AgdaPkt 2020-10-26 Joint SA PFA - Laserfiche WebLink

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6.C. - Page 43 of 57 Town of Atherton — SBWMA JPA Withdrawal Analysis JUNE 26, 2020 Scenario 1 In Scenario 1, the methodology used by SBW.MA's financial advisor was simply updated to reflect current conditions in the market. Key assumptions to Scenario 1 are unchanged from the KNN analysis which took the simplest and most. straight - forward approach, The scenario continues to assume that the Town is responsible for 3:2596 of the total debt service on tfie 2019A and 8 bonds through final maturity based on its current share of the solid waste stream. This resulted in an increased cost to withdraw under this approach. However, we believe that in addition to the future liabilities, the Town merits consideration for amounts overpaid in the past related to the current and prior bonds. Given the Town's waste generation profile, we believe that there was little to no need to build out the facility to accommodate for multifamily and commercial recycling capabilities. As a result, the prior payments on the 2009 and 2019 Bonds represent4d annual over -payments on theTown's parf'Accordingly, we have included a line item in each scenario that shows an amount of $58086'which represents a calculated total amount overpaid In the last ten years. The Town has consistently stated that the facility is larger than is needed and therefore we believe that this amount should be deducted from any scenario discussed because none of the recent bond issuances have had an impact on the Town's diversion rates although you have paid for them each year through the rates. The Town has paid a portion of these issuances through customer rates without a benefit to their rate payers, we do not believe the Town should have had to pay a portion of the debt service amounts associated to these newer programs that did not benefit the Town. Scenario 2 In this scenario, it is assumed that the share of the 2019 Bonds Debt Service given projected growth in neighboring communities would decline over the life of the bonds (3.25% in first year, 0.25% decline every 3 years until it reaches a 1.5% share). It is our understanding that the Town is a built -out residential bedroom community with no plans for higher density residential multi -family or commercial development like most of its neighboring communities. As a result, the Town 's'prioportional share of the solid waste stream will slowly decFease over time. Without readily available and reliable information, it is impossible to know the exact amount or timing of the growth so, we tried to use a conservative, straight line approach that does not go below a 1.5% share. According to this analysis the total cash required to defease the Town's obligation is reduced from $2.26millwq;to:$1 S million; before accounting for amounts overpaid in prior years. Scenario 3 As stated in prior correspondence between the Town and the JPA, we agree that the Town should not be financially accountable for bond costs that provided them with. no benefit, especially the two most recent issuances where your objections were raised repeatedly. In this scenario, we have assumed that the Town does.not benefit from improvements financed. with the 2019. Bonds and pets out a portion of the Series B (the new money component) from the Town's 3:25%.share as the benefits from this portion of the proceeds will be realized in the future after the Town is no longer a member of the Authority. The Town has stated numerous times in the past that these bonds will have no impact on the Town's diversion rate which we concur. While most of the member agencies will need to increase programs for the multi -family and commercial growth that is occurring and projected in the future and need to increase its overall waste diversion in these sectors, we believe the Town should not have to pay back any portion of these 2014 Series B Bond proceeds as they provide limited to no benefit to The Town. Additionally, the Town has already reached the mandated diversion rates that will be required in the future. As a result of not including the unused and unnecessary components related to the 2019 Series B debt Service, the Town's net defeasance amount decreases from $2.259 million to $1.6 million, before accounting for amounts overpaid in prior years. NHA ADVISORS PAGE 74