Korey Capozza Polly Holcombe Case Van Wingerden GENERAL MANAGER - - PowerPoint PPT Presentation

BOARD OF DIRECTORS Matthew Roberts– President Shirley Johnson – Vice President Korey Capozza Polly Holcombe Case Van Wingerden GENERAL MANAGER Bob McDonald

Fiscal Year 2020-21

Proposed Budget

Assistant General Manager Norma Rosales March 25, 2020

ITEM V. A.

Water Sales Projections

ITEM V. A.

Water Sales Revenue

CURRENT FY 17/18 WATER SALES REVENUE $5,105

Current FY 2019/20 3,850 AF Proposed FY 2020/21 3,850 AF Change % Change $ 4,994,934 $4,981,142 $-13,792

• 0.3%

ITEM V. A.

Overall Revenue

CURRENT FY 17/18 WATER SALES REVENUE $5,105

Current FY 2019/20 Proposed FY 2020/21 Change % Change $ 13,847,475 $14,159,400 $311,925 2.3%

ITEM V. A.

Budget Breakdown

ITEM V. A.

FY 20/21 Expenses:

Current FY 2019/20 Proposed FY 2020/21 Change % Change $ 7,511,166 $7,368,412 $-142,754

• 1.9%

ITEM V. A.

Increases/Decreases:

• Personnel
• $ 285,015

– Change in CalPERs unfunded liability payment

• Professional Services
• $110,608

– GSA Costs – Legal Labor Negotiator – Siemens/Itron Costs

• State Water Variable
• $ 188,000

– 0 Deliveries – 400 AF ID#1 Exchange

ITEM V. A.

Increases/Decreases:

• Water Treatment

$167,000

– 2,550 Cachuma Deliveries

• Joint Powers Authority

$135,000

– GSA Costs

ITEM V. A.

Debt Service

Current FY 2019/20 Proposed Budget FY 2020/21 Change % Change $ 5,913,984 $ 6,081,859 $ 167,874 2.8%

ITEM V. A.

Capital Expenditures

Current FY 2019/20 Proposed Budget FY 2020/21 Change % Change $ 931,090 $ 831,668

• $ 99,422
• 10.7%

ITEM V. A.

CURRENT AND PROPOSED FY 20/21 WATER RATES CURRENT FY 19/20 PROPOSED FY 20/21

WATER RATES ($ per hundred cubic feet) M&I BASE TIER PEAK TIER $3.83 $5.02 $3.90 $5.12 AGRICULTURAL TIER 1 $1.95 $1.97

Proposed Rates: 3,850 AF Sales

ITEM V. A.

NEW SERVICE CHARGES FY 20/21 Agricultural Accounts PROPOSED FY 20/21

AG O&M CHARGE ¾” meter $ 6.78 1” meter $ 11.30 2” meter $ 36.16 3” meter $ 72.12 4” meter $ 113.00 6” meter $ 226.00

Proposed Charges:

ITEM V. A.

CURRENT AND PROPOSED FY 20/21 SERVICE CHARGES CURRENT FY 19/20 PROPOSED FY 20/21

SERVICE CHARGES (Basic, SWP and Drought Surcharge) ¾” meter $ 49.39 $ 48.38 2” meter $ 263.36 $ 258.00 Ag customers only:

*Includes Ag Fixed O&M

6” fire service 2” meter $ 296.28 $263.36 $ 290.25 $299.52

Proposed Charges:

ITEM V. A.

CURRENT AND PROPOSED FY 20/21 SERVICE CHARGES CURRENT FY 19/20 PROPOSED FY 20/21

CAPITAL IMPROVEMENT PROGRAM CHARGE (CIP and Drought Surcharge) RATE (per HCF) $3.40 $3.70 MINIMUM $20.40/6 HCF $22.20/6 HCF MAXIMUM $340.00/100 HCF $462.50/ 125 HCF

Proposed Charges:

ITEM V. A.

Fiscal Impacts:

Projected Changes on Customer Bills

Residential: Average water user (9 HCF) Residential: High water user (24 HCF) Multi-family Residential: Change per residence Agriculture: High Water User (650 HCF)

Proposed Budget

$1.30/ month $4.81/ month $0.73/ month $47.43/ month

ITEM V. A.

April 8 – Public Hearing Notice mailed to District property owners and customers May 27, 5:30 pm; City Hall - Board holds Proposition 218 public hearing and votes on FY 2020/21 Budget and Rates

Budget Schedule

ITEM V. A.

QUESTIONS

ITEM V. A.

COVID 19 Update

ITEM IV. B.

➢ Status ➢ Continuity Plan ➢ Cleaning Plan ➢ Other Planning

2010 CAB Refunding Update

ITEM IV. C.

Background ➢ 2010 CAB debt (Bonds) repayment will begin in 2023, repayment of this debt will be at a ~6.5% interest rate. ➢ District has an opportunity to refund these Bonds by issuing new refunding bonds at a much lower interest rate. ➢ Additionally other debt or obligations are proposed to be funded including the SRF 121 loan and PERS Unfunded Accreted Liability. ➢ Finally, in order to reduce the impact of upcoming large capital projects including work related to COMB AVAR Projects and Office Building Improvements new money is being prosed in this Bond issue.

2010 CAB Refunding Update

ITEM IV. C.

Proposed Funding

Existing Obligations 2010A CAB SRF121 UAL Current value payoff $ 16,189,894.86 $ 5,192,076.11 $ 3,675,808.00 Estimated Costs of Issuance $ 148,849.54 $ 49,543.64 $ 44,192.00 Estimated Cash Contribution $ 1,131,262.50 $ 35,521.53 $ - Total Uses of Bond Proceeds $ 17,470,006.90 $ 5,277,141.28 $ 3,720,000.00 Interest rate (% APR) 6.55% 2.513% 6.07% Remaining Term (Years) 16 9 25 Total Remaining Debt Pmts $ 30,510,000.00 $ 5,904,196.58 $ 6,364,623.00 New Bond Issue Series Name 2020A 2020A 2020B New term (Years) 16 9 25 2020 Estimated Principal Amount $ 13,095,000.00 $ 4,540,000.00 $ 3,720,000.00 Total 2020 A Pmts $ 21,274,387.00 $ 5,689,370.00 $ 5,380,543.28 Estimated Savings $ 10,366,875.50 $ 214,826.58 $ 984,079.72 NPV Savings 7,164,544.77 $ 132,040.00 $ 1,193,289.75 $ NPV Savings (%) 44.87% 2.54% 32.46% Note: All figures are preliminary, subject to change. Total Savings 11,565,781.80 $ 8,489,874.52 $ 34.19% Total Estimated Savings Total NPV Savings ($) Total NPV Savings (%)

Refunding Breakdown

2010 CAB Refunding Update

ITEM IV. C.

New Money ➢ Staff is proposing to fund certain capital projects in order to minimize short-term impacts to rates. ➢ Projects include: ➢ COMB AVAR related Distribution system improvements ➢ Building security and office space improvements ($300K) ➢ Total proposed proceeds in the amount of $1.8M

2010 CAB Refunding Update

ITEM IV. C.

Recommendation ➢Staff recommends that the CVWD Board approve 2020A,B,&C Bond issuance by adopting resolution 1068. ➢ Staff recommends that the Financing Corp Board approve 2020C Bond issuance by adopting resolution 1067 at the next Financing Corp Meeting.

CARPINTERIA VALLEY WATER DISTRICT FINANCING CORPORATION CARPINTERIA VALLEY WATER DISTRICT BOARD MEETING

REFUNDING REVENUE BONDS

SERIES 2020A&B REVENUE CERTIFICATES OF PARTICIPATION SERIES 2020C

MARCH 25, 2020 ITEM V. C.

INTRODUCTION

ITEM V. C.

District anticipates issuing three different series of obligations totaling approximately $22.8 million in principal amount

• Approximately $13.1 million in tax-exempt refunding bonds to refund the

2010A COPs outstanding. The refunding is expected to generate approximately $230,000 - $930,000 annual cash flow savings (~$7.2 million NPV savings or 44% savings of refunded bonds)

• Approximately $4.5 million in tax-exempt refunding bonds to refund the

District’s Department of Water Resources Joint Loan anticipated to generate approximately $20,000 annual cash flow savings (approximately $132,000 NPV savings or 2.5% savings of refunded bonds)

• Approximately $3.7 million in taxable bonds to refund the District’s CalPERS

unfunded pension liability is anticipated to generate savings of approximately $1.19 million (NPV)

• Approximately $1.5 million in tax-exempt Certificates of Participation for the

water distribution system and office facility improvements

29

Overview*

*All numerical information on this slide is preliminary, subject to change. Based on market conditions as of March 16, 2020

ITEM V. C.

30

Series 2020A TE Refunding Revenue Bonds*

*All numerical information on this slide is preliminary, subject to change. Based on market conditions as of March 16, 2020. DWR Joint Loan Refunding FY Ending Prior Debt Service Refunding Debt Service Savings NPV Savings 2021 590,419 566,995 23,425 21,108 2022 590,419 567,000 23,419 20,517 2023 590,419 568,000 22,419 18,993 2024 590,419 568,000 22,419 18,450 2025 590,419 571,875 18,544 14,401 2026 590,419 569,625 20,794 15,950 2027 590,419 571,250 19,169 14,060 2028 590,419 566,750 23,669 17,425 2029 590,419 571,000 19,419 13,387 2030 590,422 568,875 21,547 14,672 TOTAL 5,904,197 5,689,370 214,827 168,963 Net Present Value Savings ($) $132,041 Net Present Value Savings (%) 2.54% Series 2010A COP Refunding FY Ending Prior Debt Refunding Receipts Refunding Net Cash Flow Savings NPV Savings 2021 476,513 2022 654,750 2023 880,000 654,750 225,250 217,523 2024 910,000 654,750 255,250 240,401 2025 925,000 654,750 270,250 248,517 2026 1,175,000 654,750 520,250 464,406 2027 1,445,000 654,750 790,250 687,628 2028 1,990,000 1,069,125 920,875 782,366 2029 2,270,000 1,345,250 924,750 767,533 2030 2,530,000 1,606,125 923,875 749,061 2031 2,555,000 1,632,375 922,625 730,718 2032 2,700,000 1,776,500 923,500 714,417 2033 2,690,000 1,769,000 921,000 695,921 2034 3,230,000 2,309,375 920,625 679,331 2035 3,220,000 2,296,875 923,125 665,187 2036 3,990,000 3,064,750 925,250 650,890 TOTAL $30,510,000

• $1,131,263

$20,143,125 $10,366,875 $8,293,899 Net Present Value Savings ($) $7,164,545 Net Present Value Savings (%) 44.87%

ITEM V. C.

31

Series 2020B TX Refunding Revenue Bonds*

District currently has $3.67 million outstanding on its Tier 1 Miscellaneous Plan unfunded accrued liability with CalPERS payable through 2044 at rate of ~6.07% Taxable refunding of the

• utstanding liability over 25

years is expected to generate ~$1.2 million in NPV savings assuming a true interest cost of 3.04%

Date Prior Debt Service Refunding Debt Service Savings NPV Savings 06/30/2020 353,177.00 353,177.00 351,346.32 06/30/2021 388,056.00 74,778.84 313,277.16 303,430.40 06/30/2022 418,292.00 211,922.36 206,369.64 191,905.41 06/30/2023 438,328.00 210,240.46 228,087.54 207,709.66 06/30/2024 459,336.00 213,391.01 245,944.99 219,087.00 06/30/2025 280,240.00 211,368.16 68,871.84 57,173.37 06/30/2026 287,946.00 214,207.26 73,738.74 60,014.23 06/30/2027 295,865.00 211,834.26 84,030.74 67,388.53 06/30/2028 304,001.00 214,239.68 89,761.32 70,529.41 06/30/2029 312,361.00 211,496.55 100,864.45 77,929.89 06/30/2030 320,951.00 213,631.00 107,320.00 81,195.14 06/30/2031 329,777.00 210,644.90 119,132.10 88,495.63 06/30/2032 324,336.00 212,298.25 112,037.75 81,080.58 06/30/2033 318,346.00 213,555.50 104,790.50 73,851.57 06/30/2034 306,279.00 214,676.65 91,602.35 62,634.91 06/30/2035 286,933.00 210,729.75 76,203.25 50,419.60 06/30/2036 252,987.00 211,714.80 41,272.20 25,222.55 06/30/2037 147,740.00 212,111.15

• 64,371.15
• 46,346.72

06/30/2038 124,708.00 211,904.20

• 87,196.20
• 60,288.58

06/30/2039 106,600.00 211,531.95

• 104,931.95
• 70,303.31

06/30/2040 94,701.00 210,994.40

• 116,293.40
• 75,832.15

06/30/2041 72,681.00 210,291.55

• 137,610.55
• 87,167.73

06/30/2042 68,973.00 214,340.75

• 145,367.75
• 89,898.04

06/30/2043 53,876.00 213,142.00

• 159,266.00
• 95,978.73

06/30/2044 18,133.00 211,777.95

• 193,644.95
• 113,437.40

06/30/2045 210,248.60

• 210,248.60
• 120,120.99

06/30/2046 213,471.30

• 213,471.30
• 119,200.07

TOTAL 6,364,623.00 5,380,543.28 984,079.72 1,190,840.48 Net Present Value Savings ($) $1,193,290 Net Present Value Savings (%) 32.46%

*All numerical information on this slide is preliminary, subject to change. Based on market conditions as of March 16, 2020.

ITEM V. C.

32

Series 2020C Revenue COPs

Financial Data Certificates

Project Fund Total $1,800,000 True Interest Cost 2.52% Maximum Annual DS $203,500 Average Annual DS $151,278 Total Debt Service $2,303,627 Date Principal Interest Debt Service 06/30/2021 53,128 53,128 06/30/2022 73,000 73,000 06/30/2023 73,000 73,000 06/30/2024 73,000 73,000 06/30/2025 73,000 73,000 06/30/2026 73,000 73,000 06/30/2027 73,000 73,000 06/30/2028 130,000 69,750 199,750 06/30/2029 140,000 63,000 203,000 06/30/2030 145,000 55,875 200,875 06/30/2031 155,000 48,375 203,375 06/30/2032 160,000 40,500 200,500 06/30/2033 170,000 32,250 202,250 06/30/2034 180,000 23,500 203,500 06/30/2035 185,000 14,375 199,375 06/30/2036 195,000 4,875 199,875 TOTAL $1,460,000 843,628 2,303,628

Tax-exempt proceeds in the amount of $1.8 million are expected to fund the following projects:

• Water distribution system

pipeline and valve replacements

• Pumping and well facility

improvements, and

• District office building

facility improvements

*All numerical information on this slide is preliminary, subject to change. Based on market conditions as of March 16, 2020.

ITEM V. C.

District Debt Service*

33 * Preliminary, subject to change. Debt service chart does not include subordinate lien Cater Financing Agreement and Siemens Lease.

(1) 2020 Bonds reflects net debt service assuming a portion of interest cost in FY 2021 and 2022 is paid from cash set aside with the Trustee.

$0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000

Projected Parity Debt Profile(1)

Series 2016A DWR Joint Loan 121 2020A&B Refunding Bonds (Net) 2020C Certificates Cash Set-aside Prior Parity Debt Service $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000

Projected Debt Profile(1)

Series 2016A DWR Joint Loan 121 2020A&B Refunding Bonds (Net) Cater Financing Agreement Siemens Lease 2020C Certificates Prior Debt Service

Proposed Financing Schedule

34

Timeline Milestones

March 12, 2020

• Credit rating presentation with S&P

March 25, 2020

• Consider approval of legal documentation and POS
• Receive credit ratings

March 26, 2020

• Post Preliminary Official Statement

April 2, 2020

• Price Bonds and Certificates

April 9, 2020

• Close Bonds and Certificates

ITEM V. C.

MARKET OVERVIEW

ITEM V. C.

36

Current Markets and COVID-19

Equity markets have been volatile Tax-Exempt yields have increased vs recent all-time lows Corporate credit spreads widened to recessionary levels

0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00%

10-Year AAA MMD

100 200 300 400 500 600 700

Historical JULI Spread Current Spread

4.6%

• 2.8%

4.2%

• 3.4%
• 1.7%
• 7.6%

4.9%

• 4.9%
• 9.5%

9.3%

• 12.0%

6.0%

• 5.2%

0.5%

• 4.3%
• 2.9%
• 15%
• 10%
• 5%

0% 5% 10% 15% 2-Mar 4-Mar 6-Mar 10-Mar 12-Mar 16-Mar 18-Mar 20-Mar 2008 Financial Crisis $0 $20 $40 $60 $80 $100 $120 $140 $160 WTI, Oil $/bbl Current Price Iraq invades Kuwait End of the Asia Crisis 2014 & 2020 OPEC price wars 2016 OPEC+ Accord

Oil prices plunge on reduced demand and price wars

ITEM V. C.

37

Current Dislocation in Perspective

20 Year History of Taxable and Tax-Exempt Interest Rates

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 10Y UST 10Y MMD Current UST Current MMD

ITEM V. C.

LEGAL DOCUEMNTS

ITEM V. C.

Corporation Legal Documentation

39

Adopt Financing Corporation Authorizing Resolution approving:

• Assignment Agreement. The Carpinteria Valley Water District Financing

Corporation assigns its right to receive installment payments from the District under the Installment Purchase Agreement to Bank of New York Mellon Trust Company, N.A., as trustee, for the benefit of the 2020C Certificate owners.

• Installment Purchase Agreement. Establishes the specific terms and

conditions under which Water System Revenues are pledged to repay the installment payments securing the 2020C Certificates. Also contains key covenants relating to issuance of additional debt and setting rates and charges.

• Trust Agreement. Governs flow of funds, 2020C Certificate terms,

interest rates and maturities.

• Purchase Contract. Governs purchase of 2020C Certificates by JP

Morgan Securities.

ITEM V. C.

District Legal Documentation - Certificates

40

Adopt District Authorizing Resolution approving:

• Installment Purchase Agreement.
• Trust Agreement.
• Purchase Contract.
• Continuing Disclosure Certificate. The District covenants

to provide certain key credit information on the District to the market.

• Preliminary Official Statement. District’s disclosure

document that provides description of the Bonds and Certificates, the sources of repayment, risk factors and

• ther material facts about the District.

ITEM V. C.

District Legal Documentation - Bonds

41

Adopt District Authorizing Resolution approving:

• Indenture of Trust. Governs flow of funds, 2020A&B

Bond terms, interest rates and maturities.

• Bond Purchase Agreement. Governs purchase of

2020A&B Bonds by JP Morgan Securities.

• Continuing Disclosure Certificate. The District covenants

to provide certain key credit information on the District to the market.

• Escrow Agreement (2010 Certificates). Governs use of

proceeds to pay and retire the 2010A COPs.

• Preliminary Official Statement.

ITEM V. C.

Recommendation

ITEM V. C.

Recommendation

43

Approve the Finance Corporation and District Authorizing Resolutions and legal documents allowing staff and the finance team to proceed with the issuance of the 2020A&B Refunding Bonds and the 2020C Certificates District Board to approve the revised Debt Management Policy and Disclosure Policy

ITEM V. C.

These materials include an assessment of current market conditions, and include assumptions about interest rates, execution costs, and other matters related to municipal securities issuance or municipal financial products. These assumptions may change at any time subsequent to the date these materials were provided. The refinancing and refunding scenarios presented herein are not intended to be inclusive of every feasible or suitable refinancing alternative. Fieldman, Rolapp & Associates, Inc. is an SEC-registered Municipal Advisor, undertaking a fiduciary duty in providing financial advice to public agencies. Compensation contingent on the completion of a financing or project is customary for municipal financial advisors. To the extent that our compensation for a transaction is contingent on successful completion of the transaction, a potential conflict of interest exists as we would have a potential incentive to recommend the completion of a transaction that might not be optimal for the public agency. However, Fieldman, Rolapp & Associates, Inc. undertakes a fiduciary duty in advising public agencies regardless of compensation structure.

Disclaimer

44

ITEM V. C.

Surface Water

ITEM IX. D.

Groundwater Production

ITEM IX. D.

Source of Supply

ITEM IX. D.

Projected vs. Actual

ITEM IX. D.

Conservation – February 2020

Customer Class

Metered Sales

HCF HCF HCF % Commercial 9,662 8,966

• 696
• 7.2%

Industrial 2,606 2,440

• 166
• 6.4%

Public Auth. 2,282 2,539 257 11.3% Single-meter Residential 25,674 28,120 2,446 9.5% Master-meter Residential 15,772 15,256

• 516
• 3.3%

Landscape 1,138 2,296 1,158 101.8% M&I TOTAL (HCF) 57,134 59,617 2,483 4.3% M&I TOTAL (AF) 131 137 6 4.6% Agriculture (HCF) 41,560 59,327 17,767 42.8% Agriculture (AF) 95 136 41 43.2% District Total (HCF) 98,694 118,944 20,250 20.5% DISTRICT TOTAL (AF) 227 273 46 20.3% Gallons per capita per day 77.83 80.35 February 2020 - February 2013 February 2013 February 2020

ITEM IX. D.

M&I Conservation – FY 2020

ITEM IX. D.

Agricultural Sales – FY 2020

ITEM IX. D.

Lake Cachuma

ITEM IX. D.

Rainfall

ITEM IX. D.

Statewide Reservoir Levels

ITEM IX. D.

Statewide Snowpack Conditions

ITEM IX. D.