Loading...
HomeMy WebLinkAbout14. Hold annual meeting and consider dissolving the CCCSD Facilities Financing Authority Page 1 of 15 Item 14. CENTRAL SAN BOARD OF DIRECTORS POSITION PAPER MEETING DATE: JANUARY 21, 2021 SUBJECT: ADJOURN BOARD MEETING AND RECONVENE AS THE CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY(FFA) TO CONDUCT ITS ANNUAL MEETING AND CONSIDER ADOPTING RESOLUTION NO. 2021-01 TO DISSOLVE THE FFA NOTE: IN COMPLIANCE WITH ASSEMBLY BILL 23, BOARD MEMBERS WILL NOT RECEIVER SEPARATE OR INCREASED STIPEND FOR ATTENDANCEAT THIS MEETING. SUBMITTED BY: INITIATING DEPARTMENT: KEVIN MIZUNO, FINANCE MANAGER ADMINISTRATION-FINANCE REVIEWED BY: PHIL LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION Roger S. Bailey Kenton L. Alm General Manager District Counsel ISSUE BACKGROUND Annual Report In regards to the annual required report to the FFA Board of Directors, attached is a copy of the annual FFA meeting agenda (Attachment 1), the draft minutes of last year's annual meeting held January 16, 2020 (Attachment 2), the annual Treasurer's Report (Attachment 3), and background information related to the FFA (Attachment 4). As stated in the attached FFA Treasurer's Report, the FFA did not report any financial activities during calendar year 2020 and did not have any assets or liabilities as of December 31, January 21, 2021 Regular Board Meeting Agenda Packet- Page 105 of 119 Page 2 of 15 2020. Recommendation to Dissolve As noted previously, the F FA has had limited activities over the course of the past two years following the refunding of all its outstanding Certificates of Participation (COP) (a form of debt) in 2018. Staff does not anticipate any need for financing utilizing COPs in the foreseeable future as other financing mechanisms are available such as low-interest State Revolving Fund loans through the CA Water Board, or revenue bonds issued by a joint powers authority(JPA). Per discussion with financial advisors, COPs have become a less desirable financing mechanism compared to revenue bonds, with higher interest rates on COPs compared to revenue bonds. Should the District consider the issuance of revenue bonds, it would either need to work with an existing joint powers authority(J PA)or could easily form a J PA with another public agency, such as the California Statewide Communities Development Authority, to do so. Given the likelihood of the FFA being inactive for the foreseeable future for the aforementioned reasons, staff is recommending that the FFA be dissolved. Further, the current 10-year financial plan does not anticipate the need for substantial additional borrowing at this time, although if low-interest State Revolving Fund loans are available, Central San may find it advantageous to utilize this financing. These alternatives will be reviewed at the March 2021 financial workshop with the Board. Legal dissolution of the FFA would necessitate a few formal actions and filings with the state. Firstly, the FFA's Board would need to adopt a resolution formally stating an intent to dissolve the underlying FFA non-profit public benefit corporation and providing staff the authority to do so. Thereafter, as the FFA is a "public benefit" type nonprofit corporation, staff must obtain a letter from the Attorney General's office confirming the FFA has no assets. Once this confirmation letter is received, staff would then file a Nonprofit Certification of Dissolution form (Attachment 5)with the California Secretary of State, which must be signed by all members of the FFA Board. The aforementioned letter from the California Attorney General's Office must accompany the Nonprofit Certification of Dissolution form. ALTERNATIVES/CONSIDERATIONS The Board may elect not to dissolve the FFA, which is not recommended. If the FFA is not dissolved, staff would continue to file the mandatory annual report, which is likely to report limited or no activity for the foreseeable future. Beyond the annual report to the Board, there are periodically other statutorily required filing and reporting requirements for active nonprofit corporations in California. While these are not very burdensome, it appears on balance advisable to dissolve the entity which is unlikely to be utilized in the future. FINANCIAL IMPACTS There are no direct or immediate fiscal impacts associated with dissolving the FFA. The dissolution paperwork would be filed by staff, with some legal advisory time required by the District's Counsel, Kent Alm, under the existing legal retainer agreement. Staff is aware of no state fees associated with dissolving the Authority. COMMITTEE RECOMMENDATION Not applicable. RECOMMENDED BOARD ACTION It is recommended the FFA Board adopt the attached Resolution (Attachment 6)formally stating its intent to dissolve the Authority and directing staff to file legal dissolution paperwork with the California Secretary of State and California Attorney General's Office. January 21, 2021 Regular Board Meeting Agenda Packet- Page 106 of 119 Page 3 of 15 GOAL THREE:Fiscal Responsibility Strategy 1—Maintain financial stability and sustainability, Strategy 2—Ensure integrity and transparency in financial management ATTACHMENTS: 1. F FA Agenda for January 21, 2021 2. FFA Draft minutes from January 16, 2020 meeting 3. F FA Treasurer's Report for Calendar Year 2020 4. FFA Background Information 5. Nonprofit Certificate of Dissolution (Secretary of State Form) 6. Proposed Resolution for Dissolution January 21, 2021 Regular Board Meeting Agenda Packet- Page 116 of 128 Page 4 of 15 ATTACHMENT 1 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY ANNUAL MEETING JANUARY 21, 2021 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 (Tad Pilecki, Chair of the Finance Committee of the District Board of Directors); 2) Appoint Vice Chair of the Authority (Mike McGill, Member of the Finance Committee of the District Board of Directors); 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 16, 2020. STAFF RECOMMENDATION (Motion Required): Approve the minutes. 6. BUDGET AND FINANCE a. Receive Treasurer's Report for calendar year 2020 and consider dissolution of the Authority (presentation by Kevin Mizuno, Finance Manager). January 21, 2021 Regular Board Meeting Agenda Packet- Page 117 of 128 Page 5 of 15 ATTACHMENT 1 STAFF RECOMMENDATION (Motions Required): By separate motion, (A) Receive Treasurer's Report for calendar year 2020 and (B) adopt the attached Board Resolution authorizing the dissolution of the Authority. 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 21, 2021 Regular Board Meeting Agenda Packet- Page 109 of 119 Page 6 of 15 D RAF MINUTES OF THE ANNUAL MEETING OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY HELD ON JANUARY 16, 2020 1. CALL TO ORDER At 4:11 p.m., President McGill adjourned the Central San Board Meeting and passed the gavel to the Central Contra Costa Sanitary District (District) Facilities Financing Authority (the 'Authority') Chair Causey to convene the annual meeting of the Authority. 2. ROLL CALL Chair Causey requested that the Secretary of the District call roll. PRESENT: Members: McGill, Nejedly, Pilecki, Williams, Causey 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 Causey stated that, in accordance with the Bylaws of the Authority, it would be appropriate to elect officers for 2020 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 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 Pilecki and seconded by Member McGill to approve the above slate of officers for 2020, to serve for a one-year term in accordance with Article III, January 21, 2021 Regular Board Meeting Agenda Packet- Page 110 of 119 Page 7 of 15 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 3, 2019 meeting. AUTHORITY ACTION: It was moved by Member McGill and seconded by Member Williams to approve the Authority minutes of the January 3, 2019 meeting. Motion passed by unanimous vote of the Authority Members. [5-0] 6. BUDGET AND FINANCE Finance Manager Kevin Mizuno provided a brief summary of the Financial Status Report for 2019. 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 4:14 p.m. and the meeting of the Central San District Board of Directors reconvened. Katie Young Secretary of the Authority 2 January 21, 2021 Regular Board Meeting Agenda Packet- Page 111 of 119 Page 8 of 15 ATTACHMENT 3 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY January 21, 2021 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 2020 is attached in a separate attachment. During 2020, no new debt was issued by the Authority. The Authority was previously used in 2009 to issue to Certificates of Participation (COPs), which are now fully retired. The full principal amount of the Authority's 2009 Series B COPs was legally called on September 1 , 2019, paid from the escrow account established when the 2018 Series B Wastewater Revenue Refunding Bonds were issued in on September 13, 2018. 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 COPs. Accordingly, the Authority does not have any outstanding debt as of the calendar year ended December 31 , 2020. With regard to the District's Revenue Bonds, as of December 31, 2020, the remaining unpaid principal balance on the 2018 Series A and Series B Wastewater Revenue Refunding Bonds was $13,910,000 and $1,655,000 respectively (total of $15,565,000). The 2018 Series A and Series B Wastewater Revenue Refunding Bonds are scheduled to mature on September 1, 2029 and September 1, 2023, respectively. The Authority will continue to remain inactive until a future financing need of the District that would entail the use of COPs. Staff does not anticipate any need for financing utilizing COPs in the foreseeable future as other financing mechanisms are available such as low-interest State Revolving Fund loans through the CA Water Board. Furthermore, in consultation with the District's financial advisor, staff is of the view that COPs have become a less desirable financing mechanism compared to bonds over the past several years, adversely impacting interest rates on COPs. Should the District decide to issue revenue bonds, it would either need to work with an existing joint powers authority (JPA) or could easily form a JPA with another public agency, such as the California Statewide Communities Development Authority. Given the likelihood of the Authority being inactive for the foreseeable future for the aforementioned reasons, staff is recommending the Board authorize the dissolution of the Authority. January 21, 2021 Regular Board Meeting Agenda Packet- Page 112 of 119 Page 9 of 15 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 21, 2021 Regular Board Meeting Agenda Packet- Page 113 of 119 Page 10 of 15 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 21, 2021 Regular Board Meeting Agenda Packet- Page 114 of 119 Page 11 of 15 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. 2020 The Authority did not have any outstanding debt and there was no reportable activity. Revenue Bonds that were used to refund the Certificates of Participation remain outstanding, with annual principal payments through final maturity in 2030. Next Regular Meeting of the Authority The next regular meeting of the Authority is expected to be held in January 2022 unless the Authority acts to dissolve the entity. 3 January 21, 2021 Regular Board Meeting Agenda Packet- Page 115 of 119 Page 12 of 15 SEpL OF,h DISS NP Attachment 5 Secretary of State gyp:• ';S� P� A �T Nonprofit Certificate of Dissolution (California Nonprofit Corporation ONLY) o4C'op"" IMPORTANT—Read Instructions before completing this form. There is No Fee for filing a Nonprofit Certificate of Dissolution Copy Fees– First page$1.00; each attachment page$0.50; Certification Fee-$5.00 plus copy fees Attorney General Letter: All nonprofit public benefit and religious nonprofit corporations are required to get a letter from the California Attorney General's office waiving objections to the nonprofit corporation's distribution of assets, or confirming the nonprofit corporation has no assets. If your corporation is a public benefit or religious corporation, you must attach that letter to this Nonprofit Certificate of Dissolution (see instructions). This Space For Office Use Only 1. Corporate Name (Enter the exact name of the nonprofit corporation as it is 2. 7-Digit Secretary of State Entity Number recorded with the California Secretary of State.) CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY 1895656 3. Election ❑✓ The dissolution was made by a vote of ALL of the members, or if there are no members, by a vote of ALL of the directors of the California nonprofit corporation. Note: If the above box is not checked,a Nonprofit Certificate of Election to Wind Up and Dissolve(Form ELEC NP)must be filed prior to or together with this Nonprofit Certificate of Dissolution. (California Corporations Code sections 6611, 8611,9680 and 12631.) 4. Debts and Liabilities (Check the applicable statement. Only one box may be checked. If second box is checked, you must include the required information in an attachment.) ❑✓ The known debts and liabilities have been actually paid or paid as far as its assets permitted. ❑ The known debts and liabilities have been adequately provided for in full or as far as its assets permitted by their assumption. Included in the attachment to this certificate, incorporated herein by this reference, is a description of the provisions made and the name and address of the person, corporation or government agency that has assumed or guaranteed the payment, or the depository institution with which deposit has been made. ❑ The nonprofit corporation never incurred any known debts or liabilities. 5. Required Statements (Do not alter the Required Statements—ALL must be true to file Form DISS NP.) a. The nonprofit corporation has been completely wound up and is dissolved. b. All final returns required under the California Revenue and Taxation Code have been or will be filed with the California Franchise Tax Board. c. For Mutual Benefit or General Cooperative Corporations ONLY: The known assets have been distributed to the persons entitled thereto or the nonprofit corporation acquired no known assets. 6. Read, Verify, Date and Sign Below(See Instructions for signature requirements. Do not use a computer generated signature.) The undersigned is the sole director or a majority of the directors now in office. I declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of my own knowledge. Tad J. Pilecki Date Signature Type or Print Name David R. Williams Date Signature Type or Print Name Barbara D. Hockett Date Signature Type or Print Name 2020 California Secretary of State January 21, 2021 Regular Board MEZa age 116 of 119 bizfile.sos.ca.gov Page 13 of 15 Attachment 5 Attachment 1 of 1 to Central Contra Costa Sanitary District Facilities Financing Authority's Nonprofit Certificate of Dissolution to be filed with the California Secretary of State. A separate attachment is permitted and necessary as the standard Secretary of State form DISS NP only includes three signature spaces. Board of Directors Verification Statement: I declare under penalty of perjury under the laws of the State of California that the matters set forth in the certificate are true and correct of my own knowledge Mariah N. Lauritzen Date Signature Name Michael R. McGill Date Signature Name January 21, 2021 Regular Board Meeting Agenda Packet- Page 117 of 119 Page 14 of 15 RESOLUTION NO. 2021-01 A RESOLUTION OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY WHEREAS, the Central Contra Costa Sanitary District Facilities Financing Authority (the "Authority") was established on November 14, 1994; and WHEREAS, the Authority was utilized by the Central Contra Costa Sanitary District in connection with the issuance of Certificates of Participation in 1994, 2002, and 2009; WHEREAS, all of the Certificates of Participation issued in 1994, 2002 and 2009 are no longer outstanding and there is no current expectation of future issuances of Certificates of Participation by the Authority; WHEREAS, there is no further business of the Authority to be conducted and there are no further liabilities or assets outstanding or remaining with the Authority as confirmed by the minutes of the last several Annual Board of Director's Meetings; WHEREAS, in the opinion of the Board of Directors of the Authority, it is in the best interest of the corporation that the corporation be dissolved. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Central Contra Costa Sanitary District Facilities Financing Authority as follows: THAT the Board of Directors hereby expresses an intention to dissolve the Authority and authorizes staff to initiate such filings as are necessary with the California Secretary of State and California Attorney General's office to effectuate such. PASSED AND ADOPTED this 21 st day of January 2021 , by the Board of Directors of the Central Contra Costa Sanitary District Facilities Financing Authority by the following vote: AYES: Members: NOES: Members: ABSENT: Members: Tad J. Pilecki President of the Board of Directors of the Central Contra Costa Sanitary District Facilities Financing Authority County of Contra Costa, State of California January 21, 2021 Regular Board Meeting Agenda Packet- Page 118 of 119 Page 15 of 15 Resolution No. 2021-01 Central Contra Costa Sanitary District Facilities Financing Authority Page 2 of 2 COUNTERSIGNED: Katie Young Secretary of the Central Contra Costa Sanitary District Facilities Financing Authority County of Contra Costa, State of California Approved as to form: Kenton L. Alm, Esq. Counsel for the Central Contra Costa Sanitary District and Central Contra Costa Sanitary District Facilities Financing Authority January 21, 2021 Regular Board Meeting Agenda Packet- Page 119 of 119