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OCII authorizes documents to refund Mission Bay South CFD bonds, projects $17 million in present-value savings
Summary
The Commission on Community Investment and Infrastructure approved documents to consolidate five Mission Bay South CFD bond issues into a single refunding bond, estimating about $17 million in present-value savings and a likely upgrade to investment-grade ratings; the action moves next to the Oversight Board and Department of Finance review.
The Commission on Community Investment and Infrastructure on Sept. 5 authorized documents to refund five outstanding special-tax bond issues tied to Community Facilities District No. 6 (Mission Bay South), aiming to consolidate them into a single bond and reduce debt-service costs.
John Daigle, OCI debt manager, told commissioners the refunding would combine five outstanding CFD 6 bond issues into one issuance and produce an estimated $17,000,000 in present-value savings. "The purpose of the issuance of the refunding bonds is to refund the 5 bond issues," Daigle said, and noted improved appraised values in Mission Bay would support a credit upgrade that could move the bonds to investment-grade status.
Daigle outlined the transaction structure, saying proceeds are expected to be roughly $124 million, with approximately $12 million held in a debt-service reserve and additional funds used for the escrow deposit, cost of issuance and underwriter discount. He explained the fiscal-agent role: Computershare (the successor to Wells Fargo Trust) will hold bonds, clear the transaction and disburse funds at closing.
Commissioners asked about the legal review and oversight process. General Counsel Morales said that although OCII historically treated CFD bond actions as separate under the Mello-Roos Act, recent bond-counsel work and a Department of Finance (DOF) opinion counsel that the Oversight Board and DOF should review this refunding. Morales said staff framed the resolution to "preserve our arguments" while acquiescing to DOF review to expedite the transaction.
Daigle described the agency's refunding policy: OCII typically seeks at least 3% present-value savings as a rule of thumb before proceeding, though he said the commission could consider lower savings for other reasons. He also said the proposed bonds would be fixed-rate. Underwriter selection was completed following an RFP; Stifel Nicolaus was selected as lead underwriter with Piper Sandler as co-manager.
Next steps include Oversight Board consideration (scheduled the week after the meeting) and submission to the Department of Finance; staff anticipate returning to the commission on Oct. 17 with an offering statement and preliminary official statement and expect bond pricing in late October with closing in early November if approvals proceed on the projected schedule.
The commission approved the related documents on a roll-call vote of 3 ayes and 1 absence.
