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Home My WebLink AboutITEM 12 - CFD BOND REFUNDINGCommunity Facilities District (CFD) Refunding May 20, 2025 Agenda Overview What is a bond refunding? Benefits of a bond refunding and estimated savings Estimated cost of issuance Recommendations Transaction timeline and public communication strategy What is a bond refunding.? Bond refunding is debt refinancing, similar to refinancing a mortgage. It is called refunding because it involves issuance of new debt to pay off the old debt (refund the old debt). Goal -obtain better interest rates and achieve lower debt (mortgage) payments for property owners. Benefit of the Proposed CFD Refunding Goal - To save property owners money How - issue new bonds at lower borrowing costs and pass the savings to property owners. Property owners pay annual Special Tax A, which is to fund bond principal and interest payments. Refunding will NOT extend the life of the bonds. New obligations will have the same maturity years. CFD Bonds Identified for Refunding CFD 06-1 (Tustin Legacy/Columbus Square and Columbus Grove), 1,295 homes Series 2015A and 2015B bonds CFD 2014-1 (Tustin Legacy/Greenwood), Series 2015A bonds, 375 homes $49.74 million $39.4 million $2.74 million $27.67 million $25.5 million a_... . ... _.. n ..., , 1 _ . x — — t_440 _. 1 J. CFD • Greenwood CoLumbus _�ii- • p I. :i#fit-� ,�rd .r •i.inT 3,.,.- o� : •fir- ■'r �� ` , .. t e'+ - s^ Yr"' ,..f I CFD 2014 rove i 06-1 t .4 . ,p-- - JJ-' fir',.- _ Y?; .'.'.; *. r •.r }.x'�_ �� . 69i}[�i�i �� .,r.... y 'C•� ST ��j' "r, �i�s :r�+ r US I ■ \ it �.�r•: �,_ ��' af:.��f•' -.')r, �. Remembering what connects us. 0 Property Tax Bill Examples CFD 06-1 Columbus Square/Columbus CFD 2014-1 Greenwood Grove -. . SPECIAL ASSESSMENTS V0TEnAPP-. SERVICE AGENCY RATE VALUE TAXES SERVICE AGENCY RATE VALUE a BASIC LEVY RATE 1.00DDD 918,956 9,189.56 BASIC LEVY RATE 1.00644 1,032,536 10,825.86 TUSTIN SFID 2002.1 .01951 918,956 177.44 TUSTIN SFID 2008-1 .02264 1,082,586 245.09 METRO WATER D-MWDOC .00700 918,956 6.4.32 TUSTIN SFID 2002.1 .01931 1,082,586 05 209.53 TUSTIN UNIF- SCH-DIST. SF16 �k2D12- .41566 1,082,586 159.53 METRO WATER D-MWDOC .00766 1,082,586 75.78 TAX ON LAND ONLY IRVIN E RANCH WATER DIST •0990D 636,575 630.20 TAX ON LAND ONLY IRVINE RANCH WATER DIST .09900 482,353 477.52 SPECIAL ASSESSMENT CHARGES PHONE NO, VECTOR CONTROL CHO (800)273-5167 0.67 SPECIAL ASSESSMENT CHARGES PHONE NO. MOSO.FIRE ANT ASSMT (800)273-5167 5.29 VECTOR CONTROL CHO (840}273-5167 1.92 MWD WATER STDBY CHO (866)807-6664 10.08 MOSO,FIRE ANT ASSMT (840}273-5167 8.81 TUSTIN USD CFD 06-1 (877)575-0265 1.524.52 MWD WATER STDBY CHO (856}807-6864 10.08 TUSTIN CFD NO. 06.1 COL VLG FAG TX (SDO)439-6553 2.230.60 TUSTIN CFD 14-1 TUS LEGACY -FACILITY (SDOK3"553 4,177.29 TUSTIN CFD NO. 06.1 COL VLG SVC TAX (SDOK39-6553 1.698.94 TUSTIN-CFD 14.1 TUS LEGACY -SERVICE {86OK39-6SS3 1,418.90 CC SAN REGIONAL SEWER FEE (714}693-7281 371.00 TOTAL CHARGED 1.12531 15.531.62 TOTAL CHARGED 1.16361 17,9W.82 Estimated Property Owner Savings (as of 5/20/2025) CFD 06-1 CFD 2014-1 Community Columbus Square/ Columbus Grove Greenwood Avg. Annual Savings per Property (market as of 5/20/25 per Stifel's desk) $152 $192 Bond Years Remaining 14 20 Avg. Savings per Property over Remaining Bond Years $2,124 $3,850 Who pays for the costs of refunding?. All refunding costs (consultants and city staff) will be paid from new bond proceeds. No fiscal impact to the City. No fiscal impact to property owners. Special Tax A adjustments as a result of the refunding have no impact to the City's revenues. Special Tax B for City services is not impacted by the refunding. Public Communications A postcard was mailed to all affected property owners: Over the years, the City of Tustin has formed several Community Facilities Districts (CFD) in Tustin Legacy and issued bonds to finance public infrastructure for these CFDs. CFD 06-1 bonds were issued for the Columbus Grove and Columbus Square communities, and CFD 2014-1 bonds were issued for the Greenwood community. The CFD bonds are supported by an assessment via annual property tax and paid by homeowners. City staff have identified an opportunity to generate savings on community members' annual property taxes within these two CFDs, by refinancing their CFD or Mello -Roos bonds. 4911�7 IF ® ® ❑ PROPERTY TAXES This process is similar to a homeowner refinancing a mortgage to get Lower interest rates and monthly payments. This will reduce your annual property taxes starting in Fiscal Year 2025-2026 by replacing older, higher -interest bonds with new, lower -interest bonds. It's all part of the City's commitment for responsible fiscal management and delivering values to our residents. R CFD bond refinancing 41 lowers property rates for Tustin Legacy Homeowners at CFD 06-1 and 2014-1 uspcGOSTAGro HOW WILL THIS IMPACT PROPERTY OWNERS? Ps E vnio '""G a Affected property owners will save money on future property tax bills if this refinancing transaction is approved. a The exact savings will not be finalized until the transaction closes in June 2025. The City will provide an estimate savings range based on current market conditions and this information will be available on the City's website. . Refinancing is not used to fund new projects — the taxpayer is the sole beneficiary of this action. s While Mello -Roos taxes will not be removed from annual property taxes, the lower interest rates will reduce the tax burden. TIMELINE OF BOND REFINANCING May 20, 2025 August 2025 City Council meeting to authorize bonds New tax assessments submitted to County and host public hearing on the matter of Orange for fiscal year 2025-2026 Public Communications Next Steps Notices to all affected property owners: July or August 2025 — A notice to property owners about the adjustment to their special tax assessments on the 2025-2026 property tax bill. The adjustment amount listed on the notice will be specific to the property. The Orange County Treasurer -Tax Collector will mail the FY 2025-2026 property tax bills to property owners by October 2025. The City has set up a dedicated email (Finance(@tustinca.org) to respond to inquiries from property owners. The email is included in all notices to the affected property owners. Recommendations -L. CFD 06-1 —to approve the issuance of refunding bonds at an amount up to $38 million. 2. CFD 2014-1 — to approve the issuance of refunding bonds at an amount up to $25 million. Tustin Financing Authority - to approve the issuance of the 2025 special tax revenue refunding bonds at an amount up to $63 million. Next Steps in the Refunding Process After May 20, 2025 — Negotiate bond sales if recommendations are approved tonight. June 2025 — Refunding bonds closing. August 2025 — New Special Tax A assessments to Orange County for 2025-2026 property tax roll. September 1, 2025 — Redeem 2015 bonds for CFD 06-1 and 2014-1. OOOOO—=MWO= ilN U JII Remembering what connects us. Thank You! i t s