Success Stories
City of West Sacramento

Since 1992, Westhoff, Cone & Holmstedt has served as the underwriter for the City of West Sacramento, which was incorporated in 1987. Our firm has successfully completed all 27 of West Sacramento's Mello-Roos bond issues totaling $205.9 million. The development financed by West Sacramento's Mello-Roos financings can be grouped into four major areas: (1) Southport, the primary area of residential growth in the southern portion of the West Sacramento within the Southport Framework Plan; (2) Southport Industrial Park, a large industrial business park just north of Bridgeway Island within the larger Southport area; (3) Raley's Field regional and stadium-related infrastructure improvements; and, (4) other developments including Southport Gateway, Newport Estates, Pheasant Hollow and Riverpoint.

The following information highlights Westhoff, Cone & Holmstedt's contributions to West Sacramento's ongoing financing history.

Southport Residential Area

Westhoff, Cone & Holmstedt sole managed $49,645,000 Senior Special Tax Revenue Bonds and $3,695,000 Subordinate Special Tax Revenue Bonds in June 2006 for the West Sacramento Financing Authority. The senior bonds are insured by XL Capital Assurance and rated "AAA". Collectively, the bonds were issued in order to (i) purchase $48,591,262 of Local Obligations of CFD Nos. 10, 11, 15, 16, 18 and 19, (ii) provide new money for drainage improvements throughout the greater Southport residential area, in which all of the CFDs are located, (iii) fund a Reserve Fund, (iv) fund capitalized interest on the Subordinate Bonds, and (v) pay costs of issuance. In turn, the proceeds of the Local Obligations were used to advance refund in full nine outstanding series of Special Tax Bonds issued by such CFDs. In order to leverage the bonding capacity of the CFDs, debt service "savings" associated with the refunding-only portion of the bonds was not be passed on to property owners, but rather was utilized to provide the capacity for nearly $6 million of drainage improvements, given the following constraints: (a) annual levies of the Special Tax in each CFD was not raised, and (b) the maximum Bond Authorization of each CFD was not exceeded. However, due to the small size of four of the six CFDs involved, most of the top-tier bond insurers passed on the opportunity, thus making it a very difficult transaction to complete. Only through the persistence of our investment bankers and creative structuring did we convince XL Capital to provide an insurance commitment. One feature of note was the creation of a Liquidity Account that retains revenues in excess of Senior debt service for one year, thus creating a synthetic 1.10 times coverage. Another feature was the placement of the Reserve Fund at the Authority level so as to make the full Reserve available to replenish shortfalls in any one CFD, and the full Reserve Fund will be held through the final maturity of the bonds – despite the fact that some of the CFD's Local Obligations mature sooner than others – so that the Authority will have full use of those monies after the bonds are completely retired. The Reserve Requirement was funded 50/50 by a combination of bond proceeds and a Reserve Surety. The significance of West Sacramento's Southport residential refinancing is that it demonstrates the creative bond structuring capabilities we offer our clients. Specifically, we understand how to maximize the creditworthiness of land-secured developments and work with bond insurers and rating agencies to structure the most advantageous refinancing possible.

Southport Industrial Park

Apart from the residential Bridgeway Island, the other major portion of the Southport Framework Plan is the Southport Industrial Park, development of which began in 1992. Numerous Mello-Roos financings have been utilized to implement this development, as follows.

CFD No. 2 – The first of West Sacramento's Mello-Roos financings (CFD No. 1 never issued debt), this $2.43 million financing in December 1992 funded planning and design work necessary for the development of Southport, a 7,120-acre peninsula that essentially represents the southern portion of the City where its primary residential growth has occurred and continues to this day. Included in the planning and design work were the engineering plans for Palamidessi Bridge that, once built, would provide greater access to Southport critical to the area's development.

CFDs 3 & 5 – Proceeds of the $3.8 million Series A and $1.505 million Series B CFD No. 3 Bonds issued in June 1996 provided a substantial portion of the cost of the Palamidessi Bridge and a road connecting into Jefferson Boulevard. The companion $5.2 million CFD No. 5 Bonds funded the acquisition of additional roadway improvements. Together, these issues were instrumental in development of a 664-acre industrial business park development in the northwest quadrant of Southport. The CFD No. 5 financing was the first ever variable rate Mello-Roos bond issue. By virtue of the strength of the primary developer of the industrial portion of Southport, the CFD No. 5 bonds qualified for letter of credit support, thus enabling the issuance of variable rate debt at much lower interest rates than fixed-rate bonds.

CFD No. 7 – In March 1998, the City's Financing Authority issued $2.32 million Series D and $3.145 Series E Bonds funding additional roadway, water, wastewater and drainage improvements within Southport. This district known by this time as "Southport Industrial Park" directly overlaps CFDs No. 3 & 5 as described earlier.

CFDs 8 & 9 (1999) – The largest of West Sacramento's Mello-Roos issues to date, the $32.225 million Series F Bonds of the Financing Authority in January 1999 encompassed (a) $32 million CFD No. 8 bonds which fully refunded all Bonds of CFDs No. 3, 5 & 7, prepaid a portion of overlapping CFD No. 2 debt, and provided approximately $10 million in new money for Phase II and III improvements to Southport Industrial Park; and, (b) and $225,000 CFD No. 9 Bonds funding impact fees associated with a 2-acre parcel leased to Staples Superstore. The CFD No. 8 Bonds effectively continued the development of the industrial business park that is the focus of the northwest portion of Southport.

CFD No. 8 (2001) – A second issuance in the amount of $15.5 million Special Tax Bonds occurred in March 2001. This financing for Southport Industrial Park funded improvements required for Phase IV and V of the development.

Raley's Field

Westhoff, Cone & Holmstedt underwrote $7.825 million CFD No. 12 Special Tax Bonds in August 1999 that financed public infrastructure improvements related to Raley's Field, the stadium that now serves as the home of the West Sacramento River Cats, the "AAA" minor league affiliate of the Oakland Athletics. Simultaneously, a joint powers financing authority issued a larger, taxable series of bonds that funded construction of the stadium itself. As a result of a pledge of certain funds of the West Sacramento Redevelopment Agency towards the CFD No. 12 debt service, the Mello-Roos Bonds qualified for bond insurance from Ambac. Westhoff, Cone & Holmstedt is proud to have participated in the financing of the development of this state-of-the-art baseball facility that brings prestige and economic benefits to West Sacramento.

Other Developments

CFD No. 6 – $4.25 million Series A and $1.765 million Series B Bonds issued in July 1997 funded the prepayment of prior assessments for street improvements benefiting 85 acres located within a northern section of the City known as Riverpoint, a business/professional office and commercial development.

CFD No. 11 (1999 & 2001) – Southport Gateway is a 70-acre residential development planned for 302 single family lots adjacent to Bridgeway Island and Newport Estates within the larger Southport area. $2.75 million Series 1999 Bonds in October 1999 and $1.7 million Series 2001 Bonds in May 2001 were issued to fund the public improvements necessary to allow this development.

CFD No. 14 – This $3.86 million issuance for CFD No. 14 in August 2001 funded public facilities associated with the development of Newport Estates, a 180-acre residential development planned for 846 single family homes, also in Southport.

CFD No. 15 – We financed $1.905 million issuance for CFD No. 15 in December 2002. This issue funded public facilities associated with the development of Pheasant Hollow, a 31-acre residential development planned for 134 single family homes within the central portion of the Southport Framework Plan.

Summary

Westhoff, Cone & Holmstedt's experience as underwriter for the City of West Sacramento demonstrates the firm's long-term commitment to our clients and our knowledge of the issues and challenges faced by a fast-growing area. We believe that the breadth of our experience is ideally suited to the needs of the firm's clients.

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