Discussion and possible action to adopt RES. MCFD 2023-01 authorizing the sale and issuance of not to exceed $4,500,000 aggregate principal amount of General Obligation Bonds, series 2023; approving the form and authorizing the execution and delivery of necessary agreements, instruments and documents relating to the bonds, delegating the determination of certain terms of the bonds and matters related thereto to the District Chief Financial Officer; authorizing the levying of an ad valorem property tax with respect to the bonds; adopting post-issuance tax compliance and continuing disclosure compliance procedures; and authorizing the taking of all other actions necessary to the consummation of the transactions contemplated by the Resolution.

The District Board is asked to consider the Resolution to authorize the issuance of the Bonds and all matters and documents necessary with respect thereto to acquire that section of El Mirage Road from Lone Mountain Parkway north to the point that is 2,380 lineal feet from Lone Mountain Parkway.

The Resolution provides for the following:

1.   Approve Feasibility Report and notice of hearing with respect there to

The Resolution approves the notice of public hearing (attached as an exhibit to the Resolution) and approves the Feasibility Report as presented with the corresponding Public Hearing item on the agenda.  The notice of public hearing was published in the Peoria Times on April 13, 2023 as required by State statute.

2.   Approve the sale and issuance of the Bonds

The Resolution approves the issuance of the Bonds within the following parameters: principal amount of not to exceed $4,500,000, mature no later than July 15, 2047, arbitrage yield not to exceed 8%.

3.   Approve documents related to the sale of the Bonds

The Resolution approves the following documents related to the Bonds and authorizes the District Chief Financial Officer to determine all the necessary terms and matters to complete documents related to the sale of the Bonds.

• Series 2023 Standby Contribution Agreement (SCA) – Agreement pursuant to which the owner/developer entity, Lake Pleasant (Phoenix) ASLI VIII, LLC, will be obligated to make annual shortfall payments to Mystic CFD if net tax collections at the rate of $2.65 per $100 of assessed value is not sufficient to pay debt service on the Bonds.  Such obligation is secured by a letter of credit equal to two times the maximum annual debt service with respect to the Bonds (expected to equal approximately $500,000).  SCA terminates upon payment in full of the Bonds or tax collections for 3 consecutive years at the rate of $2.65 per $100 of assessed value are sufficient to pay maximum annual debt service on the Bonds (with certain adjustments).

• Series 2023 Letter of Credit Depository Agreement – Agreement pursuant to which the trustee bank for the Bonds (U.S. Bank Trust Company, National Association) will hold the above-referenced letter of credit and draw on such letter of credit under certain circumstances, including failure to pay under the SCA.  This agreement terminates upon termination of the SCA or the draw of the letter of credit.

• Series 2023 Indenture of Trust and Security Agreement – Agreement between Mystic CFD and the trustee bank that provides for the responsibilities of the parties to ensure the payment of the bonds and the obligations and covenants to the bondholders are met.

• Bond Purchase Agreement – Agreement between Mystic CFD and the underwriter (Stifel, Nicolaus & Company, Incorporated) pursuant to which the Bonds will be sold by Mystic CFD to the underwriter, determining the price and terms of the Bonds and other conditions necessary for the transaction.

4.   Ratify and authorize distribution of the Preliminary Official Statement and Official Statement

The Preliminary Official Statement is the document used by the underwriter to market the Bonds to investors.  It is an important disclosure document that contains information from Mystic CFD, the City, the owner/developer entities and others.  It describes Mystic CFD, the plan of finance, the security and source of payment of the Bonds, risk factors associated with the Bonds, information with respect to credit enhancement of the Bonds and information related to the development of Mystic at Lake Pleasant Heights provided by the owner/developer entities.  A final Official Statement will be prepared in connection with the sale of the Bonds pursuant to the Bond Purchase Agreement.

5.    Authorize subsequent levying of ad valorem property tax

The Resolution authorizes Mystic CFD to levy a secondary property tax for the repayment of the Bonds.  The target tax rate is $2.65 per $100 of assessed value.

6.    Adopt tax compliance and continuing disclosure compliance procedures

Mystic at Lake Pleasant Heights Community Facilities District ("Mystic CFD") was formed by City Council resolution in August 2020 to provide financing for public infrastructure that benefits the Mystic at Lake Pleasant Heights development. Along with the formation of the Mystic CFD, a bond election was held in October 2020, establishing a voter approved maximum bond authority of $65,000,000 for the CFD.

Infrastructure anticipated to be financed through the CFD include arterials and collectors and related water, sewer, and drainage infrastructure to be constructed by the developer. The infrastructure is expected to be completed in phases and general obligation bonds are anticipated to be issued by the CFD in phases to pay for the infrastructure.  Proceeds of the proposed series 2023 bonds (the "Bonds") are anticipated to be used to acquire that section of El Mirage Road from Lone Mountain Parkway north to the point that is 2,380 lineal feet from Lone Mountain Parkway.  In accordance with the CFD Development Agreement relating to Mystic CFD, a target tax rate of $2.65 per $100 of assessed value was established for the repayment of bonds.  Bonds will only be issued as assessed values for Mystic CFD become sufficient to support debt service at a tax rate of $2.65 per $100 of assessed value.  One of the owner/developer entities related to Mystic CFD will be obligated to make annual contributions for any shortfall in taxes collected to pay debt service on bonds pursuant to a Standby Contribution Agreement that is secured by a letter of credit.  Based on current development projections and assessed valuation assumptions, it is not expected that such owner/developer entity will be required to make shortfall payments under the Standby Contribution Agreement. On April 22, 2021, the Board of Directors of Mystic CFD (the "District Board") approved an initial bond issuance for the purpose of having debt service bond expense for the District appear on the first tax bills applicable to any single family dwelling units in the District. Such bonds have been paid in full.

Mystic CFD is a separate legal entity within the boundaries of the City.  As such, any debt or other legal obligations of Mystic CFD are strictly obligations of Mystic CFD.  They are not obligations of the City.  The financial obligations primarily include the debt service payments necessary to pay semi-annual principal and interest payments on Mystic CFD bonds.

The debt service obligations with respect to Mystic CFD bonds are the ultimate responsibility of the property owners of the CFD.  As discussed above, such obligations are not obligations of the City.  Mystic CFD is legally obligated to establish the property tax rate at whatever rate is necessary to generate property tax revenues necessary to meet debt service requirements for Mystic CFD bonds in any given year.  The target $2.65 per $100 of assessed value tax rate is not a maximum rate.  However, as discussed above, the owner/developer will be obligated to make shortfall contributions under a Standby Contribution Agreement that is secured by a letter of credit in order to maintain the tax rate at $2.65 per $100 of assessed value.

The bonds will be structured with a 20-year term and the interest on the bonds will be determined based on market rates at closing and will not exceed 8.0%. The bonds will be sold in a public offering pursuant to the Preliminary Official Statement/Official Statement described above.