(October 25) The county this week arranged to issue $9,250,000 worth of bonds to provide financing for infrastructure to facilitate residential development in the Lytle Creek area.
The bonds are to be issued in two separate allotments, one of $6.5 million and the other of $2.75 million. Despite the bonds being intended for utilization in the same Lytle Creek North development project being undertaken by Lennar Homes, the involved infrastructure will be placed into separate improvement areas mapped out within the project.
The bonded indebtedness is to be retired by Mello-Roos fees to be borne by the eventual occupants of the homes to be built. The Mello-Roos fees will be levied upon those homeowners’ tax bills separate from the mortgages for the homes.
As a consequence of the separate bond issuances, the county is paying replicative issuing fees to the bond underwriters and attorneys involved in the bond sales.
In March 2007, the county board of supervisors approved the establishment of Community Facilities District 2006-1, which was intended to, according to the county, “provide a portion of funds needed to address specific public facilities and services that are required of the developer in the development of the Lytle Creek North Community, a 2,086 residential subdivision located west of Interstate 15.” That same month it designated Improvement Areas No. 1 within the district, pursuant to the Mello-Roos Community Facilities Act of 1982, under which bonds sold to cover the cost of infrastructure in each particular improvement area are debt serviced by a special tax levied on all improved parcels of land within the improvement area.
In October 2010 the board of supervisors approved the issuance of Special Tax Bonds Series 2010, for CFD 2006-1 Improvement Area No. 1, in an aggregate principal amount not to exceed $8,000,000.
In March  2011 the board of supervisors approved the formation of CFD Improvement Area No. 2 along with other items, pursuant to the Mello-Roos Community Facilities Act of 1982. To date, $57,685,700 in public infrastructure has been completed and it is expected that over the next few years up to $84 million of the cost of the infrastructure at Lytle Creek North will be defrayed through bond financing.
This week the second bond issuance, designating $6.5 million for Improvement Area No. 2 was issued. In connection with that issuance, the board approved agreements with Orrick, Herrington & Sutcliffe LLP as bond counsel in an amount not to exceed $81,000; Stradling, Yocca, Carlson & Rauth as disclosure counsel in an amount not to exceed $35,000; CSG Advisors, Inc. as financial advisor in an amount not to exceed $25,000; and David Taussig & Associates as special tax consultant for the completion of the bond sale and issuance and continuing services for the community facilities district  in an amount not to exceed $15,000.
In a separate but very similarly worded action, the board also approved a third bond issuance, designating $2.75 million for use in Improvement Area No. 1 along with agreements with Orrick, Herrington & Sutcliffe LLP as bond counsel in an amount not to exceed $66,000; Stradling Yocca Carlson & Rauth as disclosure counsel in an amount not to exceed $30,000; CSG Advisors, Inc. as financial advisor in an amount not to exceed $25,000; and David Taussig & Associates as special tax consultant for the completion of the bond sale and issuance and continuing services for district in an amount not to exceed $15,000.
When he was queried by the Sentinel as to why the county had not consolidated the $6.5 million and $2.75 million bond issuances to eliminate the redundancies in the bond counsel, disclosure counsel, financial advisor and tax consultant charges, county director of special districts Jeff Rigney said, “In 2006 Communities Facilities District 2006-1 was formed in conjunction with the Joanna Ranch Lennair Homes Development Project so that bonds could be sold to fund needed infrastructure, including waste water treatment facilities, roads, traffic signals, flood control levees, water lines and parks. This is our second and third issuance in that area to provide infrastructure for that development and the surrounding area. It is projected to include 2,086 homes and a community facilities district was formed to cover the entire area. But the development is proceeding in stages and that is why we formed different improvement areas. It is required that every time bonding is done for one particular area that we come back to the board of supervisors for approval. Before the developer moves ahead with each phase, both the developer and the county want to make sure the housing market is appropriate for the time we are in. That holds true especially during the economic downturn and bleak times like this. It always behooves us to develop prudently and to watch the market rather than doing one blanket issuance to make sure that only a certain number of homes are developed to meet the current and immediate forthcoming need. That is why we broke it down. The number of homes determines what the bond issuance is going to be. In this case we had two different areas and two different issuances that read virtually identically but they could not be combined. There were two different issuances, each with costs for consultants. We were able to achieve some economy of scale because we are doing them at the same time. Most likely, the $2.75 million issuance would not have been done by itself. By doing them together there were just enough economies of scale to make it work by doing the consultant fee pricing together.”