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Home My WebLink About17. Annual meeting of Central Contra Costa Sanitary District Facilities Financing Authority (FFA)Page 1 of 8 Item 17. Central Contra Costa Sanitary District January 4, 2018 TO: HONORABLE BOARD OF DIRECTORS FROM: THEAVASSALLO, FINANCE MANAGER REVIEWED BY: PHIL LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION ANN SASAKI, DEPUTY GENERAL MANAGER ROGER S. BAILEY GENERAL MANAGER SUBJECT: ADJOURN BOARD MEETING AND RECONVENE AS THE CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY (FFA) TO CONDUCT ITS ANNUAL MEETING NOTE: IN COMPLIANCE WITH ASSEMBLY BILL 23, BOARD MEMBERS WILL NOT RECEIVER SEPARATE OR INCREASED STIPEND FOR ATTENDANCEAT THIS MEETING. Please see the attached agenda, draft minutes of last year's annual meeting held January 12, 2017, annual Treasurer's Report, and background information related to the FFA. Strategic Plan Tie -In GOAL THREE: Be a Fiscally Sound and Effective Water Sector Utility Strategy 1 - Conduct Long -Range Financial Planning ATTACHMENTS: 1. FFA Agenda for 01-04-18 Meeting 2. FFA Draft Minutes of prior Meeting held 01-12-17 3. FFA Treasurer's Report dated 0 1 -04-18 4. FFA Background and Summary of Past Activity January 4, 2018 Regular Board Meeting Agenda Packet - Page 228 of 235 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY ANNUAL MEETING JANUARY 4, 2018 AGENDA 1. CALL TO ORDER 2. ROLL CALL 3. PUBLIC COMMENTS 4. APPOINTMENT OF OFFICERS Page 2 of 8 a. Appointment of Officers pursuant to Article III, Section 2 of the Bylaws as follows: 1) Appoint Chair of the Authority (Chair of the Finance Committee of the District Board of Directors — Jim Nejedly); 2) Appoint Vice Chair of the Authority (Member of the Finance Committee of the District Board of Directors — Tad Pilecki); 3) Appoint Executive Director of the Authority (General Manager of the District); 4) Appoint Treasurer of the Authority (Finance Manager of the District); and 5) Appoint Secretary of the Authority (Secretary of the District). STAFF RECOMMENDATION (Motion Required): Appoint the Officers as recommended for a one-year term. 5. APPROVAL OF MINUTES a. Approve Minutes of January 12, 2017. STAFF RECOMMENDATION (Motion Required): Approve the minutes. 6. BUDGET AND FINANCE a. The Treasurer of the Authority (Thea Vassallo) will present Financial Status Report for 2017. 7. OTHER BUSINESS RELATING TO MATTERS ABOVE 8. ADJOURNMENT a. Adjourn annual meeting of the Authority and reconvene as the Board of Directors of the Central Contra Costa Sanitary District. January 4, 2018 Regular Board Meeting Agenda Packet - Page 229 of 235 Page 3 of 8 DRAF MINUTES OF THE ANNUAL MEETING OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY HELD ON JANUARY 12, 2017 1. CALL TO ORDER At 1:38 p.m., President Causey adjourned the Board Meeting and, Member Pilecki, as Chair of the Central Contra Costa Sanitary District (District) Facilities Financing Authority (the 'Authority'), convened the annual meeting of the Authority. 2. ROLL CALL Chair Pilecki requested that the Secretary of the District call roll. PRESENT. Members: Causey, McGill, Nejedly, Williams, Pilecki ABSENT: Members: None In compliance with Assembly Bill 23, it was noted that Board Members will not be receiving a separate or increased stipend for this meeting. 3. PUBLIC COMMENTS No comments. 4. APPOINTMENT OF OFFICERS a. Chair Pilecki stated that, in accordance with the bylaws of the Authority, it would be appropriate to elect officers at this time. The proposed slate of officer is as follows: 1) Chair of the Authority shall be Board Member Jim Nejedly, Chair of the Finance Committee; 2) Vice Chair of the Authority shall be Board Member Tad Pilecki, the other member of the Finance Committee; 3) Executive Director of the Authority shall be the General Manager of the District; 4) Treasurer of the Authority shall be the Finance Manager of the District; and 5) Secretary of the Authority shall be the Secretary of the District. AUTHORITY ACTION: It was moved by Member Causey and seconded by Member McGill to approve the above slate of officers for 2017, to serve for a one-year term in accordance with Article III, January 4, 2018 Regular Board Meeting Agenda Packet - Page 230 of 235 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY Minutes of January 12, 2017 Board Meeting Section 2 of the Bylaws Authority Members. 5. APPROVAL OF MINUTES Page 4 of 8 Motion passed by unanimous vote of the a. Approve Minutes of January 7, 2016 meeting. AUTHORITY ACTION: It was moved by Member Nejedly and seconded by Member Causey to approve the Authority minutes of January 7, 2016. Motion passed by unanimous vote of the Authority Members. 6. BUDGET AND FINANCE Ms. Thea Vassallo, Finance Manager and Treasurer of the Authority, referred to the report contained in the agenda packet that included a historical background of the Authority and a summary of past activity. She reported that there had been no new debt issued by the Facilities Financing Authority during 2016. However, there was a change in the subsidy received from the Internal Revenue Service (IRS) on the 2009 Series A Bonds as part of the continued Federal budget sequestration. The IRS announced that credit payments by issuers of certain tax credit bonds, including Build America Bonds, may be subject to a reduction of 7.3%. In August 2016, the District rebate requested from the IRS was $208,397 and the amount received was $194,226, for a difference of $14,171, or a 6.8% reduction. As of December 31, 2016, the remaining principal balance on the 2009 debt service is $31,500,000. 7. OTHER BUSINESS RELATING TO MATTERS ABOVE None. 8. ADJOURNMENT There being no further business to come before the Authority, Chair Pilecki adjourned the annual meeting of the District Facilities Financing Authority at 1:41 p.m. and President Causey reconvened the meeting of the District Board of Directors. Elaine R. Boehme, CMC Secretary of the Authority K January 4, 2018 Regular Board Meeting Agenda Packet - Page 231 of 235 Page 5 of 8 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY January 4, 2018 Annual Meeting Report of Treasurer of the Authority Thea Vassallo The background on the Facilities Financing Authority (Authority) as well as a summary of past activity from its inception in 1994 through 2016 is attached in a separate attachment. During 2017, no new debt was issued by the Authority. However, there was a change in the subsidy received from the Internal Revenue Services (IRS) on the 2009 Series A Bonds as part of the ongoing Federal Budget sequestration. The IRS announced that credit payments by issuers of certain tax credit bonds, including Build America Bonds, may be subject to a reduction of 6.9%. In 2017, Central San's rebate requested from the IRS was reduced by $28,759. As of December 31, 2017, the remaining principal balance on the 2009 debt service is $29,095,000. January 4, 2018 Regular Board Meeting Agenda Packet - Page 232 of 235 Page 6 of 8 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY The Central Contra Costa Sanitary District Facilities Financing Authority ("Authority") is a non-profit corporation established on November 14, 1994 through Board action to facilitate the borrowing of funds using long-term Revenue Installment Certificates (Certificates of Participation). Background In conjunction with the 1994-95 Capital Improvements Financing Program, the Board approved borrowing $25 million by issuing 20 -year revenue bonds. As a requirement of the Installment Sale Agreement for delivery of the bond certificates, it was necessary to form a non-profit corporation to sell the facilities improvements to the District. Thus, the Authority was formed, bylaws were adopted, a time and place for regular meetings was established, and a resolution was adopted approving issuance of the bonds. Regular meetings of the Authority Board are generally held following the first District Board meeting in January each year. Summary of Past Activity 1994 In December 1994, the Authority was utilized to facilitate issuance the 1994 Revenue Installment Certificates (Certificates of Participation) in the amount of $25 million for a term of 20 years. All payments for the capital projects supported by the proceeds were made from the District's Sewer Construction Fund. Once all the capital projects supported by the proceeds were substantially complete, payments were made from the Running Expense Fund. 1998 In October 1988, revenue bonds were issued to refund all outstanding debt because interest rates had declined significantly. After the refunding, on advice of Bond Counsel was sought as to whether the Authority should be dissolved. Counsel advised that it must continue to exist and meet on an annual basis until the earliest call date of the older Certificates of Participation, September 2004. At that time, the Authority Board could decide whether the Authority should continue to exist or dissolve. 2002 In May 2002, Revenue Installment Certificates were issued in the amount of $16,565,000 for a term of 20 years. 2009 In November and December 2009 the District sold a total of $54 million in both taxable and non-taxable bonds. The purpose of the sale was to refund the 1998 and 2002 outstanding bonds of $24 million due to very favorable interest rates and to issue new debt to help fund several large capital projects included in the Capital Budget. January 4, 2018 Regular Board Meeting Agenda Packet - Page 233 of 235 Page 7 of 8 Tax exempt bonds were issued to refund the 1998 and 2002 bonds as well as to raise new money. The refunding of the District's $24 million of outstanding debt was to produce an approximate $1.2 million net present value savings. The interest rates on the tax- exempt bonds ranged from 0.4% to 3.79% with a 20 -year term. Of the $30 million in new debt, the District issued $19 million in taxable Build America Bonds which had a direct 35% subsidy from the Federal Government with yields ranging from 3.45% to 3.78% net of the subsidy. The proceeds of these 20 -year bonds have been used to fund capital projects. Debt Service payments will be $5.4 million each year for the first five years (through fiscal year (FY) 2014) dropping to $3.6 million for the next nine years (through FY 2023) and $2.4 million for the remaining six years (through FY 2029). 2013 In March 2013, as part of the Federal budget sequestration, the Internal Revenue Service (IRS) announced credit payments by issuers of certain tax credit bonds, including Build America Bonds, may be subject to a reduction of 8.7%. In 2013, the reduction in rebate received was $36,261. 2014 In March 2014, as part of the Federal budget sequestration, the Internal Revenue Service (IRS) announced credit payments by issuers of certain tax credit bonds, including Build America Bonds, may be subject to a reduction of 7.2%. In 2014, the reduction in rebate received was $30,009. The 2009 Revenue Bonds have a covenant in the Agreement to comply with requirements for rebate of excess investment earnings to the federal government to the extent applicable every 5 years. An arbitrage audit was performed by PFM Asset Management LLC during 2014 and no arbitrage liability was owed to the Internal Revenue Service. 2015 In March 2015, as part of the continued Federal budget sequestration, the Internal Revenue Service (IRS) announced credit payments by issuers of certain tax credit bonds, including Build America Bonds, may be subject to a reduction of 7.3%. In 2015, the reduction in rebate received was $30,426. 2016 During 2016, as part of the ongoing Federal budget sequestration, the Internal Revenue Service (IRS) announced credit payments by issuers of certain tax credit bonds, including Build America Bonds, may be subject to a reduction of 6.8%. In 2016, the reduction in rebate received was $28,342. K January 4, 2018 Regular Board Meeting Agenda Packet - Page 234 of 235 Page 8 of 8 Next Regular Meeting of the Authority The next regular meeting of the Authority will be held January 4, 2018. 3 January 4, 2018 Regular Board Meeting Agenda Packet - Page 235 of 235