Walnut Creek council approves lease revenue bonds to fund Heather Farm Aquatic and Community Center

Walnut Creek’s City Council voted Nov. 18 to authorize lease revenue bonds to help finance the Heather Farm Aquatic and Community Center and to create a bond fund to hold the project proceeds.

Administrative Services Director Kirsten Lacasse told the council the construction contract was awarded to Lathrop Construction with the lowest responsive bid of $51,600,000 and that total project costs are estimated at $75,800,000. To bridge the gap, the city plans $55,000,000 in bond financing, together with existing general fund and Measure O reserves. Lacasse described an estimated annual debt service of about $7,700,000 and said the proposed bond term is roughly 7½ years to align with Measure O revenues that expire in 2033.

Craig Hill of NHA Advisors and bond counsel Chris Lynch (Jones Hall) summarized the financing mechanics and credit results. Hill said Standard & Poor’s assigned an AA+ rating on the transaction and an indicative AAA rating for potential future voter-approved general obligation borrowing. Lynch outlined the lease-structure: the city will site-lease assets (Lesher Center, City Hall, Corporation Yard) to the Joint Powers Financing Authority, which will lease them back and assign payments to a bond trustee; a preliminary official statement will be posted and the competitive sale is scheduled for Dec. 3, with closing anticipated about Dec. 17.

Councilmembers pressed staff on timing, premium versus discount bids and alternatives to borrowing. The city manager explained a pay-as-you-go approach would require several years of savings (about six years at current Measure O receipts) and could cost more due to inflation and construction-market changes. Several councilmembers expressed support for issuing bonds now while interest rates are favorable and bids were competitively low.

Mayor Cindy Darling moved a council resolution authorizing the issuance and sale of lease revenue bonds in aggregate principal not to exceed $60,000,000; the motion passed on roll call. The council separately adopted a resolution creating the Heather Farm Aquatic and Community Center Bond Fund, appropriating $55,000,000 for the project and authorizing the transfer of Measure O reserves to cover estimated annual lease payments. The council then met as the Walnut Creek Joint Powers Financing Authority and adopted the JPA resolution authorizing the bonds, adopting a debt management policy and approving related documents.

Next steps include posting the preliminary official statement, issuing a notice of sale, accepting competitive bids on Dec. 3 and finalizing legal and closing documents in mid-December. City staff said the financing timeline is intentional to allow construction to proceed while Measure O revenues remain available.