To: MAYOR AND CITY COUNCIL
From: LUKE SMUDE, ASSISTANT TO THE CITY MANAGER;
STEPHANIE MEYER, FINANCE DIRECTOR
TITLE
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DISCUSSION AND POSSIBLE ACTION ON THE APPROVAL OF THE ISSUANCE OF THE CITY OF REDONDO BEACH GENERAL OBLIGATION BONDS (MEASURE FP) SERIES 2026 IN AN AMOUNT NOT TO EXCEED $93,350,000
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2610-086 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDONDO BEACH AUTHORIZING AND DIRECTING THE ISSUANCE AND SALE OF AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $93,350,000 OF CITY OF REDONDO BEACH, CALIFORNIA GENERAL OBLIGATION BONDS (MEASURE FP PUBLIC SAFETY IMPROVEMENTS), SERIES 2026, AND APPROVING OTHER RELATED ACTIONS IN CONNECTION THEREWITH
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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. Based on the most recent estimates, 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 proposed Resolution would authorize 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 certain Measure FP expenditures that occurred 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 Los Angeles County.
BACKGROUND
The City of Redondo Beach maintains a balanced budget as required by the 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. On November 5, 2024, Redondo Beach 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 execute 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. 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 guaranteed maximum prices for each Subproject. To date, the City has incurred $1.5 million in costs related to the Projects.
Additionally, 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. On August 18, 2026, the City Council approved the formation of the Measure FP Citizen’s Oversight Committee, which will review and report on project expenditures made from the 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 Los Angeles 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 repayment estimate included in Ordinance No. 3274-24 and appearing on the ballot seen by the voters at the time of the November 2024 election.
The City’s municipal advisor has prepared the following estimate with respect to the Measure FP GO Bonds, using market conditions as of October 6, 2026. The table below compares the new estimates to the available estimates provided during the adoption of Ordinance No. 3274-24.
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) of 7%, and the final maturity being no longer than 30 years from the date of issuance, as specified in the attached Resolution.
Pending approval of the Resolution by the City Council, the following actions would be undertaken by staff and the City’s representatives to offer the GO bonds for sale:
• October 14, 2026-Publish intention to sell bonds
• October 15, 2026-Publish Preliminary Offer Statement and Notice of Sale
• October 27, 2026 Bid Opening
• November 10, 2026 Bid Closing
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. Following those discussions, S&P assigned a credit rating of “AA+” with a stable outlook for the Measure FP GO Bonds and affirmed the credit rating of the City’s outstanding lease revenue bonds of “AA” also with a stable outlook. In assigning their credit rating, S&P issued a report discussing the creditworthiness of the City. Highlights of that report include:
• “…The rating reflects…Redondo Beach’s robust, high-income economy…, conservative fiscal management…, and a reserve policy that has been maintained above its formal policy…
• The fiscal 2027 budget is balanced and there are no material draws planned for reserves…
• Despite the notable cushion, if continued draws on their reserves occur, it could pressure the rating as the current level is below similar rated peers…
• Stable outlook reflects our view that Redondo Beach will maintain a sound operating profile supported by its robust tax base and prudent management…”
Competitive Bid Process
Staff recommends 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. Once an offer is accepted, the City would enter into a contract with the bidder offering the lowest effective borrowing cost, or TIC, is awarded the bonds. After receiving the award, the bidder will generally resell the bonds to investors at the bidder’s own risk.
Staff and the City’s Municipal Advisor also considered a negotiated sale process. In a negotiated sale, an issuer would select an underwriter prior to the sale. The underwriter would work with the financing team to create the terms of the financing. The underwriter would then offer the bonds to investors. After aggregating investor interest, the lead underwriter would negotiate with the issuer and finally make an offer to purchase the bonds.
Based on the fact that the Measure FP GO Bonds are general obligation bonds, the City’s high credit rating, and the City’s main priority, which is to achieve the lowest interest rate for the bonds and thereby the lowest tax rates for Redondo Beach property owners, the industry best practice is to use a competitive sale process as outlined by guidelines of both the Government Finance Officer’s Association (GFOA) guidelines and the California Debt and Investment Advisory Commission (CDIAC). Additionally, academic research shows a competitive sale is expected to achieve the lowest interest rate for the City for general obligation bonds with the size and characteristics similar to the Measure FP GO Bonds. In comparison, because the selection of the underwriter occurs before the actual pricing is known in a negotiated sale, it cannot be known whether the selected underwriter would be the firm that would offer the lowest effective borrowing cost.
Single Issuance
Under Measure FP, the maximum amount of the GO Bonds which may be issued is $93,350,000. The GO Bonds may be issued in one or more issuances. Staff recommends that this amount be issued in a single issuance for several reasons. First, the identified project cost is expected to use this entire amount. Second, with the design-build team identified, it is expected that Project-related expenditures will ramp up significantly. The City had been paying smaller amounts of Project costs from its General Fund, but additional “lending” by the General Fund, at the anticipated pace and level required to advance the project in a timely manner, could impact reserves. Third, the timeline for the issuance of GO Bonds, including the effort undertaken to prepare the documents attached to this report, require three to five months. By issuing the full amount, it eliminates any risk that funding availability would lead to a delay in the delivery of the Projects. Fourth, there is currently no expectation that interest rates will decline significantly over the period of time during which the Project is being constructed. Rather, the City’s Municipal Advisor has advised that the current market consensus is for the Federal Reserve to increase interest rates during its next one or two meetings. Fifth, short-term interest rates are attractive, and staff expects to invest Measure FP GO Bond proceeds to earn interest to help fund the Projects and/or Measure FP GO Bond costs. Sixth, each issuance of bonds requires staff effort and incurs fixed costs. Economies of scale would be achieved by issuing the entire authorization at one time.
Resolution and Supporting Documents
As discussed above, this report recommends that Council adopt the attached Resolution authorizing bond issuance. The report also includes, and Council action will approve along with the report, a number of supporting documents to accompany the bond and required to fulfill legal and other requirements associated with the bond sale. These are included as attachments to the report and described briefly below:
• Resolution Approving the Issuance of Measure FP GO Bonds: This resolution to be adopted by the City Council authorizes the bonds, approves the sale process, and commits the City to ongoing obligations (e.g., setting tax rates, using proceeds, arbitrage rules, continuing disclosure, etc.).
• Fiscal Agent Agreement: Sets the terms for issuing, administering, paying, and recordkeeping for the bonds that USBank will undertake. It governs the project fund disbursement and debt service payment mechanisms.
• Preliminary Official Statement: A legal disclosure document prepared by the City as the issuer for a new offering, functioning similarly to a corporate prospectus. This document includes information pertinent to investors, including bond terms and structure, security and repayment source, issuer demographics, financial statements, legal and tax opinions, and credit ratings
• Appendix A - Preliminary Official Statement: Contains detailed information regarding the City’s finances, including the most recent audited financial statements and relevant economic data.
• Notice of Intention to Sell Bonds: Under California Constitution, most municipalities are required to notify the public about issuing bonds. This document meets that requirement and will be published in a local newspaper and/or the Bond Buyer-the municipal finance industry daily newspaper.
• Official Notice of Sale: Controls the competitive auction process, specifying the terms and obligations for both the City and bidders. This document will be published along with the Preliminary Official Statement (POS) to establish the sale process.
• Continuing Disclosure Agreement: Establishes the terms for the City’s required ongoing reporting to investors related to the Measure FP GO Bonds. This generally consists of important information about the bonds that arises after the initial issuance, reflects the financial health or operating condition of the City over time, or the occurrence of specific events after issuance that may have an impact on the ability of the issuer to repay the bonds, the value of the bonds if it is bought or sold prior to its maturity, the timing of repayment of principal, and any number of other key features of the bonds. For the Measure FP GO Bonds, the City will report on details related to the City’s assessed value, in addition to its regular financial statements.
The City’s municipal advisor, along with City staff, will discuss the structure, market conditions, credit rating process, use of a competitive bid process related to the Measure FP GO Bonds, required documents and next steps as part of the presentation of this item on October 13th.
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). The City Attorney’s Office and City Treasurer’s Office coordinated with the City Manager’s Office and Financial Services Department in preparing this report.
FISCAL IMPACT
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 Public Safety Facility Projects, as outlined in Ordinance 3274-24. A portion of these proceeds would be used to reimburse approximately $1.5 million of 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 primarily 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 the final debt service. Ongoing administrative costs related to the Measure FP GO Bonds will be included in future annual budgets.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
• Reso - No. 2610-086 Approving the Issuance of Measure FP GO Bonds
• Fiscal Agent Agreement
• Preliminary Official Statement
• Appendix A - Preliminary Official Statement
• Notice of Intention to Sell Bonds
• Official Notice of Sale
• Continuing Disclosure Agreement
• S&P Rating Report