NHA Advisors works with public agencies throughout the State of California to provide the best financial solution
for capital projects. Some of these capital projects have included:
City Hall Facilities
City hall facilities are typically financed through lease financing secured by general fund revenues. Both Mello-Roos and general obligation bonds approved by a 2/3 vote of the local electorate can also be used to finance these facilities. However, voter support for increased taxes for city hall facilities is generally not strong enough to pass such bond measures. Another option is to secure a general purpose tax increase for a key general fund revenue, such as sales tax or utility users tax, by a simple majority (50%+) vote. While the revenue increase cannot be legally pledged to bond financing for new facilities, there are nevertheless more revenues in the general fund available to make the lease payments on the new facilities debt.
Projects completed in: Berkeley, Palmdale, Torrance
Community centers have traditionally been financed through lease financing secured by general fund revenues. However, voter support for increased taxes for community centers is generally not strong enough to pass such bond measures. Another option is to secure a general purpose tax increase for a key general fund revenue, such as sales tax or utility users tax, by a simple majority (50%+) vote.
Projects completed in: Berkeley, Newark, Rocklin
Parks and Recreation
Most parks and recreation facilities are financed through general fund lease financing. However, depending on the nature of the facilities, assessments approved under Proposition 218 can be used to finance certain parks and recreation facilities. Eligible facilities for assessment finance need to have a clear specific benefit to the parcels being assessed. This does not mean that the entire project needs to have specific benefit to assessed parcels, but that a portion of the project does have specific benefit to assessed parcels and that the amount assessed is in proportion to the specific benefit.
In addition, some public golf courses have been financed with security provided solely through golf course revenue. Such financings are rare and not always successful.
Projects completed in: Encinitas, Novato, Paso Robles, Yuba City
In general, legal experts in California are comfortable with financing roads through lease financing. However, investors are not always comfortable with the use of roadways as security for a lease financing. Asset transfer lease financing, where another real estate asset owned by the issuer is used in place of the roadway to be built or improved, is the more common form of lease financing for roadways. Assessment financing is also commonly used for roadway improvements; but again, the amount assessed to each parcel must be in proportion to the specific benefit received by the assessed parcel.
Projects completed in: Davis, Folsom, Gilroy, Rocklin
Facilities for water, sewer, solid waste, and other municipal utilities are typically financed through debt secured by a direct pledge of net revenues of the utility. Where utility revenues are weak, general fund lease financing can be used as well, or the financing can be done as a “double-barreled” bond with both utility revenues and general fund revenues pledged. Such debt can include a provision where the general fund pledge drops away when utility revenues meet certain tests.
Projects completed in: Ceres, Davis, Gilroy, Paso Robles, Ross Valley SD, Santa Ana, Torrance, Yuba City
Public Safety Facilities
Police and fire facilities are typically financed through lease financing secured by the general fund. However, voters are typically more likely to approve general obligation bonds or Mello-Roos bonds are public safety facilities than any other type of infrastructure. Also, as with City Halls, community centers and parks and recreation, a general purpose tax increase voted by a simple majority can help provide the funding for debt service payments on lease financing for new public safety facilities.
Projects completed in: Gilroy, Torrance, Yuba City
While parking facilities are typically financed through general fund backed lease financing, these financings are oftentimes self-supporting from parking revenues. Investors are much more likely to get comfortable with general fund support than a direct pledge of parking revenues. Nevertheless, a well run parking garage can oftentimes generate sufficient revenue to not only pay for operating costs, but to support debt service. The public agency owning the parking facility can operate the facility as a utility through an enterprise fund, but just use the general fund to support debt.
Projects completed in: Berkeley, San Rafael, Santa Cruz, Torrance
While convention centers have the potential to support themselves, they rarely do. If a convention center is financially successful, it is because the increased transient occupancy tax (“TOT”) generated at local lodging facilities from events at the convention center makes the difference. Since TOT is a general fund revenue, this means that convention centers are almost entirely financed through general fund lease financing. However, a public agency can used a voter approved general purpose TOT tax rate increase to help finance the convention center. In particular, the TOT tax rate increase can be limited to a geographic area that is clearly directly benefitted by the convention center.
Projects completed in: South Lake Tahoe, Visalia
Some libraries get an allocation of the basic ad valorem property tax. However, these funds are typically used solely to support operations and are not pledged to debt service. Consequently, libraries are typically financed through general fund backed lease financing.
Projects completed in: Berkeley, Gilroy, Los Altos