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Lake Elsinore to refinance $89 million in CFD bonds, city says
Summary
City officials told the council they will refinance about $89 million of community facilities district bonds callable in September 2025 to lower special taxes for up to 4,000 parcels and generate roughly $10 million for infrastructure projects; council adopted the required resolutions 5-0.
City financial advisors told the Lake Elsinore City Council on Tuesday that the city will move forward with refinancing roughly $89 million in outstanding Community Facilities District (CFD) bonds that become callable in September 2025, an action officials said will lower special taxes for property owners and free money for local capital projects.
The refinancing, presented by Michael Bush of Urban Futures and the city's financial team, is expected to produce approximately $16.4 million in gross savings to property owners and to free a little more than $10 million for eligible capital and infrastructure work across the city. Council members voted unanimously to adopt the related resolutions and to convene the city's financing authorities.
Michael Bush, the city's bond adviser, told the council the transaction would refinance about $89 million across nine CFD improvement areas including Canyon Hills, Rosetta Canyon, Serenity, Alba Hill Ranch and City Center Townhomes in Vizcaya. "This refinancing is expected to generate $16,400,000 in gross savings to property owners," Bush said. He said savings per parcel would vary by district and estimated a range between about $174 and $680 annually for affected homeowners.
Bush and staff said current market conditions support the refinancing now, that pricing would happen later this month or in early June depending on markets, and that the refunding plan would not extend the original repayment terms. The city expects a rating in the A category from S&P Global Ratings for the CFDs and reported receiving a 100 percent surety bid for the debt service reserve, which reduces the need to place cash in reserve accounts.
City officials said the refunding would not affect the general fund; bond issuance costs and any up-front costs would be covered from bond proceeds. "There's no impact of this item on the city's general fund," a staff member stated during the presentation.
Council members praised the work. Council Member Sheridan congratulated the finance team, noting the savings per parcel and cumulative benefits. Council Member Manos described the transaction as a strong opportunity given current true interest cost estimates. Mayor Pro Tem McGee and Council Member Johnson also thanked staff and said they supported moving forward.
Actions taken: the council adopted eight city-council resolutions to authorize the refunding, and separately the council approved companion actions through the Lake Elsinore Facilities Financing Authority and the Lake Elsinore Public Financing Authority. Each vote was recorded 5-0.
Votes at the meeting: the council's resolutions (items 1'8 on the staff report) were adopted on motions and recorded as passing 5-0. The financing-authority resolutions also passed unanimously.
What happens next: bond pricing and closing will follow market conditions and the issuance timeline described by the advisers. Staff said property owners should begin to see lower CFD special tax obligations on bills when the new bonds are in place and once the savings are applied.
