City Council

(17)\n26-0016\nBUDGET AND FINANCE COMMITTEE REPORT, RESOLUTION and\nORDINANCES FIRST CONSIDERATION relative to the issuance and\nsale of Municipal Improvement Corporation of Los Angeles (MICLA)\nLease Revenue Bonds (Bonds), lease and leaseback of real\nproperty between the City and MICLA; and, creation of a special fund\nto record accounting transactions.\nRecommendations for Council action, SUBJECT TO THE APPROVAL\nOF THE MAYOR:\n1. ADOPT the accompanying Authorizing RESOLUTION, attached\nto the City Administrative Officer (CAO) report dated January 8,\n2026, attached to the Council file, which authorizes the\nissuance and sale in a principal amount up to $255 million of\nMICLA Bonds, Series 2026-A (Capital Equipment and Real\nProperty), to be sold on a negotiated basis; and, authorizes the\nexecution and delivery of related bond documents in connection\nwith the issuance and sale of the Bonds.\n2. PRESENT and ADOPT the accompanying ORDINANCE, dated\nJanuary 9, 2026, approving the lease and leaseback of certain\nreal properties by and between the City and MICLA in\nconnection with the issuance of Bonds by MICLA, to be issued\nto retire certain maturities of commercial paper notes issued by\nMICLA.\n3. PRESENT and ADOPT the accompanying ORDINANCE, dated\nJanuary 9, 2026, adding Section 5.162.57 to Article 2.5,\nChapter 9, Division 5 of the Los Angeles Administrative Code to\ncreate a special fund related to the Bonds to be issued by\nMICLA, in one or more series, preliminarily named the\nMunicipal Improvement Corporation of Los Angeles Lease\nRevenue Bonds, Series 2026-A (Capital Equipment and Real\nProperty), with such additional series and subseries\ndesignations as determined by the City, to record certain\naccounting transactions related to the Bonds.\n4. INSTRUCT the Controller to create an account in the Capital\nFinance Administration Fund (Fund No. 100/53) that will be\nused to pay for future lease payments entitled “MICLA 2026-A\n(Capital Equipment & Real Property)”.\n5. AUTHORIZE the CAO to make technical corrections and\nadjustments as necessary to those transactions included in said\nCAO report to implement the Mayor and Council intentions.\nFiscal Impact Statement: The CAO reports that the issuance of the\nBonds in an aggregate principal amount up to $255 million will be\npayable from lease payments to be made by the City to MICLA\npursuant to the Lease Agreement, which is an obligation of the\nGeneral Fund, subject to annual appropriations in the Adopted Budget\nwithin the Capital Finance Administration Fund (Fund No. 100/53).\nThe resulting semi-annual lease payments will be due on April 15 and\nOctober 15 in sufficient amounts to pay semi-annual debt service\npayments for the Bonds. There is no additional General Fund impact\nas the first lease payment will occur in Fiscal Year (FY) 2026-27.\nFinancial Policies Statement: The CAO reports that the issuance of\nthe Bonds in an aggregate principal amount up to $255 million, along\nwith the associated lease payments, will not cause the City’s debt\nservice obligations to exceed six percent of General Fund revenues\nfor non-voter-approved debt, as required by the City’s Financial\nPolicies. After the issuance of the Bonds, the projected non-voter\napproved debt ratio is estimated to be 2.40 percent in FY 2025-26\nand 2.73 percent in FY 2026-27, as detailed in Attachment B of said\nCAO report.\nDebt Impact Statement: The CAO reports that the Bonds will be\npayable from lease payments to be made by the City pursuant to the\nLease Agreement, which is a General Fund obligation. These lease\npayments to MICLA will be annually budgeted in the Capital Finance\nAdministration Fund (Fund No. 100/53). The average annual debt\nservice for the Bonds is estimated to be $15.9 million over 20 years,\nthrough May 1, 2046. The total debt service, including total principal\nand interest, over the life of the Bonds is estimated to be\napproximately $318.8 million. Actual interest rates may differ as rates\nare dependent on market conditions at the time of issuance. After the\nissuance of the Bonds, the projected non-voter approved debt ratio is\nestimated to be 2.40 percent in FY 2025-26 and 2.73 percent in FY\n2026-27, as detailed in Attachment B of said CAO report.