AgdaPkt 2019-06-24 Joint SA PFA - Laserfiche WebLink

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8.B. - Page 2 of 5 to contribute approximately $12.7 million in lieu of fully participating in the Water Infrastructure Finance and Innovation Act loan (WIFIA) Financing Program. These changes will permit the Authority to borrow less money and to shift approximately $29 million of RESCU Program funding to the lower-cost SRF loans. ANALYSIS Increasing SWRCB funding to $169 million and incorporating the City of Belmont's cash contribution will reduce the 2019 Notes (and the subsequent use of WIFIA Loan proceeds) to approximately $218 million. Changes in the funding program for RESCU necessitate changes to the Financing Agreements. Specifically, the City Council is asked to authorize changes to the Financing Agreement between SVCW and the City to increase its maximum percentage of allocable debt service in support of the WIFIA Loan and the 2019 Notes. This proposed City Council action (Attachment A: Resolution to Revising the Allocable share of Debt Service) authorizes staff to increase the City's maximum share of the 2019 Notes and WIFIA Loan up to 53.5 percent. The final Allocable Share will be determined when the 2019 Notes are sold. The Amended Financing Agreement approved by the City on May 20, 2019, established the City's Allocable Share of the debt sold in connection with the WIFIA financing program at 51.44 percent. This number was based on all four SVCW members borrowing their full capital obligation in connection with the WIFIA financing program. The City of Belmont's decision to pay $12.7 million of its allocable share of the project cost reduces the total amount of WIFIA-related debt to be sold, decreases Belmont's remaining Allocable Share of debt, and increases the Allocable Share of debt for each of the other participating members. The increase of the City's Allocable Share does not reflect an increase in the City's allocated share of SVCW capital costs. It merely reflects the fact that SVCW will apportion less financial responsibility of debt to Belmont (in recognition of its cash contribution) and more to those members who have not contributed cash. FISCAL IMPACT Shifting approximately $29 million of the WIFIA Financing Program debt to a lower cost SWRCB loan is expected to save members participating in these loans approximately $3.5 million (on a present value basis) over the amortization period of the WIFIA Financing Program. The City's estimated share of that savings is approximately $1.8 million. The increase of Redwood City's Allocable Share of debt sold in connection with the WIFIA financing program of 51.44 percent to a not -to -exceed 53.5 percent does not increase the City's share of the capital cost associated with the SVCW capital spending program. Each member remains responsible for its share of SVCW capital costs as specified in the Joint Powers Agreement (Redwood City: 48.57 percent; Belmont: 9.45 percent; San Carlos: 15.14 percent; West Bay: 26.84 percent). There is no adverse financial impact to any member if another member elects to pay all or a portion of its capital obligations in cash (for example, the City has elected to pay cash in previous issuances). Any such cash payments will reduce the amount of debt necessary to fund SVCW's capital program; however, the City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore 754