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Water Revenue Bonds June 4, 2024 Page 2 EXECUTIVE SUMMARY The recommendation is the City Council's final action to approve the sale of Water Revenue Bonds. The financing team is on track to price and close the bonds in late June 2024. The Bonds are being issued to provide funds for the following: • Refund in full the Santa Ana Financing Authority's Water Revenue Refunding Bonds, Series 2014, of which $8,905,000 is currently outstanding. • Finance a portion of the design, acquisition, and construction of certain improvements to the water system of the City. • Pay certain costs of issuance of the Bonds. DISCUSSION Background By financing $40 million of water improvements with the issuance of Water Revenue Bonds ('2024 Water Revenue Bonds"), aging infrastructure can be improved and water meters can be installed sooner. In order to achieve the financing, the City would enter into an Installment Purchase Agreement with the Authority, and the Authority would issue the 2024 Water Revenue Bonds not to exceed a par amount of $47,000,000. Debt service will be repaid by the City from net revenues of the City's water system. Staff has identified $40 million in water improvements that are high priority and that can be implemented within the next three years. 2024 Projects Estimated Cost Advanced Water Meters $15,000,000 Walnut Pump Station Improvements 5,000,000 Washington Well Improvements 6,000,000 Garth Pump Station Improvements 5,000,000 Lg. Water Services Vault & Meter Apparatus Imp. 8,000,000 Citywide Facilities Improvements 1,000,000 Total $40,000,000 The documents approved with this action will allow the Series 2014 Bonds to be refunded at a current interest rate of approximately 3.00%. The reduction in interest rate will reduce debt service payments by an estimated $659,000 and generate approximately $582,000 in net present value savings. The net present value savings represents about 6.5% of the amount of debt being refinanced. This compares favorably to the City's Debt Management Policy and the Government Financing Officers Association (GFOA) target of net present value savings of 3% on municipal refundings. The proposed resolutions approve all documents and actions needed to authorize the delivery and sale of the 2024 Water Revenue Refunding Bonds, including the following form of financing documents together with any changes or additions deemed advisable by the City Attorney or Bond Counsel (BBK) and approved by the City Manager,