To: BUDGET AND FINANCE COMMISSION
From: STEPHANIE, FINANCE DIRECTOR
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DISCUSSION REGARDING MEASURE FP GENERAL OBLIGATION BOND ISSUANCE
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EXECUTIVE SUMMARY
On November 5, 2024, Redondo Beach voters approved Measure FP, authorizing the City to issue up to $93,350,000 in general obligation (GO) bonds to fund the replacement and rehabilitation of the City’s Police and Fire facilities (Projects). The results of the election were certified on December 10, 2024, with 71.41% of residents voting in favor of the ballot measure.
Since voter approval, the City has completed the initial strategic planning phase for the Projects and is currently engaged in preconstruction and design development work, working towards negotiating Guaranteed Maximum Price (GMP) for the Projects. Based on the most recent estimates from the City’s project manager, staff expects that the total cost of the Projects, including preconstruction, design development, administrative oversight, project management, design, temporary relocation, environmental testing, utilities, demolition, construction, final relocation, and other costs, plus contingency, will use the full $93,350,000 authorized through voter-approved Measure FP GO Bonds.
Approval of the recommended resolution authorizes the issuance of the Measure FP GO Bonds to provide $93,350,000 in funding for the Projects, including the reimbursement to the City’s General Fund for Measure FP expenditures taking place in FY 2025-26 and the current fiscal year prior to bond issuance. In addition, a portion of bond proceeds will pay for the costs of issuing the Measure FP GO Bonds and the first interest payments. Starting in FY 2027-28, the City will pay Measure FP GO Bond debt service with property taxes levied and collected by the County.
BACKGROUND
Redondo Beach maintains a balanced budget as required by City Charter. Maintaining this balance limits the City’s ability to use its General Fund to make large investments in public infrastructure or to take on new debt service to cover the costs associated with borrowing funds for capital financing. To that end, the City evaluated different funding options for the Projects and chose to pursue the issuance of GO bonds.
GO bonds are a form of long-term borrowing in which a City issues bonds that are repaid over many years with semi-annual debt service payments generated through increases to property taxes across the City. This is also known as an “ad valorem” tax because the total value of the tax increase is proportional to the assessed value (AV) of parcels in the City. Issuing GO bonds requires the City Council to pass a resolution proposing the GO bond issuance which specifies the purpose, amount, and estimated impact on property taxes for residents of the City. On August 6, 2024, the City passed Ordinance No. 3274-24 formalizing the authority and conditions under which the Measure FP GO Bonds may be issued and placing Measure FP on the ballot, and on November 5, 2024, the voters approved Measure FP, authorizing the City to issue up to $93,350,000 in GO bonds to fund the Projects.
Following the election, the City began efforts to plan for and to engage the necessary services to realize the construction of the Projects. To that end, on March 18, 2025, the City adopted a Resolution No. CC 2503-017 declaring its intent to reimburse certain expenditures from proceeds of GO bonds approved by the voters under Measure FP. Planning and other work on the Projects began after a source for expenditures was authorized. On July 15, 2025, the City Council approved an Agreement for Project Services with Griffin Structures, Inc. (Griffin) to serve as the City’s owner’s representative and program manager for the Strategic Planning Phase of the Measure FP (Project) implementation. Since that time, Griffin has provided professional services and subject matter expertise to advance the Project through the Strategic Planning Phase and the procurement phase of a progressive design build (PDB) process to complete the Projects. On July 7, 2026, the City Council approved an Agreement with Swinerton Builders, Inc. (Swinerton) for PDB services for Phase 1 of the Measure FP, Fire Stations 1 and 2 Subproject and an Agreement with Swinerton for PDB services for Phase 1 of the Measure FP, Police Facilities Subproject. The Projects are currently in Phase 1 Design and working towards the establishment of GMPs for each Subproject. The City’s FY 2025-26 budget included $422,800 for initial project management
Meanwhile, the City also has assembled a financing team to support bond issuance. The City has engaged the services of Public Resources Advisory Group as municipal advisor, Nossaman LLP and Best Best & Krieger LLP co bond counsel, Best Best & Krieger LLP as disclosure counsel, and U.S. Bank Trust Company, National Association (U.S. Bank) as fiscal agent for the issuance of the Measure FP GO Bonds. In addition, on August 18, 2026, City Council had approved the formation of the Measure FP Citizen’s Oversight Committee, established to review and report on expenditures made from the project proceeds of the Measure FP GO Bonds.
Summary of Financing
The proposed financing is in the form of GO bonds to be issued by the City of Redondo Beach. The City will enter into a Fiscal Agent Agreement with U.S. Bank who will assist with the administration of funds and the payment of debt service. The Measure FP GO Bonds will be structured with level annual debt service payments. Payments starting in FY 2027-28 will be paid from property taxes to be levied and collected by the County on behalf of the City. The term of the Measure FP GO Bonds is 30 years, with the final property taxes to be levied in FY 2055-56. Interest on the Measure FP GO Bonds prior to the initial tax levy will be paid from proceeds of the bonds themselves. These provisions of the Measure FP GO Bonds are standard terms used for many GO bonds issued by California cities and school districts, including Redondo Beach Unified School District, and are also consistent with the assumptions used to prepare the estimate included Ordinance No. 3274-24 and appearing on the ballot seen by the voters at the time of the November 2024 election.
The table below shows estimates provided during the adoption of Ordinance No. 3274- 24.
The City’s municipal advisor will update the estimates in the table above with respect to the Measure FP GO Bonds, using market conditions as of the final date prior to report preparation.
Note that the actual interest cost, finance charges, amount of proceeds, total payment amount, and tax levy rates may vary from the estimates above. Market interest rates and changes in assessed valuation over time, which determine these results, are affected by numerous uncontrollable and unpredictable factors. If approved, limitations on the Measure FP GO Bonds reflect only by the not-to-exceed aggregate principal amount of $93,350,000, the not-to-exceed true interest cost (TIC) referenced in bond Resolution (the statutory maximum of 12%), and the final maturity being no longer than 30 years from the date of issuance, as specified in the attached Resolution.
Credit Rating
In preparing for the potential issuance of the Measure FP GO Bonds, City staff and the City’s municipal advisor met with S&P Global Ratings (S&P) to discuss the underlying credit of the bonds. As part of that process, the current financial condition of the City was also discussed, as S&P’s methodology for assigning credit ratings for GO bonds include consideration of the issuer’s general financial condition. The City expects to receive its rating by October 9, 2026, and will include this information with the October 13, 2026 report to City Council.
Competitive Bid Process
Staff recommends that the City sell its Measure FP GO Bonds through a competitive bid process via a public auction. In a competitive bid process, the City publishes (i) a Notice of Intention to Sell Bonds to notify potential bidders and other interested parties and (ii) a longer Notice of Sale to describe the terms of the sale, including the date, the time and method for submitting their bid. Bidders offer interest rates and a purchase price for all of the Measure FP GO Bonds, following the rules set forth in the Notice of Sale. The bidder offering the lowest effective borrowing cost, or true interest cost (TIC), is awarded the bonds. After receiving the award, the bidder will generally resell the bonds to investors at the bidder’s own risk.
The City Council will consider the report recommending adoption of the Resolution authorizing bond issuance on October 13, 2026.
COORDINATION
Transaction support has been provided by Public Resources Advisory Group as the City’s municipal advisor. Additional transaction team members include Best Best & Krieger LLP (co-bond counsel and disclosure counsel); Nossaman LLP (co-bond counsel); and U.S. Bank Trust Company, National Association (fiscal agent).
FISCAL IMPACT
Council adoption of the recommended Resolution and approval of Measure FP GO Bond issuance will result in the City’s receiving $93,350,000 of proceeds with which to pay for the costs of the Projects, as outlined in Ordinance 3274-24. A portion of these proceeds would be used to reimburse prior year expenditures for the Projects, which have already been made by the City. Additionally, the City would be reimbursed $53,150.40 related to the cost of the Measure FP election (representing one-third of the total election cost supporting three measures). The debt service on the Measure FP GO Bonds will be paid from property taxes to be levied on the City’s property owners over the life of the bonds. The levy will be set as to be sufficient to pay the full amount of such debt service. Ongoing administrative costs related to the Measure FP GO Bonds will be included in the department budgets.