HomeMy WebLinkAbout15. Annual Meeting of Central San Facilities Financing AuthorityItem 15.
J anuary 18, 2024
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 E P UT Y G E NE R A L MA NA G E R - 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 19, 2023 (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 2023.
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 18, 2024
2. F FA Minutes f rom J anuary 19, 2023 meeting
3. F FA Treasurer's Report
4. F FA Background and History
January 18, 2024 Regular Board Meeting Agenda Packet - Page 75 of 84
Page 1 of 10
Attachment 1
CENTRAL CONTRA COSTA SANITARY DISTRICT
FACILITIES FINANCING AUTHORITY
JANUARY 18, 2024
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 – Mariah N. Lauritzen);
2) Appoint Vice Chair of the Authority (Member of the Finance
Committee of the District Board of Directors – Tad J. 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 19, 2023 meeting
STAFF RECOMMENDATION (Motion Required): Approve the
minutes.
6. BUDGET AND FINANCE
a. Receive Treasurer’s Report for calendar year 2023 (Kevin Mizuno).
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 18, 2024 Regular Board Meeting Agenda Packet - Page 76 of 84
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Attachment 2
MINUTES OF THE ANNUAL MEETING OF THE
CENTRAL CONTRA COSTA SANITARY DISTRICT
FACILITIES FINANCING AUTHORITY
HELD ON JANUARY 19, 2023
NOTICE
This meeting was held virtually pursuant to findings made by the Board of Directors on
January 12, 2023 under Assembly Bill (AB) 361 related to the ongoing COVID-19
pandemic. The regular Board agenda provided options in which members of the public
could participate in the meeting.
1. CALL TO ORDER
At 3:42 p.m., President Hockett adjourned the Central San Board meeting and
passed the gavel to the Central Contra Costa Sanitary District (District) Facilities
Financing Authority (the “Authority”) Vice Chair Williams to convene the annual
meeting of the Authority.
2. ROLL CALL
Vice Chair Williams requested that Katie Young, Secretary of the Authority, call
roll.
PRESENT: Members: Hockett, Lauritzen, Pilecki, Williams
ABSENT: Members: McGill
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. Vice Chair Williams stated that, in accordance with the Bylaws of the
Authority, it would be appropriate to elect officers for 2023 as follows:
1) Chair of the Authority shall be Barbara Hockett, Chair of the
Finance Committee;
2) Vice Chair of the Authority shall be Member Lauritzen, the other
member of the Finance Committee;
3) Executive Director of the Authority shall be the General Manager of
the District;
January 18, 2024 Regular Board Meeting Agenda Packet - Page 77 of 84
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CENTRAL CONTRA COSTA SANITARY DISTRICT
FACILITIES FINANCING AUTHORITY
Minutes of January 19, 2023, 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 2023, to serve for a one-year term in accordance with Article III,
Section 2 of the Bylaws. Motion passed by unanimous roll call vote
of those present (4-0-1, McGill absent).
5. APPROVAL OF MINUTES
a. Approve Minutes of January 13, 2022 meeting.
AUTHORITY ACTION: It was moved by Member Hockett and
seconded by Member Pilecki to approve the Authority minutes of the
January 13, 2022 meeting. Motion passed by unanimous roll call
vote of those present (4-0-1, McGill absent).
6. BUDGET AND FINANCE
Finance Manager Kevin Mizuno provided a summary of the Treasurer’s Report
for 2022.
AUTHORITY ACTION: Received the report.
7. OTHER BUSINESS RELATING TO MATTERS ABOVE
None.
8. ADJOURNMENT
There being no further business to come before the Authority, Vice Chair
Williams adjourned the annual meeting of the Authority at 3:46 p.m. after which
the meeting of the Central San District Board of Directors reconvened.
____________________________
Katie Young
Secretary of the Authority
January 18, 2024 Regular Board Meeting Agenda Packet - Page 78 of 84
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ATTACHMENT 3
CENTRAL CONTRA COSTA SANITARY DISTRICT
FACILITIES FINANCING AUTHORITY
January 18, 2024 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 2023 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 are amortized through and mature in full 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,
2023, the total principal amount on the 2021 COPs, the only outstanding debt of
the Authority, was $27.935 million. During calendar year 2023, two scheduled
interest payments were made on March 1, 2023 and September 1, 2023 in the
amounts of $0.827 million each, for a total of $1.653 million. One scheduled
principal payment was made on September 1, 2023 in the amount of $5.125
million. The next principal payment is due on September 1, 2024 in the amount of
$5.630 million. A total of approximately $1.397 million in interest payments are
due in 2024 split evenly between two payments on March 1, 2024 and September
1, 2024.
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 account 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 18, 2024 Regular Board Meeting Agenda Packet - Page 79 of 84
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ATTACHMENT 3
Regarding Central San’s 2018 Revenue Refunding Bonds, as of December 31,
2023, the remaining unpaid principal balance on the 2018 Series A Wastewater
Revenue Refunding Bonds was $9.910 million. The Series B Wastewater
Revenue Refunding Bonds fully matured in 2023 and no longer had an outstanding
principle balance as of December 31, 2023. The 2018 Series A Wastewater
Revenue Refunding Bonds are scheduled to mature on September 1, 2029.
Future debt issuance considerations:
Central San’s most recent financial plan anticipated funding Phase 1A of the solids
handling facilities improvement capital project with approximately $173.1 million in
low-interest State Revolving Fund (SRF) loan proceeds through the California
Water Board.
Apart from the SRF financing, other financing needs in the 10-year financial plan
have been most recently estimated to be approximately $190 million. An update of
the financial plan will be presented at the April 2024 workshop.
Alternative financing could be obtained from additional SRF loans, additional
COPs issuances through the Authority, or the issuance of revenue bonds through
the JPA that Central San joined in 2023, the Northern California Sanitation
Agencies Financing Authority (NCSAFA). No meetings of this JPA have yet been
held but are anticipated in 2024.
January 18, 2024 Regular Board Meeting Agenda Packet - Page 80 of 84
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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, the 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 18, 2024 Regular Board Meeting Agenda Packet - Page 81 of 84
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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 18, 2024 Regular Board Meeting Agenda Packet - Page 82 of 84
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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 2029.
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 18, 2024 Regular Board Meeting Agenda Packet - Page 83 of 84
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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 2029.
2023
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 (“A Series” bonds only), with annual
principal payments due through final maturity in 2029. An arbitrage audit was performed
by PFM Asset Management LLC during 2023 and no arbitrage liability was owed to the
Internal Revenue Service as of the rebate computation date of September 1, 2023.
Next Regular Meeting of the Authority
The next regular meeting of the Authority is expected to be held in January 2025, unless
a debt issuance through the Authority is required sooner.
January 18, 2024 Regular Board Meeting Agenda Packet - Page 84 of 84
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