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