation.