Berkeley City Council Special Meeting - May 20, 2025: Bond Financing for Fire Training and Affordable Housing
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Berkeley City Council Special Meeting - May 20, 2025
This special meeting of the Berkeley City Council convened at 4:30 PM on Tuesday, May 20, 2025, in the School District Board Room and via teleconference. The Council considered two financing items: authorizing up to $11 million in lease revenue notes for the Fire Administration and Training Project, and issuing $35 million in general obligation bonds for Measure O affordable housing. The meeting also included a required training on federal securities laws for municipal bond issuance. No public comments were received on either item. All actions were approved unanimously.
Discussion Items
Federal Securities Law Training
- Bond counsel Chris Lynch (Jones Hall) delivered a training on federal securities law requirements for municipal bond issuers, as required by the city's disclosure policies. Key points included:
- The city is subject to anti-fraud provisions under the Securities Act of 1933 and Securities Exchange Act of 1934 when issuing bonds and making continuing disclosures.
- Material facts (those a reasonable investor would consider) must be fully disclosed in official statements, annual reports, and even on the city's website if intended to reach investors.
- The SEC's Orange County (1994) and San Diego enforcement actions were cited as examples where elected officials faced personal liability for inadequate disclosure.
- Staff and elected officials must take reasonable steps to ensure all material facts (e.g., pension liabilities, structural budget imbalances, reserves) are included.
- The city's Disclosure Working Group, chaired by the Finance Director, reviews official statements before council approval.
Item 1: Lease Revenue Notes for Fire Administration and Training Project
- Finance Director Henry Oyekanmi presented the request to issue up to $11 million in federally taxable Lease Revenue Notes through the Berkeley Joint Powers Financing Authority.
- The total project cost is estimated at $15–17 million; the city has already saved $7.5 million toward it. The notes would cover the remaining balance.
- The notes are interest-only for 4 years, with a lump-sum principal payment due in 2029. Repayment would come from the general fund via lease payments.
- Initially, fire stations 2 and 5 were proposed as collateral because they are unencumbered and have sufficient value (approximately $15 million). However, staff is reviewing other city facilities and the resolution allows swapping properties.
- Councilmember Tregub asked about repayment risk; bond counsel confirmed the city intends to refinance with tax-exempt bonds upon exercising a purchase option on the property within approximately 3–4 years. The city manager stated resources are committed to cover both the notes and the property purchase.
Item 2: $35 Million General Obligation Bonds for Measure O – Affordable Housing
- This is the third tranche of the $135 million Measure O affordable housing bond approved by voters. After this issuance, approximately $22 million remains for a fourth tranche.
- The $35 million will fund five projects: People's Park supportive housing, Ashby BART development, North Berkeley BART development, St. Paul Terrace, and Ephesian Legacy Court.
- The bonds are taxable (rather than tax-exempt) because affordable housing projects often take longer than 3–5 years to spend proceeds, which would violate tax-exempt spend-down rules.
- Interest rates are currently estimated at 4–5%, though the market remains volatile. The city uses a competitive bid process rather than negotiated sale.
- Staff outlined a five-year borrowing plan to spread out issuances and manage taxpayer costs.
- Councilmember Tregub noted that the Measure O Oversight Committee was dissolved after making final recommendations, so the fourth tranche ($22 million) has been allocated by staff recommendation: $2 million for North Berkeley BART and $20 million for Ashby BART.
Key Outcomes
- Item 1 – Lease Revenue Notes: Council voted unanimously (7–0; Councilmembers Kesarwani, Bartlett, and Blackaby absent) to adopt Resolution No. [not provided] authorizing the issuance and sale of up to $11 million in federally taxable Lease Revenue Notes for the Fire Administration and Training Project. The public hearing was closed by a unanimous vote. (Roll call: Kesarwani absent, Taplin yes, Bartlett absent, Tregub yes, Blackaby absent, Lunaparra yes, Humbert yes, Mayor Ishii yes.)
- Item 2 – Measure O Bonds: Council voted unanimously (same roll) to adopt Resolution No. [not provided] authorizing the issuance and sale of $35 million in general obligation bonds for affordable housing under Measure O.
- The meeting adjourned at approximately 5:00 PM.
Meeting Transcript
Hello, everyone. I am going to call to order the special meeting of the Berkeley City Council. Today is Tuesday, May 20th. And clerk, could you please call the roll? Okay. Councilmember Kessarwani, currently absent. Councilmember Taplan present. Bartlett is currently absent. Treguent. OK. I'm here. Blackaby, currently absent, Luna Parra. Here. Humbert present and Mary Ishii. Here. Okay, quorum is present. Thank you very much. So this is a special meeting, and on our action calendar, we have some public hearings. Yeah, let me see what I can do about that. Okay. Um so and for item number one, uh, it's authorizing the execution sale and delivery of lease revenue notes for the fire administration and training project from the city manager. And Clerk, will you remind me? Do we need to take public comment? Uh well, we can open the public hearing and and receive the presentation. And then we'll take it. Okay. All right, we're gonna do that then. Let's open the public hearing and we will hear first from staff. Thank you. Henry, you can grant this other one over here too for you. Hi, hi. Okay. All right. Good afternoon, council. Um, my name is Henry Oyekami, and the finance director. And with me on the left to your right, is uh Chris Lynch, the bond counsel for the city. What we are going to do today is there are two things that we want to get approval from council. Number one, we want to issue uh revenue bonds so that we can um finish the construction of the fire um headquarters that we want to move the fire department from their current location to where they're going. And then the second one, we want to issue the um uh the third series, measure O bonding for that we need to issue so that we can do our affordable housing. Is that the two uh uh uh items on the agenda for tonight? But before we do that, we need to have a training. Um council should be trained every three or four years so that you understand when we come to you for borrowing of funds, that you know what the responsible for, even though I have emailed you and told you I have set up a uh according to the um to the policy that we have, which is the bond bo borrowing and disclosure. We as a finance director, I have uh constituted a a disclosure commit committee with my staff and I, and we have certified that every information that we have on the official statement are uh accurate, and so we've said that to you. That is that is part of the policy that we have. Okay, so um are we going to start with the training now? Um Mark is the training study okay, right and Mark, would you move to the second slide when you're ready? Thank you. Uh good evening, uh Madam Mayor, members of the city council. My name is Chris Lynch, and I work at a law firm called Jones Hall, and we've been helping the city with its bond work. Um the city attorney asked me to provide some training on the federal securities law, and that's something that's also required by your existing disclosure policies.
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