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HomeMy WebLinkAbout16. Annual Meeting of Central San's Facilities Financing Authority Page 1 of 9 Item 16. ,ek CENTRAL SAN CENTRAL CONTRA COSTA SANITARY DISTRICT January 16, 2020 TO: HONORABLE BOARD OF DIRECTORS FROM: KEVIN MIZUNO, 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 MEETI NG 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 3, 2019, annual Acting 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 01-16-20 Meeting 2. FFA Draft Minutes 01-03-19 meeting 3. FFA Treasurer's Report dated 0 1-16-20 4. FFA Background and Summary of Past Activity January 16, 2020 Regular Board Meeting Agenda Packet- Page 224 of 232 Page 2 of 9 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY ANNUAL MEETING JANUARY 16, 2020 AGENDA 1. CALL TO ORDER 2. ROLL CALL 3. PUBLIC COMMENTS 4. APPOINTMENT OF OFFICERS 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 — Paul Causey); 2) Appoint Vice Chair of the Authority (Member of the Finance Committee of the District Board of Directors — Jim Nejedly); 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 3, 2019. STAFF RECOMMENDATION (Motion Required): Approve the minutes. 6. BUDGET AND FINANCE a. The newly appointed Treasurer of the Authority (Kevin Mizuno, Finance Manager) will present Financial Status Report for 2019. January 16, 2020 Regular Board Meeting Agenda Packet- Page 225 of 232 Page 3 of 9 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 16, 2020 Regular Board Meeting Agenda Packet- Page 226 of 232 Page 4 of 9 DRAFT ATTACHMENT 2 MINUTES OF THE ANNUAL MEETING OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY HELD ON JANUARY 03, 2019 1. CALL TO ORDER At 1:53 p.m., President Williams adjourned the Central San Board Meeting and passed the gavel to the Central Contra Costa Sanitary District (District) Facilities Financing Authority (the "Authority') Chair Nejedly to convene the annual meeting of the Authority. 2. ROLL CALL Chair Nejedly requested that the Secretary of the District call roll. PRESENT. Members: Causey, McGill, Pilecki, Williams, Nejedly 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 Nejedly stated that, in accordance with the Bylaws of the Authority, it would be appropriate to elect officers for 2019 as follows: 1) Chair of the Authority shall be Paul Causey, Chair of the Finance Committee,- 2) ommittee,2) Vice Chair of the Authority shall be Board Member Jim Nejedly, 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 Director of Finance and Administration of the District; and 5) Secretary of the Authority shall be the Secretary of the District. AUTHORITY ACTION: It was moved by Member Pilecki and seconded by Member Williams to approve the above slate of officers for 2019, to serve for a one-year term in accordance with Article III, January 16, 2020 Regular Board Meeting Agenda Packet- Page 227 of 232 Page 5 of 9 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY Minutes of January 3, 2019 Board Meeting Section 2 of the Bylaws: Motion passed by unanimous vote of the Authority Members. [5-0] 5. APPROVAL OF MINUTES a. Approve Minutes of January 4, 2018 meeting. AUTHORITY ACTION: It was moved by Member Williams and seconded by Member Causey to approve the Authority minutes of the January 4, 2018 meeting. Motion passed by unanimous vote of the Authority Members. [5-0] 6. BUDGET AND FINANCE Director of Finance and Administration Phil Leiber provided a brief summary of the Financial Status Report for 2018. 7. OTHER BUSINESS RELATING TO MATTERS ABOVE None. 8. ADJOURNMENT There being no further business to come before the Authority, Chair Nejedly adjourned the annual meeting of the District Facilities Financing Authority at 1:56 p.m. and the meeting of the Central San District Board of Directors reconvened. Katie Young Secretary of the Authority 2 January 16, 2020 Regular Board Meeting Agenda Packet- Page 228 of 232 Page 6 of 9 ATTACHMENT 3 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY January 16, 2020 Annual Meeting Report of Treasurer of the Authority Kevin Mizuno The background on the Facilities Financing Authority (Authority) as well as a summary of past activity from its inception in 1994 through 2019 is attached in a separate attachment. During 2019, no new debt was issued by the Authority. The full principal amount of the Authority's 2009 Series B Certificates of Participation were legally called on September 1, 2019, paid from the escrow account established when the 2018 Series B Wastewater Revenue Refunding Bonds were issued in the prior year. The Authority was previously used in 2009 to issue to Certificates of Participation, which are now fully retired. The proceeds of the Revenue Bond offering issued directly by the Central Contra Costa Sanitary District (District) were the source of funds to retire the Authority's 2009 Certificates of Participation. As to the District's Revenue Bonds, as of December 31, 2019, the remaining unpaid principal balance on the 2018 Series A and Series B Wastewater Revenue Refunding Bonds was $15,135,000 and $4,315,000 respectively (total of $19,450,000). The 2018 Series A Wastewater Revenue Refunding Bonds are scheduled to mature on September 1 , 2029 and the 2018 Series B Wastewater Revenue Refunding Bonds are scheduled to mature on September 1, 2023. The Authority is anticipated to remain inactive until a future financing need of the District that would entail the use of Certificates of Participation. January 16, 2020 Regular Board Meeting Agenda Packet- Page 229 of 232 Page 7 of 9 ATTACHMENT 4 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. 1 January 16, 2020 Regular Board Meeting Agenda Packet- Page 230 of 232 Page 8 of 9 ATTACHMENT 4 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. 2 January 16, 2020 Regular Board Meeting Agenda Packet- Page 231 of 232 Page 9 of 9 ATTACHMENT 4 2017 During 2017, 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 6.9%. In 2017, the reduction in rebate received was $28,759. As of December 31, 2017, the remaining principal balance on the 2009 debt service was $29,095,000. 2018 During 2018, 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, would be subject to a reduction of 6.6% for the period of October 1, 2017 to September 30, 2018. Due to concerns about ongoing reductions of this nature, Central San explored the opportunity of refunding the Series 2009A Certificates of Participation, and on September 13, 2018 refunded the Series 2009A bonds financed with the proceeds of new tax-exempt bonds through exercise of the extraordinary call provisions of those obligations. Concurrently, Central San issued taxable obligations to establish an escrow account to advance refund the Series 2009B obligations (which were issued as tax exempt obligations) a portion of which are due on September 1, 2019, and the remainder are callable on that date. As a result of these actions, as of December 31, 2018, the obligations were legally defeased as obligations of the Authority. 2019 The full principal amount of the Authority's 2009 Series B Certificates of Participation were legally called on September 1, 2019, paid from the escrow account established when the 2018 Series B Wastewater Revenue Refunding Bonds were issued in the prior year. Next Regular Meetinq of the Authority The next regular meeting of the Authority will be held in January 2021. 3 January 16, 2020 Regular Board Meeting Agenda Packet- Page 232 of 232