REPORT TO COUNCIL & PUBLIC FACILITIES FINANCING CORPORATION
SUBJECT
Title
Adoption of Resolutions Approving Financing for the City of Santa Clara's (the "City") portion of Capital Costs at the Regional Wastewater Facility (RWF) in an Amount Not-to-Exceed $50,000,000 [Council Pillar: Deliver and Enhance High Quality Efficient Services and Infrastructure]
Report
BACKGROUND
The City is a co-owner of the San Jos?-Santa Clara Regional Wastewater Facility ("RWF"), which is undergoing over $1 billion of capital improvements in the next five years. Under the Sewage Treatment Plant Agreement between San Jos? and Santa Clara dated March 30, 1959, as amended, the City is obligated to contribute its share of the capital costs of improvements to the RWF. The City's 10-year financial plan utilized for budget and rate setting purposes assumes that a portion of the City's contribution (currently projected to total $145.4 million in 2019-20 through 2023-24) will be paid from debt financing proceeds. Debt service on the financing would be repaid over time from net revenues of the sewer system that distributes the project costs across current and future sewer ratepayers.
To provide the City maximum flexibility to fund unpredictable construction drawdown requirements, staff determined that an interim credit facility financing instrument would be financially advantageous for the RWF project. Similar to a commercial line of credit, this form of financing allows the City to draw funds as needed over time, with the expectation that long-term, fixed rate financing would be secured within approximately four years, when project cash flows are better defined.
The enclosed Resolutions authorize documents and actions related to the execution of the interim financing outlined above in an amount not to exceed $50,000,000.
DISCUSSION
The Finance Department entered into an agreement with Brandis Tallman LLC to assist with the solicitation of offers for tax-exempt private placement interim...
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