$285 million for roads, parks, and housing finally a go in Oakland

This morning, town of Oakland introduced that it had offered the entire $285 million in municipal bonds it issued final week. The bond collection was provided final Wednesday after a two-year wait amid considerations concerning the metropolis’s downgraded credit standing and general monetary outlook.

They have been all offered inside per week.

Town informed The Oaklandside that there was extra demand for its bonds than it may really promote, with $638 million in orders from 26 separate funding corporations.

“The oversubscription in the end allowed town to scale back the ultimate rates of interest provided to buyers and cut back town’s borrowing prices,” stated Sean Maher, town’s communications director.

Mayor Barbara Lee known as the bond providing a milestone for town. “Oakland is on the transfer and constructing momentum with this bond sale,” she stated in an announcement shared with The Oaklandside. “We’re revitalizing entry to financing to pave our streets, restoring the general public providers all of us use and rely upon, and investing in inexpensive housing for our neighborhood, all whereas sustaining transparency and financial self-discipline.”

“Collectively we strengthen our basis for generations to come back,” she stated.

As of 11 a.m. on December 3, town had 95 separate gross sales of its Measure U bonds on the open market; the preliminary sale of a multi-tranche package deal was anticipated to boost as much as $285 million to finance inexpensive housing, roads, libraries, senior facilities and parks, and one other $49 million to refinance previous loans.

The providing contains varied kinds of basic obligation bonds. The curiosity on collection 2025B-2 is tax exempt as a result of it’s for inexpensive housing, whereas collection 2025B-1 and 2025B-3 are taxable as a result of they’re for public works initiatives corresponding to street repairs. In complete, town says it has issued $143.5 million in tax-exempt bonds at a 3.99% rate of interest, and $191 million in taxable bonds at a 5.55% rate of interest. Town can be promoting a collection of tax-exempt bonds labeled 2025 REF for refinancing, as famous within the disclosure document; the assertion from Lee’s workplace stated they may supply $5.6 million in debt service financial savings.

Moody’s gave town an AA2 ranking for the bonds, the third highest ranking it provides to high-quality investment-grade securities.

In line with the disclosure doc, the bond sale will elevate roughly $181 million for residential and $104 million for non-residential infrastructure. Initiatives that may profit from the sale embrace libraries and senior facilities, stormwater and watershed repairs, and lots of avenue restore initiatives, together with pace bumps and bumps that may assist cut back speeds on town’s high-damage street community.

In line with the Digital Municipal Entry Market, there have been 36 separate gross sales of Oakland Measure U bonds between final Wednesday morning and Monday afternoon. website.

Jestin Johnson, town’s administrator, recommended the finance and underwriting group for the bond sale, saying they positioned town “as a dependable funding and a vibrant, resilient metropolis.” He talked about Daybreak Hort, town’s assistant administrator of finance; Jan Maczyk, the interim director of finance; David Jones, the Treasury Division administrator, and several other others.

Town’s municipal advisors have been PFM Monetary Advisors LLC, based mostly in Philadelphia, and the managers have been Siebert Williams Shank & Co., LLC, Loop Capital Markets, LLC and BofA Securities, Inc.

In line with transaction knowledge on the bond gross sales web sites, the sale of tranches closes on December 18, 2025. The supply of bonds to buyers – and the time town receives the cash – will happen on the last closing.

A brush with insolvency

In November 2022, voters permitted Measure U for $850 million in bonds for avenue repairs and inexpensive housing. Even after final week’s bond concern, the measure will nonetheless permit town to borrow about $450 million extra at a later date.

The bond sale is the newest monetary transfer by town to deliver it again from the brink of insolvency and pay for needed public works. In 2024, town labored with the Metropolis Council to deal with a basic fund scarcity, resulting in extreme cuts to important departments and hiring freezes.

In 2024, an Alameda County Grand Jury started investigating Oakland’s monetary issues after studying that town had stopped issuing bonds resulting from considerations about its shaky financial system. The ultimate report issued present in June 2024 that town’s finance division stated town may go bankrupt “if the Metropolis Council doesn’t take pressing, drastic price range motion.”

The Grand Jury additionally discovered a “troubling” rift between key authorities officers, together with the Metropolis Council, the mayor’s employees, metropolis division heads and town’s finance workplace. All of them stated various things.

“Elected officers have testified that Oakland is financially sound, with substantial property and no risk of insolvency,” the grand jury wrote. “In distinction, metropolis finance and administration employees warned that town faces rapid price range dangers. Additional complicating our investigation, public info was launched after which retracted, within the type of a Nov. 8, 2024 memo that explicitly warned of insolvency and doable chapter. Elected officers claimed the discharge of the doc was a ‘mistake’.”

However the finance division’s major concern, that Oakland’s credit standing could be downgraded, in the end got here to fruition. The numerous errors that led to the reduce, in line with the report, included poor administration by the finance division and an emergency price range for town resulting from missed funds from the anticipated sale of the Oakland Coliseum, which made it clear to buyers that Oakland was a barely riskier wager.

Inside a number of months, three of the most important credit score businesses within the nation downgraded town’s credit standing, inflicting the finance division to hesitate to concern bonds. Moody’s quoted Oakland’s “declining revenues and expected deficits‘ when relegating town from AA1 to AA2.

Lengthy-awaited paving initiatives are getting a lift

Promoting bonds is important for cities as a result of they finance non-routine bills corresponding to bodily infrastructure.

The Oakland Division of Transportation has been urgent town’s finance division for the previous 16 months to promote bonds to finance street repairs. Minimal paving occurred in 2023 and 2024, primarily utilizing what was left of Measure KK and Measure BB funds, measures handed by Oakland voters within the mid-2010s.

The Oaklandside reported in October 2024 that elected officers, the Metropolis Council and the Transportation Division had all anticipated the bond sale to happen that yr. However when the price range was introduced in mid-2024, OakDOT was shocked to study, in line with a metropolis worker, that about $50 million in street infrastructure capital initiatives had been reduce to steadiness the price range.

On the time, OakDOT officers informed us that the finance division had not knowledgeable them concerning the bond issuance delay. OakDOT had initiatives designed and budgeted for work to be paid for with bond funds that yr.

OakDOT has traditionally used bond capital as leverage to obtain aggressive subsidies. Jamie Parks, OakDOT’s deputy director, stated at a council assembly final yr that the division was “roughly $300 million in grants previously 5 years.”

The cash raised by Oakland on this newest bond concern will assist finance 50 miles of street enchancment initiatives which were held up by the Finance Division’s choices. In line with OakDOT reviews, a few of these initiatives embrace cost-sharing agreements with native infrastructure companions, together with the East Bay Municipal Utility District, or EBMUD.

The record of metropolis street initiatives that will probably be supported by the bond concern contains $50.5 million for avenue renewal, and $13 million for the Full Streets Capital program (which gives priority to the network with many injuries and vulnerable users corresponding to seniors and traditionally underserved communities) and $9.5 million for curbs.

Some main streets in want of paving may now get the inexperienced gentle, or at the least a development bid, such because the 4.5-mile Brookfield/Hegenberger Native Streets Rehab mission; the EBMUD Value-Share Settlement mission on Normandie Avenue; 84th Avenue and B Road; East sixteenth Road; a 6km stretch of Magellan Drive; and the 8.8-mile Prescott/Decrease Bottoms native streets mission.

The bonds may also present $28 million for the event of Liberation Park in East Oakland, $10 million for the Oakland Ice Heart and $1.5 million for the Oakland Software Lending Library in Temescal.