City Council Agenda
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Memo to: |
Manteca Financing Authority Board of Directors |
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From: |
Matthew Boring, Treasurer |
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Date: |
October 20, 2026 |
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Subject: |
Issuance of 2026 Lease Revenue Bonds to Finance a Portion of the New Police Department Building and Fire Station No. 6 |
Recommendation:
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Adopt a resolution of the governing Board of the Manteca Financing Authority approving, authorizing and directing the issuance and sale of Lease Revenue Bonds in an amount not to exceed $65 million to assist the City of Manteca in financing capital improvements, and approving related documents and actions.
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Background:
The city has discussed the need for new public safety facilities because of population growth and increased service needs. At its October 6, 2026 meeting, the City Council received an informational presentation on a proposed funding plan for the construction of a new Police Department building and Fire Station No. 6 (the “Project”), including the use of impact fees, Measure Q funds, and lease revenue bond proceeds.
Financing a portion of the Project with lease revenue bond proceeds provides construction funds upfront (avoiding further rising construction costs) and spreads repayment over years of facility use, while adding interest and financing costs. The city expects to use certain earmarked, but not pledged, Measure Q revenues toward lease payments supporting debt service.
The Manteca Financing Authority (the “Authority”) was established on May 1, 1991 with the authority to assist in the acquisition and financing of public capital improvements on behalf of the city. The city seeks to finance a portion of the Project through the Authority’s issuance of 2026 Lease Revenue Bonds (the “Bonds”) to generate $57.7 million in bond proceeds.
Discussion:
Project Cost and Funding Plan
The City opened bids for the Police Department building construction, with bids ranging from $52.8 million to $63.0 million. The estimate to complete construction and furnish the Police Department building is $75.0 million. The Government Building Facilities Fees are expected to contribute $30.0 million to the project, leaving approximately $45.0 million in funding needed.
The current estimate to construct and furnish Fire Station No. 6 is $24.8 million. While the Fire Fees can cover 100% of this expense, they can contribute $5.8 million at this time. The remaining $19.0 million will need an additional funding source, although the Fire Fees can contribute this amount in the future as more fees are collected.
The City budgeted $8 million for debt service in FY 2026-27; however, only an interest payment of approximately $1.62 million is expected to be due during that fiscal year. The remaining approximately $6.3 million will be reallocated to the Project and, together with approximately $57.7 million in net bond proceeds, will provide approximately $64 million in project funding. Using these budgeted funds for the Project reduces the amount that must be borrowed and the associated total interest expense.
Public Hearing/City Council Approval
In accordance with Government Code Section 6586.5(a), the city will hold a public hearing to consider public testimony concerning the possible issuance of bonds by the Authority to finance certain public capital improvements within the boundaries of the city. The city will also consider a Resolution approving the sale of bonds by the Authority and finding that there are significant public benefits in connection with the Project, and the associated financing thereof, with bond proceeds.
Summary of Financing Documents
The proposed Resolution recommended for adoption by the governing Board authorizes the issuance of the Bonds, appoints professionals to assist with the financing, and approves all documents and actions needed to authorize the sale of the Bonds, including the following substantially final form financing documents together with any changes or additions deemed advisable and approved by an Authorized Officer. Certain information in these documents will be finalized after the bond sale.
• Site Lease and Lease Agreement - The Site Lease and Lease Agreement provide for the City to lease the initial Leased Property (anticipated to initially consist of the City Hall, Corporation Yard, Vehicle Maintenance Yard, Animal Shelter, Fire Station Nos. 2, 3, 4, and 5, and the new Police Department building site) to the Authority in consideration of an upfront site lease payment to finance the Project and pay costs of issuance, and for the Authority to lease the Leased Property back to the City in consideration of the payment by the City to the Authority of semi-annual lease payments. The lease payments will be due on dates and in amounts to enable the Authority to pay scheduled debt service on the Bonds.
In addition, under the Lease Agreement the City agrees to annually budget for and appropriate the lease payments for the use and occupancy of the Leased Property. The City further agrees in the Lease Agreement to provide specified forms of insurance and to maintain the Leased Property. Upon final completion of the construction of the City’s new Police Department building, the City has the right to release all of the initial Leased Property other than the land and buildings comprising the new Police Department building, and anticipates doing so, so that the sole Leased Property is the Police Department building which is the primary asset financed with the Bonds.
• Assignment Agreement - The Assignment Agreement between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), provides for the Authority to assign certain of its rights under the Lease Agreement, including its right to receive the lease payments from the City, to the Trustee for the benefit of the Bond owners.
• Indenture of Trust - The Indenture of Trust between the Authority and the Trustee defines the terms and conditions of the Bonds, including the pledge of revenues, redemption provisions, investment and management of funds and accounts, and repayment mechanisms. Under the Indenture, the Trustee receives and disburses the lease payments semiannually to Bond owners as payments of interest and principal.
• Bond Purchase Agreement - The Bond Purchase Agreement among the Authority, the City, and the Underwriter (Ramirez & Co., Inc.) defines the terms and conditions under which the Bonds will be purchased by the Underwriter for further resale to ultimate investors.
• Preliminary Official Statement (“POS”) - The POS will be distributed to prospective purchasers of the Bonds. The POS must contain all facts material to potential purchasers of the Bonds, including information regarding the security for the Bonds, the City, and the Authority (with certain permitted exceptions to be completed in the final Official Statement) and must not omit any material facts. The POS is required to satisfy the Authority’s obligation under federal securities laws to provide material information to potential purchasers of the Bonds and must be accurate and complete in all material respects.
The Authority has an obligation to ensure that the POS includes all information that would be material to a prospective investor’s decision whether to purchase the Bonds. While the Disclosure Counsel, Municipal Advisor, and the Underwriter have participated in preparing the documents, the Authority and the City are ultimately responsible for ensuring that the POS is accurate, contains no misleading information, and does not omit any information necessary to make the POS not misleading to investors.
The Resolution also sets forth certain not-to-exceed parameters for the Bonds, including a principal amount not exceeding $65 million, a true interest cost not exceeding 5.50%, and an underwriter’s discount not exceeding 0.45% of the principal amount of the Bonds. These not-to-exceed parameters are meant to provide some flexibility and cushion in case market conditions change.
Fiscal Impact:
Pursuant to Government Code Section 5852.1, good faith estimates (obtained from the underwriter and the municipal advisor) must be disclosed at a public meeting before the authorization of the Bonds. The table below summarizes those estimates and includes additional information. Final maturity of the Bonds is aligned with the sunset of Measure Q in 2045.
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2026 Lease Revenue Bonds |
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Principal Amount: Final Maturity: True interest cost: |
$56,425,000 June 1, 2045 4.90% |
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Finance charge: |
$653,912.50 |
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Amount of proceeds received: |
$57,700,000 |
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Average annual debt service: Total debt service payment amount: |
$4,867,884.59 $90,312,781.07 |
* These are good faith estimates only and are based on market rates as of October 5, 2026. Final results will likely differ based on market conditions as of the actual sale date and other factors. However, for the financing to proceed, the not-to-exceed parameters described in the previous section must be met.
If the subject Resolution is approved, sale of the Bonds is expected to be completed in late October or early November with a delivery/closing date prior to the end of November, at which time the City will receive the bond proceeds.
Documents Attached:
Attachment 1 - Resolution
Attachment 2 - Form of Site Lease
Attachment 3 - Form of Lease Agreement
Attachment 4 - Form of Assignment Agreement
Attachment 5 - Form of Indenture of Trust
Attachment 6 - Form of Bond Purchase Agreement
Attachment 7 - Form of Preliminary Official Statement