Finance & Risk
Management
Committee
Meeting
April 13, 2023
Welcome
&
Call to
Order
Roll
Call
Items to
be Added,
Withdrawn
or
Reordered
on the
Agenda
Public
Comment
for Items
NOT
on the
Agenda
Regular
Meeting
Agenda
Welcome
Roll Call
Items to be Added, Withdrawn or Reordered on
the Agenda
Public Comment for items Not on the Agenda
REGULAR AGENDA
1. Approval of March 16, 2023 Meeting Minutes
2. Treasurer’s Report for Period Ending 2/28/23
3. Recommend Board Approval of the SDCP Debt Policy
Committee Member Announcements
Adjournment
7 Item 1
Approval of March 16, 2023 Meeting Minutes
Recommendation: Approve March 16, 2023
Meeting Minutes
Presenter:
Kimberly Isley
Clerk of the Board
8 Item 2
Treasurer’s Report for Period Ending 02/28/23
Recommendation: Receive and File Treasurer’s
Report for Period Ending 02/28/23
Presenter:
Dr. Eric Washington,
Chief Financial Officer
9 Overall, results for the period were favorable
when compared to the budget:
• Net operating revenues 1.0 percentage
points under budget.
• Operating expenses came in 6.0
percentage points under budget
Financial results for the YTD FY23:
• $553.8M in net operating revenues
• $529.8M in total expenses (includes
energy costs of $513.5M or 93% of net
revenues)
• $23.9M change in YTD net position
Item 2: Treasurer’s Report
YTD FY23 Budget v. Actual
$(100,000,000)
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
Net Operating Revenues Total Expenses Change in Net Position YTD FY23 Results v. Budget
YTD FY23 as of 02/28/23 (8 mos) FY23 YTD Budget
Budget Comparison
YTD FY23 as of
02/28/23 (8 mos)
FY23 YTD
Budget
Budget
Variance ($) Budget (%)
Net Operating Revenues $ 553,791,653 $ 558,931,078 $ (5,139,425) 99% Total Expenses $ 529,808,952 $ 562,578,606 $ (32,769,654) 94% Change in Net Position $ 23,982,701 $ (3,647,528) $ 27,630,229 10 Item 2: Treasurer’s Report
Year-to-date financial results compared to
projections:
• Net operating revenues were 1% lower
than proforma projections
• Total expenses were 5% under the
proforma projections
• Change in net position was $25.3M
over the projected ($1.3M) deficit
YTD FY23 Proforma v. Actual
$(100,000,000)
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
Net Operating Revenues Total Expenses Change in Net Position YTD FY23 Results v. Proforma
YTD FY23 as of 02/28/23 (8 mos) FY23 YTD ProForma
Proforma Comparison
YTD FY23 as of
02/28/23 (8 mos)
FY23 YTD
ProForma
ProForma
Variance ($)
Proforma
(%)
Net Operating Revenues $ 553,791,653 $ 558,931,078 $ (5,139,425) -1% Total Expenses $ 529,808,952 $ 560,238,664 $ (30,429,712) -5% Change in Net Position $ 23,982,701 $ (1,307,586) $ 25,290,287 Results for the period were favorable
overall compared to proforma:
• Expenses were $30.42M under the
projected
11 Cash
38%
Unmet
180-Days Goal
62%
$191M
Total Liquidity
FY 2022-23 YTD
$24M
Outstanding
Debt
FY 2022-23 YTD
$M $20M $40M $60M
$24M
Reserve
Contribution
FY 2022-23 YTD
38%
Percent Reserve
Goal Met
FY 2022-23
Item 2: Treasurer’s Report CONTRIBUTION RESERVES GOAL DEBT Reserve contribution
for the fiscal year
Outstanding loans
FY23 YTD
City Loans
Total available liquidity
FY23 YTD
$24M - Actual
-$1M - Budget
$24M - Budget
$107M - Goal
LOC
$191M
$171M Reserve
Target FY23
$M $50M $100M
$M $100M $200M
Unrestricted
Cash LOC
12 Item 2: Treasurer’s Report
$75.7M
$85.9M
$54.4M $61.6M
$73.2M
$56.5M
$73.9M
$190.8M
33% 29% 18% 26% 27%
18%
28%
38%
$0.0M
$50.0M
$100.0M
$150.0M
$200.0M
$250.0M
7/31/20228/31/20229/30/2022
10/31/202211/30/202212/31/2022
1/31/20232/28/2023
Year-to-Date Reserves FY 2023
Unrestricted Cash Lines of Credit Reserve Goal Total Reserves Percent of Unrestricted Cash to Reserve Target RESERVE GOAL: $171.3M
13 Item 2: Treasurer’s Report
14 Item 2
Recommendation: Receive and File Treasurer’s
Report for Period Ending 02/28/23
15 Item 3
Recommend Board Approval of the SDCP Debt
Policy
Recommendation: Recommend Board approval
of the Debt Policy
Presenter:
Dr. Eric Washington,
Chief Financial Officer
16 Development of Debt Policy
4.12.2 Two-thirds vote (or such greater vote as
required by state law) of the appointed Directors
shall be required to take any action on the
following:
(a) Issue bonds or other forms of debt;
17 Development of Debt Policy
Debt Policy
Peer
CCAs
Member
Agencies
Financial Best
Practices
Scope
Tax Exempt
and Taxable
Permitted
Debt Type
Covenants
Scope and Authority
Debt Issuance
Debt Management
CA Government
Code Section 8855
Senate Bill 1029
18 Additional Policy Elements
SDCP has added three additional requirements to its proposed debt policy which are not required by local, state or federal law.
Green Bonds
To the extent possible, SDCP bond
issuances shall be green bonds. A
green bond is a type of fixed-income
instrument that is specifically
earmarked to raise money for
climate and environmental projects.
Pledged Revenues
No less than one and a half times
(1.5x) the maximum annual principal
and interest and debt service for the
aggregate outstanding senior lien
bonds including the debt service for
the new issuance.
Annual Debt Service
Long-term debt shall not exceed 5%
of the Agency’s annual total
expenses.
19 Permited Debt Types
Finance capital
expenditures
Structured within
expected useful life
Long-Term Debt Short-Term Debt
Interim funding
pending long-term debt
Maturity generally less
than 7 years
Variable Rate Debt
Long-term variable
rate debt as needed
Refunding Debt
Refinance bonds
Achieve debt service
savings
Restructure debt
service payments
Modify covenants
Reduce exposure to
counterparties
SDCP may legally issue both short-term and long-term debt, through either a direct loan or through the public market, using the debt instruments described below. 20 Example – Long-Term Debt (Revenue Bond)
SDCP Additional Bond Tests
1. Green bonds earmarked to raise money for climate and environmental projects.
2. Pledged revenues will be no less than one and a half times (1.5x) the maximum annual principal and interest
and debt service for the aggregate outstanding senior
lien bonds including the debt service for the new
issuance.
3. Annual debt service on long-term debt shall not exceed 5% of the Agency’s annual total expenses.
Example (Revenue Bond):
SDCP issues a $500 million
revenue bond to construct a
solar and storage project.
Loan amount: $500,000,000
Interest Rate: 5.00%
Pledged revenues: Ratepayer revenue
Repayment Term/Useful life: 20 years
Example For Illustration Purposes Only
21 Example – Long-Term Debt (Revenue Bond)
Net Revenue
$1,284 m
FY 2024
Projected
Total Expense
$974 m
Net Position
$310 m
1. Green Bonds
Solar/storage project.
Bond Test Passed
2. Pledged Revenues
FY24 Revenue = $1,284m
Aggregate Debt Service= $802m
Calculation
1.5 x $802m = $1,204m
$1,284m > $1,204m
Bond Test Passed
3. Annual Debt Service
FY24 Expense = $974m
Yearly Debt Service = $40.1m
Calculation
$974m x 5% = $48.7m
$48.7m > $40.1m
Bond Test Passed
Example For Illustration Purposes Only
Debt Service Schedule SDCP Bond Tests
22 Item 3
Recommendation: Recommend Board approval
of the Debt Policy
Committee
Member
Announcements
Adjournment
Next Regular
Finance & Risk
Management
Committee
Meeting
May 11, 2023