Council establishes joint powers financing authority and declares intent to reimburse for Heather Farm aquatics project

The Walnut Creek City Council on Oct. 7 adopted resolutions to create a joint powers financing authority and to declare the city’s intent to reimburse project expenditures from proceeds of future lease revenue bonds for the Heather Farm aquatics and community center project.

Jones Hall attorney Chris Lynch, acting as bond counsel, briefed the council on the financing mechanics. Lynch explained that a lease-revenue bond structure commonly used by California cities involves a new joint powers authority (JPA) that leases a city asset, issues bonds and subleases the asset back to the city; the city’s periodic lease payments are the source of funds to pay debt service. Lynch also explained the tax-law requirement that allows the city to reimburse “hard costs” paid before bond issuance only if the governing body adopts a declaration of intent; that declaration permits reimbursement for qualified costs incurred no earlier than 60 days before the declaration.

The council approved the resolutions unanimously. The adopted JPA will appoint the city council as the authority’s board, assign administrative roles to city staff (for example, the city manager as executive director and the city clerk as secretary) and authorize the authority to assist with city financings and issue lease revenue bonds under applicable law. The city also adopted a declaration of intent to reimburse certain project costs with proceeds of the authority’s lease revenue bonds; council members emphasized that the declaration does not obligate the city to issue bonds or to reimburse any specific costs, only that it reserves the technical ability to reimburse eligible prior expenditures if the city later issues bonds.

Lynch outlined additional financing mechanics: bond proceeds will be held and disbursed by a trustee on presentation of requisitions for project costs; the JPA’s lease payments will be the sole source of debt service; insurance (casualty and rental-reduction) and other customary protections will be included in the financing documents; and the city will allocate project costs between tax-exempt and other financing sources as required by federal tax rules. Lynch said staff expects to return with formal financing authorizations later in November.

Why it matters: the action clears key legal and procedural steps needed to pursue lease-revenue financing for the long-planned Heather Farm aquatic and community center; it does not, by itself, issue bonds or obligate future revenues beyond the ordinary lease payment structure that will be part of the financing documents.