West Sacramento PFA authorizes up to $80 million EIFD bond sale; city aims to be first in state

The West Sacramento Public Financing Authority voted May 21, 2025, to authorize the issuance and sale of Enhanced Infrastructure Financing District No. 1 bonds in an amount not to exceed $80,000,000, adopting Resolution 25-3 in a unanimous roll-call vote.

Tracy Michael, director of economic development and housing, and the city's financing team told the PFA that the proposed bonds would fund eligible infrastructure projects identified in the IFP. Michael described the action as a group effort and said the team would prioritize projects that are shovel-ready and can meet statutory spending rules.

Municipal advisor Ken Deacker of Del Rio Advisors told the board the financing seeks to balance near-term credit strength with future bonding capacity. He outlined rating scenarios presented to S&P: a 150% debt-service-coverage option received a B rating in the evaluation; a 135% coverage approach would be rated BBB- under S&P's assessment. The financing team is negotiating with Assure Guarantee for a surety policy that would replace a cash-funded reserve and could boost proceeds and lower interest costs. Deacker said a surety would free roughly $5 million that otherwise would be deposited to a reserve fund and could be used for projects.

"If we can buy a surety policy to replace [a reserve], that frees up in this case about $5,000,000 that would otherwise go to the reserve fund," Deacker said.

Bond counsel Constantine Baranoff told the board West Sacramento is the first city to reach the point of issuing EIFD bonds in California. "West Sacramento is the very first city. EFA is the very first PFA to be issuing," he said. Staff noted the Yolo County Superior Court issued a validation judgment in favor of the city and the EIFD in April 2025.

Staff and consultants presented other key points the board discussed: projected EIFD incremental revenues assumed no development growth are roughly $4.3 million annually beginning in 2026; successor-agency obligations that mature in 2038 could increase annual increment materially (projected to about $8 million annually after that date); the IFD maturity in 2044 could add roughly another $700,000 per year thereafter. The team also reported the top 10 taxpayers account for about 25.3% of the project-area assessed value and about 60% of current incremental revenue, a concentration the team said will diminish as development diversifies.

PFA members asked how the city will meet the legal requirement to spend 85% of bond proceeds within three years. Michael said staff will focus on projects that are shovel-ready and those that best leverage other funding sources; the I Street Bridge Replacement project is a principal candidate for EIFD bond funding. Deacker said the financing team expects to post a preliminary official statement to market in June and close the sale in mid-July if conditions allow.

Action and vote: The PFA adopted Resolution 25-3 authorizing the EIFD bond issuance and the pledge agreement. The motion to approve was moved by Member Guerrero and seconded by Member Solpisio Hall; roll-call vote recorded all members present as "Aye."

The board heard that if insurance is secured the transaction could yield additional project proceeds (a preliminary estimate of several million dollars), and that the rating and insurance discussions are ongoing. Staff and the financing team will return with final sale documents when underwriting and insurance negotiations conclude.