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Palm Springs Unified moves toward selling bonds for Community Facilities District No. 1; board to consider issuance July 8
Summary
District municipal adviser reported the Community Facilities District (CFD) formed years ago has met development thresholds and is expected to sell bonds; trustees pressed staff on how proceeds will be used and the item is scheduled for a July 8 vote to authorize issuance.
The Palm Springs Unified School District is preparing to sell bonds backed by Community Facilities District No. 1 after municipal advisers reported enough development activity in the district to support a bond sale, a presentation to the board said on June 24.
Adam Bauer, the district’s municipal adviser, told trustees the CFD — formed in February several years ago but held until development reached a viable stage — now includes 141 lots and a mix of ownership that the market prefers: a national builder (D.R. Horton) has purchased a block of lots and Williams Homes has developed a portion, with other lots already owned by individual homeowners. "This CFD could be a total of 141 units," Bauer said.
Bauer said market conditions are attractive for selling this type of tax-exempt special-tax debt; the presentation showed a not-to-exceed illustrative interest rate of about 5.42 percent for the proposed bonds. He explained investors buy the bonds because the interest is tax-exempt, which tends to lower yields compared with taxable loans.
Board members asked how the district would use the bond proceeds. When asked directly, a district staff member identified in the meeting as Jeff said the district had not finalized specific plans: "We haven't had any plans at this particular point," he said, adding officials expected proceeds to be applied toward facilities needs but that details remained under discussion.
The board was told that, under the district’s land-secured policy, the value of property securing the bonds exceeds three times the proposed bond amount, which advisers said strengthens the financing. Bauer also described mechanisms in the district’s development mitigation agreement — including developer deposits triggered by building permits — designed to ensure the district receives its full mitigation amount even if bond proceeds fall short of estimates.
Trustees asked whether the district’s bond committee would be involved; staff explained the CFD formation work began years earlier and that current work is focused on pricing and closing the bonds. Bauer presented a timeline that would bring a resolution of issuance to the board on July 8; once the board adopted the resolution authorizing issuance within specified parameters, the bonds would be marketed and priced, with an anticipated close in August.
On June 24 the board approved a separate, related item: a resolution authorizing the annual levy of special taxes for Fiscal Year 2025–26 for CFD No. 1, a procedural step that maintains the special-tax structure while the district finalizes the bond sale schedule. The board did not yet vote to approve bond issuance itself; that approval is scheduled as an action item for the July 8 meeting.
