Commission confirms refunding bonds for Hunters Point Shipyard Phase 1

The Commission on Community Investment and Infrastructure voted unanimously July 15 to confirm the issuance of special tax refunding bonds for Community Facilities District (CFD) No. 7 at the Hunters Point Shipyard.

The resolution (No. 47-2014) confirms staff authorization to issue fixed-rate special tax refunding bonds in an amount not to exceed $40,000,000 to refinance the CFD’s 2005 variable-rate bonds. Project manager Thor Kozlowski told commissioners the phase has grown in value and can support the refunding: “the shipyard phase 1 has over $127,000,000 in land value and can support the bond issuance,” he said during the staff presentation.

Why it matters: staff and outside advisors said converting variable-rate debt to fixed-rate bonds should reduce financing risk and debt-service uncertainty for the redevelopment effort. An initial estimate of the actual refunding size is slightly above $32 million; the final size will depend on market conditions when the transaction prices. An underwriting representative estimated current interest-rate assumptions at roughly 5.5%–6% (she stated an estimate near 5.7%).

The refinancing follows a sequence of prior approvals: change proceedings began in April, the Oversight Board and the Department of Finance provided earlier approvals, and staff has already selected financing team members. Kozlowski outlined project credit support, including performance bonds held by the Department of Public Works and a $5,000,000 corporate guarantee tied to Phase 1 disposition and development agreements. He said the appraiser Sievers Jordan Ziggenmeier valued Phase 1 at over $127,000,000, producing an aggregate value-to-lien ratio above the policy minimum.

The motion to confirm issuance was moved and seconded during the meeting; roll call produced five ayes and the commission approved the resolution.

Next steps: staff will complete the final bond documents, market the bonds, and return as required for closing steps and any remaining approvals. The commission and staff noted that exact transaction timing and the final bond amount depend on market conditions.