Report Prepared by: Scott McBride, City Manager
Title
SUBJECT: City Council input and Direction on Creating a Joint Powers Authority (JPA) with Merced County Office of Education Board (MCOE) to Fund Critical Infrastructure for the Virginia Smith Trust (VST) Development Project
REPORT IN BRIEF
Staff is seeking input and direction from the City of Merced City Council on proposed documents necessary to create a Joint Powers Authority (JPA) between the City of Merced and the Merced County Office of Education Board (MCOE) for the purpose of financing critical infrastructure to serve the Virginia Smith Trust (VST) Development Project.
RECOMMENDATION
City Council: Provide input and direction to staff on proposed documents necessary to implement a Joint Powers Authority (JPA) with the Merced County Office of Education Board (MCOE) for land secured financing to provide infrastructure to the VST project.
Body
ALTERNATIVES
1. Provide input and direction as requested; or,
2. Refer back to staff; or,
3. Continue to a future meeting (date and time to be specified in the motion).
AUTHORITY
Charter of the City of Merced, Article II, Section 200 - Powers.
CITY COUNCIL PRIORITIES
Implementation of the VST project supports long standing priorities in the areas of Housing and Economic Development including supporting housing development and sustainable economic growth.
DISCUSSION
The VST Project is located near the northeast corner of Lake Road and Cardella Road, just south of the UC Merced campus. The project was contemplated in the University Community Plan which also includes the UC Merced campus. The City Council has approved various entitlements and agreements supporting the 650 plus acre project including the annexation into the city. This phased project has development capacity which includes 3,500 plus residential units, 850,000 square feet of commercial uses including office. The project also includes over 100 acres of parks and open space, and a K-8 school site. Proceeds from the project will also support scholarship opportunities for Merced County residents.
The Superintendent of the Merced County Board of Education has requested that the city potentially consider the creation of a JPA between the City of Merced and the MCOE Board to support improvements necessary to build out the backbone or critical infrastructure.
The purpose of the JPA would be to issue debt - bonds and oversee the creation of a Community Facilities District (CFD) that would repay the obligations. The CFD would repay the debt through annual property assessments. These improvements could include water lines, sewer lines, roads, and other dry utilities. Other items may also be covered such as school facilities, park improvements, and fees.
On July 20, 2026, the Merced City Council held a Study Session for the purpose of receiving information related to the potential creation of a JPA between the City of Merced and MCOE.
At that meeting Fieldman Rolapp Associates provided an overview the JPA concept and Land Secured Financing. In their professional capacity they provide support on a wide range of municipal and public financing structures. Examples include Community Facilities Districts, Assessment Districts, Public Improvement Districts, Tax Increment Development Districts, and Successor Agencies.
The City has a land secured financing policy - A-29 which outlines procedures and other calculations necessary for formation of a CFD. The city currently has several infrastructure CFD’s that were established for the purpose of repaying debt financing for public improvements. These CFD’s are separate from maintenance CFD’s which are also used by the city but address on going needs. Their only similarity is they are authorized by the same laws and create a property assessment which is paid by the property owner.
There are other options to create land secured financing besides the JPA. As was noted on July 20, 2026 the City executed resolutions approving the participation in the California Statewide Communities Development Authority (CSDA) SCIP program- Statewide Community Infrastructure Program and the California Municipal Finance Authority (CMFA) BOLD program - Bond Opportunities for Land Development.
The Pre-Annexation Development Agreement, City Ordinance 2561- approved in 2024, and entered into by the city and MCOE did contemplate the establishment of financing mechanisms - special assessments, Section 5.03. This section also highlights the city’s nature of participation which includes usual and customary public agency functions related to the formation and administration of special districts and project debt. Additionally, Section 5.04. stipulates that that VST will not protest, or challenge assessment formation provided VST agrees, consents to the formation of the assessment. It is staff’s understanding that the preference of VST is to utilize the JPA process instead of other options.
Since the study session Fieldman Rolapp Associates has updated draft documents which are attached to this administrative report. These include the JPA Agreement, City Council Resolution, and MCOE Board Resolution. Additionally, coordination calls have bene held with MCOE, Fieldman Rolapp Associates, and city staff to discuss potential amendments or information that needed to be included in the draft documents. These revised documents more clearly lay out specific functions and responsibilities. A proposed implementation schedule has also been created.
Staff is seeking any input the City Council may have on the Draft Documents. Additionally, staff is seeking direction to proceed with the JPA formation steps that will be agendized on future meeting agendas. These documents have not undergone legal review by the City Attorney’s Office. That review and analysis would be completed pending direction form the City Council.
IMPACT ON CITY RESOURCES
None.
ATTACHMENTS
1. Proposed Schedule
2. Draft JPA Agreement
3. Draft City of Merced City Council Resolution
4. Draft MCEOE Board Resolution
5. A29 Land Secured Financing Policy
6. Presentation