California Municipal Financing Authority (CMFA)
Who is CMFA? The CMFA is a State-wide joint powers authority (“JPA”) whose members are numerous public entities throughout California. The CMFA has the authority to issue bonds to meet its mission of supporting economic development, job creation and social programs throughout the State of California while giving back to California communities. By supporting member communities and their local charities with a portion of the revenue generated through the issuance of taxable and tax-exempt bonds for public, private and non-profit entities, the CMFA is able to directly contribute to the health and welfare of the residents of California. The CMFA offers a means to finance new or continuing construction of infrastructure and public facilities through bonds it issues as an alternative to issuance of bonds directly by a public entity.
Facilitating Development. The CMFA recognizes that new residential development often challenges the mission of municipalities to provide infrastructure and schools, since new development triggers the need to construct, acquire, or otherwise provide additional public facilities to accommodate that growth. By working directly with developers, the BOLD program facilitates financing for infrastructure and fee obligations of developers, particularly obligations related to impact fees imposed under California law, and including fees related to schools and mitigation agreements.
Giving Back to Communities. The CMFA strives to maintain a fee structure that is lower than other JPA conduit issuers. In addition to lower borrowing and administrative costs, the CMFA shares a portion of all issuance fees directly with its member communities. In addition, a grant from a portion of the issuance fee is made to the California Foundation for Stronger Communities (“CFSC”) to fund charities designated by the member communities. In addition, a portion of the annual fees received by the CMFA may also be directed to charitable activities within California communities. A portion of the annual fees received by the CMFA will also be directed to charitable activities within California communities. This unique commitment to “give back” directly to the communities in which we operate sets CMFA apart from other JPA conduit issuers operating in the State.
Working With Joint Powers Authority Members for Economic Development
The Bond Opportunities for Land Development (“BOLD”) program (sometimes referred to herein as the “Program”) is offered by the California Municipal Finance Authority (“CMFA”) and designed to help developers, municipalities and schools throughout the State work together to cost-effectively finance public infrastructure projects and development fees through bonds issued by a community facilities district (“CFD”) formed under the Mello-Roos Community Facilities Act of 1982 (California Government Code Section 53311 et seq.). Administration of the Program, bond offerings, and related CFD formation and ongoing administrative responsibilities are handled by CMFA, without cost, liability or administration to the municipality or developer.
The BOLD Program has been developed to provide economic development financing opportunities to its members throughout California. The program facilitates a solution to what local agencies understand – the availability of bond proceeds to finance public infrastructure is a key part of providing the much needed new housing development in California.
Participation by the Local Agency
Community Facilities District Financing. The Program utilizes the Mello-Roos Community Facilities Act of 1982 (California Government Code Section 53311 et seq.) to raise revenues for the capital improvement needs of participating local agencies. The Act offers financing flexibility commonly used by cities, schools and other local agencies throughout the State to generate funds for the payment of public facilities, including development fees for facilities. An additional highlight for the local agencies involved is that the program also has the ability to include a municipal services component in the special tax if the local agency desires.
Public Entity Joining CMFA. If the local agency is not a member of the CMFA it will need to become one by joining the joint powers authority by adopting a resolution similar to the form attached here. Joining CMFA is easy and comes with absolutely no monetary obligation or potential legal liability.
Benefitting Local Public Entities. Once a member, the member is asked to consent to formation of community facilities districts within its territory, typically by adoption of a resolution approving participation in the Program, and, if needed, will enter into an acquisition agreement governing the use of bond proceeds to acquire public infrastructure and/or accept impact fees. With that being the only needed involvement of the local government and the rest being left up to the CMFA BOLD Program’s financing team and the participating developer–, the agency will quickly recognize the convenience of joining the CMFA to facilitate use of the program.
The CMFA and its consultant team will form and approve each CFD, the CMFA will issue bonds on behalf of the CFD and will utilize the services of special tax administrators to create the special tax formula and levy and collect the special taxes, without interfering with, or limiting, a local government’s general obligation bond (GO Bond) debt program, all while leaving time for the staff of the participating local government to focus on its core public services. The BOLD team welcomes input from the local government to ensure the program is meeting the local government’s goals. Review by the local agency and its municipal advisor is permitted and encouraged- local government direction and input is always welcome.
Upon the issuance of bonds, proceeds are quickly available to the participating local agency for facilities, which may include payment of impact fees in advance of the due date otherwise applicable as development progresses the local agency has the opportunity to sooner access those revenues quickly and eliminate the risk of nonpayment by the developer.
An additional highlight for the local agencies involved is that the program utilizes the services of special tax administrators to levy and collect the special taxes, which are billed in the name of the CMFA, without interfering with, or limiting, a local agency’s general obligation bond (GO Bond) debt program.
Financing Team. The Program is facilitated through bond industry professionals having extensive experience with community facilities districts and highly specialized expertise in CFD bond issuance and sales. Any local agency that desires to use its own financial advisor to review the BOLD Program application and/or other program documents may do so, with all related costs payable from a developer participant or from bond proceeds.
Bond Issuance. Bonds are issued through the CMFA, with no involvement of the local agency needed, other than becoming a member of CMFA, approval of the use of the Program in its territory and entering into an agreement to accept the fees or public improvements financed by the tax-exempt bond proceeds. No fees or costs are charged to the local agency and compensation for staff time can be provided for.
Developer Reimbursement. The Program offers developers the opportunity to finance public infrastructure, as well as impact fees associated with the public infrastructure needed for new development, for municipalities and school districts through the favorable interest rates associated with tax-exempt bonds. Repayment of the bonds is in the form of special taxes payable by home buyers or other end users, levied under the special taxing authority provided by a CFD, a typical financing method for new home developments in California. Upon issuance of the bonds, with the approval of the benefiting local agency, proceeds are a funding source for direct payment of impact or mitigation fees or to otherwise reimburse developer costs for public facilities associated with new development. The Program has the flexibility to accommodate the timing and needs of local agencies and developers related to most financial obligations to cities and school districts which are typically a part of a new home development, all with the flexibility to involve the local agency to its desired level of involvement.
The local agency pays no fees or costs of the Program. Upon approval of a land developer request and participation approval by the local agency, a deposit from the developer will be required to cover costs of formation and may also provide for local jurisdiction costs for consultants it may wish to utilize to approve participation in the Program. Costs for the issuance and sale of municipal bond issuances are paid from bond proceeds.
For Information on Joining CMFA, Contact:
For More Program Information, Contact:
Piper Sandler & Co
50 California Street, Suite 3100
San Francisco, California 94111