Tracy, California, plans to issue $35 million in limited obligation bonds to help meet infrastructure costs for a housing development that is the largest expansion in the San Joaquin Valley city’s history.
The city of 92,553 residents, located 55 miles east of San Francisco, has approved a master-planned community called Tracy Hills on 2,438 acres it annexed in 1998.
The first phase of that plan is now coming to fruition with 1,139 homes on 351 acres approved for development and expected to start construction this fall. The project also includes a 50-acre business/office area, a 12-acre park and an elementary and middle school.
The bonds will be used to build capital improvements such as roads, sidewalks, and water and sewer lines, according to the preliminary official statement.
A special tax levied on property in a community facilities district will pay off the bonds over 30 years. The Tracy City Council has authorized up to $80 million in bonded indebtedness for the district.
The city expects to collect $3.5 million in taxes from the area this year.
The bonds are scheduled to be priced Aug. 8.
Jones Hall is the bond counsel and CSG Advisors, Inc. is the municipal advisor. Piper Jaffray and Co. has been selected as the underwriter.
According to a market study, the development is intended to reach the expanding housing market that includes many Bay Area commuters moving farther east.
About 5,000 homes will be built over a decade, said Karin Schnaider, Tracy’s finance director.
“It’s the largest development growth in the city of Tracy taking place,” she said. “We’re all really excited. They have a nice mix of commercial property as well as residential housing. It’s going to be great for our tax base.”
The bonds will assist the developer, the Tracy Hills Group, with a portion of the infrastructure costs, which the city has estimated at $600 million, Schnaider said.
This is only the first bond issuance planned. The city expects to issue another series up to the full $80 million authorized in the future, she said.