HomeMy WebLinkAbout2015-08-25 - 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