1 STAFF REPORT
DATE
: September 13, 2022
TO: J
ustin Hess, City Manager
FR
OM: Dawn Roth Lindell, General Manager, Burbank Water and Power VIA: Bob Liu, Chief Financial Officer, Burbank Water and Power BY: Armando Casillas, Senior Administrative Analyst
SUBJECT: Approval of the Amended and Restated Joint Power s Agreement for the Southern California Public Utilities Financing Authority (Currently Known as the Southern California Public Water Authority Joint Powers Agreement)
RECOMMENDATION
Approve and authorize the Burbank Water and Power (BWP) General Manager, as designee of the City Manager, to enter into an amended and restated joint powers agreement (JPA) with the Los Angeles Department of Water and Power (LADWP) with respect to the Southern California Public Utilities Financing A uthority, currently known as the Southern California Public Water Authority (authority ) and to execute any ancillary documents necessary to implement the amended and restated JPA.
BACKGROUND
On September 20, 2016, City Council requested that the City of Burbank enter into a JPA with LADWP to form the authority pursuant to Government Code Section 6500 et seq (the “Joint Powers A ct”). The a uthority w as f ormally cr eated on O ctober 1, 2016. Under California law, two or more public agencies may enter into an agreement to form a JPA, a separate legal entity that shares powers common to its member agencies. One of the primary benefits of a JPA is the benefit of economies of scale for operations and financing.
Burbank has gr eatly b enefited as a m ember of t he S outhern Californi a Public P ower Authority (“SCPPA”), an electric JPA, where it participates in the Magnolia Power Project, the Palo Verde Power Project, the Hoover Uprating Project, and STS transmission lines.
In addition to these traditional benefits, Assembly Bill (“AB”) 850 allows a JPA to issue special “securitized” bonds for water projects. These bonds, known as Rate Reduction
WATER AND
POWER
2 Bonds, allow the bonds to be securitized directly by the utility customer, instead of the utility. This securitization generally results in a higher bond rating and the elimination of a debt service reserve fund. Higher bond ratings result in lower bond interest rates and the elimination of a debt service reserve allows for a smaller bond issuance, ultimately lowering debt service cost to the customer. The debt service on rate reduction bonds is collected through a specific line item on utility bills. The funds collected are held and paid out by a trustee; the utility only serves as a collecting agent for the debt service. Another advantage of rate reduction bonds is that the bonds will not be on the utility’s books and will not affect the financial ratios of the util ity. Water projects that are allowed in AB 850 are limited to conservation or reclamation purposes or in response to a mandate.
DISCUSSION
At the authority’s special board meetings on June 6, 2022 and on August 2, 2022 , the board considered and recommended that each member seek approval of an a mended and restated JPA.
Below is a summary of these revisions:
1. Expansion of Purpose and Name Change
. The Joint Powers Act was amended
in 2019 by AB 305 and in 2021 by AB 758 to expand the utility projects that can be financed with rate reduction bonds to include electrical and wastewater service. The amended and restated JPA will allow the authority to also provide financing and refinancing of utility projects for electrical and wastewater. As a result of this change, the authority’s name will be changed from the “Southern California Public Water Authority” to “Southern California Public Utilities Financing Authority.” The indemnification provision was also adjusted to reflect this expansion.
2. Changes in the Composition of the Board. The amended and restated JPA will increase board membership to a total of six members, consisting of the General Manager of BWP, the General Manager of LADWP, two additional members appointed by Burbank, and two additional members appointed by LADWP. A quorum will require at least four members, including each General Manager.
In addition, board approvals will require at least four affirmative votes of members, including both General Managers.
3. Changes Provisions for the Addition of New Members to the Authority . In addition, the a mended and r estated JPA has been revised to allow new members to join the a uthority upon unanimous approval of t he board. This allows the authority to increase its membership in a manner that is consistent with other JPAs, like SCPPA. Upon the addition of such new members, the board’s size, quorum , and voting requirements can be adjusted by an amendment to the bylaws with certain protections:
3 a. The number of board members must be equal for each participating public agency of the authority;
b. The board must always include the General Manager , or equivalent, of each participating public agency of the authority; and
c. Quorum and affirmative votes of b oard members require an affirmative vote of each General Manager.
Additionally, on September 1, 2022, the BWP Board voted 6 – 0 to recommend that the Burbank City Council approve and authorize the BWP General Manager, as designee of the City Manager, to enter into the amended and restated JPA for the authority.
FISCAL IMPACT
No fiscal impact is associated with the amended and restated JPA approval.
CONCLUSION
Staff requests that the Burbank City Council approve and authorize the BWP General Manager, as designee of the City Manager, to enter into the amended and restated JPA for the authority.
ATTACHMENT
Attachment 1 – Amended and Restated Joint Powers Agreement Attachment 2 – Redlined Amended and Restated Joint Powers Agreement