AgdaPkt 2019-05-20 Joint SA PFA - Laserfiche WebLink

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8.A. - Page 4 of 73 coverage ratios, fund its collection system CIP with cash resources, and maintain financially prudent working capital balances. Actual future sewer rate increases will depend in large part on future bond interest rates and the actual cost of the Authority's CIP, and will be evaluated periodically. SVCW has structured the WIFIA Loan to defer interest for 4 years followed by 31 years of fully amortizing payments. Members may capitalize interest during the 4 -year interest only period. This will provide additional cash flow relief to Members, but does so by increasing the cost of the improvements financed with the WIFIA Loan. If the City were to capitalize interest during this period, its cost would increase by an estimated $16 million (approximately $4 million interest annually over the 4 -year period). WEMF's analysis suggests that the City does not need this additional cash flow relief. The WIFIA Loan is structured to allow the City to evaluate annually the prepayment of principal during the 4 -year deferment period. The City's intention is to prepay its principal balance on the WIFIA Loan ($1 million minimum) during the deferral period to avoid the additional interest cost. Bond Documents and Responsibilities under Federal Securities Laws As the issuer of the 2019 Notes and the WIFIA Loan, the Authority's Commission Members will approve the primary financing documents and have responsibility over the entire preliminary official statement. The documents to be approved by the City are: 1. Appendix A to the Preliminary Official Statement, which contains financial and operating information relating to the City, and the portion of the Preliminary Official Statement under the caption "Certain Participating Member Risk Factors" (aside from information under that caption that refers specifically to another SVCW Member). 2. The Continuing Disclosure Certificate, which states what operating and financial information the City will disclose to investors in future years and by what dates this information will be made available. 3. A Ninth Supplement to the Joint Powers Agreement, to incorporate certain changes to the Joint Exercise of Power Act. 4. Second Amendment to the Financing Agreement, to allow the execution of the WIFIA Loan and the issuance of the 2019 Notes. The portions of the Preliminary Official Statement mentioned above are of particular importance for the City Council.' The Preliminary Official Statement must include all facts that would be material to an ' The Securities & Exchange Commission has issued guidance as to the duties of the City Council with respect to its approval of a Preliminary Official Statement (or a portion thereof). In its "Report of Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of the Board of Supervisors" (Release No. 36761 / January 24, 1996) ("Orange County Release"), the SEC indicated that, if a member of a City Council has knowledge of any facts or circumstances that an investor would want to know about prior to investing in bonds to be issued by the City, whether relating to their repayment, tax-exempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should endeavor to discover whether such facts are adequately disclosed in the Preliminary Official Statement. In the Orange County Release, the SEC indicated that the steps that a member of a City Council could take include becoming familiar with the Preliminary Official Statement and questioning City staff and consultants about the disclosure of such facts. If the City Council concludes that the Preliminary Official City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org 518