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Home My WebLink About2015-08-25 - Board of Directors Meeting Agenda Packet orba Linda Hater District AGENDA YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS SPECIAL MEETING Tuesday, August 25, 2015, 3:00 PM 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL Ric Collett, President Michael J. Beverage, Vice President Phil Hawkins Robert R. Kiley Gary T. Melton 4. PUBLIC COMMENTS Any individual wishing to address the Board is requested to identify themselves and state the matter on which they wish to comment. If the matter is on the agenda, the Board will recognize the individual for their comment when the item is considered. No action will be taken on matters not listed on the agenda. Comments are limited to matters of public interest and matters within the jurisdiction of the Water District. Comments are limited to three minutes. 5. DISCUSSION ITEMS This portion of the agenda is for matters that cannot reasonably be expected to be concluded by action of the Board of Directors at the meeting, such as technical presentations, drafts of proposed policies, or similar items for which staff is seeking the advice and counsel of the Board of Directors. Time permitting, it is generally in the District's interest to discuss these more complex matters at one meeting and consider formal action at another meeting. This portion of the agenda may also include items for information only. 5.1. Presentation by Representatives from Stradling Yocca, Fieldman Rolapp, and US Bank Regarding the District's Debt Covenant Requirements 6. ADJOURNMENT 6.1. The next Regular Board of Directors Meeting will be held Monday, August 31, 2015 at 8:30 a.m. Items Distributed to the Board Less Than 72 Hours Prior to the Meeting Pursuant to Government Code section 54957.5, non-exempt public records that relate to open session agenda items and are distributed to a majority of the Board less than seventy-two (72) hours prior to the meeting will be available for public inspection in the lobby of the District's business office located at 1717 E. Miraloma Avenue, Placentia, CA 92870, during regular business hours. When practical, these public records will also be made available on the District's internet website accessible at http://www.ylwd.com/. Accommodations for the Disabled Any person may make a request for a disability-related modification or accommodation needed for that person to be able to participate in the public meeting by telephoning the Executive Secretary at 714-701-3020, or writing to Yorba Linda Water District, P.O. Box 309, Yorba Linda, CA 92885-0309. Requests must specify the nature of the disability and the type of accommodation requested. A telephone number or other contact information should be included so the District staff may discuss appropriate arrangements. Persons requesting a disability-related accommodation should make the request with adequate time before the meeting for the District to provide the requested accommodation. ITEM NO. 5.1 AGENDA REPORT Meeting Date: August 25, 2015 Subject: Presentation by Representatives from Stradling Yocca, Fieldman Rolapp, and US Bank Regarding the District's Debt Covenant Requirements Im ATTACHMENTS: Description: Type: Fieldman Rollap PowerPoint 082515.pdf Backup Material Backup Material orba Linda Water District Financial Compliance of Debt Portfolio Tuesday, August 25, 2015 Table of Contents �) YLWD Debt Portfolio 4) Overview of Financial Obligations El Yvrha Linda Water District �) Consequences of Non-Compliance of Financial Obligations Yorba Linda Water District YLWD Debt Portfolio { Financing Team El Yvrha Linda Water District • Tom DeMars, Managing Principal • Joshua Lentz, Vice Principal • Kurt Yeager, Esq., Shareholder • Cyrus Torabi, Esq., Shareholder • Linda Verstuyft, Vice President 3 Overview of Existing Debt Portfolio Underwriter/Bank Bond Counsel/Disclosure Counsel Financial Advisor Trustee Issue Date Issue Size Current Principal Balance Last Maturity Source of Repayment Current Underlying Rating Uses of funds Optional Call Provisions Reserve Fund Banc of America Securities LLC Stradling Yocca Carlson & Rauth Fieldman, Rolapp & Associates U.S. Bank National Association Tuesday, February 26, 2008 $34,995,000 $30,630,000 10/1/2038 @ 5.00% Net Water Revenues S&P: AA+ Fitch: AA Various Water System Capital Improvements 10/1/2017 @ par Cash funded reserve fund Citigroup Global Markets Stradling Yocca Carlson & Rauth Fieldman, Rolapp & Associates U.S. Bank National Association Wednesday, September 19, 2012 $8,330,000 $7,795,000 10/1/2033 @ 3.25% Net Water Revenues S&P: AA+ Fitch: AA Advance refund 2003 Certificates of Participation 10/1/2022 @ par No reserve fund requirement. Yvrha Linda Water District Wells Fargo Bank, National Bank Stradling Yocca Carlson & Rauth Not Applicable Not Applicable Monday, September 24, 2012 $7,000,000 $6,066,000 9/30/2016 @ Daily One Month LIBOR + 0.90% with an unused commitment fee of 0.35% Net Water Revenues after payment of 2008 Certificates and 2012A Bonds Not Rated Various Water System Capital Improvements Any date plus a possible prepayment fee No reserve fund requirement. 4 Yorba Linda Water District Overview of Financial Obligations �L J� � Pledge of Revenues i • All Revenues of the Water System including cash proceeds from standby or water availability charges, development fees and connection charges • Ad Valorem Tax Revenues • Less Operating and Maintenance Costs of Water System • Less Non-Operating and Maintenance Costs of Water System • Net Revenues of the Water System El Yvrha Linda Water District 0 Rate Covenant Definitions El Yvrha Linda Water District - Water Service = Water distribution service made available or provided by the Water System • Debt Service = 2008 Certificates Annual Debt Service, 2012A Annual Debt Service and Line of Credit Annual Debt Service A, Rates and Charges District shall fix, prescribe and collect rates and charges for the water distribution service made available or provided by the Water System which will be at least sufficient to yield during each Fiscal Year Net Revenues equal to 110% of the Debt Service for such Fiscal Year • District may make adjustments from time to time in such rates and charges and may make such classification as it deems necessary , but shall not reduce the rates and charges then in effect unless the Net Revenues from such reduced rates and charges will at all times be sufficient to meet the requirements Aj Additional Contracts and Bonds • During a consecutive 12 months, Net Revenues must be a minimum of 110% of existing Debt Service and additional Debt Service to be accrued on any Additional Contracts or Bonds 7 Other Covenants El Yvrha Linda Water District ,') Continuing Disclosure IRS Tax Covenants '�� Accounting Records, Financial Statements and Budgets ?) Compliance with Contracts Prosecution and Defense of Suits ,") Impairments of the Operation of the Water System Maintenance and Operation of the Water System �A) Insurance ) Payment of Taxes and Compliance with Governmental Regulations ,A1 Eminent Domain Proceeds "j Enforcement of Contract Events of Default 2008 Certificates/2012A Bonds r, Non-payment of principal and interest of the 2008 Certificates and 2012A Bonds '; Non-observance of other covenants, agreements or conditions not cured within 60 days ') Petition, seeking arrangement or reorganization under federal bankruptcy laws Accelerated payment of principal of any Bond or Contract El Yvrha Linda Water District Wells Fargo Bank Line of Credit Non-payment of principal and interest of Line of Credit '� Non-payment of principal and interest of the 2008 Certificates and 2012A Bonds "> Incorrect, false or misleading in any material respects in any financial statements, certificates and/or agreements Non-observance of other covenants, agreements or conditions not cured within 10 days Judgment liens against the District F> Petition, seeking arrangement or reorganization under federal bankruptcy laws e�) Failure to meet Rate Covenant Z Yorba Linda Water District Consequences of Non -Compliance of Financial Obligations } l _ C Non-Compliance of Rate Covenant El Yvrha Linda Water District 2008 Certificates/2012A Bonds Wells Fargo Bank Line of Credit ,') Short-Term Consequences Rating Agencies May place on negative watch Disclose in Continuing Disclosure Annual Report ,', Long-Term Consequences Rating Agencies Rating downgrades Higher Borrowing Costs for Future Borrowings Trustee, on behalf of a 50% majority of bondholders, shall proceed to protect and enforce its rights to have the District raise rates and charges to comply with the Rate Covenant ") Short-Term Consequences Acceleration of Line of Credit Possible Depletion of Reserves ,') Long-Term Consequences Rating Agencies Rating downgrades Higher Borrowing Costs for Future Borrowings 7 > Consequences El Yvrha Linda Water District Inability to Raise Rates • Rate fatigue exists across the state to varying degrees • Additional rates are needed to offset mandated lower sales • Foregoing full cost recovery at the expense of lower financial margins for bondholders and lenders risks Greater Dependency of Reserves • Operating and Maintenance Costs • Non-Operating and Maintenance Costs • Debt Service and Other Financing Obligations ,', Delay of Maintenance and Capital Needs �) Management Risks and Political Capital 72 Questions and Discussion 4 r El Yvrha Linda Water District 73