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6.C. - Page 49 of 57 Additional Cost Analysis for the Town of Atherton's Withdrawal I July 22, 2020 1 pg 4 impact on each of the members if Atherton's pro -rata share of the 2019B bonds is deducted from the calculation of the Town's liability: Reallocation of 2019B New Money Debt Service (DS) to Member Agencies We note that the total difference in the remaining members' debt service is higher than the cost of defeasing Atherton's share of the 2019B bonds. This is because the cost of defeasance is calculated to the first call date on the bonds and the above chart assumes the 2019B bonds remain outstanding through the final maturity of the bonds. In our opinion, the argument that Atherton would not benefit from the new projects if they were to remain a member is less than compelling -the projects are expected to increase both the efficiency of the diversion of recyclables and organics from the waste stream (lowering operating costs) as well as increasing the amount of material diverted from landfills. It is true that, with its withdrawal, Atherton will not receive benefit from the new improvements. Whether that is relevant to the calculation of the amount required to finance "the liquidation in full of its proportion of any and all existing debts" will be a matter for the Authority members to decide. ■ Scenario 4: this analysis combines Scenario 2 (taking into account a presumed future reduction in Atherton's proportion of the waste stream, and thus a reduction in their share of their appropriate cost to defease a portion Of the 2019A refunding bonds) and Scenario 3 (exclusion of the cost to defease the 2019B new money bonds), reducing the proportionate share to $903,623. This is the Scenario that Atherton proposes the Authority accept in its Notice of Intent to Withdraw. We believe this approach is flawed for the reasons discussed above regarding Scenario 2. 1300 Clay Street, Suite 1000 I Oakland, CA 94612 I Main 510-839-8200 I Fax 510-208-8282 1451 Quail Street, Suite 200 I Newport Beach, CA 92660 I Main 949-346-4900 I Fax 510-208-8282 5757 W. Century Boulevard, Suite 700 I Los Angeles, CA 90045 I Main 310-348-2901 I Fax 510-208-8282 A rsm;tPa 1, harry C, p A,y Avg. Annual Avg. Annual Total DS Total DS DS with DS without with without Atherton Atherton Annual Atherton Atherton Total Prepayment Prepayment Difference Prepayment Prepayment Difference Belmont $89,419 $92,415 $2,996 $983,609 $1,016,566 $32,958 Burlingame $216,415 $223,666 $7,251 $2,380,560 $2,460,325 $79,765 County $57,028 $58,939 $1,911 $627,313 $648,332 $21,019 No. Fair Oaks $55,600 $57,463 $1,863 $611,601 $632,094 $20,493 East Palo Alto $98,752 $102,061 $3,309 $1,086,269 $1,122,666 $36,397 Foster City $108,280 $111,908 $3,628 $1,191,077 $1,230,987 $39,909 Hillsborough $53,707 $55,506 $1,800 $590,776 $610,571 $19,795 Menlo Park $227,894 $235,530 $7,636 $2,506,830 $2,590,826 $83,996 Redwood City $360,318 $372,391 $12,073 $3,963,495 $4,096,299 $132,804 San Carlos $142,452 $147,225 $4,773 $1,566,970 $1,619,474 $52,504 San Mateo $401,268 $414,713 $13,445 $4,413,948 $4,561,846 $147,897 West Bay Sanitary $28,149 $29,092 $943 $309,640 $320,015 $10,375 Total $1,839,281 $1,900,909 $61,628 $20,232,088 $20,910,000 $677,912 We note that the total difference in the remaining members' debt service is higher than the cost of defeasing Atherton's share of the 2019B bonds. This is because the cost of defeasance is calculated to the first call date on the bonds and the above chart assumes the 2019B bonds remain outstanding through the final maturity of the bonds. In our opinion, the argument that Atherton would not benefit from the new projects if they were to remain a member is less than compelling -the projects are expected to increase both the efficiency of the diversion of recyclables and organics from the waste stream (lowering operating costs) as well as increasing the amount of material diverted from landfills. It is true that, with its withdrawal, Atherton will not receive benefit from the new improvements. Whether that is relevant to the calculation of the amount required to finance "the liquidation in full of its proportion of any and all existing debts" will be a matter for the Authority members to decide. ■ Scenario 4: this analysis combines Scenario 2 (taking into account a presumed future reduction in Atherton's proportion of the waste stream, and thus a reduction in their share of their appropriate cost to defease a portion Of the 2019A refunding bonds) and Scenario 3 (exclusion of the cost to defease the 2019B new money bonds), reducing the proportionate share to $903,623. This is the Scenario that Atherton proposes the Authority accept in its Notice of Intent to Withdraw. We believe this approach is flawed for the reasons discussed above regarding Scenario 2. 1300 Clay Street, Suite 1000 I Oakland, CA 94612 I Main 510-839-8200 I Fax 510-208-8282 1451 Quail Street, Suite 200 I Newport Beach, CA 92660 I Main 949-346-4900 I Fax 510-208-8282 5757 W. Century Boulevard, Suite 700 I Los Angeles, CA 90045 I Main 310-348-2901 I Fax 510-208-8282 A rsm;tPa 1, harry C, p A,y