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7A two construction bids are due. The SBWMA will utilize $18.96 million of its capital Page 3 reserves towards the total project costs. The plan of finance entails the issuance of AMT tax-exempt bonds to fund new construction and the issuance of short-term notes to refund the Authority's 2000 bonds and the subsequent sale in early 2011 of taxable refunding bonds to refinance the short- term notes. Refunding the 2000 bonds now with tax-exempt notes will produce interest cost savings. The plan anticipates the sale of debt in January 2009 to coincide with the opening of construction bids. (See Attachments 4 and 5 for a summary of bond funding and sequencing). The amount of funding required by the SBWMA will depend on the final cost of the project. To enhance the security for the 2009 notes the Board is requesting that member agencies approve at this time the sale of debt to finance new construction and single stream processing equipment, to refund the 2000 bonds and to refund in 2011 the notes that will be issued in 2009. The requested maximum bond authorization of $65.455 million is large enough to refund the outstanding 2000 bonds and to allow for a 10% construction contingency based on the current 40% construction cost estimate. The bond authorization includes all bond issuance incidental costs. The following table shows project cost estimates and the corresponding expected and maximum bond sizes. Project Cost Debt Issued 2009 ill June 2008 Estimate $53,961,530 $58,455,000 $60,440,000 Maximum Estimate $59,357,430 ill Total Debt 2011 m Note Interest Rate - 2009 Bond Interest Rate -2009 Interest Rate - 2011 $63,470,000 $65,455,000 3.85% 5.75% 7.75% 3.85% 5.75% 7.75% (1) Indudes refunding of 2000 bonds. (2) Indudes refunding of 2009 note. (3) Project cost contingency of 10% over June 2008 estimate. ALTERNATIVE The City may elect not to approve the resolution approving and authorizing the sale of debt by the SBWMA. If 5 of the 12 SBWMA member agencies fail to approve the resolution, the SBWMA will not have sufficient funding to proceed with the Shoreway Master Plan as currently proposed. Depending on how the master plan might be revised, this will either delay or prevent the implementation of weekly residential collection of single stream recyclables, weekly residential collection of organics (plant materials and food scraps), and rollout of single stream collection for commercial businesses. FISCAL IMPACT The sale of bonds will increase debt service obligations of the Authority. All debt issued by the Authority will be secured solely by the net revenues of the Authority (total revenues less operating expenses exclusive of debt service and depreciation). Debt service for the SBWMA will increase after 2010 by an estimated $4.14 million (see