Council approves bond issuance for Fallon Crest CFD 2022‑1; bonds expected to be non‑rated

The City Council on July 8 approved resolutions authorizing the issuance of bonds for Community Facilities District (CFD) No. 2022‑1, Fallon Crest, a district formed as part of the Preserve Specific Plan. Finance staff and municipal advisor John White described the proposed structure and investor considerations for the non‑rated new money bond issue.

Project details: CFD 2022‑1 covers a planned development of 197 single‑family detached condominium units across two neighborhoods (referred in staff materials as Monet at Contour and Rembrandt at Contour). As of May 15, 2025, 101 units were reported as owned by individual homeowners, 40 remained completed and held by the developer, and 56 were under development.

Financing overview: The estimated bond issue size presented was $12.4 million with a 30‑year level amortization and a full cash reserve (staff noted that a surety bond was not available for this issue and the reserve would be funded with cash). Because the district is relatively new and concentrated ownership remains, the bonds are expected to be sold non‑rated; consultants estimated a true interest cost (TIC) around 5.19% under current market assumptions.

Council approved staff recommendations to adopt the resolution approving the issuance and the substantially final bond documents and to authorize the city manager to execute necessary documents. Motion: Councilmember Don Lucio moved; Councilmember Comstock seconded; the vote was unanimous.

Staff said continuing disclosure and investor information will be prepared and that the city does not pledge its general fund to repayment; bonds are secured solely by special tax revenues for the district. Closing was targeted for early August under the timeline presented.