Unique Characteristics of Project: NHA guided the funding through a bond issue of a very extensive remediations effort for a former military base in the nation. Over an 18 month period NHA staff developed solutions to (1) statutory termination of the bond issuer on June 30, 2020; (2) achieving consensus amongst multiple stakeholders on both the security for the bond issues and the use of proceeds; (3) legal challenges to the ability of FORA to issue the debt and (4) an obligation to fully prepay FORA’s obligation to CalPERS prior to its June 30, 2020 dissolution.
Executive Summary: Beginning in January 2019, NHA staff developed a financing plan to help achieve maximum leverage from three redevelopment project areas within the FORA jurisdiction. The ability of FORA to issue bonds secured by tax increment revenue from these projects was specifically addressed in the original FORA authorizing statute. However, the State Department of Finance challenged FORA’s ability to issue this debt late in 2019. This issue was successfully resolved through negotiation with DOF in the spring of 2020, culminating in a $30.705 million taxable tax allocation bond that closed 5 days before FORA was dissolved by statute.
In addition to that challenge, there were disputes amongst FORA’s statutory members (local cities and the County of Monterey) over the pledge of tax increment and the use of the proceeds. FORA and NHA staff worked carefully over many months with each stakeholder’s staff and elected officials to build consensus on the eventual financing structure.
Finally, the bond issue had to be structured to also fund a significant cash payment to CalPERS to fully satisfy FORA’s remaining pension obligation after dissolution.