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7.B. - Page 2 of 11
<br />ANALYSIS
<br />Since closing the WIFIA Loan, interest rates on United States Treasury Obligations known as State and
<br />Local Government Securities ("SLGS") have declined to a current estimate of 1.24% assuming a weighted
<br />average life of 20.9 years. A WIFIA Loan interest rate reset is permitted under certain conditions:
<br />• No changes to the original agreement's terms and conditions; and
<br />• No changes to the original loan amount; and
<br />• The borrower has not yet drawn against the WIFIA Loan; and
<br />• The borrower can demonstrate its ability to obtain a better rate from other sources in the market
<br />on debt comparable to the terms of the WIFIA loan and of equal lien priority; and
<br />• The borrower can document that, if in construction, the project's remaining construction value
<br />exceeds the WIFIA Loan's share of the total eligible project costs; and
<br />• The borrower can demonstrate that the loan amount at the time of re-execution will still be no
<br />more than 49% of eligible project costs.
<br />SVCW has demonstrated it satisfies the above criteria and received notice from the EPA on September 11,
<br />2020 of its agreement to proceed with the renegotiation of the WIFIA Loan to re -set the interest rate. In
<br />connection with the interest rate re -set, the City needs to execute a revised Financing Agreement.
<br />FISCAL IMPACT
<br />Assuming market rates as of September 15, 2020, a successful reset of the WIFIA loan's interest rate would
<br />reduce the City's current debt service payments of approximately $5.5 million by approximately $1.01
<br />million annually. This equates to a net present value savings of approximately $23.53 million.
<br />Set forth below are good faith estimates of Fieldman, Rolapp & Associates, Inc., the municipal advisor to
<br />SVCW, as required under Section 5852.1 of the Code. The following estimates have no bearing on, and
<br />should not be misconstrued as, any not -to -exceed financial parameters authorized by resolution.
<br />(a) The true interest cost of the loan is estimated at 1.24%, calculated as provided in Section
<br />5852.1(a)(1)(A) of the Code.
<br />Page 2 of 4
<br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org
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<br />Net Present
<br />Debt
<br />Nominal
<br />Value Savings
<br />Service
<br />Savings over
<br />over
<br />Annual
<br />Amortization
<br />Amortization
<br />Member
<br />JPA %
<br />WIFIA %
<br />Savings
<br />Period
<br />Period
<br />Redwood City
<br />48.57%
<br />51.70%
<br />$1,013,730
<br />$31,425,643
<br />$23,530,522
<br />West Bay Sanitary District
<br />26.84%
<br />28.60%
<br />$560,810
<br />$17,385,110
<br />$13,017,418
<br />City of San Carlos
<br />15.14%
<br />16.10%
<br />$315,709
<br />$9,786,966
<br />$7,328,169
<br />City of Belmont
<br />9.45%
<br />3.60%
<br />$70,562
<br />$2,187,429
<br />$1,637,877
<br />TOTAL
<br />100.00%
<br />100.00%
<br />$1,960,811
<br />$60,785,148
<br />$45,513,986
<br />Set forth below are good faith estimates of Fieldman, Rolapp & Associates, Inc., the municipal advisor to
<br />SVCW, as required under Section 5852.1 of the Code. The following estimates have no bearing on, and
<br />should not be misconstrued as, any not -to -exceed financial parameters authorized by resolution.
<br />(a) The true interest cost of the loan is estimated at 1.24%, calculated as provided in Section
<br />5852.1(a)(1)(A) of the Code.
<br />Page 2 of 4
<br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org
<br />360
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