HomeMy WebLinkAbout28. Hold Annual CCCSD Facilities Financing Authority MeetingItem 28.
J anuary 19, 2023
T O: HO NO R A B L E B O A R D O F D I R E C TO R S
F RO M :K E V I N MI Z UNO, F I NA NC E MA NA G E R
RE V IE WE D B Y:P HI L I P L E I B E R , D I R E C TO R O F F I NA NC E A ND A D MI NI S T R AT I O N
R O G E R S. B A I L E Y, G E NE R A L MA NA G E R
S UB J E C T: A D J O UR N B O A R D ME E T I NG A ND R E C O NV E NE A S T HE C E NT R A L
C O NT R A C O S TA S A NI TA RY D I S T R I C T FA C I L I T I E S F I NA NC I NG
A UT HO R I T Y (F FA ) TO C O ND UC T I T S A NNUA L ME E T I NG
NOT E: BOARD MEMBERS WIL L NOT RECEIVE A SEPARAT E OR
INCREASED ST IPEND F OR AT TENDANCE AT T HIS MEET ING.
Attached is a copy of the annual F FA meeting agenda (A ttachment 1), the draf t minutes of the last meeting
held by the F FA on J anuary 13, 2022 (Attachment 2), the annual Treasurer's Report (A ttachment 3), and
background information related to the F FA (Attachment 4).
T he Treasurer's R eport provides a synopsis of activities of the F FA during calendar year 2022.
Strategic Plan Tie-I n
G O A L FO U R : G overnance and Fiscal R esponsibility
Strategy 1 - Promote and uphold ethical behavior, openness, and accessibility
AT TAC HM E NT S :
D escription
1. F FA A genda f or J anuary 19, 2023
2. F FA D raf t minutes from J anuary 13, 2022 meeting
3. F FA Treasurer's Report
4. F FA Background and History
January 19, 2023 Regular Board Meeting Agenda Packet - Page 310 of 319
Page 1 of 10
Attachment 1
CENTRAL CONTRA COSTA SANITARY DISTRICT
FACILITIES FINANCING AUTHORITY
JANUARY 19, 2023
MEETING AGENDA
1. CALL MEETING 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 – Barbara Hockett);
2) Appoint Vice Chair of the Authority (Member of the Finance
Committee of the District Board of Directors – Mariah Lauritzen);
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 13, 2022 meeting
Staff Recommendation (Motion Required): Approve the minutes.
6. BUDGET AND FINANCE
a. Receive Treasurer’s Report for calendar year 2022 (Kevin Mizuno).
Staff Recommendation: Receive the report.
7. OTHER BUSINESS RELATING TO MATTERS ABOVE
8. ADJOURNMENT
a. Adjourn meeting of the Authority and reconvene as the Board of
Directors of the Central Contra Costa Sanitary District.
January 19, 2023 Regular Board Meeting Agenda Packet - Page 311 of 319
Page 2 of 10
Attachment 2
MINUTES OF THE ANNUAL MEETING OF THE
CENTRAL CONTRA COSTA SANITARY DISTRICT
FACILITIES FINANCING AUTHORITY
HELD ON JANUARY 13, 2022
NOTICE
This meeting was held virtually pursuant to Central San Resolution 2021-082. The
resolution made findings with the Governor’s Emergency Declaration and County Health
Services recommendations related to the ongoing COVID-19 pandemic, and the
provisions provided under Assembly Bill 361. The regular Board agenda provided
options in which members of the public could participate in the meeting.
1. CALL TO ORDER
At 4:34 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 McGill to convene the annual meeting
of the Authority.
2. ROLL CALL
Chair McGill requested that Katie Young, Secretary of the Authority, call roll.
PRESENT: Members: Hockett, Lauritzen, Pilecki, Williams, McGill
ABSENT: Members: None
It was noted on the Board agenda that Board Members will not receive a
separate or increased stipend for this meeting.
3. PUBLIC COMMENTS
No comments.
4. APPOINTMENT OF OFFICERS
a. Chair McGill stated that, in accordance with the Bylaws of the Authority, it
would be appropriate to elect officers for 2022 as follows:
1) Chair of the Authority shall be Michael McGill, Chair of the Finance
Committee;
2) Vice Chair of the Authority shall be Member Williams, the other
member of the Finance Committee;
3) Executive Director of the Authority shall be the General Manager of
the District;
DRAFT
January 19, 2023 Regular Board Meeting Agenda Packet - Page 312 of 319
Page 3 of 10
CENTRAL CONTRA COSTA SANITARY DISTRICT
FACILITIES FINANCING AUTHORITY
Minutes of January 13, 2022 Meeting
2
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 Hockett to approve the above slate of officers
for 2022, to serve for a one-year term in accordance with Article III,
Section 2 of the Bylaws. Motion passed by unanimous roll call vote.
5. APPROVAL OF MINUTES
a. Approve Minutes of June 3, 2021 meeting.
AUTHORITY ACTION: It was moved by Member Pilecki and
seconded by Member Williams to approve the Authority minutes of
the June 3, 2021 meeting. Motion passed by unanimous roll call
vote.
6. BUDGET AND FINANCE
Finance Manager Kevin Mizuno provided a brief summary of the Financial Status
Report for 2021.
Member Pilecki provided some minor corrections to Mr. Mizuno on the report.
7. OTHER BUSINESS RELATING TO MATTERS ABOVE
None.
8. ADJOURNMENT
There being no further business to come before the Authority, Chair McGill
adjourned the annual meeting of the Authority at 4:43 p.m. after which the
meeting of the Central San District Board of Directors reconvened.
____________________________
Katie Young
Secretary of the Authority
January 19, 2023 Regular Board Meeting Agenda Packet - Page 313 of 319
Page 4 of 10
ATTACHMENT 3
CENTRAL CONTRA COSTA SANITARY DISTRICT
FACILITIES FINANCING AUTHORITY
January 19, 2023 Annual Meeting
Report of Treasurer of the Authority Kevin Mizuno
The following is a synopsis of debt issuance of the Facilities Financing Authority
(the Authority) as well as other debt issuances being considered. Additional
background on the Authority as well as a summary of past activity from its
inception in 1994 through 2021 is included in a separate attachment.
2021 Certificates of Participation:
In June 2021 the Authority issued $50.57 million in Certificates of Participation
(2021 COPs), generating $58.0 million in proceeds to finance a portion of the FY
2020-21 and FY 2021-22 capital improvement budget. This COPs issuance
allowed sewer service charge revenues previously budgeted for capital purposes
to be made available to finance the payoff of Central Contra Costa Sanitary
District’s (Central San’s) outstanding pension plan unfunded actuarially accrued
liability (UAAL) totaling $70.76 million.
The 2021 COPs mature on September 1, 2028 (FY 2028-29), seven years from
the date of issuance, with its debt service schedule roughly mirroring that of the
pension UAAL amortization schedule. The 2021 COPs were issued with a true
interest cost of 0.38%, compared to the pension UAAL which was being charged
a 7.0% discount rate by Central San’s pension administrator, CCCERA. As of
the calendar year ended December 31, 2022, the total principal amount on the
2021 COPs, the only outstanding debt of the Authority, was $30.06 million.
During calendar year 2022, two scheduled principal payments were made on
March 1, 2022 and September 1, 2022 in the amounts of $8.645 million and
$8.865 million respectively. Total interest paid in 2022 was approximately $2.783
million. The next principal payment is due on September 1, 2023 in the amount
of $5.125 million. A total of $1.653 million in interest payments are due in 2023
split evenly between two payments schedule for March 1, 2023 and September
1, 2023.
2018 Revenue Refunding Bonds:
Prior to the issuance of the 2021 COPs, the Authority was used to issue the 2009
COPs, which are now fully retired through an issuance of 2018 Revenue
Refunding Bonds. The full principal amount of the Authority’s 2009 Series B
COPs was legally called on September 1, 2019, paid from the escrow acco unt
established when the 2018 Series B Wastewater Revenue Refunding Bonds
were issued in on September 13, 2018. The proceeds of the Revenue Refunding
Bonds issued by Central San were the source of funds to retire the Authority’s
2009 COPs.
January 19, 2023 Regular Board Meeting Agenda Packet - Page 314 of 319
Page 5 of 10
ATTACHMENT 3
Regarding Central San’s 2018 Revenue Refunding Bonds, as of December 31,
2022, the remaining unpaid principal balance on the 2018 Series A and Series B
Wastewater Revenue Refunding Bonds was $11,305,000 and $570,000
respectively (total of $11,875,000). The 2018 Series A and Series B Wastewater
Revenue Refunding Bonds are scheduled to mature on September 1, 2029 and
September 1, 2023, respectively.
Future debt issuance considerations:
Central San’s most recent financial plan anticipated the large solids handling
facilities improvement project being financed with $173.1 million in low-interest
State Revolving Fund (SRF) loan proceeds through the California Water Board.
Over the past two years, discussions have been held and analyses conducted to
determine alternative paths towards the future solids handling treatment proc ess.
This has had significant impacts to the project’s timeline, scope, and planned
financing sources. The current plan involves proceeding with only Phase 1A of
the project, which would be funded with a portion of the $173.1 million currently
approved SRF loan. Other future funding sources would be needed for future
project phases.
As of calendar year-end 2022, the current financial plan anticipates the need for
about $170 million of external financing in the next decade apart from the $173.1
million SRF loan. Financing could be obtained from additional COPs issuances
through the Authority, additional SRF loans, or the issuance of revenue bond s
through the proposed JPA.
During 2022, staff held discussions with the Sacramento Regional County
Sanitation District (Regional San) on the possibility of forming a new JPA to
facilitate the issuance of revenue bonds for capital financing needs. Following
staff presentations to the Finance Committee and Board , a proposal is being
brought to the Board in January 2023 to form the Norther California Sanitation
Agencies Financing Authority (NCSAFA) JPA with Regional San. At the very
latest, next year’s annual report of the Authority will provide an update on the
formation of the NCSAFA and its completed or considered debt issuances, if any.
January 19, 2023 Regular Board Meeting Agenda Packet - Page 315 of 319
Page 6 of 10
ATTACHMENT 4
1
CENTRAL CONTRA COSTA SANITARY DISTRICT
FACILITIES FINANCING AUTHORITY
The Central Contra Costa Sanitary District Facilities Financing Authority (the 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 Central Contra
Costa Sanitary District (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 19, 2023 Regular Board Meeting Agenda Packet - Page 316 of 319
Page 7 of 10
ATTACHMENT 4
2
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) 2013-14) dropping to $3.6 million for the next nine years (through FY 2022-23)
and $2.4 million for the remaining six years (through FY 2028-29).
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.
January 19, 2023 Regular Board Meeting Agenda Packet - Page 317 of 319
Page 8 of 10
ATTACHMENT 4
3
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 2009 Certificates of Participation remain
outstanding, with annual principal payments through final maturity in 2030.
2021
Not anticipating the issuance of new debt given the availability of alternative and
perceived more desirable financing mechanisms available to the District, the Authority’s
Board approved the dissolution of the non-profit corporation at its annual meeting in
January 2021. Shortly thereafter, however, given historically low interest rates District
staff sought advice from its financial advisors, PFM, on potentially issuing low-interest
debt financing to pay off the remaining unfunded actuarially accrued liability (UAAL) of the
District’ pension plan, incurring interest at a 7.0% discount rate. Given significant
uncertainty as to how long this phenomenon would last, it was concluded that a faster
debt issuance of certificates through the existing Authority was preferable to slower
alternatives, which could have the adverse impact of being pushed out into a higher
interest rate environment.
January 19, 2023 Regular Board Meeting Agenda Packet - Page 318 of 319
Page 9 of 10
ATTACHMENT 4
4
In June 2021 the Authority issued $50.57 million in Certificates of Participation (2021
COPs), generating $58.0 million in proceeds to finance a portion of the FY 2020-21 and
FY 2021-22 capital improvement budget. This COPs issuance allowed sewer service
charge revenues previously budgeted for capital purposes to be made available to
finance the payoff of the District’s outstanding pension plan unfunded actuarially accrued
liability (UAAL) totaling $70.76 million.
The 2021 COPs mature on September 1, 2028 (FY 2028-29), seven years from the date
of issuance, with its debt service schedule roughly mirroring that of the pension UAAL
amortization schedule. The 2021 COPs were issued with a true interest cost of 0.38%,
compared to the pension UAAL which is charged a 7.0% discount rate by the District’s
pension administrator, CCCERA. As of the calendar year ended December 31, 2021, the
total principal amount on the 2021 COPs, the only outstanding debt issuance of the
Authority, was $50.57 million, with the first debt service payment becoming due on March
1, 2022.
2022
The Authority did not issue any new debt this year, with its only outstanding debt
pertaining to the 2021 COPs. Revenue Refunding Bonds that were used to refund the
2009 Certificates of Participation remain outstanding, with annual principal payments due
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 2024, unless
a debt issuance through the Authority is required sooner.
January 19, 2023 Regular Board Meeting Agenda Packet - Page 319 of 319
Page 10 of 10