Goleta council authorizes $43 million in bonds to speed up crib wall repair, San Jose Creek trail

The Goleta City Council on Dec. 3 unanimously authorized two bond series — local Measure A transportation sales tax revenue bonds of up to $20 million and lease revenue bonds of up to $23 million — to accelerate funding for a set of priority capital projects, principally the Cathedral Oaks crib wall replacement and the San Jose Creek multi‑use trail.

The council voted 5‑0 to approve resolutions authorizing staff to proceed with document preparation and to seek market financing, with the city’s financing team saying the two issuances are intended to produce about $37 million in proceeds and to preserve the city’s ability to capture outside grants.

Why it matters: Council members said the crib wall on Cathedral Oaks Drive poses a public‑safety and access risk when storms occur, and the San Jose Creek trail is a long‑planned north‑south bicycle and pedestrian connection that has attracted outside grant dollars that could be forfeited if the city does not secure matching or gap funding. Issuing tax‑exempt bonds lets the city accelerate construction now rather than waiting years to save the same funds.

City staff and municipal advisor Wing C. Fox told the council the plan is to pair the county Measure A sales‑tax stream with a lease revenue financing to reach the $37 million target. “Instead of paying, again, saving up the money to pay for the projects, [the bonds] allow us to accelerate the money upfront by issuing bonds and then repaying them with the anticipated annual Measure A revenue streams,” Fox said. He said Stifel’s pre‑sale modeling in November estimated roughly $18.3 million could be produced from the Measure A revenue stream that sunsets in 2040, and the lease bonds would cover the remainder.

The financing team described the two borrowing vehicles as follows: the Measure A transportation sales tax revenue bonds are repaid from the city’s share of county Measure A receipts and would be constrained by that stream and the Measure A sunset. Lease revenue bonds require the city to enter a lease/leaseback structure with the financing authority and make lease payments to cover debt service; the staff report notes the city has used a similar approach before and that the City Hall asset may be substituted as the leased asset with the California Infrastructure and Economic Development Bank’s (I‑Bank) approval.

Estimated costs and structure: Staff provided illustrative, not locked‑in estimates. As of November modeling, the Measure A bonds were projected with a true interest cost around 3.57 percent (shorter term because the Measure A stream sunsets in 2040) and the lease revenue bonds at roughly 4.27 percent (longer term). Staff cited illustrative totals of roughly $16.9 million principal for the Measure A bonds with about $7 million in interest, and the lease revenue bonds carrying a longer repayment period through the mid‑2050s. Staff also said they plan to structure coverage conservatively (about 1.5x coverage) so the issuances would not “soak up” the entire Measure A return each year.

Federal disclosure training: Before the council vote the city’s bond and disclosure counsel and municipal advisors gave a securities‑law training to the council about the city’s ongoing disclosure obligations under federal securities laws enforced by the U.S. Securities and Exchange Commission. Bond counsel emphasized that the official statement and related disclosure must include all material information for investors and that council members and staff have responsibilities during the primary offering period to avoid selective or misleading statements. Counsel advised a single designated city contact for investor queries and said the official statements will be prepared as preliminary official statements for market distribution following council authorization.

Council discussion and rationale: Council members pressed on alternatives and timing. One council member asked how the proposed financings differ from a general‑obligation bond requiring voter approval; staff replied that these financings do not increase tax rates — Measure A is an existing voter‑approved half‑cent sales tax (2008) and lease revenue is repaid from legally available funds — and that a general‑obligation bond would require a property tax measure and a different public approval process. Several council members said that rising construction inflation and the risk of losing outside grants (notably for the San Jose Creek trail) weighed heavily in favor of borrowing now to accelerate work.

Public comment: No members of the public spoke on the item during the hearing.

Outcome and next steps: The council adopted the two resolutions authorizing staff to execute and deliver preliminary financing documents and to proceed toward preparing the official statements. Staff said, if authorized, the next steps are drafting preliminary official statements and continuing disclosure agreements in January, selling the bonds in February and closing a few weeks after the sale, at which point the city would receive the proceeds. The council’s vote was unanimous.

Votes at a glance - Authorization of Local Measure A Transportation Sales Tax Revenue Bonds (authorization up to $20,000,000). Motion passed 5‑0 (all ayes). The measure was described in staff materials as intended to accelerate Measure A‑eligible transportation projects; illustration showed roughly $18.3 million of proceeds estimated from the Measure A stream (sunset 2040). - Authorization of Lease Revenue Bonds (authorization up to $23,000,000). Motion passed 5‑0 (all ayes). Lease bonds would be issued to cover the remaining financing gap to reach the city’s ~$37 million target for the listed projects; illustrative interest cost around 4.27% and a multi‑decade amortization were shown.

What the approvals do and do not do: The council authorized the city to proceed with legal and financing documents and to seek market financing within the stated not‑to‑exceed amounts. The vote did not fix final interest rates, precise amortization, or the final project list; those details will be presented back to the council as the official statements and sale documents are finalized.

City contacts and advisory team: City staff and external advisors (municipal advisor and underwriter) will coordinate preparation of the official statements and continuing disclosure documents. The team present during the presentations included municipal advisor Wing C. Fox, counsel Vanessa Legbant (disclosure counsel, Stradling Yocca Carlson & Rauth), Kevin Hale (bond/disclosure counsel), and Sarah Orbelis Brown (Stifel, underwriter). Council members said staff should keep the public informed about the projects and timelines.

Briefing note: The city emphasized that material terms shown to council were estimates and the financing will not be locked until the date of sale when market rates and final structure are set. If material events occur between the preliminary documents and sale, staff and counsel said they will evaluate disclosure or delay options as required by federal securities law.

Next council steps: Staff said it will return with the preliminary official statements and continuing disclosure agreements, and expects to go to market in February for sale and close weeks later. The council’s authorization provides the staff and financing team the ability to complete disclosure and sale preparations but does not obligate the city to issue bonds until final documents and sale terms are approved.