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OCII begins process to refinance Hunters Point Shipyard CFD bonds, seeking final state approvals
Summary
The Commission authorized staff to start the bond-issuance steps to refund CFD 7’s variable-rate bonds (up to $40 million) and approve related bond documents; final confirmation requires Oversight Board and Department of Finance sign-offs. Underwriter estimates place a 30-year fixed-rate at roughly 5.5–6%.
The Commission on Community Investment and Infrastructure on April 15 approved a resolution to begin the process of refinancing Community Facilities District No. 7 (Hunters Point Shipyard Phase 1) variable-rate bonds and to approve three core bond documents needed to move the deal forward.
John Daigle, OCII senior financial analyst, told commissioners that CFD 7 issued variable-rate bonds in 2005 under the Mello-Roos Act and that the bonds are currently secured by a letter of credit that expires in September 2014. Daigle said issuing fixed-rate bonds now would remove the need for the letter of credit and lower borrowing costs given recent shipyard infrastructure improvements. “Issuance of the fixed-rate bonds to refund the existing variable-rate bonds will eliminate the need for the letter of credit,” he said.
The action approved today authorizes staff to execute a fiscal agent agreement, an escrow deposit and trust agreement, and a bond purchase agreement and to select underwriters. Anna von Degna of lead underwriter Stifel, Nicholas & Company estimated market pricing for a 30-year, nonrated, tax-exempt special-tax bond at about 5.5 to 6 percent, contingent on market conditions.
The vote was procedural: commissioners approved the documents needed to carry the proposal to the next steps, including hearings before the OCII Oversight Board and review by the California Department of Finance (DOF). Acting director and staff emphasized that the transaction is not final until DOF and the Oversight Board sign off and the commission confirms the sale (tentatively scheduled for July).
Public comment on the shipyard financing was brief and generally supportive of continued redevelopment. Staff said the bonds would support infrastructure and parks for the Phase 1 development by the master developer Lennar and stressed that the refunding is intended to achieve lower, fixed debt-service costs for the project area.
What’s next: OCII will present the refunding to the Oversight Board (April 28) and to DOF (April 29), return on May 6 for related RMA amendments and other procedural steps, and seek final legislative action in late June or July, subject to DOF’s review timetable.
