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6.C. - Page 15 of 57
<br />Legal or Credit Implications Created by Atherton's Withdrawal: Bond counsel (Stradling Yocca Carlson &
<br />Rauth) has raised no additional legal issues relating to the bonds that the Board needs to be aware of. KNN Public
<br />Finance has indicated that Atherton's withdrawal should have no rating impact, as it was known as a risk at the time
<br />of the last bond issuance, but allowing a Member Agency to exit without a full defeasance of its obligation could
<br />result in a rating impact in the future if additional Member Agencies were to withdraw from SBWMA.
<br />Fiscal Impact
<br />Assuming that Atherton's withdrawal is approved, the fiscal impact to SBWMA will depend on the liquidation amount
<br />determined by the Board, as discussed above. If the Board chooses Option 1, Atherton's share of the existing debt
<br />obligation will be paid. If the Board chooses Option 2 or 3, the remaining Member Agencies will each be responsible
<br />for a higher amount of debt service on the bonds.
<br />Otherwise, under all options, commencing January 1, 2021, the remaining eleven Member Agencies will be
<br />responsible for the ongoing operational costs of SBWMA because, pursuant to the terms of the JPA, once a
<br />Member Agency withdraws, it is no longer a part of SBWMA and thus no longer responsible for ongoing expenses.
<br />Tip fee revenue from each Member Agency covers SBWMA fixed and variable costs. After adjusting for Atherton's
<br />variable costs, Staff calculates that Atherton's withdrawal will result in a net shortfall in operating funds of
<br />approximately $146,760 from fixed costs that would need to be reallocated. Staff anticipates recommending the
<br />Board address this shortfall through a tip fee adjustment of $0.52 per ton for all franchise material. To put this in
<br />perspective, the 52 cents would be added to current franchise tip fees, which range from $127/ton to $141/ton. The
<br />projected impact of this increase to the individual Member Agencies is shown in the chart below:
<br />SBWMA BOD PACKET 8/20/2020 AGENDA ITEM: 5A - p7
<br />46
<br />Avg. Annual
<br />DS with Total
<br />Atherton
<br />Prepayment
<br />(3.242%)
<br />Avg. Annual
<br />DS with
<br />Partial
<br />Atherton
<br />Prepayment
<br />(1.393%)
<br />Annual
<br />Difference
<br />Total DS with
<br />Total
<br />Atherton
<br />Prepayment
<br />(3.242%)
<br />Total DS with
<br />Partial
<br />Atherton
<br />Prepayment
<br />(1.393%)
<br />Total
<br />Difference
<br />Belmont
<br />$171,264
<br />$174,537
<br />$3,273
<br />$3,767,818
<br />$3,839,820
<br />$72,002
<br />Burlingame
<br />$414,500
<br />$422,420
<br />$7,921
<br />$9,118,990
<br />$9,293,251
<br />$174,260
<br />County
<br />$109,227
<br />$111,314
<br />$2,087
<br />$2,402,988
<br />$2,448,909
<br />$45,920
<br />No. Fair Oaks
<br />$106,491
<br />$108,526
<br />$2,035
<br />$2,342,805
<br />$2,387,575
<br />$44,770
<br />East Palo Alto
<br />$189,140
<br />$192,754
<br />$3,614
<br />$4,161,069
<br />$4,240,586
<br />$79,516
<br />Foster City
<br />$207,389
<br />$211,352
<br />$3,963
<br />$4,562,550
<br />$4,649,738
<br />$87,189
<br />Hillsborough
<br />$102,865
<br />$104,831
<br />$1,966
<br />$2,263,031
<br />$2,306,277
<br />$43,246
<br />Menlo Park
<br />$436,486
<br />$444,827
<br />$8,341
<br />$9,602,682
<br />$9,786,185
<br />$183,503
<br />Redwood City
<br />$690,118
<br />$703,306
<br />$13,188
<br />$15,182,594
<br />$15,472,727
<br />$290,133
<br />San Carlos
<br />$272,838
<br />$278,052
<br />$5,214
<br />$6,002,445
<br />$6,117,149
<br />$114,704
<br />San Mateo
<br />$768,550
<br />$783,237
<br />$14,687
<br />$16,908,103
<br />$17,231,210
<br />$323,107
<br />West Bay
<br />Sanitary
<br />$53,914
<br />$54,944
<br />$1,030
<br />$1,186,108
<br />$1,208,774
<br />$22,666
<br />Total
<br />$3,522,781
<br />$3,590,100
<br />$67,319
<br />$77,501,185
<br />$78,982,202
<br />$1,481,017
<br />Legal or Credit Implications Created by Atherton's Withdrawal: Bond counsel (Stradling Yocca Carlson &
<br />Rauth) has raised no additional legal issues relating to the bonds that the Board needs to be aware of. KNN Public
<br />Finance has indicated that Atherton's withdrawal should have no rating impact, as it was known as a risk at the time
<br />of the last bond issuance, but allowing a Member Agency to exit without a full defeasance of its obligation could
<br />result in a rating impact in the future if additional Member Agencies were to withdraw from SBWMA.
<br />Fiscal Impact
<br />Assuming that Atherton's withdrawal is approved, the fiscal impact to SBWMA will depend on the liquidation amount
<br />determined by the Board, as discussed above. If the Board chooses Option 1, Atherton's share of the existing debt
<br />obligation will be paid. If the Board chooses Option 2 or 3, the remaining Member Agencies will each be responsible
<br />for a higher amount of debt service on the bonds.
<br />Otherwise, under all options, commencing January 1, 2021, the remaining eleven Member Agencies will be
<br />responsible for the ongoing operational costs of SBWMA because, pursuant to the terms of the JPA, once a
<br />Member Agency withdraws, it is no longer a part of SBWMA and thus no longer responsible for ongoing expenses.
<br />Tip fee revenue from each Member Agency covers SBWMA fixed and variable costs. After adjusting for Atherton's
<br />variable costs, Staff calculates that Atherton's withdrawal will result in a net shortfall in operating funds of
<br />approximately $146,760 from fixed costs that would need to be reallocated. Staff anticipates recommending the
<br />Board address this shortfall through a tip fee adjustment of $0.52 per ton for all franchise material. To put this in
<br />perspective, the 52 cents would be added to current franchise tip fees, which range from $127/ton to $141/ton. The
<br />projected impact of this increase to the individual Member Agencies is shown in the chart below:
<br />SBWMA BOD PACKET 8/20/2020 AGENDA ITEM: 5A - p7
<br />46
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