$34,170,000 Water/Wastewater Revenue Bond Financing, 2012
Serving in the capacity of real estate, economic development and financial advisor, Kosmont entities have been retained by the City of South Gate, California since 2003. One such project of which we are particularly proud is the “azalea” project, which is now a 370,000 square foot 32-acre regional retail lifestyle center at the intersection of Firestone Blvd. and Atlantic Ave. in the heart of South Gate. azalea was recently featured in the Los Angeles Times under A New Latino Clout – South Gate shopping center goes maintream” and was awarded the 2015 CALED Economic Development Project of the Year.
The project nearly came to a screeching halt when redevelopment agencies were dissolved in 2011. However, Kosmont was able to quickly devise an alternative plan to finance the needed improvements. As the City’s Economic Development Consultant, Kosmont drew on our Public/Private Partnership expertise to successfully negotiate an Infrastructure Financing Agreement with the developer whereby the City would fund certain offsite improvements.
Then, acting as the City’s Financial Advisor, Kosmont devised a strategy to leverage the resources available from the City’s water and wastewater utilities in order to provide the financing for the City’s share of the project costs.
The structure included the leasing of the City’s water and wastewater utilities to a Joint Powers Authority controlled by the City. In order to pay the City’s share of the offsite improvements, the JPA loaned $8.4 million of the revenue bonds’ proceeds to the City’s General Fund, to be repaid with the project’s anticipated new sales tax and other new “site specific tax revenues”. The improvements included the realignment of a major intersection and relocation of major utilities and other infrastructure improvements.
Kosmont was also successful in obtaining a municipal bond insurance policy from Assured Guaranty, earning the bonds a AA- rating at the time of issue, significantly lowering interest costs. While the use of some of the bond proceeds supported an economic development project, the credit structure was entirely based on the operations of the utility.
Kosmont’s ingenuity, agility and ability to deploy a broad array of skills from seemingly unrelated disciplines revived a project that was seemingly dead in the water, resulting in a true Public/Private Partnership that enabled the City to bridge a gap that initially seemed unbridgeable. The center celebrated its formal grand opening on August 23, 2014 and is presently producing annualized new tax revenues of over $2.5 million per year for the City, making this an unqualified success story for this small Southeast City.