Loading...
HomeMy WebLinkAbout15. Adjourn Board Meeting and reconvene as the Central Contra Costa Sanitary District Facilities Financing Authority (FFA) to conduct its annual meetingPage 1 of 10 Item 15. 110ENTRAL SAN January 9, 2025 FROM: KEVIN MIZUNO, FINANCE MANAGER REVIEWED BY: PHILIP LEIBER, DEPUTYGM -ADMINISTRATION 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: BOARD MEMBERS WILL NOT RECEIVER SEPARATE OR INCREASED STIPEND FOR ATTENDANICE AT THIS MEETING. Attached is a copy of the annual FFA meeting agenda (Attachment 1), the draft minutes of the last meeting held by the FFA on January 18, 2024 (Attachment 2), the annual Treasurer's Report (Attachment 3), and background information related to the FFA (Attachment 4). The Treasurer's Report provides a synopsis of activities of the FFA during calendar year 2024. Strategic Plan Tie -In GOAL FOUR: Governance and Fiscal Responsibility Strategy 1 - Promote and uphold ethical behavior, openness, and accessibility ATTACHMENTS: 1. FFA Agenda for January 9, 2025 2. FFA Minutes from January 18, 2024 meeting 3. Treasurer's Report 4. Background and History January 9, 2025 Special Board Meeting Agenda Packet - Page 84 of 93 Page 2 of 10 Attachment 1 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY JANUARY 9, 2025 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 — Tad Pilecki); 2) Appoint Vice Chair of the Authority (Member of the Finance Committee of the District Board of Directors — Michael McGill); 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 18, 2024 meeting Staff Recommendation (Motion Required): Approve the minutes. 6. BUDGET AND FINANCE a. Receive Treasurer's Report for calendar year 2024 (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 9, 2025 Special Board Meeting Agenda Packet - Page 85 of 93 Page 3 of 10 Attachment 2 DRAFT MINUTES OF THE ANNUAL MEETING OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY HELD ON JANUARY 18, 2024 1. CALL TO ORDER At 3:35 p.m., President Pro Tem Michael 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 Hockett to convene the annual meeting of the Authority. 2. ROLL CALL Chair Hockett requested that Katie Young, Secretary of the Authority, call roll. PRESENT.- Members: McGill, Pilecki, Wedington, Hockett ABSENT.- Members: Lauritzen 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 Hockett stated that, in accordance with the Bylaws of the Authority, it would be appropriate to elect officers for 2024 as follows: 1) Chair of the Authority shall be Mariah Lauritzen, Chair of the Finance Committee; 2) Vice Chair of the Authority shall be Member 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 McGill and seconded by Member Wedington to approve the above slate of officers for 2024, to serve for a one-year term in accordance with Article III, January 9, 2025 Special Board Meeting Agenda Packet - Page 86 of 93 Page 4 of 10 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY Minutes of January 18, 2024, Meeting Section 2 of the Bylaws. Motion passed by unanimous roll call vote of those present (4-0-1, Lauritzen absent). 5. APPROVAL OF MINUTES a. Approve Minutes of January 19, 2023 meeting. AUTHORITY ACTION: It was moved by Member McGill and seconded by Member Pilecki to approve the Authority minutes of the January 19, 2023 meeting. Motion passed by unanimous roll call vote of those present (4-0-1, Lauritzen absent). 6. BUDGET AND FINANCE Finance Manager Kevin Mizuno provided a summary of the Treasurer's Report for 2023. 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, Chair Hockett adjourned the annual meeting of the Authority at 3:40 p.m. after which the meeting of the Central San District Board of Directors reconvened. Katie Young, CPMC, CMC Secretary of the Authority 1 January 9, 2025 Special Board Meeting Agenda Packet - Page 87 of 93 Page 5 of 10 ATTACHMENT 3 CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY January 9, 2025 Annual Meeting Resort of Treasurer of the Authoritv 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 2024 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, 2024, the total principal amount on the 2021 COPs, the only outstanding debt of the Authority, was $22.305 million. During calendar year 2024, two scheduled interest payments were made on March 1, 2024 and September 1, 2024 in the amounts of $0.628 million each, for a total of $1.256 million. One scheduled principal payment was made on September 1, 2024 in the amount of $5.630 million. Looking forward, the next principal payment is due on September 1, 2025 in the amount of $6.165 million. A total of approximately $1.538 million in interest payments are due in 2025 split evenly between two payments on March 1, 2025 and September 1, 2025. 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 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 9, 2025 Special Board Meeting Agenda Packet - Page 88 of 93 Page 6 of 10 ATTACHMENT 3 Regarding Central San's 2018 Revenue Refunding Bonds, as of December 31, 2024, the remaining unpaid principal balance on the 2018 Series A Wastewater Revenue Refunding Bonds was $8.445 million. The Series B Wastewater Revenue Refunding Bonds fully matured in 2023 and no longer had an outstanding principal 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 1 A 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. This loan is in place and draws have been made of $16.170 million; with $39 million of additional draws anticipated for FY 2024-25. Apart from the SRF financing, other financing needs in the 10 -year financial plan will be presented at the January 16, 2025 Board Financial 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). January 9, 2025 Special Board Meeting Agenda Packet - Page 89 of 93 Page 7 of 10 ATTACHMENT 4 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. 1 January 9, 2025 Special Board Meeting Agenda Packet - Page 90 of 93 Page 8 of 10 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) 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. K January 9, 2025 Special Board Meeting Agenda Packet - Page 91 of 93 Page 9 of 10 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 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. 3 January 9, 2025 Special Board Meeting Agenda Packet - Page 92 of 93 Page 10 of 10 ATTACHMENT 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 2026, unless a debt issuance through the Authority is required sooner. ►I January 9, 2025 Special Board Meeting Agenda Packet - Page 93 of 93