HomeMy WebLinkAboutPresentation - Item 38 - Water Revenue Bonds-compressedSlide 1
Water Revenue Bonds
Item #38
Finance and Management Services Agency
June 4, 2024
Resolution to Authorize
Issuance and Sale of
Water Revenue Bonds
Slide 2
Water Revenue Bonds
Item #38
Finance and Management Services Agency
June 4, 2024
Recommendation
•Adopt the resolution to authorize issuance
and sale of water revenue bonds
•This is the City Council’s final action to
authorize the bonds
The Water Enterprise may issue debt without
voter approval via exception in California law
Slide 3
Water Revenue Bonds
Item #38
Finance and Management Services Agency
June 4, 2024
Background
•2019 Water Rate Study included recommendations for:
–Capital projects to maintain and improve the water delivery
system
–Debt issuance to pay for capital projects
–Rate increases to provide sufficient revenue for operations and
debt repayment
•January 2024 –City’s water rate engineering consultant
provided an updated recommendation to issue debt for capital
projects
•March 19 –Early Direction Budget Report included a plan to
issue water bonds
•April 2 –City Council approved Bond Counsel Agreement
•May 7 –City Council approved formation of new Public
Financing Authority JPA to issue bonds
Slide 4
Water Revenue Bonds
Item #38
Finance and Management Services Agency
June 4, 2024
Proposed Water Bonds
Up to $47 million face value (par) to be sold with a
multi-million $ premium to finance:
•$40 million of capital improvements
•$9 million payoff for 2014 water bonds
•Approximately $350,000 for costs of bond issuance
Expected terms:
•25-year fixed rate amortization
•True interest cost of approximately 4.16% (estimate
as of May 29)
Slide 5
Water Revenue Bonds
Item #38
Finance and Management Services Agency
June 4, 2024
Improvements to be Financed
Slide 6
Water Revenue Bonds
Item #38
Finance and Management Services Agency
June 4, 2024
Potential Future Impacts
Year
Past
Increases Year
Potential
Future
Increases
Average
Residential
Impact
(monthly)
2019 7.0%2024 0.0%$0.00
2020 7.0%2025 3.5%$3.93
2021 6.5%2026 3.5%$4.07
2022 2.0%2027 3.5%$4.21
2023 2.0%2028 3.5%$4.36
To maintain sufficient debt service coverage, rates
may need to be increased 3.5% in future years
No increase proposed for 2024
Slide 7
Water Revenue Bonds
Item #38
Finance and Management Services Agency
June 4, 2024
Resolution to Approve Documents
1.Master Installment Purchase Agreement where
PFA agrees to sell bonds and City agrees to
purchase completed capital improvements with
installment payments
2.First Supplement to Master Installment Purchase
Agreement to create the obligation and assign the
PFA rights to collect installment payments and
duties to make bond payments to the Trustee
3.Escrow Agreement to facilitate payment of the
2014 bonds
Slide 8
Water Revenue Bonds
Item #38
Finance and Management Services Agency
June 4, 2024
Resolution to Approve Documents
4.Bond Purchase Agreement with the Underwriter
to negotiate the sale of bonds
5.Indenture of Trust setting the terms, covenants
and provisions of the bonds
6.Preliminary Official Statement to be distributed
to prospective purchasers containing all material
facts for making an investment decision
7.Continuing Disclosure Certificate committing City
to provide annual reports and notices to investors
Slide 9
Water Revenue Bonds
Item #38
Finance and Management Services Agency
June 4, 2024
Schedule
•May 30 –Credit rating presentation to
Standard and Poor’s
Subject to change:
•June 5 –Receive credit rating and post the
Preliminary Official Statement for
prospective investors
•June 11 –Sell the bonds
Slide 10
Water Revenue Bonds
Item #38
Finance and Management Services Agency
June 4, 2024
Thank You