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Historic Operating Results and Debt Service Coverage
<br />The following Table 10 describes the City's historic operating results, debt service coverage and excess
<br />revenues for the Water System for the Fiscal Years ending June 30, 2019 through 2023. The auditor has not
<br />reviewed such statements in connection with their inclusion in this Official Statement, nor has the City requested
<br />such a review. Selected information from the aforementioned audited financial statements has been used to
<br />prepare the following four-year comparative summary of revenues and expenses. The results presented in the
<br />following summary are qualified in their entirety by reference to the respective annual consolidated audited
<br />financial statements of the City. Copies of the audited financial statements for the City can be obtained at the
<br />office of the City's Finance Director. Table 10 is the City's historical debt service coverage based upon "System
<br />Revenues" and "Maintenance and Operation Costs" as defined in the Installment Purchase Agreement.
<br />TABLE 10
<br />City of Santa Ana
<br />Historic Operating Results and Debt Service Coverage
<br />(Fiscal Year Ended June 30)
<br />2019
<br />2020
<br />2021
<br />2022
<br />2023
<br />Operating Revenues:
<br />Charges for Services
<br />$54,969,763
<br />$56,665,706
<br />$63,513,177(')
<br />$66,622,643(3)
<br />$66,027,622
<br />Lease Revenues
<br />-
<br />-
<br />237,826
<br />237,826
<br />Miscellaneous
<br />1,257,430
<br />396,034
<br />531,444
<br />38,587
<br />213,061
<br />Total Operating Revenues
<br />$56,227,193
<br />$57,061,740
<br />$64,044,621
<br />$66,661,230
<br />$66,478,509
<br />Operating Expenses:
<br />Personal Services
<br />$ 6,613,837
<br />$ 6,872,423
<br />$ 7,051,066
<br />$ 7,669,572
<br />$ 9,504,772(4)
<br />Contractual Services(7)
<br />19,200,248
<br />19,859,140
<br />24,289,548(2)
<br />23,928,584
<br />25,813,812(5)
<br />Materials and Supplies(')
<br />10,905,575
<br />11,424,668
<br />11,526,983
<br />11,445,307
<br />13,612,2360)
<br />Administrative Charges
<br />9,088,288
<br />10,258,676
<br />9,382,529
<br />11,264,633
<br />11,457,436
<br />Total Operating Expenses
<br />$45,807,948
<br />$48,414,907
<br />$52,250,126
<br />$54,308,096
<br />$60,388,256
<br />Operating Income (Loss)
<br />$10,419,245
<br />$ 8,646,833
<br />$11,794,495
<br />$12,353,134
<br />$ 6,090,253
<br />Non -Operating Revenues:
<br />Intergovernmental
<br />-
<br />-
<br />-
<br />-
<br />$ 1,971,763
<br />Investment Earnings
<br />$ 746,956
<br />$ 821,458
<br />$ 384,332
<br />$ 394,948
<br />328,672
<br />Total Non -Operating Revenues (Expenses)
<br />$ 746,956
<br />$ 821,458
<br />$ 384,332
<br />$ 394,948
<br />$ 2,300,435
<br />Net revenues
<br />$11,166,201
<br />$ 9,468,291
<br />$12,178,827
<br />$12,748,082
<br />$ 8,390,688
<br />Prior Obligations Debt Service
<br />$ 1,355,075
<br />$ 1,353,700
<br />$ 1,355,450
<br />$ 1,350,325
<br />$ 1,353,200
<br />Total debt service
<br />$ 1,355,075
<br />$ 1,353,700
<br />$ 1,355,450
<br />$ 1,350,325
<br />$ 1,353,200
<br />Debt Service coverage
<br />824%
<br />699%
<br />899%
<br />944%
<br />620%
<br />Remaining revenues
<br />$ 9,811,126
<br />$ 8,114,591
<br />$10,823,377
<br />$11,397,757
<br />$ 7,037,488
<br />0) Increase due to first full fiscal year of new
<br />rate structure.
<br />(2) Increase in wholesale water costs (OCWD), implementation of new
<br />SCADA system, and staff augmentation utilizing contract
<br />employees.
<br />0) Water rate increase was 6.5% from previous FY, so a realized revenue increase of 4.9% is expected.
<br />(4) Increase due to negotiated 3% increase, step
<br />increases for large percentage of employees, and filling of vacancies.
<br />(5) Main driver for increase due to additional costs for maintenance and repair of equipment at water production facilities.
<br />0) Main drivers for increased costs are the imported water (MWD) cost increases and
<br />purchase of materials
<br />and equipment that had been unavailable
<br />due to supply chain issues during the COVID-19
<br />pandemic.
<br />(7) Includes OCWD RA charges.
<br />M Includes MWD charges.
<br />Source: City of Santa Ana Comprehensive Audited
<br />Financial Reports.
<br />RISK FACTORS
<br />The following factors, along with other information in this Official Statement, should be considered by
<br />potential investors in evaluating the risks in the purchase of the Bonds.
<br />Water System Demand and Growth
<br />There can be no assurance that the local demand for the services provided by the Water System will be
<br />maintained at levels described in this Official Statement under the heading "THE WATER SYSTEM." Reduction
<br />in the level of demand due to conservation efforts of the City and MWD, or other factors, could require an increase
<br />in rates or charges in order to produce Net System Revenues sufficient to comply with the City's rate covenant in
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