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6.C. - Page 9 of 57 ( 0 . VEink waste.. So uch & de waste X-m9emene Authority A Public Agency STAFF REPORT To: SBWMA Board Members From: Joe LaMariana, Executive Director Date: August 20, 2020 Board of Directors Special Meeting Subject: Potential Withdrawal of Town of Atherton from Membership in the SBWMA: Consideration of a Resolution to Determine Atherton's Liquidation Costs and Recommend Member Agencies Aaarove the Withdrawal Based on Certain Conditions Executive Summary On June 29, 2020, the Town of Atherton formally notified SBWMA of its intent to withdraw from membership in the SBWMA, effective December 31, 2020. Pursuant to the Second Amended and Restated Joint Powers Agreement ("JPA Agreement"), Article 15, "Withdrawal from SBWMA", a Member may not withdraw from the SBWMA unless and until that Member achieves the following: The liquidation in full of its proportion of any and all existing debts, obligations, and liabilities incurred, earned, or expected to be earned by the date of withdrawal, including but not limited to the Revenue Bonds, as determined by the Board. The provision to the SBWMA of a written notice of intent to withdraw from the SBWMA at least six (6) months prior to the end of the current Rate Year, specifying the date on which the Member intends to withdraw. The approval of such withdrawal by a 4/5 affirmative vote of Equity Members. Atherton's June 29, 2020 letter satisfies its Article 15.1.b. obligation. Next, it must satisfy its Article 15.1.a. obligation, highlighted above. In order for it to do so, the Board is required to determine the amount Atherton must pay to liquidate "its proportion of any and all existing debts, obligations, and liabilities incurred, earned, or expected to be earned by the date of withdrawal," which is the purpose of this meeting. Finally, pursuant to Article 15.1.c., Atherton's withdrawal must be approved by four-fifths (10) of the JPA's Equity Members (i.e., Member Agencies) to become effective. Staff recommends that the Board adopt the attached resolution determining the amount necessary for Atherton to liquidate its portion of existing debt obligations based on calculating the amount required to defease Atherton's portion of SBWMA's outstanding 2019 bonds plus costs, which is approximately $2.2 million dollars,' and further recommending to the Member Agencies that they approve Atherton's withdrawal from the JPA, as required by 1 The actual amount will vary slightly based on the date of defeasance and interest rates on Treasury obligations at the time. For example, as calculated on July 14, 2020, the defeasance cost would be $2,203,016; if interest rates dropped to zero by the date of defeasance (worst case scenario), the defeasance cost would be $2,271,183. If rates were to go up, on the other hand, the defeasance cost would be less. SBWMA BOD PACKET 8/20/2020 AGENDA ITEM 5A - pl 40