HOW SALE OF BONDS WILL WORK
This is how Gardena’s recent sale of $17 million in bonds, technically known as certificates of participation, will work. Money from the sale of the bonds will be used to help finance the construction of parking facilities at two private developments in the city.
A--The city forms a parking authority, giving it legal authority to issue bonds for construction of parking facilities. It then works with developer, determining project costs. Developer signs agreement saying he will pay to issue the bonds.
B--City hires underwriter to issue certificates, which are backed not by the city’s money, but by a letter of credit signed by a bank or other financial institution. City then subleases a portion of the new parking facilities to the developer for 55-year period.
C--Money from bond sale is released to developer if he begins construction within 12 months. Developer has 18 months to complete construction. Developer pays off bond debt within 20 years. Parking garages then become property of city.
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