What specific services will the requested positions provide to the fire department and community?
(3,000 character limit) (2,961 characters)
With increasing call volume, rapid residential growth, expanding wildfire risk, and only 4 frontline companies protecting a growing community, staffing a fifth fire station has become critically important for SLOFD. The City’s Standards of Cover analysis evaluated station locations, response performance, staffing levels, and community risk and recommended a fifth fire station to reduce response times, improve response capability, and improve firefighter and resident safety.
Nine additional firefighters will join the existing 42 firefighters at SLOFD in protecting the City in all-hazards response, including all out-of-hospital medical emergencies, structure fires, wildland fires, hazardous material releases, technical rescues, structural collapse, active shooters, and all natural or human caused disasters.
These additional firefighters will allow the City to open an additional station in the rapidly growing southern area of the City that is currently underserved. Within the fifth station response area, these 9 SAFER positions will cover 20% of the city, provide emergency services to more than 2,000 residential units and approximately 5,000 residents. The firefighters will help SLOFD reduce average travel times by 66% from 6:02 minutes to well below 4-minute responses.
Currently, SLOFD operates with 42 operational personnel staffing 4 fire stations and responding to approximately 7,344 calls annually. In a city serving approximately 49,000 residents, more than 22,000 Cal Poly students and staff, and nearly 1.4 million annual visitors, the department is currently operating at approximately 0.9 firefighters per 1,000 residents, below the department goal of 1.1 to 1.3 firefighters per 1,000 residents. Nine SAFER firefighters would increase daily staffing by 20% from 14 firefighters to 17 firefighters, improve compliance with NFPA 1710, NFPA 1750, and OSHA 1910 “two-in/two-out” requirements, and allow the department to place a critical fifth fire station into service.
Without this funding, SLOFD will remain unable to staff the fifth fire station, continue relying heavily on automatic and mutual aid resources, and continue experiencing extended response times within the southern growth area.
This SAFER grant would directly improve emergency response coverage, firefighter safety, and deployment reliability while providing faster and more effective emergency response service to the community.
Describe how funds awarded through this grant would enhance the department's ability to protect critical infrastructure within the primary response area. (3,000 character limit) (2,572 characters)
Additional firefighters will improve emergency response capabilities during structure fires, vegetation fires, traffic collisions, hazardous materials incidents, and medical emergencies throughout the City. Faster staffing of an ERF will improve firefighter safety, reduce reliance on automatic and mutual aid resources, and improve compliance with NFPA 1710, NFPA 1750 deployment recommendations, and OSHA 1910 “two-in/two-out” requirements.
Currently, with only 42 operational personnel staffing 4 fire stations, SLOFD serves approximately 47,000 residents, more than 22,000 Cal Poly students and staff, and nearly 1.4 million annual visitors each year. The department currently operates at approximately 0.9 firefighters per 1,000 residents, below the department’s target staffing ratio of 1.1–1.3 firefighters per 1,000 residents. Without assistance, the City cannot fund the 9 additional positions necessary to place a fifth fire station into service despite already securing the station site and purchasing a new Type I fire engine.
SLOFD currently struggles to keep pace with increasing call demand generated by more than 7,300 annual calls for service, and a rapidly growing area of town with average travel times of approximately 6:02 minutes. These 9 SAFER firefighters would increase staffing by 20%, allowing SLOFD to open a fifth fire station, which would significantly improve response capabilities reducing travel times to below 4 minutes 90% of the time, meeting NFPA 1710.
Increased staffing and response reduces the department’s reliability on neighboring jurisdictions to accomplish ERF in 8:00 minutes reducing the impact on our allied agencies.
With nearly 1000% increase of properties increase of properties, from 38 to over 8,000, in Fire Hazard Severity Zones and the City surrounded by Tier 2 (Elevated) and Tier 3 (Extreme) wildfire threat areas, the 9 SAFER firefighters would allow for faster response to all areas of the City when threatened by a fast-moving wildfire.
Additional staffing is also critical to protecting the City’s most vulnerable populations and critical infrastructure, including 22,000 Cal Poly students, public schools, hospitals, assisted living facilities, unhoused population, utility infrastructure, and the 2,800 homes located within the wildland-urban interface. In all emergency scenarios, these 9 SAFER firefighters will make SLOFD operations safer, faster, and more effective for both the community and neighboring jurisdictions that currently support SLOFD operations.
Explain how the community and the current firefighters employed by the department are at risk without the positions requested in this application. (3,000 character limit) (2,663 characters)
Today, SLOFD struggles to consistently meet NFPA 1710 standards even with the inclusion of automatic aid agencies responding to structure fires within the City. Due to limited staffing, crews often rely on our automatic aid partners from greater distances in order to meet OSHA 1910 “two-in/two-out” requirements and safely begin critical fireground operations. First-due crews frequently wait several minutes for additional companies to arrive before safely initiating rescue, fire attack, ventilation, and rapid intervention functions. Engine companies responding
from outside the City also leave significant coverage gaps within neighboring jurisdictions, increasing strain on the regional response system and impacting public safety regionally.
Our lack of staffing also leads to increased response times during simultaneous incidents. In 2025, all first-due apparatus were committed 424 times, averaging more than 1.16 times per day without an immediately available first-due company to respond to additional emergency calls.
Because approximately 65% of all calls for service are EMS-related, suppression companies are routinely committed to medical emergencies, reducing response availability across the system.
As the City continues to expand, response times continue to increase within the southern growth area where more than 5,000 residents have moved into the service area. Average travel times within this area are currently approximately 6:02 minutes, significantly exceeding NFPA 1710 response objectives.
Given the increasing call volume, expanding wildfire risk, longer response times, and limited staffing, our community members are at constant risk of delayed emergency response and reduced firefighter availability during critical incidents. Current staffing levels also prevent the department from consistently meeting NFPA 1710, NFPA 1750, and OSHA 1910 requirements during structure fire operations.
Attempting to reach NFPA 1710 response times in an area with documented challenges to do so increases firefighter emotional and physical stress and can add to work related injuries. The results can be increased time out of work and increased overtime and fatigue for remaining staff.
Reduced staffing numbers add challenges to achieving compliance with NFPA equipment testing and maintenance standards as well. The 9 requested SAFER firefighters will allow SLOFD to place a fifth fire station into service increasing department capabilities during critical incidents, reduce response times by 66% in the newest area of town, offer faster and safer service to approximately 5,000 residents, and decrease our reliance on automatic aid partners.
How will that risk be reduced if awarded?
(3,000 character limit) (1,742 characters)
By funding these 9 positions, SLOFD will be able to assemble 17 personnel within 8 minutes to a single-family residential structure fire, allowing the department to consistently meet NFPA 1710 objectives. Increased staffing will also allow SLOFD to place a fifth fire station into service, significantly improving response times to approximately 1,500 calls for service annually, or nearly 20% of the department’s projected call volume.
Additional staffing will greatly improve firefighter and civilian safety by enhancing the department’s ability to safely perform rescue, fire attack, ventilation, and incident command functions while meeting OSHA 1910 “two-in/two-out” requirements. The additional personnel will also reduce reliance on automatic and mutual aid resources, improving response capabilities throughout the region and reducing strain on neighboring agencies.
Additional staffing will improve the overall health and safety of department personnel by reducing physical and emotional stress decreasing fatigue associated with current mandatory
overtime, reducing injuries, and creating a safer working environment consistent with NFPA 1500 firefighter health and safety principles.
The additional personnel will also help SLOFD to maintain compliance with critical NFPA equipment testing and maintenance standards, including hose testing (NFPA 1962), ladder testing (NFPA 1932), and pump testing (NFPA 1911), ensuring reliable and fully operational equipment during emergency incidents.
Overall, the 9 SAFER-funded positions will provide faster and more effective emergency response coverage, improve firefighter and civilian safety, strengthen regional emergency response capability, and better protect a rapidly growing community.
Describe the benefits (e.g., quantifying the anticipated savings and/or efficiencies) the department and community will realize if awarded the positions requested in this application. (3,000 character limit) (2,653 characters)
SLOFD is seeking $3,600,006.67 to hire 9 additional firefighters, and if awarded the SAFER grant, our community would immediately realize substantial benefits. Perhaps the greatest benefit is that a 9-person SAFER award will increase staffing by 20% and allow the department to staff a fifth fire station and place a new engine company into service in the fastest growing area of the City. Currently, average travel times within the southern growth area are approximately 6:02 minutes, significantly exceeding NFPA 1710 objectives and the department’s adopted response-time goal of 4 minutes, 90% of the time. Staffing a fifth station will reduce travel times by 66% in this area to below 4 minutes and improve response coverage to 20% of the community and more than 5,000 residents.
Additionally, the introduction of a fifth fire station will improve service delivery within a rapidly expanding part of the City and offer faster response to 1,500 calls annually, or 20% of our call volume. Over the past five years, call volume has increased 19%, rising from 6,180 incidents in 2019 to 7,344 incidents in 2025. As the community continues to grow, we plan to exceed 10,000 calls annually by 2030, which further justifies the need for additional staffing. Without these 9 SAFER positions, SLOFD will continue to have extended response times in the fastest growing area of town.
This grant will also improve firefighter safety and enhance the level of service currently provided to the community. SLOFD currently struggles to consistently meet NFPA 1710 and often relies on automatic aid agencies responding from greater distances in order to meet OSHA 1910 “twoin/two-out” requirements during structure fires. Additional firefighters will allow crews to more quickly establish an Effective Response Force, initiate rescue and fire attack operations sooner, reduce reliance on neighboring agencies, and improve firefighter and civilian safety.
Additional staffing will also improve deployment reliability during simultaneous incidents. In 2025, all first-due apparatus were committed 424 times, leaving no immediately available firstdue company for additional emergencies. Staffing a fifth station is critical to meeting current and future service demands while improving response reliability throughout the City.
This award will provide needed staffing without placing a significant burden on local taxpayers.
The total projected cost of $3,600,006.67 equates to approximately $24.24 per resident per year over the performance period, representing a highly cost-effective investment in firefighter safety, emergency response capability, and resident safety.
Additional information
If you have any additional information you would like to include about the department and/or this application in general, please provide below.
The San Luis Obispo Fire Department, our automatic aid partners and our citizens offer sincere thank you to DHS, FEMA, and SAFER for the opportunity to apply for relief to resolve our critical staffing needs. We would also like to thank the reviewers for donating their time and efforts.
Please provide a brief description on how the positions will be sustained. (975 characters)
The City is committed to sustaining the 11 SAFER positions beyond the grant period. These positions are a vital part of our long-term deployment strategy and are required to place the newest fire station into service.
The need for additional staffing has been validated through the City’s Standards of Cover analysis. In response, the City is currently building a new fire station through a development agreement and has already purchased new Type I fire engine, demonstrating its long-term commitment to this project.
While current budget constraints limit the City’s ability to hire these firefighters today, longrange financial forecasts project improved fiscal stability by FY 2028-29. Continued residential and commercial growth is expected to generate additional recurring revenues that will support these positions.
The City fully intends to retain these positions and continue operation of the 5th fire station as a permanent component of our emergency response system.
Item 6f
Department: Police
Cost Center: 8001
For Agenda of: 8/18/2026
Placement: Consent
Estimated Time: N/A
FROM: Rick Scott, Police Chief
Prepared By: Melissa Ellsworth, Senior Business Analyst SUBJECT: FY 2026-27 ABC-OTS GRANT APPLICATION
RECOMMENDATION
1. Authorize staff to submit a grant application to the California Department of Alcoholic Beverage Control, sponsored by the Office of Traffic Safety, in an amount not to exceed $25,000.
2. Adopt a draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, authorizing a grant application for funding provided through the Department of Alcoholic Beverage Control-Office of Traffic Safety through the National Highway Traffic Safety Administration to increase education and enforcement programs focusing on underage drinking and authorizing the City Manager or Designee to execute all related grant documents”.
3. If the grant is awarded, authorize the City Manager, or the Chief of Police, to execute grant related documents and authorize the Finance Director to make the necessary budget adjustments upon the award of the grant.
POLICY CONTEXT
The recommended actions are consistent with the City of San Luis Obispo’s Financial Management Manual, Section 740 - Grant Management Policy. The policy states that Council must approve all grant applications in excess of $5,000 and delegates receipt and contract execution to the City Manager.
DISCUSSION
Background
The Department of Alcoholic Beverage Control (ABC), sponsored by the Office of Traffic Safety, through the National Highway Traffic Safety Administration, anticipates awarding grants up to $25,000 to local law enforcement agencies to utilize the Minor Decoy Program, Shoulder Tap Program, IMPACT Program, and Holiday Enforcement. The grant funding will enable agencies to expand their efforts in addressing alcohol-related problems through a comprehensive ABC program that will encompass a wide range of strategies.
Item 6f
The goal of the grant program is to reduce the number of licensees who sell alcoholic beverages to minors, target adults who furnish alcoholic beverages to minors, provide licensee education, and conduct focused enforcement during peak holiday periods. The Police Department is seeking authorization to request grant funds to pay for overtime related to these operations. The grant application was due on August 14th, 2026, and due to timing of the grant notification, staff was unable to place this item on the Council agenda prior to the deadline. If Council denies this request, staff can withdraw the application or decline the award.
Public Engagement
This item is on the agenda for the August 18, 2026, City Council meeting and will follow all required postings and notifications. The public may have an opportunity to comment on this item at or before the meeting.
CONCURRENCE
The Director of Finance concurs with staff’s recommendations.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report because the action does not constitute a “Project” under CEQA Guidelines Section 15378.
FISCAL IMPACT
Budgeted: No Budget Year: 2026-27 & 2027-28
Funding Identified: No
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $ $ $
State Grant $25,000
Total $25,000 $ $ $
City matching funds are not required for this grant. The grant period will overlap two fiscal years, October 2026 – August 2027.
Per the grant resolution, the City agrees that any liability arising out of the performance of the contract, including civil court actions for damages, shall be the responsibility of the grant recipient and the authorizing agency and acknowledges that the State of California and ABC disclaim responsibility for any such liability.
Item 6f
ALTERNATIVES
Do not submit grant application or decline funding. The department would be unable to conduct targeted education and enforcement opportunities without the requested grant funding.
ATTACHMENT
A - Draft Resolution authorizing the City to submit a grant application for funding provided through the Department of Alcoholic Beverage Control/Office of Traffic Safety through the National Highway Traffic Safety Administration.
RESOLUTION NO. _____ (2026 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING GRANT APPLICATIONS FOR
FUNDING PROVIDED THROUGH THE DEPARTMENT OF ALCOHOLIC
BEVERAGE CONTROL – OFFICE OF TRAFFIC SAFETY THROUGH
THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION TO
INCREASE EDUCATION AND ENFORCEMENT PROGRAMS
FOCUSING ON UNDERAGE DRINKING AND AUTHORIZING THE CITY
MANAGER OR DESIGNEE TO EXECUTE ALL RELATED GRANT
DOCUMENTS
WHEREAS, the San Luis Obispo Police Department (the “Police Department”) through the City of San Luis Obispo desires to undertake programs to increase education and enforcement to deter underage drinking; and WHEREAS, on July 1st, 2026, the Police Department was notified of a grant through the Department of Alcoholic Beverage Control (ABC), sponsored by the Office of Traffic Safety (OTS), through the National Highway Traffic Safety Administration (NHTSA), to conduct education and enforcement activities to deter underage drinking; and
WHEREAS, the Police Department submitted an application for a grant through the ABC-OTS Local Enforcement Grant opportunity in an award amount not to exceed $25,000 to conduct education and enforcement activities to deter underage drinking.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows:
SECTION 1. The Chief of Police or his designee is hereby authorized to submit the grant application consistent with program requirements to pursue a grant administered by ABC-OTS, including the Police Department's August 2026 application.
SECTION 2. The City Manager, or the Chief of Police, of the City of San Luis Obispo is authorized to execute the grant related documents, including the State of California Standard Agreement, any extensions or amendments thereof, and any subsequent contract with the State in relation to the ABC-OTS Local Enforcement 2026 grant administered by ABC.
SECTION 3. The Finance Director is hereby authorized to make the necessary budget adjustments upon the award of the grant.
SECTION 4. The City agrees that any liability arising out of the performance of this contract, including civil court actions for damages, shall be the responsibility of the grant recipient and the authorizing agency and acknowledges that the State of California
and ABC disclaim responsibility for any such liability.
SECTION 5. Grant funds received hereunder shall not be used to supplant expenditures controlled by this body.
SECTION 6. This award is not subject to local hiring freezes.
Upon motion of __________________, seconded by___________________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this ______day of _____________2026. ___________________________
Mayor Erica Stewart
ATTEST:
____________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
____________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this _______day of ____________2026.
_____________________________
Teresa Purrington
City Clerk
Item 6g
Department: Administration
Cost Center: 1004
For Agenda of: 8/18/2026
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Laura Fiedler, Economic Development & Tourism Manager SUBJECT: RESOLUTION TO SUPPORT NOMINATION OF FIVE CENSUS TRACTS
TO THE STATE OF CALIFORNIA FOR DESIGNATION IN THE FEDERAL OPPORTUNITY ZONE 2.0 PROGRAM
RECOMMENDATION
Adopt a draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, Supporting the Nomination of Eligible Census Tracts Within the City for Designation Under the Federal Opportunity Zone 2.0 Program.”
POLICY CONTEXT
The Opportunity Zones 2.0 program (OZ 2.0) aligns with multiple adopted City of San Luis Obispo policy frameworks. The program’s emphasis on housing, economic development, and infrastructure modernization is directly supported by the City’s General Plan, Economic Development Strategic Plan (EDSP) 2023–2028, and 2026 Legislative Action Platform.
The 2020-2028 Housing Element of the General Plan includes the goal to facilitate the production of housing to meet the full range of community housing needs, including the goal to stimulate higher density infill where appropriate in the Downtown, Upper Monterey, and Mid-Higuera Special Focus areas (City of San Luis Obispo Housing Element, November 2020, Page 16).
The Economic Development Strategic Plan (2023-2028) prioritizes inclusive neighborhood planning (EDSP Strategy 2.5), increased housing production (EDSP Strategy 1.5.8, 2.5.1), conference facility exploration (EDSP Strategy 2.3.3), and support for local business development (EDSP Strategy 1.1)—all of which are advanced through Opportunity Zone incentives that encourage mixed-use projects, commercial reinvestment, and redevelopment of underutilized parcels.
The 2026 Legislative Action Platform supports tax-incentive-based tools to promote research and development (Economic Development Policy #4, pg. 14), attract head-of-household jobs (Economic Development Policy #5, pg. 14), and strengthen
Item 6g
2 economic sectors aligned with Major City Goals (Economic Development Policy #6, pg. 14).
DISCUSSION
Background
The California Governor’s Office of Business and Economic Development (GO-Biz) describes Opportunity Zones as follows:
“Opportunity Zones are economically distressed communities, defined at the individual census tract level, that are nominated by the governors of each state and territory and certified by the U.S. Secretary of the Treasury through a delegation of authority to the Internal Revenue Service. Under certain conditions, new investments in Opportunity Zones may be eligible for preferential tax incentives.
Opportunity Zones can be a powerful tool for driving private investment into underserved communities. The program was established by the Tax Cuts and Jobs Act (TCJA) on December 22, 2017. Originally created as a temporary initiative, the incentive was later enhanced and made permanent under Public Law 119-21, which was passed by the 119th United States Congress.”
Opportunity Zones are intended to catalyze reinvestment in communities by offering federal tax benefits for qualifying commercial and residential development projects. More than $100 billion in qualifying investment flowed into OZ 1.0 tracts nationally since 2018.
Census tracts qualify as an “Opportunity Zone” if they meet one of the following criteria (note: The U.S. Department of the Treasury determined median family income for each census tract based on the 2020-2024 American Community Survey 5-year estimates):
• Income does not exceed 70% of the applicable median family income; OR • Poverty rate is at least 20% and income does not exceed 125% of the applicable median family income.
GO-Biz further reports that the program now operates on a permanent, rolling 10-year cycle. Governors must nominate Qualified Opportunity Zones every decade and the first round of new designations must occur within a 90-day window beginning July 1, 2026, subject to U.S. Treasury approval. Governors may nominate up to 25% of their state’s eligible census tracts as Qualified Opportunity Zones. California has 2,469 eligible census tracts, so the Governor may nominate a maximum of 618 tracts. The state will consider major demographic and other socioeconomic factors, alongside local recommendations to inform California’s proposed census tract nominations.
Local jurisdictional authorities were invited to submit nominations of census tracts from June 15 to July 20, 2026. On August 3, 2026, the state opened a public comment period through August 28, 2026, on a draft list of census tracts recommended for Opportunity
Item 6g
3 Zone 2.0 nomination. The Department of Finance, in partnership with GO-Biz, is expected to submit California’s final nominations to the U.S. Treasury by September 28, 2026. The Treasury is expected to finalize designations in November, and they will go into effect on January 1, 2027.
Six census tracts in and around the City of San Luis Obispo were eligible for nomination.
Consistent with Council’s economic development goals and the City’s General Plan, staff submitted nomination forms for all five eligible census tracts primarily within the limits of the City of San Luis Obispo that are eligible for designation. The County of San Luis Obispo nominated the sixth census tract that includes the core of Cal Poly's campus, primarily outside City limits.
Based on evaluation of the census tracts against the General Plan, Housing Element, and Economic Development Strategy Plan, staff listed the census tracts in the following order of preference on the nomination forms (please note that the text descriptors are for reference purposes only and are not reflective of official names of these census tracts or neighborhoods):
1. 06079011101 (downtown core, extending down South Higuera)
2. 06079011104 (corridor along South Broad)
3. 06079011201 (north of Foothill Blvd./west of Highway 1)
4. 06079010902 (Santa Rosa St. towards Grand Ave./Loomis St.)
5. 06079011002 (Upper Monterey, Johnson Ave.)
The map below shows the boundaries of those tracts (last six numerals only).
Item 6g
4 In the draft list of nominations published by the state on August 3, 2026, two of the eligible census tracts in and around City limits were recommended for designation. Those two are census tracts are 06079010903, nominated by the County of San Luis Obispo around Cal Poly’s core campus, and tract 06079011002, which includes the Upper Monterey and Johnson Avenue neighborhoods. The map below shows in darker blue the two tracts recommended for designation on the state’s draft list.
It is important to note that Opportunity Zone designation does not alter or supersede any local planning, zoning, or land use regulations. All future projects will continue to be subject to the City’s established standards, requirements, and approval processes. The designation simply provides an additional voluntary tool that may help attract investment to areas where the City already anticipates housing, infrastructure improvements, and economic development activity. The City has already made substantial local public investments in these areas in mobility infrastructure, water and wastewater upgrades, cultural venues, Mission Plaza renovations, and parking infrastructure, creating a strong foundation for leveraging private investment through OZ 2.0.
Item 6g
5 The City is aware that Cal Poly is interested in developing Lot H9 in tract 06079011201 for their Faculty & Staff Housing Phase III project, an approximately $100 million investment that is expected to deliver approximately 150 new workforce housing units for Cal Poly faculty and staff. The project is in its early planning stages and needs to be evaluated in terms of utilities, neighborhood access, services, and the Local Agency Formation Commission (LAFCO) process. City approvals are required and no City action has been taken on this proposed project.
During the public comment period, GO-Biz will consider letters of support and official actions taken by nominating agencies (e.g. proclamation, record of action taken, or resolutions). Staff, therefore, recommend that the Council adopt the attached draft resolution to indicate its support for this nomination process and confirm the City’s nomination of five tracts. The resolution also indicates support for the nomination of census tract 06079010903 by the County of San Luis Obispo that primarily contains the core campus of Cal Poly State University. If the resolution is approved, staff will transmit the resolution to the state as part of the public comment process for each of those tracts.
While only two census tracts are on the state’s draft recommendation list, staff recommend that the attached draft resolution be submitted to the state in support for all six census tracts, noting the City’s prioritization of the tracts. Staff also recommend sharing information with regional partners and community organizations regarding the OZ
2.0 program and the public comment period.
Public Engagement
This item is on the agenda for the August 18, 2026, City Council meeting and will follow all required postings and notifications. The public may have an opportunity to comment on this matter at or before the meeting.
In addition, the public may submit comment on this matter directly to the state between August 3 to August 28, 2026, through the California Department of Finance OZ 2.0 Public Comment portal. Instructions and the link to the portal are available here.
CONCURRENCE
The Department of Community Development was consulted and concurs with staff’s recommendation.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report because the action does not constitute a project under CEQA Guidelines Section 15378.
FISCAL IMPACT
Budgeted: N/A Budget Year: 2026-27
Item 6g
6 Funding Identified: N/A
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ N/A $ $ $
State
Federal
Fees
Other:
Total $ N/A $ $ $
There is no direct fiscal impact associated with the nomination of the five census tracts to the State of California for designation in the federal Opportunity Zones 2.0 program
ALTERNATIVES
1. Council could provide direction to staff to submit public comment to the state on one or more census tracts opposing the tract’s nomination by the City or recommendation by the State. Should Council pursue this option, specific direction should be given on which tracts’ City nomination should be rescinded or state recommendation should be opposed.
2. Council could provide direction to staff to amend the draft resolution and submit it to the state through public comment requesting to adjust the prioritization of nominated census tracts. Should Council pursue this option, specific direction should be given on how the tracts should be re-prioritized.
ATTACHMENTS
A - Draft Resolution supporting the nomination of eligible census tracts within the City for designation under the federal Opportunity Zone 2.0 program
R ______
RESOLUTION NO. _____ (2026 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, SUPPORTING THE NOMINATION OF ELIGIBLE
CENSUS TRACTS WITHIN THE CITY FOR DESIGNATION UNDER THE FEDERAL OPPORTUNITY ZONE 2.0 PROGRAM
WHEREAS, the Opportunity Zones program was originally established by the Tax Cuts and Jobs Act of 2017 and permanently renewed and enhanced under Public Law 119-21, creating Opportunity Zones 2.0, a strengthened and permanent federal incentive for long-term, equity-based investment in eligible census tracts; WHEREAS, Opportunity Zones 2.0 introduces updated eligibility criteria, tax incentives, compliance requirements, and a permanent, rolling 10-year designation cycle requiring governors to nominate qualified census tracts every decade, beginning with the nomination window from July 1 to September 28, 2026;
WHEREAS, the U.S. Department of the Treasury released the official list of eligible census tracts on April 6, 2026, including six eligible tracts within and around the limits of the City of San Luis Obispo;
WHEREAS, the Governor of California may nominate up to 25 percent of the 2,469 eligible statewide census tracts, for a maximum of 618 tracts; WHEREAS, the California Governor’s Office of Business and Economic Development (GO-Biz) GO-Biz initiated a formal Local Authority Recommendation process for jurisdictions to provide evidence-based nominations by the deadline of July 20, 2026;
WHEREAS, the City of San Luis Obispo evaluated the five eligible census tracts primarily within its jurisdiction and submitted nomination materials for all five tracts, identifying the tracts’ alignment with statewide priorities, including housing development and the California Jobs First State Blueprint;
WHEREAS, the City’s evaluation also documented committed local public investments, including the Local Revenue Measure (2020), capital improvement projects and investments in cultural and civic facilities;
WHEREAS, consistent with City policy documents, including the Economic Development Strategic Plan (2023–2028), the General Plan, and the Housing Element, Opportunity Zones 2.0 designation presents a generational opportunity to expand housing, support infill development, enhance mobility, strengthen economic competitiveness, and encourage private investment aligned with City goals;
Resolution No. _____ (2026 Series) Page 2
R ______
WHEREAS, based on this evaluation, the City listed the census tracts in the following order of preference on the nomination forms: 06079011101; 06079011104; 06079011201; 06079010902; 06079011002; and
WHEREAS, GO-Biz opened a public comment period on August 3, 2026, through August 28, 2026, and recommended that tracts 06079011002 and 06079010903 be designated;
NOW, THEREFORE, BE IT RESOLVED that the Council of the City of San Luis Obispo hereby:
SECTION 1. Supports submission of Local Authority Recommendation Forms to GO-Biz for the following five census tracts, prioritized as follows: 06079011101; 06079011104; 06079011201; 06079010902; 06079011002.
SECTION 2. Also supports nomination of census tract 06079010903 nominated by the County of San Luis Obispo that primarily contains the core campus of Cal Poly State University.
SECTION 3. Thanks the Governor for recommending on the draft list census tracts 06079011002 and 06079010903 for designation and also respectfully requests that the Governor considers the City’s prioritization of the tracts and adds to the recommended list at a minimum census tract 06079011101, as well as tracts 06079011104, 06079011201, and 06079010902.
SECTION 2. Authorizes the City Manager or her designee to continue in the California Local Authority Recommendation process and Opportunity Zone 2.0 designation process by submitting all necessary forms and information, including by submitting this Resolution upon adoption to GO-Biz during the statewide public comment period, open August 3 - 28, 2026.
SECTION 3. Encourages coordinated regional support and invites partner agencies, local business organizations, educational institutions, community organizations, economic development partners, state and federal representatives, and members of the community to provide public comment during the statewide review period.
Upon motion of Council Member ___________, seconded by Council Member ___________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _______________ 2026.
Resolution No. _____ (2026 Series) Page 3
R ______
___________________________
Mayor Erica A. Stewart
ATTEST:
______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
______________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________
Teresa Purrington
City Clerk
Item 7a
Department: Utilities
Cost Center: 6002-Water Source of Supply
For Agenda of: 8/18/2026
Placement: Business
Estimated Time: 30 minutes
FROM: Aaron Floyd, Public Works & Utilities Director
Prepared By: Shane Whittington, Utilities Business Manager SUBJECT: APPROVAL OF PARTICIPATION IN THE NACIMIENTO WATER PROJECT 2026 REVENUE REFUNDING BONDS
RECOMMENDATION
1. Adopt a draft Resolution titled “Resolution of the City Council of the City of San Luis Obispo, California, in Connection with the Refunding of the 2015 Nacimiento Water Project Revenue Refunding Bonds, Approving Certain Disclosures Regarding the City and Authorizing Certain Actions in Connection with Such Refunding”, and;
2. Approve certain disclosures regarding the City of San Luis Obispo, describing certain demographic, financial, statistical and other information of the City of San Luis Obispo to be included in Appendix A to the Preliminary Official Statement and the Official Statement that will be used by the Underwriter in the marketing and sale of the SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “2026 Revenue Refunding Bonds”); and
3. Authorize the refunding of the SLO County Financing Authority Nacimiento Water Project Revenue Refunding Bonds, 2015 Series A; and
4. Approve the execution and delivery of a Continuing Disclosure Agreement; and
5. Authorize the taking of all necessary actions in connection with such issuance of 2026 Revenue Refunding Bonds.
REPORT-IN-BRIEF
In 2004, the City of San Luis Obispo entered into a Nacimiento Project Water Delivery Entitlement Contract with the San Luis Obispo County Flood Control and Water Conservation District (District) in connection with the Nacimiento Water Project. In September 2007, the San Luis Obispo County Financing Authority (Authority) issued $157,845,000 Nacimiento Water Project Revenue Bonds, 2007 Series A (the “2007A Bonds”) and $38,565,000 Nacimiento Water Project Revenue Bonds, 2007 Series B (Taxable) to finance the Project. In August 2015, the Authority issued Revenue Refunding
Item 7a
Bonds to partially refund the 2007A Bonds, resulting in the currently outstanding 2015 Series A Bonds (the “2015A Bonds”). In April 2018, the Authority issued Revenue Refunding Bonds to refund the remaining outstanding 2007A Bonds, resulting in the currently outstanding 2018 Series A Bonds.
The Authority is proposing to refund the outstanding 2015A Bonds to reduce future debt service costs. The refinancing would not extend the existing September 1, 2038 final maturity date. The transaction is currently estimated to produce systemwide net present value savings of approximately $5.1 million, or 6.8 percent of the refunded principal, exceeding the applicable debt-policy savings thresholds.
Based on current good faith estimates, the refinancing would save the City approximately $3.2 million over the remaining term of the bonds, or an average of approximately $256,000 annually.
The City Council is being asked to adopt a resolution (Attachment A) authorizing the Authority to proceed with the refunding and approving the City’s related disclosure and financing documents. All amounts are preliminary good faith estimates and may change based on interest rates, market conditions, and the final structure of the bonds at the time of sale.
If market conditions deteriorate such that the refunding no longer meets the applicable debt-management thresholds, City staff would consult with the Authority, the District, and the financing team regarding whether to pause or cancel the bond sale rather than proceed with an uneconomic refinancing.
POLICY CONTEXT
California Government Code Sections 5850–5854, relating to general bond provisions, and Sections 53630–53686, relating to the deposit and investment of local agency funds, establish statutory requirements applicable to the proposed financing.
Government Code Section 5852.1 requires the governing body to obtain and publicly disclose specified good faith estimates of financing costs before authorizing the issuance of bonds with a term exceeding 13 months. In addition, Government Code Section 53635.7 requires any decision involving borrowing of $100,000 or more to be discussed, considered, and deliberated as a separate item of business on the governing body’s agenda.
The 2026 Revenue Refunding Bonds will be issued by the San Luis Obispo County Financing Authority and authorized by the participating partner agencies, including the City of San Luis Obispo. Consistent with the debt management policies of the participating agencies, debt refunding may be considered when it produces net present value savings of at least 3 percent.
The City’s Capital Financing and Debt Management Policies state:
Item 7a
“Refinancings that produce net present value savings of less than five percent will be considered on a case-by-case basis, provided that the present value savings are at least three percent (3%) of the refunded debt.”
Based on estimates prepared by the Authority’s and District’s municipal advisors, the proposed refinancing is expected to generate approximately $5.1 million in net present value savings, or 6.8 percent of the refunded debt. Accordingly, the proposed refinancing is consistent with the City’s debt management policies, as well as the policies of the other participating organizations.
DISCUSSION
Background
In 2004, the City entered into a Nacimiento Project Water Delivery Entitlement Contract with the San Luis Obispo County Flood Control and Water Conservation District (District), in connection with the Nacimiento Water Project for the supply of additional water for the use and benefit of the lands and inhabitants served by the City of San Luis Obispo. In September 2007, the SLO County Financing Authority (Authority) issued $157,845,000 Nacimiento Water Project Revenue Bonds, 2007 Series A (the “2007A Bonds”) and $38,565,000 Nacimiento Water Project Revenue Bonds, 2007 Series B (Taxable) to finance the Project. In August 2015, the Authority issued Revenue Refunding Bonds to partially refund the 2007A Bonds, resulting in the currently outstanding 2015 Series A Bonds (the “2015A Bonds”). In April 2018, the Authority issued Revenue Refunding Bonds to refund the remaining outstanding 2007A Bonds, resulting in the currently outstanding 2018 Series A Bonds.
The table below summarizes the currently outstanding Nacimiento Water Project Bonds.
Table 1. Nacimiento Water Project Bonds
Nacimiento Water Project
Bonds
Purpose Original
Par Amount
Outstanding
Par Amount
Final
Maturity
2007 Series B (Taxable) Project Funding $38,565,000 $26,840,000 09/01/2040 2015 Series A
(Tax-Exempt)*
Refunding $107,115,000 $80,160,000 09/01/2038
2018 Series A
(Tax-Exempt)
Refunding $27,045,000 $22,005,000 09/01/2040
TOTAL: $172,725,000 $129,005,000
*To be refunded by the 2026 Refunding Revenue Bonds.
Item 7a
The security structure and debt service payments on the Nacimiento Water Project Revenue Bonds are funded by the delivery contracts between the District and the Atascadero Mutual Water Company, the City of El Paso de Robles, the City of San Luis Obispo, and the Templeton Community Services District (collectively, the “Participating Agencies” or each “Participating Agency”). The District allocates Capital Projects Installment Debt Service among all Participating Agencies, according to the proportion of Nacimiento Project Construction Costs paid by each Participating Agency (see Table 2 for Project Installment Debt Service by Participating Agency).
Table 2. Nacimiento Capital Projects Installment Debt Service Allocation Participating Agency Tax-Exempt
Bonds
Taxable
Bonds
% Total of
Bond Debt Service
Atascadero Mutual Water Company 0.00% 98.74% 20.08%
City of El Paso de Robles 45.03% 0.57% 35.99%
City of San Luis Obispo 52.28% 0.69% 41.79%
Templeton Community Services District 2.69% 0.00% 2.14% TOTAL: 100.00% 100.00% 100.00%
Overview
The current tax-exempt interest
rate environment creates an
opportunity to achieve annual
debt service savings by
refunding the outstanding 2015A
Bonds through the issuance of
2026 Revenue Refunding
Bonds. The 2015A Bonds
became callable1 on September
1, 2025, and can be refinanced for debt service savings at any time. The proposed issuance of 2026 Revenue Refunding Bonds is expected to refinance all $75.5 million of the outstanding 2015A Bonds (specifically, the maturities of the 2015A Bonds from September 1, 2027, through September 1, 20382). The transaction will not extend the final maturity of the original 2015A Bonds. The 2015A Bonds currently bear interest rates ranging from 3.0% to 5.0%.
Estimated Savings
Based on preliminary tax-exempt pricing yields provided by the Authority’s and the District’s Municipal Advisor, KNN Public Finance, and the Underwriter, Loop Capital Markets, as of the week of June 29, 2026, the 2026 Revenue Refunding Bonds are projected to generate approximately $6.2 million in total annual debt service savings for the Participating Agencies, with each Participant Agency receiving savings proportional to its share of the annual debt service obligations.
1 Callable describes a bond that the issuer can buy back or redeem before the maturity date. 2 Based on market conditions as of the week of June 29, 2026. Preliminary and subject to change. 2026 Revenue Refunding Bonds: Estimated Results
2026 Revenue Refunding Bonds Par: $68,650,000
Refunded 2015A Bonds Par: $75,480,000
Total Gross Savings: $6,154,822
Present Value Savings ($): $5,146,355
Present Value Savings (%): 6.82%
*Based on market conditions as of the week of June 29,
2026. Preliminary and subject to change.
Item 7a
On a net present value (“NPV”) basis, the estimated savings through the issuance of the 2026 Revenue Refunding Bonds is $5.1 million or 6.8% of refunded 2015A Bond par amount. The Authority’s Debt Policy requires that any issuance of current refunding bonds achieve at least 3% NPV savings, calculated net of costs of issuance and expressed as a percentage of the refunded bonds’ par amount. The pricing of the 2026 Revenue Refunding Bonds is expected to occur in September 2026. Working with its Municipal Advisor and Underwriter, the Authority would only enter the market and sell the 2026 Revenue Refunding Bonds if it was certain that the 3% NPV savings threshold could be achieved. Final debt service savings will be secured on the pricing day of the 2026 Revenue Refunding Bonds in September.
The table below allocates the estimated debt service savings from the 2026 Revenue Refunding Bonds per the Nacimiento Capital Projects Installment Debt Service Allocation by Participating Agency. Because Atascadero Mutual Water Company is only responsible for a share of the 2007B Bonds (Taxable) debt service, which are not being refunded, the estimated savings generated by the 2026 Revenue Refunding Bonds will be shared only by those Participating Agencies that are responsible for a portion of the debt service on the 2015A Bonds.
Table 3. Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A SLO County Financing Authority Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (Estimated as of the week of June 29, 2026; Preliminary subject to change) 45.03% 52.28% 2.69% 2026 Refunding Revenue Bonds Estimated Savings Estimated Savings Allocation by Participant Fiscal Year
Ending
Prior 2015
Bonds
Annual Debt
Service
2026 Bonds
Annual Debt
Service
(Preliminary)
Annual
Savings
City of Paso
Robles
City of San
Luis Obispo
Templeton
Community
Services
District
Total Annual
Savings
A B C=A-B D=45.03%*C E=52.28%*C F=2.69%*C G=C=D+E+F
6/30/27 $1,649,491 $1,363,465 $286,025 $128,797 $149,534 $7,694 $286,025 6/30/28 8,096,606 7,610,375 486,231 218,950 254,202 13,080 486,231 6/30/29 8,095,669 7,605,750 489,919 220,610 256,130 13,179 489,919 6/30/30 8,095,500 7,605,000 490,500 220,872 256,433 13,194 490,500 6/30/31 8,101,522 7,612,250 489,272 220,319 255,791 13,161 489,272 6/30/32 8,090,400 7,602,125 488,275 219,870 255,270 13,135 488,275 6/30/33 8,095,338 7,604,125 491,213 221,193 256,806 13,214 491,213 6/30/34 8,097,463 7,607,250 490,213 220,743 256,283 13,187 490,213 6/30/35 8,090,650 7,601,000 489,650 220,489 255,989 13,172 489,650 6/30/36 8,098,175 7,609,500 488,675 220,050 255,479 13,145 488,675 6/30/37 8,096,400 7,606,875 489,525 220,433 255,924 13,168 489,525 6/30/38 8,094,625 7,607,500 487,125 219,352 254,669 13,104 487,125 6/30/39 8,093,700 7,605,500 488,200$0 219,836 255,231 13,133 488,200 Total $98,795,538 $92,640,715 $6,154,822 $2,771,516 $3,217,741 $165,565 $6,154,822
Item 7a
Good Faith Borrowing Estimates
As detailed in Exhibit A to the Resolution (Attachment A), the following information is provided in accordance with California Government Code Section 5852.1 to provide certain public disclosures related to the estimated borrowing costs of the 2026 Revenue Refunding Bonds. All figures represented below, as provided by the Municipal Advisor, are good faith estimates as of the week of June 29, 2026, and are subject to change based on the interest rate environment and other market and structuring factors on the day of sale:
1) True Interest Cost 2) Cost of
Issuance1
3) Proceeds
Amount
4) Total Debt
Service
3.13 percent $873,000 $75,819,062 $92,640,715
1 Includes costs of issuance (legal, municipal advisor, rating agency, etc.), underwriter’s discount, and estimated cost of bond insurance.
Documents for Consideration and Approval
In order for the Authority to proceed with the sale and issuance of the 2026 Revenue Refunding Bonds, the City Council must first approve and adopt the Resolution (Attachment A) that, among other things, incorporates and approves the documents below, all of which are attached to this report.
Appendix A to the Preliminary Official Statement and Official Statement (Attachment B) includes certain disclosures of the City of San Luis Obispo related to Litigation (related to water revenues and any pending claims that could materially affect its finances) and certain financial and other information in Appendix A to the Preliminary Official Statement.
Continuing Disclosure Agreement (Attachment C) is an agreement between the City of San Luis obispo and the District, whereby the City of San Luis Obispo covenants and agrees to provide annual disclosures in the form of an Annual Disclosure Report and event notices to be distributed by the Dissemination Agent to bondholders.
What if the Market Changes?
The proposed bond sale is expected to occur after Council approval and will remain subject to changes in interest rates and other market conditions. The resolution (Attachment A) delegates authority to designated City representatives (City Manager, Finance Director, or a designee thereof) to execute related documents and take actions reasonably necessary or advisable to support the refunding. The Authority, District, City representatives, and financing team will use this delegated authority to finalize the timing and structure of the transaction based on available savings and applicable debtmanagement policies. If market conditions deteriorate such that the refunding no longer meets those standards, the parties may pause, restructure, or cancel the sale rather than
Item 7a
proceed with an uneconomic transaction. The final interest rates and savings will not be known until the bonds are priced and sold.
Previous Council or Advisory Body Action
In June 2004, the City Council approved by Resolution 9586 an agreement with the San Luis Obispo County Flood Control and Water Conservation District for the design, construction and operation of facilities required for the delivery water to the City from the Nacimiento Water Supply Project and appointed a member of the Council to serve on the Nacimiento Project Commission. Subsequent amendments to the Agreement have been approved by the City Council.
In August 2007, the City Council approved by Resolution 9922 the disclosure of financial and other related information related to refinancing the Nacimiento Water Project. In September 2007, the County Authority issued $157,845,000 Nacimiento Water Project Revenue Bonds, 2007 Series A and $38,565,000 Nacimiento Water Project Revenue Bonds, 2007 Series B (Taxable) in order to finance and refinance the Project.
In June 2015, the City Council approved by Resolution 10634 certain disclosures and authorized certain actions in connection with the refunding of the Nacimiento water project revenue bonds. In August 2015, the Authority issued $107,115,000 Nacimiento Water Project Revenue Refunding Bonds, 2015 Series A (the “2015A Bonds”) in order to refund a portion of the 2007A Bonds.
At a special meeting on July 9, 2026, the Nacimiento Project Commission recommended approval of the proposed refunding of the Nacimiento Water Project 2015 Series A Revenue Refunding Bonds.
CONCURRENCE
The City’s Finance Department concurs with recommended actions and associated documentation. The City Attorney’s Office has reviewed the draft Resolution and associated Exhibits and approved to form.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report, because it is limited to administrative and fiscal activities which would not result in a physical impact on the environment, and therefore does not constitute a “Project” under CEQA Guidelines Section 15378. In addition, In 2004, the City Council reviewed and approved the Nacimiento Water Project Environmental Impact Report and associated mitigation and monitoring program, and adopted required CEQA Findings for the Project (Resolution 9585).
FISCAL IMPACT
Budgeted: Yes Budget Year: 2026-27
Item 7a
Funding Identified: Yes
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $ $ $
State
Federal
Fees
Other:
Total $ N/A $ N/A $ N/A $ N/A
Fiscal Impact
The proposed issuance of the 2026 Revenue Refunding Bonds is expected to achieve annual and total debt service savings relative to the outstanding 2015A Bonds. The table below summarizes the estimated total and annual debt service savings for the benefit of the Participating Agencies.
Total
City of El
Paso de
Robles
@ 45.03%
City of San Luis
Obispo
@ 52.28%
Templeton
CSD
@ 2.69%
2015A Bonds Total Debt Service (“D/S”) $98,795,538 $44,487,631 $51,650,307 $2,657,600 2026 Revenue Refunding Bonds Total D/S1 92,640,715 41,716,114 48,432,566 2,492,035 Total Savings: $6,154,822 $2,771,516 $3,217,741 $165,565 2015A Bonds Avg. Annual DS $8,095,504 $3,645,405 $4,232,329 $217,769 2026 Revenue Refunding Bonds Avg. Annual D/S1 7,606,438 3,425,179 3,976,646 204,613 Average Annual Savings: $489,066 $220,227 $255,684 $13,156
1.Estimated based on market conditions as of the week of June 29, 2026.
ALTERNATIVES
1. Do not approve the Resolution or other recommended actions to authorize the bond refunding. The City Council could choose not to approve the Resolution and forego the opportunity to achieve debt service savings. Because participation in the refunding requires unanimous approval by all participating agencies, declining to approve the Resolution would prevent the refunding from proceeding and the existing bonds and associated debt service obligations would remain unchanged for all participating agencies.
2. Continue the business item hearing to a date certain and instruct staff to obtain additional information or modify the documents. The City Council could direct staff to obtain additional information or make revisions to the proposed documents before returning for further consideration and action. Under this Alternative, staff request continuance of the business item hearing to a date certain. This alternative would delay authorization of the refunding and could require coordination with the Financing Authority, other participating agencies, bond counsel, and the financing team before the transaction could proceed.
Item 7a
3. Authorize the bond refinancing and instruct staff to obtain additional information and/or modify the documents. The City Council could take action and request staff provide a supplemental informational memorandum with the additional requested information and/or modified documentation inclusive of Council's amendments. Under this alternative, staff request that Council provide specific direction within the motion (if action is taken to authorize the bond refinancing documentation, as amended by Council).
ATTACHMENTS
A - Draft Resolution titled “Resolution of the City Council of the City of San Luis Obispo, California, in Connection with the Refunding of the 2015 Nacimiento Water Project Revenue Refunding Bonds, Approving Certain Disclosures Regarding the City and Authorizing Certain Actions in Connection with Such Refunding” B - Preliminary Official Statement and Appendix A
C - Continuing Disclosure Agreement
RESOLUTION NO. _____ (2026 Series)
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, IN CONNECTION WITH THE REFUNDING OF THE 2015 NACIMIENTO WATER PROJECT REVENUE REFUNDING BONDS,
APPROVING CERTAIN DISCLOSURES REGARDING THE CITY AND
AUTHORIZING CERTAIN ACTIONS IN CONNECTION WITH SUCH
REFUNDING
WHEREAS, the City of San Luis Obispo (the “City”) has heretofore entered into a Nacimiento Project Water Delivery Entitlement Contract, as amended (the “Delivery Contract”), with the San Luis Obispo County Flood Control and Water Conservation District (the “District”), in connection with the Nacimiento Water Project (the “Project”) for the supply of additional water for the use and benefit of the lands and inhabitants served by the City; and WHEREAS, on September 26, 2007, the SLO County Financing Authority (the “Authority”) issued $157,845,000 Nacimiento Water Project Revenue Bonds, 2007 Series A (the “2007A Bonds”) and $38,565,000 Nacimiento Water Project Revenue Bonds, 2007 Series B (Taxable) in order to finance and refinance the Project; and WHEREAS, on August 19, 2015, the Authority issued $107,115,000 Nacimiento Water Project Revenue Refunding Bonds, 2015 Series A (the “2015A Bonds”) in order to refund a portion of the 2007A Bonds; and
WHEREAS, the District and the Authority have determined that it is necessary and desirable to proceed with the refunding of all or a portion of the 2015A Bonds for debt service savings through the issuance and sale of Municipal Obligations (as defined in the Delivery Contract), consisting of one or more series of the SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “Bonds”); and
WHEREAS, in connection with such refunding, this Council (the “Council”) has been presented with a form of Preliminary Official Statement, together with an appendix containing statistical and other descriptive information regarding the City (the captions containing such information being referred to herein as the “Appendix”), based upon information provided and to be provided by the City, and a form of Continuing Disclosure Agreement (the “Continuing Disclosure Agreement”); and
WHEREAS, Section 5852.1 of the Government Code of the State of California (the “Government Code”) requires that the Council obtain from an underwriter, municipal advisor or private lender and disclose, prior to authorization of the issuance of bonds with a term of greater than 13 months, good faith estimates of the following information in a meeting open to the public: (a) the true interest cost of the bonds, (b) the sum of all fees and charges paid to third parties with respect to the bonds, (c) the amount of proceeds of the bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the bonds, and (d) the sum total of all debt service
payments on the bonds calculated to the final maturity of the bonds plus the fees and charges paid to third parties not paid with the proceeds of the bonds; and WHEREAS, in compliance with Section 5852.1 of the Government Code, the Council has obtained from KNN Public Finance, LLC, as municipal advisor (the “Municipal Advisor”), based on interest rate estimates provided by Loop Capital Markets LLC, as underwriter (the “Underwriter”) of the Bonds, the required good faith estimates and such estimates are disclosed and set forth on Exhibit A attached hereto.
NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of San Luis Obispo as follows:
SECTION 1. The foregoing recitals are true and correct.
SECTION 2. The form of the Appendix presented to and reviewed by this meeting of the Council, with such changes as the City Manager, Finance Director, or a designee thereof (each, an “Authorized Representative”) may determine to be in the best interests of the City, is hereby approved. The Authority is authorized to include the Appendix in the Preliminary Official Statement and Official Statement relating to the Bonds, and the Underwriter is authorized to use the Appendix in the marketing and sale of the Bonds. From the date hereof until the closing date of the Bonds (unless such date is extended in writing by the Authority), the Authorized Representatives shall notify the Authority and the Underwriter immediately upon the occurrence of any material change to information regarding the City in the Appendix.
SECTION 3. The form of Continuing Disclosure Agreement presented to and reviewed by this meeting of the Council is hereby approved, and the Authorized Representative of the City is hereby authorized and directed to execute and deliver a Continuing Disclosure Agreement, substantially in the form presented to and approved at this meeting of the Council, with such changes therein as the Authorized Representative and the District may approve, such approval to be evidenced by the signature of said Authorized Representative.
SECTION 4. In accordance with Section 5852.1 of the Government Code, good faith estimates of the following have been obtained from the Municipal Advisor based on interest rate estimates provided by the Underwriter and are set forth on Exhibit A attached hereto: (a) the true interest cost of the Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Bonds, (c) the amount of proceeds of the Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Bonds, and (d) the sum total of all debt service payments on the Bonds calculated to the final maturity of the Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Bonds.
SECTION 5. The Authorized Representatives of the City are hereby authorized and directed, for and in the name and on behalf of the City, to do or cause to be done any and all things and take any and all other actions in support of the issuance of the Bonds, including, without limitation, the execution of certificates and ancillary documents and the delivery of
opinions on behalf of the City as may be reasonably required by the District, which they, or any of them, deem necessary or advisable in order to consummate the purposes described herein.
SECTION 6. This resolution shall take effect immediately upon its adoption.
Upon motion of Council Member ___________, seconded by Council Member __________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this ____ day of ____________, 2026.
Mayor Erica A. Stewart
ATTEST:
________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this _____ day of ___________, 2026. ________________________________
Teresa Purrington
City Clerk
A-1
EXHIBIT A
GOOD FAITH ESTIMATES
The following information was obtained from KNN Public Finance, LLC based on interest rate estimates provided by Loop Capital Markets LLC, as the underwriter of the SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “Bonds”), and is provided in compliance with Section 5852.1 of the Government Code with respect to the Bonds:
It should be noted that the following information constitutes good faith estimates only as of June 29, 2026. The actual interest cost, finance charges, amount of proceeds and total payment amount may vary from the estimates below due to the timing of Bond sale, the amount of Bonds sold, the amortization of the Bonds sold, and prevailing market interest rates at the time of each sale. The date of sale and the amount of Bonds sold will be determined by the Authority and the District based on achieving net present value debt service savings and other factors related to refinancing outstanding debt.
The actual interest rates at which the Bonds will be sold will depend on the bond market on the date and at the time of the sale. The actual amortization of the Bonds will also depend, in part, on market interest rates on the date and at the time of the sale. Market interest rates are affected by economic, national, international, and other factors beyond the control of the Municipal Advisor, the Underwriter, the Authority, or the District.
1. True Interest Cost of the Bonds. Assuming the maximum aggregate principal amount of the Bonds authorized ($80,000,000) are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 3.13%
2. Finance Charge of the Bonds. Assuming the maximum aggregate principal amount of the Bonds authorized ($80,000,000) are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the finance charge of the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $873,000.
3. Amount of Proceeds to be Received. Assuming the maximum aggregate principal amount of the Bonds authorized ($80,000,000) are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the amount of proceeds expected to be received by the Authority for sale of the Bonds less the finance charge of the Bonds described in 2 above and any reserves or capitalized interest paid or funded with proceeds of the Bonds, is $75,819,062.
4. Total Payment Amount. Assuming the maximum aggregate principal amount of the Bonds authorized ($80,000,000) are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the total payment amount, which means the sum total of all payments the Authority will make to pay debt service on the Bonds plus the finance charge of the Bonds described in paragraph 2 above not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $92,640,715.
NRF Draft 7/23/26
APPENDIX A
THE PARTICIPANTS
Information contained in this Appendix A is presented as general background data. The 2026 Bonds are payable solely from and secured by certain Revenues and any other amounts pledged therefor pursuant to the Indenture. The taxing power of the State of California, the County of San Luis Obispo or any political subdivision thereof is not pledged to the payment of the 2026 Bonds. For additional information regarding security for the 2026 Bonds, see “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.” Audited financial information for each Participant can be found under the heading “AUDITED FINANCIAL STATEMENTS” within the Appendix for each Participant. Capitalized terms not otherwise defined in this Appendix A shall have the meanings ascribed to them in the body of this Official Statement.
Atascadero Mutual Water Company.......................................................................................................A1-1 City of El Paso de Robles ......................................................................................................................A2-1 City of San Luis Obispo..........................................................................................................................A3-1 Templeton Community Services District................................................................................................A4-1
A1-i
APPENDIX A1
ATASCADERO MUTUAL WATER COMPANY
TABLE OF CONTENTS
Page Page
ATASCADERO MUTUAL WATER
COMPANY..................................................A1-1 General.....................................................A1-1 Governance and Management..................A1-1
Water Rights............................................A1-1 No Litigation Related to the 2026 Bonds.A1-1
The Water System....................................A1-2 Water Supply ...........................................A1-3 Drought and Conservation Measures.......A1-3
Water Connections...................................A1-4 Water Deliveries......................................A1-4 Water Sales Revenues..............................A1-5
Largest Customers ...................................A1-5 Water System Rates and Charges ............A1-5
Future Water System Improvements........A1-8
Cybersecurity ...........................................A1-9
FINANCIAL INFORMATION OF
ATASCADERO MUTUAL WATER
COMPANY .................................................A1-9 Budgetary Process ...................................A1-9 Financial Statements..............................A1-10 Operating Results ..................................A1-10 Management’s Discussion and AnalysisA1-11
Outstanding Long-Term Indebtedness ..A1-12
Capital Improvement Program ..............A1-12
Investment Policy ..................................A1-12 Insurance................................................A1-12 Employees .............................................A1-12 Pension...................................................A1-12 AUDITED FINANCIAL STATEMENTS A1-13
Tables
Table A1-1–AMWC Water Connections................................................................................................A1-4 Table A1-2–AMWC Water Deliveries in Millions of Gallons Per Year................................................A1-4 Table A1-3–AMWC Water Sales Revenues...........................................................................................A1-5 Table A1-4–AMWC Largest Water Customers......................................................................................A1-5 Table A1-5A–AMWC Ready-to-Serve Charges ....................................................................................A1-6 Table A1-5B–AMWC Commodity Charges ..........................................................................................A1-7 Table A1-6–AMWC Rate Comparison...................................................................................................A1-8 Table A1-7–AMWC Operating Results................................................................................................A1-11
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ATASCADERO MUTUAL WATER COMPANY
General
Atascadero Mutual Water Company (“AMWC”), a California corporation, was incorporated under the laws of the State of California (the “State”) in 1913 to acquire and hold water and water rights and construct and maintain waterworks and distribution facilities to furnish and distribute water for domestic and irrigation to its shareholders at cost. Pursuant to its bylaws, AMWC is permitted to sell, distribute, supply, or deliver water only to owners of property within the AMWC service area (the “AMWC Shareholders”), except as otherwise required by applicable laws or regulations. AMWC is one of the largest mutual water companies in the State and is responsible for meeting the water requirements of more than 31,000 residents.
AMWC entered into a Delivery Contract (the “Delivery Contract”) with the San Luis Obispo County Flood Control and Water Conservation District (the “Flood Control District”), pursuant to which AMWC covenanted, inter alia, to pay its pro rata share of various capital expenses relating to the funding of design costs, engineering, planning, environmental mitigation, equipping new facilities and/or construction efforts, accounting services, project administration and management, installation, grading, razing and building the Nacimiento Project.
Currently, AMWC’s fiscal year ends on April 30 of each year. As used herein, “FYE” means the fiscal year ended or ending on April 30 of the year referenced. For additional financial information regarding AMWC, see the financial statements submitted by AMWC under the heading “AUDITED FINANCIAL STATEMENTS.”
Governance and Management
A five-person Board of Directors (the “AMWC Board”) elected annually by the AMWC Shareholders has authority to set rates, incur debt and make decisions relative to the operations of AMWC.
Certain actions are subject to a vote of the shareholders. A General Manager, appointed by the AMWC Board, is responsible for the day-to-day administration of the organization and is responsible for the supervision of all staff.
Water Rights
AMWC has significant water rights in both the Salinas River (considered to be riparian water) and the Atascadero Area Groundwater Sub-basin of the Salinas Valley Basin, identified as Basin No. 3004.11 in the Department of Water Resources Bulletin 118 (together, the “Atascadero Basin”). AMWC has preappropriative (i.e. established prior to 1914) riparian rights to the waters of the Salinas River and has an appropriative license for these waters. In addition, AMWC has “overlying” water rights to the groundwater in the Atascadero Basin.
No Litigation Related to the 2026 Bonds
There is no litigation pending or, to AMWC’s knowledge, threatened in any way to restrain or enjoin the delivery of the 2026 Bonds, to contest the validity of the 2026 Bonds, or any proceeding with respect thereto.
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The Water System
Service Area. AMWC’s service area includes approximately 38 square miles covering the City of Atascadero and part of the unincorporated area of the County of San Luis Obispo (the “County”). The City of Atascadero covers approximately 26 square miles and is situated just north of the City of San Luis Obispo, along Highway 101, approximately 218 miles north of Los Angeles and 215 miles south of San Francisco. The portion of the County served by AMWC covers approximately 12 square miles. The greatest water demand is for single-family residential homes and associated landscaping, with relatively small industrial and commercial water demand. Water rates are the same for all classes of customers. Customer classifications and certain information per classification as of FYE [2025] are summarized below:
Customer Classification
Number of
Customers
Percentage of
Water Use*
Percentage of
Revenue*
Single-Family Residential 9,736 73.7 73.7
Multi-Family Residential 351 9.2 9.2
Commercial 746 8.4 8.4
Landscape 223 8.5 8.5
Industrial 27 0.1 0.1
Other 0 0.0 0.0
TOTAL 11,083 100.0% 100.0%
*Totals may not add due to rounding.
Water Permits, Licenses and Other Regulations. AMWC has a water supply permit from the State of California Department of Water Resources (“DWR”). Under this permit, AMWC files annual reports on the quality of its water and is subject to annual inspections by the DWR. Regulations regarding water quality standards have become more stringent, increasing the costs of delivering water. It is anticipated that this regulatory trend will continue, and AMWC is unable to evaluate the future impact on the operating and capital expenditures of AMWC.
The Atascadero Basin Groundwater Sustainability Agency (“GSA”) was formed in April 2017 under a Memorandum of Agreement between the City of Atascadero, City of El Paso de Robles, County of San Luis Obispo, Templeton Community Services District, AMWC, and other small water systems. The purpose of the GSA is to manage groundwater in the Atascadero Basin under the requirements of the Sustainable Groundwater Management Act. The DWR has determined that the Atascadero Basin is a “Very Low Priority” basin.
The DWR approved a Groundwater Sustainability Plan (“GSP”) prepared by the GSA for the Atascadero Basin on April 14, 2025. The GSP and an annual report for water year ending September 30, 2025, are available for review on the Atascadero Basin communication portal (https://portal.atascaderobasin.com/). There are currently no pumping restrictions in the Atascadero Basin, and none are anticipated. The annual report indicates that the basin is being sustainably managed.
AMWC Water System. The AMWC water system (the “AMWC Water System”) consists of a water production system and a water distribution system. The water distribution system consists of approximately 250 miles of pipeline ranging in size from four to 24 inches, nine storage tanks ranging in size from 120,000 to 4.8 million gallons, eight booster stations, 20 pressure-reducing stations, 1,900 valves, 1,700 fire hydrants and nearly 11,000 service connections. The water production system consists of 17 active groundwater wells, one standby groundwater well, five water treatment buildings, and a groundwater recharge basin for water from the Nacimiento Project. The current pumping capacity of all active wells at the end of the peak summer irrigation season is approximately 11.8 million gallons per day (gpd). Each of
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AMWC’s active wells, treatment buildings, booster stations, and storage tanks are equipped with a radiocontrolled computer system for supervisory control and data acquisition (SCADA). All wells, treatment facilities, and booster stations are housed in secure buildings and have special valves, waste flushing systems, sand separators and other features.
In 2007, AMWC purchased a 60-acre ranch that overlies the Atascadero Basin for the purpose of developing new water supply wells. The ranch is currently leased to a private party and is being used for cattle and hay production.
In FYE 2026, AMWC delivered 1.49 billion gallons of water to its shareholders. Lower annual water use over the past several years is a result of above average winter rains, higher water rates, and AMWC’s voluntary water conservation measures. See also “CERTAIN RISKS TO BOND OWNERS– Drought” in the front of this Official Statement.
Treatment System. Thirteen of AMWC’s fifteen production wells have been found to have levels of per- and poly-fluoroalkyl substances (“PFAS”) above the required notification level. AMWC has not identified any specific source of these PFAS.
AMWC is in the process of designing and constructing a treatment plant to remove PFAS. The plant is expected to come online in late 2028. The plant will use activated carbon to adsorb the PFAS.
Other than PFAS removal, the groundwater requires no treatment other than chlorination and the “natural filtration” that occurs when the water passes through sand and gravel formations. AMWC regularly takes samples and maintains chlorine residuals at the wells and throughout the distribution system to maintain disinfection levels. AMWC monitors the samples for all containments as required by the United States Environmental Protection Act, the Safe Drinking Water Act, and primary drinking water standards, and follows all guidelines according to national primary drinking water regulations. See “CERTAIN RISKS TO BOND OWNERS – Water Quality and PFAS” in the forepart of this Official Statement for a discussion on PFAS regulations and requirements.
A group of property owners in the Paso Robles Basin previously filed a quiet title action seeking an adjudication of water rights among AMWC, the City of El Paso de Robles, the Templeton Community Services District and other water purveyors and users. See “LITIGATION– Steinbeck Vineyards and Eidemiller” in the forepart of this Official Statement. The court determined that AMWC has overlying rights to the groundwater in the Atascadero Basin.
Water Supply
AMWC obtains its water by wells pumping water from two distinct yet interrelated groundwater sources, the Salinas River underflow and the Atascadero Basin. These existing groundwater supplies, together with water from the Nacimiento Project, are expected to meet all future water demands through 2045. AMWC is in the process of preparing a 5-year update of its Urban Water Management Plan that will project water demands through 2050. The completion of the Nacimiento Project augmented the AMWC groundwater supply.
Drought and Conservation Measures
AMWC has had a tiered rate structure in place since the mid-1970s to encourage water conservation by its shareholders.
Since 1992, AMWC has implemented a majority of the “Best Management Practices” for water conservation suggested by the California Urban Water Conservation Council, including among other
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things: rebates for toilet retrofit, sprinkler head retrofits, irrigation controller upgrades, turf conversions, high-efficiency clothes washers, and rainwater harvesting; outreach and education, including classroom presentations; annual water conserving landscape awards program; annual water conserving landscape tour; and tiered water rates.
AMWC’s conservation program has been very effective and has reduced per capita water use in the AMWC service area from 239 gallons/day/person in 1988 to 146 gallons/day/person for FYE 2025, assuming a population of 30,618. Total annual water production has been reduced from 6,241 acre-feet/year in 1988 to 5,200 acre-feet/year for FYE 2025. Overall, the reductions in water use achieved by AMWC’s conservation program have more than offset a 32% population increase in its service area from 1988 through 2025.
Water Connections
The following table shows the number of water connections to the AMWC Water System for FYE 2021 through FYE 2025 expressed in equivalent dwelling units (“EDUs”). One EDU is equivalent to a 3/4” water meter.
Table A1-1
AMWC
Water Connections
For FYE 2021 through FYE 2025
FYE Connections (in EDUs) % Increase/(Decrease)
2021 14,611 --
2022 14,667 0.42%
2023 14,682 0.10
2024 14,717 0.24
2025 14,755 0.26
Source: AMWC.
Water Deliveries
The following table presents a summary of water deliveries (based on production records) for the AMWC Water System in millions of gallons per year for FYE 2021 through FYE 2025.
Table A1-2
AMWC
Water Deliveries in Millions of Gallons Per Year
FYE 2021 through FYE 2025
FYE Total % Increase/(Decrease)
2021 1,637 --
2022 1,646 0.55%
2023 1,451 (11.85)
2024 1,383 (4.69)
2025 1,468 6.15
Source: AMWC.
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Water Sales Revenues
The following table shows annual revenues from water sales for FYE 2021 through FYE 2025.
Table A1-3
AMWC
Water Sales Revenues
FYE 2021 through FYE 2025
FYE Sales Revenues % Increase/(Decrease)
2021 $8,650,478 --
2022 8,679,640 0.34%
2023 9,264,817 6.74
2024 10,892,621 17.57
2025 12,213,903 12.13
Source: AMWC.
Largest Customers
The following table sets forth the ten largest customers connected to the AMWC Water System as of April 30, 2025, as determined by total usage in 1,000 gallons. In the aggregate, the ten largest customers accounted for approximately 4.1% of water usage from the AMWC Water System.
Table A1-4
AMWC
10 Largest Water Customers
FYE 2025
Customer User Class* Use (in 1,000 gal)
CITY OF ATASCADERO L 10,347
ATASCADERO UNIFIED SCHOOL DIST L 7,906
ATASCADERO DISTRICT CEMETERY L 7,361
ATASCADERO UNIFIED SCHOOL DIST L 5,957
RANCHO DEL BORDO ESTATES LLC M 5,197
RANCHO DEL BORDO ESTATES LLC M 5,048
ATASCADERO UNIFIED SCHOOL DIST L 4,768
HIDDEN OAKS APARTMENTS INC M 4,482
VILLA MARGARITA MOBILE HOME PARK LLC M 4,447
ATASCADERO UNIFIED SCHOOL DIST L 4,382
TOTAL 10 LARGEST USERS
* L=landscape; M=multi-family
Source: AMWC.
Water System Rates and Charges
AMWC water rates are comprised of a monthly minimum charge and a commodity charge based on the units of water used. AMWC also charges for disconnections and reconnections to the AMWC Water System and for construction meter rentals. AMWC currently charges connection fees for new connections to the AMWC Water System. AMWC increased water rates and charges in June 2024 and June 2025 to
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offset reductions in water sales resulting from shareholder’s conservation practices water and in anticipation of the funding needs to construct a water treatment facility to remove PFAS from the drinking water.
AMWC adopted an approximately 13% water rate increase with the approval of its budget for FYE 2027. The new rates became effective June 15, 2026.
Ready-to-Serve Charges. The table below shows AMWC’s monthly ready-to-serve charge that is based on meter size or number of units, whichever is greater. In addition, there is a monthly surcharge for Nacimiento Project (NWP) expenses.
Table A1-5A
AMWC
Ready-to-Serve Charges
(Effective June 15, 2026) [to be updated/confirmed]
Meter Size
(in inches)
Quantity
(as of April 30, 2026) Monthly Minimum Charge
Standby 202 $10.00
5/8 5,082 35.00
3/4 4,079 35.00
1 700 44.00
1-1/2 78 51.00
2 62 85.00
3 4 261.00
4 8 329.00
6 1 512.00
8 2 512.00
Fireline 203 27.00
MFR (per unit) 3,787 21.10
Motel (per unit) 744 7.90
NWP Surcharge 11,038 5.00
Source: AMWC.
Water Use Charges. The table below shows AMWC’s commodity charge per 1,000-gallon (kgal) unit of water used. AMWC adopted a surcharge to fund treating water for the removal of PFAS.
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Table A1-5B
AMWC
Commodity Charges
(Effective June 15, 2026) [to be updated/confirmed]
Tier Use Single Family Residential
Commercial, Multi-family,
Landscape
Tier 1 1,000 to 10,000 gallons $3.70 $3.70
Tier 2 11,000 to 25,000 gallons 5.40 5.40
Tier 3 26,000 to 50,000 gallons 7.40 7.40
Tier 4 51,000 to 75,000 gallons 8.30 8.30
Tier 5 > 75,000 gallons 11.10 n/a
n/a PFAS Surcharge 0.25 0.25
Source: AMWC.
Nacimiento Project Surcharge. All accounts (except fire lines and accounts on standby) are charged $[5.00] per month to pay their pro rata share of capital costs associated with the Nacimiento Project. [confirm/update]
Water Service Charges. AMWC conducts and prepares an annual rate comparison survey of water purveyors located on the central coast of the State. The table below summarizes that data, based upon an assumed standard metered usage as of July 1, 2025:
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Table A1-6
AMWC
Rate Comparison
(Based on 8,500 gallons Per Month)
As of July 1, 2025
CENTRAL COAST SERVICE AREAS [to be updated]
Community
Total Monthly
Charge(1)(2)
AMWC (6/15/25 rates)(3) $73.58
AMWC (6/15/26 rates)(3)
Arroyo Grande 88.25
Grover Beach(4) 64.11
Heritage Ranch 99.02
Morro Bay 136.50
Nipomo 134.51
Paso Robles 95.56
Pismo Beach 89.35
Santa Margarita 118.65
San Luis Obispo(5) 146.20
Templeton 46.54
(1) Total charge is calculated based on 8,500 gallons per month of metered water based on average single-family use. Where several rates exist based on elevation or zone, the lowest rate is assumed. (2) Total monthly charge is the sum of monthly residential service charge and monthly commodity charge. Total monthly charges calculated using the inside city rate. Applicable base charges, service charges and surcharges are included in the calculation. The charges and taxes of the State Public Utilities Commission are not included. (3) Includes a $5.00 monthly surcharge for Nacimiento Project and $0.25/1,000 gal surcharge for PFAS. (4) Includes a 1% utility tax applied to water portion of the bill. (5) Includes a 5% utility users tax applied to the water portion of the bill.
Source: AMWC.
Collection Procedures. AMWC is on a monthly billing cycle for water service. Payment is due by the 30th day after the billing date and is considered delinquent if not paid by that date. If payment is not received, a delinquency message appears on the next monthly water bill for accounts with unpaid balances greater than $50. After 60 days, delinquent customers are billed a late fee and have 30 days to bring the delinquent account current. Water deliveries to accounts not paid in full within 90 days of the billing date are discontinued until all delinquent amounts are paid. Historically, revenue loss from uncollected accounts has been immaterial.
Connection Fees. AMWC charges connection fees for development of new water resources to meet the requirements of community growth. Current connection fees for single family residential, commercial and industrial units vary depending on the size of the water meter provided and range in cost from $19,600 for a 3/4-inch meter to $588,000 for a 4-inch meter.
Future Water System Improvements
Each year, AMWC prepares a five-year capital improvement plan. The current five-year capital improvement plan covers FYE 2027 through FYE 2031. In addition, AMWC annually adopts a capital budget for projects to be completed during each fiscal year. For FYE 2027, the capital budget is approximately $7.4 million and includes design and initial phases of construction of a water treatment plant to remove PFAS, upgrading the supervisory control and data acquisition (SCADA) software and radios, replacing defective water main valves, replacing aging water service laterals and meters, installing new
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water service laterals and meters, upgrading fire hydrants, installing new fire hydrants, and numerous other projects. Many of these projects are expected to be undertaken in conjunction with and ahead of City of Atascadero and County road improvement projects. The cost of the capital projects for FYE 2027 are in addition to the ongoing expenses associated with the operation and maintenance of AMWC’s wells, booster stations, tanks, the distribution system, and the Nacimiento Water Project.
Annual expenditures for capital projects for FYE 2027 through FYE 2031 are expected to average $10.5 million and include: construction of a water treatment plant to remove PFAS; replacing the Pine Mountain Tank; recoating the Rojo Tank; upgrading well pumps and motors on nine wells; upgrading the well field electrical system; replacing aging vehicles; pressure reducing station upgrades; water main valve replacements; and numerous other projects. AMWC expects to issue debt to fund its capital investment program over the next five fiscal years.
The capital improvement plan described above does not include costs for a planned replacement of the spillway at San Antonio Dam. The spillway replacement is proposed to be undertaken by the Monterey County Water Resources Agency. The Flood Control District may be required to contribute up to approximately 32.3%, or about $25.2 million (estimated as of 2025), of the costs of the spillway replacement. The Flood Control District would charge through such costs, if any, proportionally to the Participants under the Delivery Contracts, including the Delivery Contract with AMWC. Spillway replacement project costs are expected to be incurred beginning in 2028. If AMWC is required to contribute, it currently expects to fund its share of such costs from its Water Resource Developer Reserve fund. Currently, whether and how much the Flood Control District and, correspondingly, the Participants, including AMWC, will pay, and the funding sources for such payments, have not been determined and may change as the foregoing parties deliberate on proposals for the spillway replacement project at San Antonio Dam.
Cybersecurity
AMWC relies on a complex technology environment to conduct its daily operations. As a recipient and provider of personal, confidential, and sensitive information AMWC and its departments experience multiple cybersecurity threats which include but are not limited to, social engineering, malware, denial-ofservice and other attacks on endpoints.
AMWC has put several preventive measures in place to safeguard against cybersecurity threats.
These measures include cybersecurity awareness training, firewalls, email filtering, web content filtering, endpoint protection, and ensuring that operating systems, network equipment, and endpoint devices are upto-date with the latest patches.
AMWC has not had any material cybersecurity incidents in the past five years.
AMWC currently maintains insurance coverage with respect to certain information security and privacy liability claims. However, AMWC is not required to maintain cybersecurity insurance. Future cybersecurity attacks could affect the operations and finances of AMWC, including its ability to meet payment obligations under its Delivery Contract.
FINANCIAL INFORMATION OF ATASCADERO MUTUAL WATER COMPANY Budgetary Process
The AMWC Board establishes and approves an annual budget prior to the beginning of each fiscal year. The five-year capital improvement plan is updated annually as part of the budget process. The AMWC
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Board reviews financial statements and investments monthly. All rates and charges are reviewed annually and any changes are subject to the approval of the AMWC Board. The AMWC Board also conducts an annual review and assessment of the levels of its two reserve funds.
Financial Statements
The most recent audited financial statements of AMWC prepared by Caliber Audit & Attest, LLP, independent certified public accountants, are included as an attachment hereto. The independent auditor’s letter concludes that the audited financial statements present fairly, in all material respects, the financial position of the business-type activities of AMWC as of FYE 2025, and the respective changes in financial position and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The summary operating results contained under the caption “–Operating Results” are derived from these financial statements (excluding certain non-cash items and after certain other adjustments) and are qualified in their entirety by reference to such statements, including the notes thereto.
Operating Results
The following table is a summary of operating results of the AMWC, for the last five fiscal years.
These results have been derived from the financial statements of AMWC but exclude certain receipts which are not included as Revenues under the Delivery Contract and certain non-cash items and include certain other adjustments.
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Table A1-7
AMWC
Operating Results(1)
FYE 2021 through FYE 2025
2021 2022 2023 2024 2025
Revenues
Water sales $8,650,478 $8,679,640 $9,264,817 $10,892,621 $12,213,903 Other revenue 3,355,362 2,308,562 1,593,654 1,593,654 2,296,753 12,005,840 10,998,202 10,858,471 12,972,828 14,510,656
Operating
Expenses(2) 11,100,844 11,051,534 11,689,479 11,340,488 12,437,188 Operating income
(loss) 904,996 (63,332) (831,008) 1,632,340 2,073,468
Non-operating
Revenue (expense) 583,616 262,402 225,069 401,833 164,765 Net income (loss)
before income taxes 1,488,612 199,070 (605,939) 2,034,173 2,238,233 Income Tax
Expense 14,704 14,240 17,414 24,914 29,463
Net Income (loss) 1,473,908 184,830 (623,353) 2,009,259 2,208,770 (1) See also discussion under “–Management’s Discussion and Analysis.” (2) Includes depreciation and payments made to the Flood Control District pursuant to the AMWC Delivery Contract. See “Security and Sources of Payment for the Bonds–The Delivery Contracts” in the forepart of this Official Statement.
Source: AMWC.
Management’s Discussion and Analysis
The following discussion relates to certain items in the table above.
Total Revenues. Total revenues increased by approximately [11.85]% in FYE 2024 compared to FYE 2025, primarily due to increased water sales and rates. Water sales revenues for FYE 2025 were approximately 12.13% more than for FYE 2024, which is primarily attributed to the water rate increase adopted in June 2024 and increased water sales.
Operating Expenses. Operating expenses, including depreciation and excluding Nacimiento Project debt service, increased approximately [11]% in FYE 2025 compared to FYE 2024 primarily due to higher energy, labor, and insurance costs.
Projected Operating Results. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Outstanding Long-Term Indebtedness
Other than the Bonds, AMWC has no other outstanding long-term indebtedness payable from the revenues of the AMWC Water System. [confirm]
Capital Improvement Program
AMWC currently plans to engage in numerous capital improvement projects, including construction of a water treatment facility and other AMWC Water System facility and infrastructure upgrades, over the next five fiscal years. See also “— Future Water System Improvements” herein for AMWC’s expected capital projects for FYE 2027 through FYE 2031.
Investment Policy
AMWC investment policy requires AMWC to invest in insured and other secure investments, such as Treasury bills, notes and certificates of deposit. Such securities are stated in the audited financial statements at cost, adjusted for amortization of premiums and accretion of discounts over their remaining lives.
Insurance
AMWC is covered under various insurance policies, including general liability, property damage, workers’ compensation, automobile and excess liability policies.
Employees
For FYE 2026, AMWC has budgeted 22.8 full-time equivalent employees.
Pension
AMWC adopted a defined contribution pension plan in January 1, 1974. The pension plan is a qualified defined plan contribution pension trust under Section 401 of the Internal Revenue Code. AMWC reserves the right to terminate the trust at its discretion. Trustees of the pension trust are the AMWC Board of Directors. All full-time employees, with the exception of leased employees, with six months of service and who are at least 18 years or older are eligible to join. Each participant may contribute up to the maximum annual contribution limitation established under Internal Revenue Service Regulations.
Participants who are over age 50 may contribute additional amounts.
AMWC makes a 3% safe harbor contribution, as well as a 4% matching contribution of the eligible employee’s annual compensation. Employer contributions to the plan for FYE 2025 and FYE 2024 were $165,688 and $155,289, respectively.
Vesting of contributions is as follows:
Years of Service Vested
1 year 25%
2 years 50
3 years 75
4 years or more 100
Source: AMWC Financial Statements April 30, 2025 and 2024.
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AUDITED FINANCIAL STATEMENTS
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APPENDIX A2
CITY OF EL PASO DE ROBLES
TABLE OF CONTENTS
Page
THE CITY OF EL PASO DE ROBLES.................................................................................................A2-1 General................................................................................................................................................A2-1 Governance and Management.............................................................................................................A2-1 Land and Land Use .............................................................................................................................A2-1 Water Rights.......................................................................................................................................A2-2 No Litigation Related to the 2026 Bonds............................................................................................A2-3 THE WATER SYSTEM OF THE CITY OF EL PASO DE ROBLES..................................................A2-3 Service Area........................................................................................................................................A2-3 Water and Wastewater Facilities.........................................................................................................A2-3 Water Permits, Licenses and Other Regulations.................................................................................A2-3 Water System and Water Supply ........................................................................................................A2-4 Drought and Conservation Measures..................................................................................................A2-5 Water Connections..............................................................................................................................A2-5 Water Deliveries.................................................................................................................................A2-5 Water Sales Revenues.........................................................................................................................A2-5 Largest Customers ..............................................................................................................................A2-6 Water System Rates and Charges .......................................................................................................A2-6 Future Water System Improvements...................................................................................................A2-7 Cybersecurity ......................................................................................................................................A2-8 FINANCIAL INFORMATION OF PASO ROBLES ............................................................................A2-9 Budgetary Process...............................................................................................................................A2-9 Financial Statements...........................................................................................................................A2-9 Operating Results..............................................................................................................................A2-10 Management’s Discussion and Analysis...........................................................................................A2-10 Outstanding Long-Term Indebtedness..............................................................................................A2-10 Investment Policy..............................................................................................................................A2-10 Insurance...........................................................................................................................................A2-11 Pension Benefits................................................................................................................................A2-11 Post-Employment Benefits ...............................................................................................................A2-12 CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES...........................A2-13
A2-ii
Article XIII B....................................................................................................................................A2-13 Proposition 218 .................................................................................................................................A2-13 AUDITED FINANCIAL STATEMENTS ...........................................................................................A2-13 Tables
Table A2-1–Paso Robles Water Connections ........................................................................................A2-5 Table A2-2–Paso Robles Water Deliveries ...........................................................................................A2-5 Table A2-3–Paso Robles Water Sales Revenues ...................................................................................A2-6 Table A2-4–Paso Robles Connection Fees ............................................................................................A2-6 Table A2-5–Paso Robles Water Rates ...................................................................................................A2-7 Table A2-6–Paso Robles Water System Operating Results ................................................................A2-10
A2-1
THE CITY OF EL PASO DE ROBLES
General
The City of Paso Robles (“Paso Robles), officially El Paso de Robles, is a municipal corporation incorporated in 1889. Paso Robles is located in the Central Coast region of the State of California (the “State”), just off of U.S. Highway 101 and within easy reach of beaches, rolling hills, and outdoor recreation. Paso Robles’s strategic location, supportive business climate, and thriving tourism economy make it an appealing place to live, work, and grow. Paso Robles continues to be one of the fastest growing cities within the County of San Luis Obispo and has become its second largest city with a population of 31,525 according to the State Department of Finance (a population gain of 374 year-over-year). Paso Robles anticipates accommodating a population of up to approximately 42,800 residents by 2045.
Paso Robles has previously entered into a Delivery Contract (the “Delivery Contract”) with the San Luis Obispo County Flood Control and Water Conservation District (the “Flood Control District”), pursuant to which Paso Robles covenanted, inter alia, to pay its pro rata share of various capital expenses relating to the funding of design costs, engineering, planning, environmental mitigation, equipping new facilities and/or construction efforts, accounting services, project administration and management, installation, grading, razing and building the Nacimiento Project.
For additional financial information regarding Paso Robles, see the financial statements submitted by Paso Robles under the heading “AUDITED FINANCIAL STATEMENTS.” Governance and Management
Paso Robles is organized as a “general law” city with a city council/manager form of government.
The five-member City Council (the “City Council”), including an at-large, elected Mayor and four district Councilmembers, sets policy direction, adopts ordinances and resolutions, makes land use decisions, and approves Paso Robles’s budget. The voters also elect one City Treasurer at-large. All six elected position are nonpartisan. The city manager is appointed by the City Council to enforce city laws, direct the operations of the city government, prepare and manage the budget and implement the programs initiated by the City Council. Paso Robles is a full-service city as the organization directly provides a wide range of essential public services that enhance community safety, quality of life, and sustainable growth including police and fire and emergency medical services; library, parks, and recreation services; landfill maintenance and operations; water, wastewater, and stormwater utility services; municipal airport; streets, sidewalks, trails, and traffic safety infrastructure; building inspections; licenses and permits; and private development review, approval, and inspection services.
Land and Land Use
Paso Robles is located in the northern portion of the County of San Luis Obispo in the upper Salinas River Valley. The Salinas River itself flows through the center of Paso Robles from south to north. The community is bounded by steep hills and canyons on the west, open rolling hills to the east, and relatively flat river valley topography to the north and south. Paso Robles is located in a rich agricultural area where ranchlands are transitioning to vineyards to support a growing wine industry.
Paso Robles is centered on an identifiable downtown and surrounded by residential neighborhoods.
The development pattern of Paso Robles is different on the east side of the Salinas River than on the west side. The older part of the community lies west of the Salinas River and Highway 101. This area includes many prominent buildings of architectural interest, which are developed along a traditional grid network of streets and alleys. However, the steep hills on the west side have limited growth in this area, and much of
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Paso Robles’s growth over the past 20 years has occurred on the east side of the Salinas River. The eastern portion of Paso Robles includes many newer developments and is primarily residential in character.
The total area within the corporate limits of Paso Robles is approximately 20.0 square miles, comprising a total of 12,739 acres. In 2003, Paso Robles established the maximum potential geographical boundaries to which Paso Robles could grow in the foreseeable future.
The existing sphere of influence (areas outside of Paso Robles current boundaries where growth may occur in the future) comprise approximately 1,026 acres of developable land.
Water Rights
Paso Robles has significant water rights in the Salinas River and pumps groundwater from its wells at this location. Paso Robles also has groundwater wells outside of the Salinas River as well as annual allocations from the Nacimiento Lake surface water.
Two separate lawsuits were filed against Atascadero Mutual Water Company, Paso Robles, County of San Luis Obispo, San Luis Obispo County Flood Control and Water Conservation District, San Miguel Community Services District and Templeton Community Services District. The first lawsuit, titled Steinbeck Vineyards #1, LLC, et al. v. County of San Luis Obispo, et al., Santa Clara County Superior Court Case No. 1-14-CV-265039 (“Steinbeck Litigation”), was initiated on November 25, 2013 by a number of landowners who own property within San Luis Obispo and Monterey Counties and claim that their rights to use groundwater are superior to those of the defendant water suppliers and public agencies.
In addition to the Steinbeck Litigation, another landowner, alleging similar claims, initiated a separate lawsuit against the same public agencies and water suppliers on May 5, 2014. That landowner is not actively pursuing his claims against the defendants. As such, the discussion below focuses on the proceedings in the Steinbeck Litigation.
It should be noted that both lawsuits are limited in nature—they are quiet title actions involving a limited number of pumpers and/or landowners as opposed to comprehensive basin-wide adjudications.
In the Steinbeck Litigation, the Court scheduled several phases of trial. The first trial commenced on January 5, 2016 and involved presentation of evidence from the plaintiff landowners as to their claims that the parties pump from a common groundwater supply. The Court issued its ruling on April 11, 2016, holding that plaintiffs have met their prima facie case and the burden of proof is now shifted to the defendants to prove their affirmative defenses.
The second phase of trial involved certain defendants’ claim that the Atascadero area should be a separate groundwater basin. The Court held that the area is not a separate and distinct basin for purposes of the quiet title action. Thereafter, the parties stipulated to the basin boundary as the outermost exterior boundary line for the Combined Subbasins as identified by the California Department of Water Resources (“DWR”) in DWR’s 2016 Bulletin 118 Interim Update.
The third phase of trial commenced on August 28, 2018 to determine Paso Robles, County of San Luis Obispo, San Miguel Community Services District and Templeton Community Services District’s affirmative defense that they have acquired prescriptive water rights. After a four-week trial, the jury found that those defendants acquired such water rights through their pumping of groundwater from 1981 to 1990.
The Court subsequently quantified those prescriptive water rights.
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Trial on plaintiffs’ “self-help” defense against the defendants’ prescriptive water rights commenced on November 1, 2021. The Court issued its ruling on March 4, 2024, finding that only certain plaintiff landowners established self-help pumping during the prescriptive period, while others did not.
Trial on the San Miguel Community Services District’s pueblo and treaty rights are scheduled to commence on August 17, 2026. This is the last phase of trial before the Court issues a judgment. Paso Robles intends to participate in the trial and subsequent proceedings to protect its rights.
No Litigation Related to the 2026 Bonds
There is no litigation pending or, to Paso Robles’s knowledge, threatened in any way to restrain or enjoin the delivery of the 2026 Bonds, to contest the validity of the 2026 Bonds, or any proceeding of Paso Robles with respect thereto.
THE WATER SYSTEM OF THE CITY OF EL PASO DE ROBLES
Service Area
Paso Robles’s service area is limited to its incorporated city limits, serving a population of approximately 31,525 as of January 2026, with a combined 11,115 residential and commercial/industrial utility accounts, and 370 irrigation customers as of June 30, 2025. The service area served is approximately 20 square miles and topography varies from 660 feet above sea level at the Salinas River to more than 980 feet on the hillsides east of Golden Hill storage tanks.
Water and Wastewater Facilities
The Paso Robles water system (the “Paso Robles Water System”) is composed of 17 active groundwater wells (eight relatively shallow wells, including three Ronconi Wells that required treatment by an auxiliary micro-filtration trailer, located along the Salinas River Corridor and nine deeper basin wells located throughout Paso Robles); two arsenic removal treatment systems; two micro-filtration systems: one
2.4 million gallons per day (“mgd”) and one [___] mgd micro-filtration water treatment plants; six booster stations (used to pump water to higher elevations), plus one east-west booster station at 13th Street; and four storage reservoirs with a total capacity of over 12 million gallons. The storage reservoirs include: two 4-million gallon welded steel tanks; one 4-million gallon reinforced concrete reservoir; and a 150,000 gallon welded steel tank. The Paso Robles Water System also includes approximately 185 miles of distribution mains.
Water Permits, Licenses and Other Regulations
The Paso Robles Water System is permitted and regulated by the State Water Resources Control Board, Division of Drinking Water (System No. 401-0007). The California Division of Drinking Water (“DDW”) inspected the Paso Robles Water System most recently in March 2024. The report describes the system as generally well-operated and compliant, with no DDW enforcement actions. It identified several follow-up items, but it did not describe an immediate threat to drinking-water safety. The 2025 Annual Water Quality Report confirms that Paso Robles water met all applicable state and federal drinking-water standards during 2025.
River-well production was 2,642 acre-feet (“AF”) in 2025 and averaged approximately 3,124 acrefeet per year (“AFY”) from 2020 through 2025. Paso Robles’s surface-water permit allows a maximum diversion of 4,600 AFY, sufficient to meet projected river-well demand through buildout.
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Paso Robles is a Groundwater Sustainability Agency for the portion of the Paso Robles Subbasin within its jurisdiction. Paso Robles is also a member of the Paso Robles Area Groundwater Authority (PRAGA), formed in 2025 to coordinate and fund basin-wide monitoring, reporting, projects, management actions, and Sustainable Groundwater Management Act compliance. Paso Robles participates in groundwater-level and water-quality monitoring, annual reporting, five-year plan evaluations, supplemental-supply development, conservation, recycled-water planning, and potential projects intended to reduce reliance on basin groundwater.
Water System and Water Supply
As of June 30, 2025, there were 11,115 active consumer connections compared to 10,999 as of June 30, 2024. Paso Robles has no affiliation with other existing water agencies except for its affiliation with the Flood Control District for the delivery of water from the Nacimiento Project.
Historically, Paso Robles met the service-area customer needs using wells that pump groundwater and Salinas River water. Additionally, Paso Robles produced 939 AF of treated Nacimiento water at the Water Treatment Plant and recovered another 67 AF through the dedicated recovery well, for a total of 1,006 AF. From 2020 through 2025, these two sources averaged approximately 1,416 AF annually. Paso Robles holds a contractual NWP entitlement of 6,488 AFY (sufficient to meet projected demand through buildout). The Water Treatment Plant is currently capable of producing 2,688 AFY (2.4 mgd).
The 2025 Annual Water Quality Report lists the average total dissolved solids at 424 parts per million (ppm), with a reported range of 180–760 ppm. The secondary maximum contaminant level shown in the report is 1,000 ppm, and no violation was reported.
Recycled Water. In 2017, Paso Robles entered into an installment sale agreement with the State Water Resources Control Board for the construction of Tertiary Treatment Facilities at the Wastewater Treatment Plant in the amount of $14.4 million. This project, by way of producing recycled water, was eligible for a loan forgiveness grant in the amount of $4.0 million. It is anticipated that the debt will be paid by Fiscal Year 2048-49. The total debt amount outstanding on June 30, 2025, was $8,624,051. In 2023, Paso Robles entered into an installment sale agreement with the State Water Resources Control Board for the construction of the Paso Robles Recycled Water Distribution System in the amount of $22.1 million.
Approximately $1.5 million has been withdrawn to reimburse for design services incurred-to-date.
Unfortunately, the project is currently on hold and is not likely to be constructed as initially planned. As a result, Paso Robles is required to repay the $1.5 million loan over the next five years beginning on February 28, 2027. All funding is through the Paso Robles Sewer Enterprise Fund and not from Water System Revenues.
Paso Robles has been named as a defendant in two lawsuits filed by landowners who claim superior overlying water rights as against Paso Robles and other water supplier defendants. For a description of these actions, see “— Water Rights” herein and see also “LITIGATION–Steinbeck Vineyards and Eidemiller” in the forepart of this Official Statement.
PFAS Monitoring. Paso Robles routinely monitors for PFAS in its water supply and has periodically detected low levels of certain PFAS. Paso Robles has not identified any specific source of these PFAS that have reached its water supplies, and the occasional PFAS detections remain below the State’s required response levels. See “CERTAIN RISKS TO BOND OWNERS – Water Quality and PFAS” in the forepart of this Official Statement for a discussion on PFAS regulations and requirements.
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Drought and Conservation Measures
Paso Robles adopted its current Water Shortage Contingency Plan in June 2026. Conservation measures include reducing landscape irrigation and incentivizing leak repair. Paso Robles continues to implement water conservation through public education and outreach, customer assistance, rebates and incentives, water-waste enforcement, irrigation requirements, and permanent prohibitions against wasteful water use.
Water Connections
The following table shows the growth in the number of water connections to the Paso Robles Water System for Fiscal Years 2020-21 through 2024-25.
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Paso Robles
Water Connections
For Fiscal Years Ended June 30, 2021 through 2025
Fiscal Year Ended (June 30) Connections % Increase/(Decrease) 2021 10,874 --
2022 10,899 0.23%
2023 10,951 0.48
2024 10,999 0.44
2025 11,115 1.05
Source: Paso Robles.
Water Deliveries
The following table presents a summary of water deliveries for the Paso Robles Water System in cubic feet per year for the Fiscal Years 2020-21 through 2024-25.
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Paso Robles
Water Deliveries
For Fiscal Years Ended June 30, 2021 through 2025
Fiscal Year Ended (June 30)
Total Gallons
(in hundreds) % Increase/(Decrease)
2021 1,871,939 --
2022 1,814,957 (3.04)%
2023 1,635,733 (9.87)
2024 1,656,053 1.24
2025 1,672,355 0.98
Source: Paso Robles.
Water Sales Revenues
The following table shows annual water sales revenues from water sales for Fiscal Years 2020-21 through 2024-25.
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Table A2-3
Paso Robles
Water Sales Revenues
For Fiscal Years Ended June 30, 2021 through 2025
Fiscal Year Ended (June 30) Sales Revenues % Increase/(Decrease) 2021 $16,553,214 --
2022 16,608,091 0.33%
2023 15,889,796 (4.32)
2024 16,737,235 5.33
2025 19,039,492 13.76
Source: Paso Robles.
Largest Customers
For the Fiscal Year ended June 30, 2026, no customer’s total billings represent 10% or more of the gross revenues of the Paso Robles Water System.
Water System Rates and Charges
Paso Robles’s water rates are comprised of a monthly unit (consumption) charge based on the amount of water used. Paso Robles also charges for connections to the Paso Robles Water System, and for metered construction water consumption.
Connection Fee. Paso Robles charges connection fees for improvement or expansion of water treatment and distribution facilities to meet the requirements of community growth. As of January 1, 2026, connection fees for single family residences and commercial and industrial units range from $19,066 to $1,461,788 depending upon the meter size installed. Paso Robles assesses a connection fee based on customer class and meter size. The fee is as follows:
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Paso Robles
Connection Fees
As of January 1, 2026
Meter Size (in inches) Connection Fee
3/4” $19,066
1” 31,840
1.5” 63,490
2” 101,622
3” 190,660
4” 317,830
6” 635,470
8” 1,016,790
10” 1,461,788
Source: Paso Robles.
User Rates and Charges. Paso Robles charges rates (base fee plus consumption fee) for all customers, which have increased or will increase each year from April 1, 2023 through January 1, 2027.
Pursuant to Resolution No. 22-167, adopted on December 20, 2022, Paso Robles established five-year rate
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increases concluding on January 1, 2027. The historic, current and approved rates through calendar year 2027 for all customers are set forth in the following table:
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Paso Robles
Water Rates
Effective Date
April 1, January 1, January 1, January 1, January 1,
2023 2024 2025 2026 2027
Monthly Fixed Charges
Monthly charge billed based on meter size
Single Family 3/4 & 1-
inch
$13.00 $16.00 $19.00 $22.00 $25.00
3/4-inch Other $13.00 $16.00 $19.00 $22.00 $25.00
1-inch Other $16.33 $22.67 $29.00 $35.34 $41.67
1.5-inch $24.67 $39.33 $54.00 $68.66 $83.33
2-inch $34.67 $59.33 $84.00 $108.66 $133.33
3-inch $58.00 $106.00 $154.00 $202.00 $250.00
4-inch $91.33 $172.67 $254.00 $335.34 $416.67
6-inch & larger $174.67 $339.33 $504.00 $668.66 $833.33 Usage Charges
Billed based on metered water use in each billing period Rate per unit ($/hcf) $6.68 $6.81 $6.96 $7.13 $7.32
* HCF = hundred cubic feet, or 748 gallons
Source: Paso Robles.
If it is determined that water rate increases will be required in the future to meet coverage requirements, Paso Robles will implement those increases through the required public hearing process. See also “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.”
Collection Procedures. Paso Robles is on a monthly billing cycle for water service. Payment is due by the fifth day of the following month and is considered delinquent if not paid by that date. If not paid by end of such day, the account is deemed delinquent, and customers are assessed a 10% penalty. If the amount due is not paid within 10 days of the penalty date, water service is terminated. Prior to termination of service, Paso Robles provides a 48-hour notification on the door where service is to be terminated until paid. Termination notices are delivered to each such delinquent account two days prior to the discontinuance date. Customers receiving termination notices are currently assessed a $50 penalty fee. If service is discontinued, the customer must pay an additional $61 non-payment/restoration fee (this fee is subject to the provisions of Senate Bill 998). Both fees are increased by the annual percentage increase of the CPI on July 1 of each year.
Future Water System Improvements
In 2022, Paso Robles developed a water system Master Plan (the “Master Plan”) which assessed the ability of the existing water system to reliably meet the needs of current customers, as well as city-wide needs at buildout. The Master Plan identifies improvements to the water distribution system that are necessary to meet existing and projected demands. The Master Plan was included in Paso Robles’s recent water rate study.
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The major findings of the Master Plan are that approximately 5 miles of transmission and pipeline improvements, estimated to cost $12.1 million, are recommended to reliably meet existing demands, in particular to reliably sustain fire flows. Recommended improvements to meet current needs are focused in the west side of the system to improve fire flow for multiple land uses. Storage on each side of Paso Robles and existing river crossings provide adequate redundancy and reliability for existing conditions and distribution of supply from the Phase 1 Nacimiento Water Treatment Plant.
Increasing water demand coupled with the anticipated locations of potable water customers at buildout point to the need for an additional 3.2 miles of transmission and pipeline improvements estimated to cost $12.6 million. Transmission and pipeline improvements include installations to serve future singlefamily and multi-family residential developments at the eastern and southeastern areas of the system and the installation of a 16-inch main river crossing near the Thunderbird well field area to provide redundancy and reliability for distribution of Nacimiento water. An additional $4.5 million in storage tank improvements are also recommended to meet needs at buildout. These pipeline and storage improvements are within the Paso Robles’s existing water distribution system and do not include new pipelines and facilities within planned developments necessary for providing service within those developments.
In addition to the recommended capital improvements to address current or future capacity deficiencies, Paso Robles is proactively planning for the repair or replacement of the Paso Robles Water System assets as they reach the end of their useful lives. An anticipated replacement schedule for distribution system pipelines has been developed based on an analysis of pipeline age and useful life.
Rehabilitation and replacement projects were developed for both the booster pump stations and storage tanks, as well. The total budget for these projects over the next 30 years is $1.8 million for the booster pump station projects and $1.8 million for tank projects. Paso Robles plans to inspect wells regularly, perform efficiency test annually, and rehabilitate up to two wells per year. Based on age of the wells and rehabilitating two wells per year, Paso Robles’s budget includes a total of $13.4 million over the next 30 years.
The capital improvement plan described above does not include costs for a planned replacement of the spillway at San Antonio Dam. The spillway replacement is proposed to be undertaken by the Monterey County Water Resources Agency. The Flood Control District may be required to contribute up to approximately 32.3%, or about $25.2 million (estimated as of 2025), of the costs of the spillway replacement. The Flood Control District would charge through such costs, if any, proportionally to the Participants under the Delivery Contracts, including the Delivery Contract with Paso Robles. Spillway replacement project costs are expected to be incurred beginning in 2028. If Paso Robles is required to contribute, it currently expects to fund its share of such costs from water revenues, which may require increases in water rates. Currently, whether and how much the Flood Control District and, correspondingly, the Participants, including Paso Robles, will pay, and the funding sources for such payments, have not been determined and may change as the foregoing parties deliberate on proposals for the spillway replacement project at San Antonio Dam.
Cybersecurity
Paso Robles, like other public and private entities, relies on a large and complex technology environment to conduct its operations, and consequently faces the threat of cybersecurity incidents. Such incidents can result from unintentional events, or from deliberate attacks by unauthorized entities or individuals attempting to gain access to Paso Robles’s information technology systems to misappropriate assets or information or to cause operational disruption and damage. Paso Robles and its departments face cyber threats from time to time, including but not limited to hacking, viruses, malware, phishing, distributed denial-of-service, and other attacks on computers, networks, and systems. Paso Robles maintains cyber liability insurance through its insurance carrier.
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No assurances can be given that Paso Robles’s security and operational control measures will ensure against any and all cybersecurity threats and attacks. A cybersecurity incident or breach could damage Paso Robles’s information technology systems and cause disruption to city services and operations.
Although Paso Robles carries cyber liability insurance, the cost of any such disruption or remedying damage caused by future attacks could be substantial. Paso Robles will continue to assess cyber threats and protect its data and systems.
Paso Robles is also reliant on other entities and service providers in connection with its operations and finances. No assurance can be given that Paso Robles and these other entities will not be affected by cyber threats and attacks in a manner that may affect the operations and finances of Paso Robles, including its ability to meet payment obligations under its Delivery Contract.
FINANCIAL INFORMATION OF PASO ROBLES
Budgetary Process
Paso Robles’s budget development framework is guided by four primary priorities: (1) the longterm well-being and economic strength of the community; (2) the long-term fiscal stability of Paso Robles; (3) the nature and scope of municipal services provided; and (4) the overall well-being of the organization and its employees. As a service based organization, Paso Robles relies heavily on its workforce to deliver essential services, making organizational health a critical component of financial planning. The budget process is therefore centered on balancing these priorities in a manner that ensures they work collectively to support both current service levels and long-term sustainability.
The operating budget is prepared in the context of a five-year financial plan with operating expenditures and revenues being balanced over the term of the five-year financial plan. Paso Robles typically adopts a two-year budget, except in special situations (as in the case of the COVID-19 pandemic), which may call for a one-year budget. The budget development process begins with a review of current appropriations, with adjustments made only as needed to maintain existing service levels. This “baseline” approach accounts for known cost changes, such as contractual salary increases, updated employee benefit costs, or the elimination of services that are no longer required. Next, finance staff compiles budgetary requests for new and/or expanded services, as well as requests for operating capital not already provided for on various pre-authorized replacement schedules. These schedules are distributed to all executive managers for affirmation and/or completion. Upon affirmation and return of new request forms, the finance department compiles and publishes the draft budget. Executive managers meet to review the draft budget and prepare specific recommendations to balance the budget should resources not cover budgetary requests.
The draft budget and executive manager recommendations are then reviewed by the City Council and then formally adopted in June. The budget preparation, review, and approval process take place in the context of and with the objective of addressing the goals established by the City Council during a goal setting workshop held just prior to the process noted above.
Financial Statements
The most recent comprehensive annual financial report of Paso Robles prepared by Moss, Levy & Hartzheim L.L.P., independent certified public accountants, is attached hereto. The independent auditor’s letter concludes that the comprehensive annual financial report presents fairly, in all material respects, the financial position of the business-type activities of Paso Robles as of June 30, 2025, and the respective changes in financial position and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
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The summary operating results contained under the caption “–Operating Results” are derived from these financial statements (excluding certain non-cash items and after certain other adjustments) and are qualified in their entirety by reference to such statements, including the notes thereto.
Operating Results
The following table is a summary of operating results of Paso Robles Water System, for Fiscal Years 2020-21 through 2024-25. These results have been derived from the financial statements of Paso Robles, and excludes certain receipts which are not included as Revenues under the Delivery Contract and certain non-cash items and includes certain other adjustments.
Table A2-6
Paso Robles Water System
Operating Results
Fiscal Years Ended June 30
2021 2022 2023 2024 2025
Revenues
Charges for Current
Services $16,553,214 $16,608,091 $15,889,796 $16,737,235 $19,039,492 Interest Revenues 34,150 122,062 190,545 458,687 502,289 Connection Fees 495,527 1,008,013 1,844,929 1,027,794 3,013,923 Other Revenue 20,725 23,455 34,944 16,918 45,654
Total Revenues 17,103,616 17,761,621 17,960,214 18,240,634 22,601,358 Maintenance,
Operations, and
Administration(1)
12,417,131 12,133,925 11,959,228 13,075,391 13,763,864
Net Revenues 4,686,485 5,627,696 6,000,986 5,165,243 8,837,494 (1) Excludes depreciation and amortization.
Source: Paso Robles.
Management’s Discussion and Analysis
For the Fiscal Year ended June 30, 2025, the Water Fund’s change in net position was $7.0 million, representing a 13.7% increase when compared to the prior year. The growth, in large part, is attributable to the utility rate increase enacted by City Council approximately five years ago while operating expenses have been stable over the past two fiscal years. The Water Fund’s expenses for the [current] fiscal year were $15.9 million, representing an increase of $698,000, or 4.6%.
Outstanding Long-Term Indebtedness
On March 1, 2019, Paso Robles issued $8,118,000 Water Revenue Bonds for the purpose of providing funds for the replacement of the 21st Street Reservoir, an approximately four-million-gallon water storage tank. As of June 30, 2025, $5,266,712 of such Water Revenue Bonds was outstanding.
Investment Policy
Cash balances from all funds are combined and invested pursuant to the City Council’s adopted Investment Policy and California Government Code. Authorized investments include securities of the
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United States or its agencies, certificates of deposit, the State of California Local Agency Investment Fund, bakers’ acceptances, negotiable certificates of deposit and repurchase agreements. The earnings from these investments are allocated monthly to each fund based upon the closing balance of each fund at month end.
All enterprise fund investments are considered to be liquid investments for cash flow and reporting purposes. Funds held by outside fiscal agents under the provisions of bond indentures are maintained separately and interest income earned on such funds are credited directly to the bond fund or reported as if the interest was credited directly to said funds.
Insurance
Paso Robles is a member of the California Joint Powers Insurance Authority, a risk sharing selffunded joint powers authority composed of 126 California public agencies. The California Joint Powers Insurance Authority arranges and administers programs for providing self-insured losses, purchases excess insurance or reinsurance, and arranges for group purchased insurance for property and other lines of coverage. For additional information regarding Paso Robles’s insurance programs and related coverage, see Note 18 of the financial statements attached hereto.
Pension Benefits
Plan Description. Paso Robles includes two separate types of employer plans where all qualified permanent and probationary employees are eligible to participate, depending on the employee classification (i) Miscellaneous Employee Pension Plan (the “Miscellaneous Plan”), an agent multiple-employer defined benefit pension plan, and (ii) Safety Employee Pension Plan (includes police and fire), a cost-sharing multiple employer defined benefit pension plan. Eligible employees of the Paso Robles Water System participate only in the Miscellaneous Plan. Both types of pension plans are administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employees. Benefit provisions under the plans are established by State statute and Paso Robles City Council resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website (https://www.calpers.ca.gov/).
Benefits Provided. For both plans, CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment.
Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for nonduty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
The provisions and benefits in effect at June 30, 2025 for the Miscellaneous Plan, are summarized as follows:
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Miscellaneous Plan
Tier Tier II(1) Tier III (PEPRA)
Prior to On or after On or after
Hire date May 27, 2012 May 27, 2012 January 1, 2013
Benefit formula 2.5% @ 55 2.0% @ 60 2.0% @ 62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payment Monthly for life Monthly for life Monthly for life Retirement age 50-55 50-63 52-67
Monthly benefits, as a % of
eligible compensation 2.00% to 2.70% 1.43% to 2.42% 1.00% to 2.50% Final average compensation
period One year Three year Three year
Required employee
contribution rate 8.000% 7.000% 7.750%
Required employer normal
cost rate 10.450% 10.450% 10.450%
Required employer payment of
UAL(2) |-----------------------------$2,478,940---------------------------| (1) Second tier will only apply to employees transferring from another CalPERS’ agency or one with reciprocity on or after May 27, 2012.
(2)
The Miscellaneous Plan’s required employer payment of the Unfunded Actuarial/Accrued Liability (UAL) was calculated for the entire plan and is not allocated by Tier.
Source: City of El Paso de Robles Annual Comprehensive Financial Report, Fiscal Year Ended June 30, 2025.
Contributions. Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the fiscal year, with an additional amount to finance any unfunded accrued liability. Paso Robles is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
For additional information regarding the plans, including actuarial methods and assumptions, discount rate, pension liability and expense, see Notes 10 and 11 of the financial statements.
Post-Employment Benefits
Plan Description. In addition to pension benefits, the Paso Robles provides other post-employment benefits (OPEB), a single employer contribution plan, in accordance with State statutes, to all employees retiring from Paso Robles and enrolled in an insurance program under the California Public Employees’ Medical and Hospital Care Act (PEMHCA). Providing healthcare benefits under the Paso Robles’s group health plan may provide benefits at a substantially lower cost than if the retirees purchased their own individual benefits.
Benefits Provided. Paso Robles is required to contribute the PEMHCA minimum to CalPERS on behalf of annuitants eligible for, and participating in, CalPERS’ health insurance. In addition to contributions under PEMHCA, Paso Robles provides the following retiree medical reimbursement:
(i) Management, Police, Fire and Service Employees International Union (SEIU) employees hired before January 1, 2012, and who have a minimum of 10 years of service with Paso Robles, are eligible to receive up to $500 per month in medical reimbursements with no age limitation and (ii) Management, Police, Fire and SEIU employees hired on or after January 1, 2012, and who have a minimum of 20 years of service
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with Paso Robles, are eligible to receive up to $500 per month in medical reimbursements until age 65.
Paso Robles’s contributions may be used to defray premium cost for either Paso Robles provided plan(s) or other plans(s) secured by the retiree. Each retiree choosing to receive Paso Robles provided health care insurance pays CalPERS the full premium cost that exceeded Paso Robles’s contribution as detailed above directly.
For additional information regarding post-employment benefits including the annual contributions, expense, and obligation, see Note 12 of the financial statements.
CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES Article XIII B
Article XIII B of the State Constitution limits the annual appropriations of the State and of any city, county, school district, authority or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and population. Paso Robles is of the opinion that charges for Water Service do not exceed the costs it reasonably bears in providing such services and therefore are not subject to the limits of Article XIII B.
Paso Robles has covenanted in the Delivery Contract that it will establish, fix and collect rates and charges from the customers of the Paso Robles Water System at levels sufficient to produce revenue from the Paso Robles Water System which are at least equal to: the costs of operating and maintaining the Paso Robles Water System; plus the Contract Payments (as defined in the Delivery Contract). Paso Robles is of the opinion that the water rates and use charges imposed by Paso Robles do not exceed the costs that Paso Robles reasonably bears in providing such service.
Proposition 218
Article XIII D requires that any agency imposing or increasing any property-related fee or charge must provide written notice thereof to the record owner of each identified parcel upon which such fee or charge is to be imposed and must conduct a public hearing with respect thereto. The proposed fee or charge may not be imposed or increased if a majority of owners of the identified parcels file written protests against it. As a result, if and to the extent that a fee or charge imposed by a local government for water or wastewater service is ultimately determined to be a “fee” or “charge” as defined in Article XIII D, the local government’s ability to increase such fee or charge may be limited by a majority protest. See the discussion under “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS–Articles XIII C and XIII D of the California Constitution” in the forepart of this Official Statement.
AUDITED FINANCIAL STATEMENTS
The following is the complete comprehensive annual financial report of Paso Robles for the Fiscal Year ended June 30, 2025. Only the gross revenues of the Paso Robles Water System is pledged to pay the obligations of Paso Robles under its Delivery Contract. The inclusion of the complete comprehensive annual financial report of Paso Robles does not imply that any revenues of Paso Robles other than those of the Paso Robles Water System are pledged or available to make any payments under the Delivery Contract.
i
APPENDIX A3
CITY OF SAN LUIS OBISPO
TABLE OF CONTENTS
Page
THE CITY OF SAN LUIS OBISPO ......................................................................................................A3-1 General................................................................................................................................................A3-1 Governance and Management.............................................................................................................A3-1 Land and Land Use .............................................................................................................................A3-1 Water Rights.......................................................................................................................................A3-2 No Litigation Related to the 2026 Bonds............................................................................................A3-3 THE WATER SYSTEM OF THE CITY OF SAN LUIS OBISPO........................................................A3-3 Service Area........................................................................................................................................A3-3 Water Facilities...................................................................................................................................A3-3 Water Permits, Licenses and Other Regulations.................................................................................A3-4 Water System and Water Supply ........................................................................................................A3-4 Drought and Conservation Measures..................................................................................................A3-4 Water Connections..............................................................................................................................A3-5 Water Deliveries.................................................................................................................................A3-5 Water Sales Revenues.........................................................................................................................A3-6 Largest Customers ..............................................................................................................................A3-6 Water System Rates and Charges .......................................................................................................A3-7 Future Water System Improvements...................................................................................................A3-9 Cybersecurity ......................................................................................................................................A3-9 FINANCIAL INFORMATION OF THE CITY OF SAN LUIS OBISPO...........................................A3-10 Budgetary Process.............................................................................................................................A3-10 Investment Management Plan...........................................................................................................A3-11 Financial Statements.........................................................................................................................A3-12 Operating Results..............................................................................................................................A3-12 Outstanding Long-Term SLO Water System Indebtedness..............................................................A3-13 Insurance...........................................................................................................................................A3-13 Pension and Post-Retirement Benefits..............................................................................................A3-14 CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES...........................A3-15 Article XIII B....................................................................................................................................A3-15 Proposition 218 .................................................................................................................................A3-15 AUDITED FINANCIAL STATEMENTS ...........................................................................................A3-15
ii
Tables
Table A3-1–SLO Water System Estimated Active Accounts by Type of Customer..............................A3-3 Table A3-2–SLO Water System Water Connections..............................................................................A3-5 Table A3-3–SLO Water System Water Deliveries in Acre-Feet Per Year ............................................A3-6 Table A3-4–SLO Water System Water Sales Revenues ........................................................................A3-6 Table A3-5–SLO Water System Largest Customers by Water Use ......................................................A3-7 Table A3-6–SLO Water System Water Rates ........................................................................................A3-9 Table A3-7–SLO Water System Operating Results .............................................................................A3-12
1 THE CITY OF SAN LUIS OBISPO
General
The City of San Luis Obispo (“SLO”) is a charter city and municipal corporation of the State of California (the “State”). SLO was first incorporated in 1856 as a General Law City and became a Charter City in 1876. SLO operates as a full-service city that provides police, fire, water, sewer, streets, transit, parking, planning, building, engineering and parks and recreation services to the community. SLO operates under the Council-Mayor-City Manager form of government. Council members are elected at- large and serve overlapping, four-year terms. The Mayor is also elected at-large for a two-year term and serves as an equal member of the Council. The Council appoints the City Manager and City Attorney. All other department heads are appointed by the City Manager.
SLO is located eight miles from the Pacific Ocean and is midway between San Francisco and Los Angeles at the junction of Highway 101 and Highway 1. A number of federal and state regional offices and facilities are located in SLO, which also serves as the County of San Luis Obispo (the “County”) seat, including, the Regional Water Quality Control Board and Caltrans District offices. California Polytechnic State University, San Luis Obispo and Cuesta Community College are located in the County, not far outside of SLO’s city limits. The State Department of Finance estimated that SLO’s population as of January 1, 2026 was approximately 50,165.
SLO is a party to a Delivery Contract (the “Delivery Contract”) with the San Luis Obispo County Flood Control and Water Conservation District (the “Flood Control District”), pursuant to which SLO covenanted, inter alia, to pay its pro rata share of various capital expenses relating to the funding of design costs, engineering, planning, environmental mitigation, equipping new facilities and/or construction efforts, accounting services, project administration and management, installation, grading, razing, and building the Nacimiento Project.
For additional financial information regarding SLO, see the excerpts of the financial statements submitted by SLO under the heading “AUDITED FINANCIAL STATEMENTS.” Governance and Management
SLO has provided water service to its residents for over 100 years. During this time SLO has developed its water sources and treatment facilities (the “SLO Water System”) to satisfy SLO’s growing water needs. The operation of the SLO Water System is administered and managed by the Public Works and Utilities Department, which includes a Water Division and a Wastewater Division as separate enterprise funds. The SLO Water System’s operation is aided by the use of computers, automated controls, and telemetry systems.
Land and Land Use
SLO’s existing water treatment plant is located on Stenner Creek Road, northwest of the California Polytechnic State University, San Luis Obispo campus. This facility was originally constructed in 1964 to provide treatment of surface water from Salinas and Whale Rock Reservoirs. Since 2011, this plant (the “SLO Water Plant”) also treats water from Nacimiento Reservoir. The SLO Water Plant was originally designed to treat up to 8 million gallons per day (mgd). The SLO Water Plant has been upgraded three times and is permitted to treat up to 16.0 mgd, a level capable of serving existing and future build-out consistent with SLO’s General Plan.
2 Water Rights
The existing city water system is made up of raw water supply from Nacimiento, Whale Rock, and Salinas Reservoirs, and the SLO Water Plant. The City is also in the process of constructing two new groundwater production wells. Brief descriptions of the water sources are as follows:
Nacimiento Reservoir. Since 1959, the Flood Control District has had an entitlement to 17,500 acre-feet per year (“AFY”) of water from the Nacimiento Reservoir for use in the County. The Nacimiento Reservoir provides flood protection and is a source of supply for groundwater recharge for the Salinas Valley. The Nacimiento Reservoir is owned and operated by the Monterey County Water Resources Agency. Approximately 1,750 AFY have been designated for uses around the lake, leaving 15,750 acre feet for allocation to other areas within the County. SLO has a contractual entitlement to 5,482 AFY.
Construction of the Nacimiento Project was substantially completed in December 2010 and water deliveries to SLO began in January 2011. In 2025, due to necessary pipeline repairs, the Nacimiento Reservoir supplied a reduced volume of 1,230 acre feet of water to SLO, constituting 23% of the total supply for that year.
Whale Rock Reservoir. The Whale Rock Reservoir, owned and operated by a joint exercise of powers agency formed by SLO and the State, is a 38,967 acre feet reservoir created by the construction of an earthen dam on Old Creek near the town of Cayucos. The State Department of Water Resources designed and completed the dam in 1961 to provide water to SLO, California Polytechnic State University, and the California Men’s Colony. The Whale Rock Dam captures water from a 20.3-square mile watershed and water is delivered to the three agencies through 17.6 miles of shared 30-inch pipeline and two pumping stations. The Whale Rock Reservoir is considered a backup supply and provides water during off-peak operations, when Salinas Reservoir has excessive turbidity problems following storm events, or to supplement supply when water demand exceeds delivery capacity from Salinas Reservoir. In 2025, the Whale Rock Reservoir supplied 1,774 acre feet of water, constituting 33% of the total supply for that year.
Salinas Reservoir. The Salinas Dam was built in 1941 by the War Department to supply water to Camp San Luis Obispo and, secondarily, to meet the water needs of SLO. The Salinas Reservoir (Santa Margarita Lake) captures water from a 112-square mile watershed and can currently store up to 22,508 acrefeet. In 1947, the Salinas Dam and delivery system was transferred from the regular Army to the U.S. Army Corps of Engineers. Since 1965, the Flood Control District has operated this water supply for the exclusive use of SLO under a lease from the U.S. Army Corps of Engineers. Water from this reservoir is pumped through the Cuesta Tunnel (a one-mile long tunnel through the mountains of the Cuesta Ridge) and then flows by gravity to the SLO Water Plant. SLO has water rights to store up to 45,000 acre feet in the Salinas Reservoir. The original design of the dam included a gate in the spillway to increase the storage capacity.
In 2025, the Salinas Reservoir supplied 2,379 acre feet of water, constituting 44% of the total supply for that year.
Recycled Water. Recycled water is highly-treated wastewater approved for reuse by the California Department of Public Health for a variety of applications, including landscape irrigation and construction dust control. Completed in 2006, the SLO Water Reuse Project created the first new source of water for SLO since 1961 following construction of Whale Rock Dam. The project resulted in improvements at the SLO Water Resource Recovery Facility and an initial eight miles of distribution pipeline. The first delivery of recycled water to SLO took place in 2006. Current demand exists for approximately 400 acre feet of recycled water for landscape irrigation and other approved uses within SLO limits. In 2025, SLO delivered 261 acre feet for irrigation to construction projects, parks, the school district, and private development landscape areas.
3 Groundwater. SLO overlies the San Luis Obispo Valley Groundwater Basin, which is subject to the Sustainable Groundwater Management Act (“SGMA”). SLO and the County formed Groundwater Sustainability Agencies for their respective jurisdictions within the basin, and a Groundwater Sustainability Plan has been prepared to guide long-term sustainable management of the basin. SLO does not currently rely on groundwater as an active potable source, but groundwater is expected to be used as a source of supply starting in 2027 when SLO completes a groundwater cleanup project that is designed to restore SLO’s ability to pump and treat local groundwater supplies. SLO anticipates that any future municipal groundwater extraction would be operated consistent with SGMA, the adopted Groundwater Sustainability Plan, applicable water quality and treatment requirements, and any future basin management actions. SLO does not anticipate that groundwater supplies will be needed to meet customer demands in the future.
Rather, groundwater will be utilized as it is available to reduce ongoing operating costs and to improve water quality within SLO’s drinking water system.
No Litigation Related to the 2026 Bonds
SLO is presently involved in certain matters of litigation that have arisen in the normal course of its city business. SLO management believes, based upon consultation of the SLO City Attorney, that these cases, in the aggregate, are adequately covered by insurance and not expected to result in a material adverse financial impact on SLO.
THE WATER SYSTEM OF THE CITY OF SAN LUIS OBISPO
Service Area
The SLO Water System currently provides water within a service area which consists primarily of the incorporated boundaries of SLO, serving a population of approximately 50,165 as of January 1, 2026, as estimated by the State Department of Finance. In addition, the SLO Water System serves several users located outside city limits, including the California Polytechnic State University and San Luis Obispo Regional Airport, under separate agreements. The following table shows active accounts in SLO by type of customer as of June 30, 2025.
Table A3-1
SLO Water System
Estimated Active Accounts by Type of Customer
Fiscal Year Ended June 30, 2025
Type of Customer
Active
Accounts Percent
Single Family 13,702 80%
Multi-Family 1,121 6%
Non-Residential 1,677 10%
Dedicated Irrigation 627 4%
Total 17,127 100%
________________
Source: SLO.
Water Facilities
SLO’s existing water distribution facilities include 10 reservoirs/tanks, 8 booster pumping stations, 11 pressure zones, and a total of approximately 191 miles of water mains. SLO’s existing water storage
4 facilities have a total nominal capacity of approximately 25 million gallons. SLO operates the SLO Water Plant which is located approximately one mile north of Highway 1 along Stenner Creek Road. SLO’s current drinking water permit allows the SLO Water Plant to treat up to 16 mgd from its three surface water sources - Nacimiento Reservoir, Whale Rock Reservoir, and Salinas Reservoir. The SLO Water Plant was upgraded in 2008 to provide full-conventional treatment for the entire 16 mgd rated flow. The water is first oxidized and disinfected using ozone, then flows to rapid mixers where alum and polymer are added for coagulation and then to a ballasted flocculation process (Actiflo) which uses micro-sand to enhance removal of floc particles from the water. The water is then finally filtered, chlorinated and fluoride is added before the treated water is stored for use in the SLO water distribution system. From 2017-2023 SLO completed a major upgrade to the SLO Water Plant, replacing its original ozone system with a state-of-the-art ozone system, installing a battery system to reduce energy costs, and installing a diesel generator for emergency backup power.
PFAS Monitoring. SLO monitors for per- and poly-fluoroalkyl substances (“PFAS”) in accordance with State and federal regulations and to date has not identified PFAS in its drinking water reservoirs. Groundwater supplies have been determined to have low levels of PFAS contamination, which is expected to be reduced to meet State and federal water quality requirements through the treatment systems that will be installed with SLO’s two new groundwater pumping wells. PFAS contamination is not believed to be caused by SLO-related operations and SLO does not expect to be liable for PFAS-related groundwater cleanup efforts. See “CERTAIN RISKS TO BOND OWNERS – Water Quality and PFAS” in the forepart of this Official Statement for a discussion on PFAS regulations and requirements.
Water Permits, Licenses and Other Regulations
SLO’s water production and distribution system is permitted and regulated by the California State Water Resources Control Board (the “SWRCB”) pursuant to amended Water Permit No. 04-06-94P-000, System No. 4010009. The SWRCB Division of Water Rights regulates the appropriation and use of water from Salinas and Whale Rock Reservoirs pursuant to permit numbers 5882 and 11390, respectively. Permit No. 11390 (Whale Rock) limits annual diversion to storage to 22,040 acre feet per year and the amount allowed for direct diversion to 16 cubic feet per second. Permit No. 5882 (Salinas) limits annual diversion to storage to 45,000 acre feet per year and the amount allowed for direct diversion to 12.4 cubic feet per second.
Water System and Water Supply
As of June 30, 2025, there were 17,133 consumer connections compared with 17,015 as of June 30, 2024. The SLO Water System consists of raw water supply from Nacimiento, Whale Rock, and Salinas Reservoirs, and the SLO Water Plant. For additional water supply information, see “–Water Rights.” Historically, SLO has met its water supply demand primarily from surface water supplies and a small amount of groundwater. These water supplies are expected to meet all future water demands through 2050.
Drought and Conservation Measures
California is not currently under statewide emergency drought conservation restrictions, but urban water suppliers remain subject to permanent water-use efficiency requirements and annual reporting. The State’s “Making Conservation a California Way of Life” framework establishes supplier-specific urban water use objectives and gives each supplier flexibility to meet those objectives through locally appropriate programs, rather than imposing identical customer-by-customer requirements statewide. The SWRCB also notes that there are currently no statewide emergency water conservation regulations in effect, though local
5 agencies may adopt and enforce local conservation measures as needed. SLO does not currently have any drought-related regulations in effect.
SLO remains compliant with applicable conservation and water-use efficiency requirements through its ongoing conservation program, water waste prevention rules, metering and billing practices, recycled water use, public education and customer support, water loss management, landscape efficiency efforts, and demand management measures. These programs have helped keep community water use low; current potable demand remains well below SLO’s conservative long-term planning value of 117 gallons per capita per day. SLO’s conservation ethic, recycled water program, and demand management measures reduce pressure on potable supplies and support long-term water supply reliability.
As a result, SLO is not relying on short-term emergency restrictions to achieve conservation.
Instead, conservation is built into normal operations through ongoing programs, customer outreach, efficient development standards, recycled water use, water loss tracking, and compliance with State reporting requirements. These efforts help maintain low demand, support drought preparedness, and demonstrate that SLO is meeting applicable conservation regulations while retaining the ability to implement additional Water Shortage Contingency Plan measures if future conditions require them.
Water Connections
The following table shows the growth in the number of water connections, excluding recycled water connections, to the SLO Water System for Fiscal Years ended June 30, 2021 through June 30, 2025.
Table A3-2
SLO Water System
Water Connections
For Fiscal Years Ended June 30, 2021 through 2025
Fiscal Year Ended
(June 30) Connections % Increase/(Decrease)
2021 15,958 --
2022 16,256 1.87%
2023 16,703 2.75
2024 17,015 1.87
2025 17,127 0.66
________________
Source: SLO Annual Comprehensive Financial Report, Fiscal Year 2024-25.
Water Deliveries
The following table presents a summary of historic water deliveries, excluding recycled water deliveries, for the SLO Water System in acre-feet per year for Fiscal Years ended June 30, 2021 through June 30, 2025.
6 Table A3-3
SLO Water System
Water Deliveries in Acre-Feet Per Year
For Fiscal Years Ended June 30, 2021 through 2025
Fiscal Year Ended
(June 30) Deliveries % Increase/(Decrease)
2021 5,602 --
2022 5,732 2%
2023 5,130 (11)
2024 4,678 (9)
2025 5,029 8
________________
Source: SLO Annual Comprehensive Financial Report, Fiscal Year 2024-25.
Water Sales Revenues
The following table shows annual water sales revenues from water sales, including recycled water sales, for Fiscal Years ended June 30, 2021 through June 30, 2025.
Table A3-4
SLO Water System
Water Sales Revenues
For Fiscal Years Ended June 30, 2021 through 2025
Fiscal Year Ended
(June 30) Sales Revenues % Increase/(Decrease)
2021 $22,757,325 --
2022 24,129,231 6.03%
2023 23,297,077 (3.45)
2024 26,088,324 11.98
2025 28,958,623 11.00
________________
Source: SLO Annual Comprehensive Financial Report, Fiscal Year 2024-25.
Largest Customers
The following table sets forth the 10 largest customers of the SLO Water System as of June 30, 2025 as determined by water use.
7 Table A3-5
SLO Water System
Largest Water Customers by Water Use
(Fiscal Year Ended June 30, 2025)
Customers Service Type
Water Use
(acre-feet)
City of San Luis Obispo Parks & Golf Landscape 57.85
Silver City Mobile Home Park Mobile Homes 56.86
ELL-CAP 97-Laguna Lake Mobile Homes 56.44
Adventist Health System/West Care Facilities 42.86
CAP VIII - Mustang Village LLC Apartments 40.34
Creekside Community Mobile Homes 32.65
Dignity Health #366 Care Facilities 31.43
SLO Coastal Unified School 24.41
Embassy Suites Hotel 22.02
State of California Landscape 18.31
Source: SLO Annual Comprehensive Financial Report, Fiscal Year 2024-25.
SLO serves several customers located outside its city limits, including California Polytechnic State University (the “University”), the largest customer of the SLO Water System. Under the agreement with the University, SLO charges rates based on the actual consumption of water, in accordance with a formula established by SLO which is based on rates charged to commercial users generally as modified to reflect the part of the rate structure which is applicable to the University. For the Fiscal Year ended June 30, 2025, the University used 572 acre feet of water supplied by the SLO Water System, for which it paid $1,078,647 which was approximately 3.7% of total revenues derived from water sales in that year.
Water System Rates and Charges
The SLO Water System receives revenues from three primary sources: (i) monthly water rates and service charges, (ii) development impact fees and (iii) miscellaneous sources including interest income.
SLO’s current rate structure imposes charges based on consumption, and fixed components in form of a base fee.
SLO water rates apply a flat (base) fee plus a volumetric charge based on a unit fee for the amount of water used. SLO also charges for disconnections and reconnections to the SLO Water System. In addition, SLO charges impact fees for new connections to the SLO Water System. SLO’s unit charge is based on the number of 100 cubic feet (“hcf”) used and calculated at the rate shown on the following schedule (as of June 30, 2025).
Quantity
Cost/hcf
Inside City
Cost/hcf
Outside City
Base Fee $30.25 $60.50
Volumetric Charge
0-5 hcf 8.54 17.07
6-12 hcf 9.84 19.68
13+ 16.97 33.95
Source: SLO.
8 Rate Increases. The SLO City Council reviews its water rate schedule on an annual basis and adjusts water rates by resolution at a public meeting pursuant to Proposition 218. In June 2025, the SLO City Council adopted updated water rates for Fiscal Years 2025-26 and 2026-27, which rates take effect on July 1 of each fiscal year. The following tables reflect the updated volumetric water rates and monthly base fees.
Volumetric Water Rates
Usage (per unit(1) cost) Effective July 1, 2025 Effective July 1, 2026 Single Family Residential
Tier 1: 0 to 5 units $9.01 $9.51
Tier 2: 6 to 12 units 10.38 10.95
Tier 3: 13+ units 17.90 18.88
Multi Family, Non-Residential, Landscape Irrigation
Multi-Family — all use $10.11 $10.67
Non-Residential — all use 10.70 11.29
Landscape Irrigation — all use(2) 10.92 11.52
(1) One unit of water = 100 cubic feet.
(2) Recycled water is set at 90% of the landscape irrigation rate.
Note: A 5% Utility Users Tax is applied to the entire water portion of the bill, including the base fee and all surcharges.
Source: SLO.
Monthly Water Base Fees
Base Fees Effective July 1, 2025 Effective July 1, 2026 Single Family Residential
Monthly Base Fee $31.91 $33.67
Multi Family, Non-Residential, and Landscape Irrigation Monthly Base Fee by Water Meter Size
0.75 inch meter or less $31.91 $33.67
1 inch meter 53.28 56.21
1.5 inch meter 106.34 112.19
2 inch meter 170.17 179.53
3 inch meter 319.24 336.80
4 inch meter 532.19 561.46
6 inch meter 1,064.07 1,122.59
8 inch meter 1,702.61 1,796.25
Water System Access Charge(1) 114.47 120.76
(1) Water System Access Charge applies where SLO provides fire protection only to accounts that utilize a private well for domestic purposes.
Note: A 5% Utility Users Tax is applied to the entire water portion of the bill, including the base fee and all surcharges.
Source: SLO.
The following table reflects historic water rates for Fiscal Years 2020-21 through 2024-25.
9 Table A3-6
SLO Water System
Water Rates
Fiscal Years
Monthly
Base Fee
Monthly
Consumption
1-5 hcf
Monthly
Consumption
6-12 hcf
Monthly
Consumption
13+ hcf
2020-21* $22.52 $6.44 $7.51 $13.76
2021-22 23.31 6.67 7.77 14.24
2022-23 24.12 6.90 8.04 14.74
2023-24 28.15 7.94 9.16 15.79
2024-25 30.25 8.54 9.84 16.97
* Rate increase was deferred to February 1, 2021 due to COVID-19.
Notes:
1. Rates are for services inside SLO, outside SLO rates are double.
2. Third tier applies only to single-family residential customers.
Source: SLO Annual Comprehensive Financial Report, Fiscal Year 2024-25.
Development Impact Fees. SLO charges development impact fees for improvement or expansion of water treatment and distribution facilities to meet the requirements of community growth. The 2026-27 Fiscal Year development impact fee for single family residences are determined by square footage between $5,555.37 (for <450 sq. ft. per unit) and $18,410.19 (for >1201 sq. ft. per unit). Non-residential projects are charged based on meter size and range between $18,517.82 (for a 3/4” meter) to $614,900.19 (for a 6” meter).
Future Water System Improvements
SLO is planning several significant water system improvements for the upcoming ten year period.
Major upgrades include a rehabilitation of the raw water distribution pump stations at Whale Rock Reservoir, a replacement of SLO’s largest treated water storage tank (Reservoir #2), and replacement of major water distribution transmission lines from the SLO Water Plant into the city limits. These projects, and others captured in SLO’s most recent financial plan, are accounted for in SLO’s long-term fiscal planning documents and supported by current water rates.
The capital improvement plan described above includes costs for a planned replacement of the spillway at San Antonio Dam. The spillway replacement is proposed to be undertaken by the Monterey County Water Resources Agency. The Flood Control District may be required to contribute up to approximately 32.3%, or about $25.2 million (estimated as of 2025), of the costs of the spillway replacement. The Flood Control District would charge through such costs, if any, proportionally to the Participants under the Delivery Contracts, including the Delivery Contract with SLO. Spillway replacement project costs are expected to be incurred beginning in 2028. If SLO is required to contribute, it currently expects to fund its share of such costs from water rates. Currently, whether and how much the Flood Control District and, correspondingly, the Participants, including SLO, will pay, and the funding sources for such payments, have not been determined and may change as the foregoing parties deliberate on proposals for the spillway replacement project at San Antonio Dam.
Cybersecurity
SLO relies on a complex technology environment to conduct its daily operations. As a recipient and provider of personal, confidential, and sensitive information SLO and its departments experience
10 multiple cybersecurity threats which include but are not limited to, social engineering, malware, denial-ofservice and other attacks on endpoints.
SLO has put several preventive measures in place to safeguard against cybersecurity threats. These measures include cybersecurity awareness training, firewalls, email filtering, web content filtering, endpoint protection, and ensuring that operating systems, network equipment, and endpoint devices are upto-date with the latest patches. Additionally, advanced segmentation and monitoring techniques are employed to detect and respond to potential threats within the network, while real-time endpoint detection and response systems help identify and mitigate any malicious activity on devices.
SLO currently maintains insurance coverage with respect to certain information security and privacy liability claims. However, SLO is not required to maintain cybersecurity insurance. Future cybersecurity attacks could affect the operations and finances of SLO, including its ability to meet payment obligations under its Delivery Contract.
FINANCIAL INFORMATION OF THE CITY OF SAN LUIS OBISPO
Budgetary Process
SLO has received national recognition for its use of a two-year financial plan (a “Financial Plan”) and budgetary process that emphasizes long-range planning and effective program management. Significant features of SLO’s two-year Financial Plan include the integration of SLO City Council goalsetting into the budgetary process and the extensive use of formal policies and measurable objectives. The Financial Plan includes operating budgets for two years and a Capital Improvement Plan (the “CIP”) covering five years.
Under this multi-year approach, appropriations continue to be made annually; however, the Financial Plan is the foundation for preparing the budget for the second year. Additionally, unexpended operating appropriations from the first year may be carried over for specific purposes into the second year with the approval of the City Manager.
Management Policies. The overall goal of SLO’s Financial Plan is to establish and maintain effective management of SLO’s financial resources. Formal statements of budgetary policies and major objectives provide the foundation for achieving this goal. Key budget principles include: continuing basic services at current levels and adequately funding them; maintaining fund balances at levels which will protect SLO from future uncertainties; estimating revenues at realistic levels; making all current expenditures with current revenues; finding solutions to SLO’s financial challenges which maintain and promote a quality community; maintaining a traditional commitment to a strong General Fund; and complying with provisions of the State Constitution, SLO City Charter, municipal code and sound fiscal policy. Key revenue policies include: maintaining a diversified and stable revenue base; setting enterprise fund rates at levels that fully recover the total cost of providing services; charging fees for General Fund programs in accordance with adopted user fee cost recovery goals; and ensuring that new development pays its fair share of the cost of constructing necessary community facilities.
Budget Process. The City Manager is responsible for preparing the budget and submitting it to the SLO City Council for approval. Although specific steps will vary from year to year, the following is an overview of the general approach used under SLO’s two-year budgetary process:
First Year. The Financial Plan process begins with a SLO City Council goal-setting session to determine major objectives to be accomplished over the next two years. These are incorporated into the budget instructions issued to the operating departments, that are responsible for submitting initial budget proposals. After these proposals are comprehensively reviewed and a detailed
11 financial forecast is prepared, the City Manager issues the Preliminary Financial Plan for public comment. A series of study sessions and public hearings are then held leading to SLO City Council adoption of the budget by July 1.
Second Year. Before the beginning of the second year of the two-year cycle, the SLO City Council reviews the progress made during the first year and approves appropriations for the second fiscal year.
Mid-Year Reviews. The SLO City Council formally reviews SLO’s financial condition and amends appropriations, if necessary, in February of each year, based on the first six months of operations.
Status Reports. Online access to “up-to-date” financial information is provided to staff throughout the organization. Additionally, financial reports are prepared monthly to monitor SLO’s fiscal condition; more formal reports are issued to the SLO City Council on a quarterly basis. The status of major program objectives, including CIP projects, is formally reported to the SLO City Council on an ongoing basis.
Accounting. Budgets are prepared for each fund in accordance with its respective basis of accounting.
All governmental funds have legally adopted budgets including capital project funds. While budgets are prepared for SLO’s capital project funds, the CIP projects generally span more than one year and are effectively controlled at the project level; accordingly, budgetary comparisons are not presented in the accompanying basic financial statements.
Administration. As provided under the SLO City Charter, the SLO City Council may amend or supplement the budget at any time after its adoption by majority vote of the SLO City Council. The SLO City Manager has the authority to make or approve administrative adjustments to the budget as long as those changes will not have a significant policy impact nor affect the budgeted year-end fund balances. The level for which expenditures are not to exceed appropriations is at the fund level.
Investment Management Plan
SLO’s investment management plan addresses a wide variety of investment practices, including primary investment objectives, investment authority, allowable invest vehicles, investment maturity terms eligible financial institutions, capital preservation and cash flow management. Under SLO’s policies, investments in its portfolio are intended to be held until maturity. Accordingly, investment terms are selected for consistency with SLO’s cash flow needs. SLO is authorized by its investment policy and the California Government Code to invest in securities issued or guaranteed by the federal government or its agencies, repurchase agreements, bankers’ acceptances, commercial paper, corporate notes and mutual funds, negotiable certificates of deposit, and the State Local Agency Investment Fund.
Reports are issued quarterly to the Investment Oversight Committee by the SLO City Treasurer, providing detailed information regarding SLO’s investments and compliance with SLO policy. The Investment Oversight Committee, comprised of one SLO Council Member, the SLO City Manager, the SLO Assistant City Manager, the SLO Director of Finance/City Treasurer, the SLO Accounting Manager, and an appointed member from the SLO public at large meet quarterly to review SLO’s investment activities. At these meetings, the SLO City Treasurer reports to the committee on compliance with the Investment Management Plan. Under SLO’s investment policies, its primary investment objective is to achieve a reasonable rate of return on public funds while minimizing risk and preserving capital. In
12 evaluating the performance of SLO’s portfolio in achieving this objective, it is expected that yields on SLO’s investments will regularly meet or exceed the average return on three-month U.S. Treasury Bills, and that the portfolio managed by the investment advisor will meet or exceed the BofA Merrill Lynch 0 to 5-year U.S. Treasury Bond Index.
Financial Statements
The most recent annual comprehensive financial report of SLO prepared by Badawi & Associates, certified public accountants, is included under the heading “AUDITED FINANCIAL STATEMENTS.” The independent auditor’s letter concludes that the Annual Comprehensive Financial Report presents fairly, in all material respects, the financial position of the business-type activities of SLO as of June 30, 2025, and the respective changes in financial position and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The summary operating results contained under the caption “–Operating Results” are derived from these financial statements (excluding certain non-cash items and after certain other adjustments) and are qualified in their entirety by reference to such statements, including the notes thereto.
Operating Results
The following table is a summary of operating results of the SLO Water System, for Fiscal Years ended June 30, 2021 through June 30, 2025. These results have been derived from the financial statements of SLO but exclude certain receipts which are not included as Revenues under the Delivery Contract and certain non-cash items and include certain other adjustments.
Table A3-7
SLO Water System
Operating Results
Fiscal Years Ended June 30
Operating Revenues 2021 2022 2023 2024 2025
Charges for sales and services $23,387,564 $24,511,658 $23,856,235 $26,454,326 $29,285,188 Development impact fees(1) 4,744,361 5,160,020 3,616,307 4,686,719 4,843,919 Other revenue 208,150 222,451 248,134 253,917 227,320
Total Revenues $28,340,075 $29,894,129 $27,720,676 $31,394,962 $34,356,427 Operating Expenses(2) $20,666,702 $20,160,343 $21,475,685 $25,043,587 $27,485,998 Net Revenues $7,673,373 $9,733,786 $6,244,991 $6,351,375 $6,870,429 (1) Includes development impact fees but excludes the value of physical facilities dedicated to SLO by developers. (2) Includes payments made to the Flood Control District pursuant to the SLO Delivery Contract. See “Security and Sources of Payment for the Bonds–The Delivery Contracts” in the forepart of this Official Statement. Excludes depreciation/amortization and loss on disposal of assets.
Source: SLO; SLO Annual Comprehensive Financial Reports, Fiscal Years 2020-21 through 2024-25.
Gross Revenues. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period.
13 Operations and Maintenance Costs. The water fund accounts for the provision of water services to the residents of SLO as well as some customers in the County of San Luis Obispo. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, maintenance, improvements and debt service.
Outstanding Long-Term SLO Water System Indebtedness
As of June 30, 2025, SLO had outstanding obligations payable to the California Infrastructure and Economic Development Bank (CIEDB) of $10,484,882. Additionally, SLO had outstanding obligations for its 2018 Water Revenue Refunding Bonds of $6,845,000. The aggregate outstanding amount of the obligations as of June 30, 2025 was $17,329,882.
The term “net revenues” is defined in the State loan agreements and the bond indentures as all gross income and revenues received or receivable by SLO from the ownership or operation of the SLO Water System less operations and maintenance costs. As presented in Table A3-7, payments made to the Flood Control District pursuant to the SLO Delivery Contract are included as operations and maintenance costs of the Water System.
Insurance
General Liability and Workers’ Compensation. SLO is a member of the California Joint Powers Insurance Authority (“CJPIA”), which provides joint protection programs and group purchased insurance for public entities covering liability, errors and omission losses, auto liability, employment practices liability, crime, pollution, workers’ compensation injuries and coverage for city-owned property. SLO has a retained limit of $500,000 per occurrence for liability and no retained limit for workers’ compensation.
Liabilities of SLO are reported when it is probable that a loss has occurred, and the amount of the loss can be reasonable estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNR). The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines and damage awards.
Accordingly, claims are reevaluated periodically to consider the effects of economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether or not they are attributable to specific claims. Estimated recoveries, for example from salvage or subrogation, are another component of the claims liability estimate.
During the past three fiscal years, none of the protection programs experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured coverage in Fiscal Year 2024-25.
CJPIA covers workers’ compensation claims up to a pooled limit of $1 million per occurrence and provides excess coverage to statutory limits with a group purchased commercial insurance policy. SLO pays an annual contribution to CJPIA and may share in any member refunds in the event that pooled funding exceeds the cost of pooled claims and claim-related expenses, or SLO may be required to pay additional contributions based upon CJPIA’s operating results. Financial statements of CJPIA may be obtained from its administrative office located at 8081 Moody Street, La Palma, California 90623, or by calling (562) 467- 8700.
Additional claims and lawsuits have been filed against SLO in the normal course of business. It is reasonably possible that SLO may be liable for claims not to exceed $500,000. In the opinion of
14 management, the resolution of these matters will not have a material adverse effect on the financial condition of SLO.
Pension and Post-Retirement Benefits
SLO contributes to the California Public Employees’ Retirement System (“CalPERS”) pension plans to provide retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. Eligible employees of the SLO Water System participate in the Miscellaneous Plan administered by CalPERS. Benefit provisions and all other requirements are established by State statute and city ordinance. The amount of SLO’s required annual contribution is determined actuarially. It is the policy of SLO to fund the annual contribution to ensure that the plan will be able to fully meet its obligation to retired employees on a timely basis. For the Fiscal Year ended June 30, 2025, SLO’s annual CalPERS pension cost for the SLO Water System was $1,452,663 for miscellaneous employees, which was equal to SLO’s annual required contribution and actual contributions. The unfunded actuarial accrued liability in the Fiscal Year ended June 30, 2025 was $13,703,752 million based on the Water Fund’s pro rata share of total payroll.
The primary OPEB cost obligation of SLO is for retiree health benefits under its election to participate in the California Public Employees’ Retirement System (CalPERS) Health Benefit Program, an agent multiple-employer defined benefit OPEB plan, under the “unequal contribution option.” SLO entered the CalPERS medical insurance program in 1993 under the Public Employees’ Medical and Hospital Care Act (PEMHCA). During the Fiscal Year ended June 30, 2009, SLO entered into an agreement to participate in an irrevocable trust to provide a funding mechanism for retiree health benefits. The Trust, California Employers’ Retiree Benefit Trust (CERBT), is administered by CalPERS and managed by a separately appointed board, which is not under control of the SLO City Council. This Trust is not considered a component unit of SLO. For each retiree enrolled in a CalPERS medical plan, the employer will pay the required statutory PEMHCA minimum, which was $157 per month per retiree in calendar year 2024 and $158 per month per retiree in calendar year 2025. Retirees pay the differential monthly amount of the premium, which varies depending on the health benefits they select.
Additionally, SLO has established certain post-retirement health care benefits available to executive management employees appointed prior to August 2000.
The OPEB contribution requirements of the plan members and SLO are established and may be amended by SLO. SLO prefunds the plan through CERBT by contributing at least 100% of the annual required contribution. For the measurement period, SLO’s contributions totaled $740,550.
Annual OPEB Expense and Net OPEB Obligation. For the Fiscal Year ended June 30, 2025, the annual OPEB expense was $258,685. The actual contributions totaled $1,975,082. Of the total actual contributions amount, the Water Fund was responsible for $225,159 (11.4%).
For additional information regarding the pension plans and other post-employment benefits, see notes 8 and 9 to the financial statements appearing under “AUDITED FINANCIAL STATEMENTS.”
15 CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES Article XIII B
Article XIII B of the California State Constitution limits the annual appropriations of the State and of any city, county, school district, authority or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and population. SLO is of the opinion that charges for water service do not exceed the costs it reasonably bears in providing such services and therefore are not subject to the limits of Article XIII B.
SLO has covenanted in the Delivery Contract that it will establish, fix and collect rates and charges from the customers of the SLO Water System at levels sufficient to produce revenue from the SLO Water System which are at least equal to: the costs of operating and maintaining the SLO Water System; plus the Contract Payments (as defined in the Delivery Contract). SLO is of the opinion that the water rates and use charges imposed by SLO do not exceed the costs SLO reasonably bears in providing such service.
Proposition 218
Article XIII D requires that any agency imposing or increasing any property-related fee or charge must provide written notice thereof to the record owner of each identified parcel upon which such fee or charge is to be imposed and must conduct a public hearing with respect thereto. The proposed fee or charge may not be imposed or increased if a majority of owners of the identified parcels file written protests against it. As a result, if and to the extent that a fee or charge imposed by a local government for water or wastewater service is ultimately determined to be a “fee” or “charge” as defined in Article XIII D, the local government’s ability to increase such fee or charge may be limited by a majority protest. See the discussion under “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS–Articles XIII C and XIII D of the California Constitution” in the forepart of this Official Statement.
AUDITED FINANCIAL STATEMENTS
The following is the complete annual comprehensive financial report of SLO for the Fiscal Year ended June 30, 2025. Only the gross revenues of the SLO Water System is pledged to pay the obligations of SLO under its Delivery Contract. The inclusion of the complete annual comprehensive financial report of SLO does not imply that any revenues of SLO other than those of the SLO Water System are pledged or available to make any payments under the Delivery Contract.
i
APPENDIX A4
TEMPLETON COMMUNITY SERVICES DISTRICT
TABLE OF CONTENTS
Page
TEMPLETON COMMUNITY SERVICES DISTRICT........................................................................A4-1 THE WATER SYSTEM OF TEMPLETON COMMUNITY SERVICES DISTRICT .........................A4-2 Service Area........................................................................................................................................A4-2 Water System and Facilities................................................................................................................A4-2 Water Permits, Licenses and Other Regulations.................................................................................A4-2 Water Supply ......................................................................................................................................A4-2 Drought and Conservation Measures..................................................................................................A4-3 Water Connections..............................................................................................................................A4-4 Water Deliveries.................................................................................................................................A4-4 Water Sales Revenues.........................................................................................................................A4-4 Largest Customers ..............................................................................................................................A4-5 Water System Rates and Charges .......................................................................................................A4-5 Future Water System Improvements...................................................................................................A4-7 Cybersecurity ......................................................................................................................................A4-7 FINANCIAL INFORMATION OF TEMPLETON COMMUNITY SERVICES DISTRICT...............A4-8 Budgetary Process...............................................................................................................................A4-8 Financial Statements...........................................................................................................................A4-8 Operating Results................................................................................................................................A4-8 Management’s Discussion and Analysis...........................................................................................A4-10 No Outstanding Long-Term Templeton CSD Water System Indebtedness .....................................A4-10 Investment Policy..............................................................................................................................A4-10 Insurance...........................................................................................................................................A4-10 Employees and Employee Benefits...................................................................................................A4-10 Pension Benefits................................................................................................................................A4-10 Other Postemployment Benefits.......................................................................................................A4-11 AUDITED FINANCIAL STATEMENTS ...........................................................................................A4-12
ii
Tables
Table A-4-1–Templeton CSD Water Connections ...............................................................................A-4-4 Table A-4-2–Templeton CSD Water Deliveries in Acre-Feet Per Year ...............................................A-4-4 Table A-4-3–Templeton CSD Water Sales Revenues ..........................................................................A-4-5 Table A-4-4–Templeton CSD Water Monthly Minimum Charge .........................................................A-4-5 Table A-4-5–Templeton CSD Water Sales Rates..................................................................................A-4-6 Table A-4-6–Templeton CSD Water System Operating Results ..........................................................A-4-9
1 TEMPLETON COMMUNITY SERVICES DISTRICT
General
Templeton Community Services District (“Templeton CSD”) operates a public water supply system, and is a party to a Delivery Contract (the “Delivery Contract”) with the San Luis Obispo County Flood Control and Water Conservation District (the “Flood Control District”) pursuant to which, inter alia, Templeton CSD has covenanted to pay its pro rata share (the “Templeton Share”) of various capital expenses relating to the funding of design costs, engineering, planning, environmental mitigation, equipping new facilities and/or construction efforts, accounting services, project administration and management, installation, grading, raising and building the Nacimiento Project.
As of June 30, 2026, Templeton CSD provided water services to approximately 8,036 people.
Templeton CSD also provides wastewater disposal services, storm water drainage, fire protection, street lighting, park and recreation services and a community center within its boundaries.
For additional financial information regarding Templeton CSD, see the financial statements submitted by Templeton CSD under “AUDITED FINANCIAL STATEMENTS.” Governance and Management
Templeton CSD was organized on December 29, 1976 under the authorization of the California Government Code for the purpose of providing all permissible services of a community services district, and is governed by a five-member elected Board of Directors.
Land and Land Use
Templeton CSD serves an approximately 5.5 square mile service area with water service, which included approximately 40 miles of water lines and 3,034 water connections for the Fiscal Year ended June 30, 2026.
Water Rights
Since 1959, the Flood Control District has held the rights to 17,500 acre-feet per year of water from Lake Nacimiento. The Board of Directors of Templeton CSD requested and received 406 acre-feet from this amount, which is equivalent to supplying water to 500 residential units. Templeton CSD has its own surface water and groundwater rights which are more fully described under “THE WATER SYSTEM OF TEMPLETON COMMUNITY SERVICES DISTRICT.”
No Litigation Related to the 2026 Bonds
There are pending lawsuits in which Templeton CSD is involved. The management and legal counsel for Templeton CSD estimate that the potential claims against Templeton CSD, not covered by insurance, resulting from such litigation would not materially affect the operations or financial condition of Templeton CSD.
2 THE WATER SYSTEM OF TEMPLETON COMMUNITY SERVICES DISTRICT Service Area
Templeton CSD service area is located in the central coast area of the State. As of June 30, 2026, there were 3,034 active consumer connections, compared with 3,027 as of June 30, 2025. The average monthly water bill for residential, commercial and industrial customers for the Fiscal Year ended June 30, 2025 was $65.17.
Water System and Facilities
The Templeton CSD water system (the “Templeton CSD Water System”) consists of 40 miles of distribution pipelines, eight groundwater wells, and three underflow wells (which are considered surface water sources under California law). No sewers or sewage disposal facilities are located within 100 feet of the well sites. Templeton CSD well water complies with primary and most secondary drinking water standards.
PFAS Monitoring. Templeton CSD monitors for per- and poly-fluoroalkyl substances (“PFAS”) in its water supply in accomplishing necessary compliance with regulatory requirements issued by Federal and State agencies and has detected low levels of two PFAS compounds at two well sites. Templeton CSD has not identified any specific source of these PFAS that have reached its water supplies, and the PFAS results remain below the State’s required response levels. See “CERTAIN RISKS TO BOND OWNERS – Water Quality and PFAS” in the forepart of this Official Statement for a discussion on PFAS regulations and requirements.
Water Permits, Licenses and Other Regulations
Templeton CSD possesses two permits and one license, which have been issued by the State Water Resources Control Board to pump water from the Salinas River underflow. Permit 8964 authorizes Templeton CSD to directly divert from the Salinas River at a rate of 1.5 cubic feet per second (“cfs”) from October 1 to April 1 with a maximum diversion of 500 acre-feet per year. Permit 20785 authorizes Templeton CSD to directly divert from the Salinas River at a rate of 1.5 cfs from April 1 to May 15 with a maximum diversion of 133.7 acre-feet, but the total combined diversion under both permits cannot exceed 500 acre-feet per year. Templeton CSD holds one license (License 4829) that authorizes it to divert from the Salinas River underflow at a rate of 0.26 cfs from April 1 to October 15.
Templeton CSD is located within the Atascadero Area Subbasin (the “Atascadero Basin”). In May 2018, the California Department of Water Resources designated the Atascadero Basin as a very low priority basin under the Sustainable Groundwater Management Act. The adopted Groundwater Sustainability Plan for the Atascadero Basin does not constrain Templeton CSD’s use of groundwater.
Water Supply
The current water supply for Templeton CSD is from local groundwater wells and 406-acre feet from the Nacimiento Project.
Groundwater Basin. Templeton CSD has traditionally met its service area customer needs during the summer months from groundwater through the primary water wells of Templeton CSD. These wells pump from the Atascadero Basin. During winter months, the customer water needs are primarily met with water pumped from Salinas River underflow wells under its permits and license.
3 Templeton CSD currently has eight active groundwater wells, and four storage tanks with a combined capacity of 2.7 million gallons all of which are available for use. Templeton CSD’s current pumping capacity is 1,875 gallons per minute (gpm) (does not include river underflow wells). In calendar year 2025, 1,377 acre-feet were delivered to Templeton CSD customers from groundwater wells.
Based upon monitoring for the period January 1 through December 31, 2025, the quality of the currently pumped groundwater meets existing State and federal regulatory requirements.
A group of property owners in the Paso Robles and Atascadero Basins has filed a quiet title action seeking quiet title judgments concerning their claimed groundwater rights against the County, AMWC, the City of El Paso de Robles, Templeton CSD and other water purveyors and users. For the status of this action see “LITIGATION–Steinbeck Vineyards and Eidemiller” in the forepart of this Official Statement. The water rights of individual water users within the Paso Robles and Atascadero Basins have not been adjudicated. No other water rights are at issue in this litigation. The litigation is still pending. The last phase of trial is set to begin on August 17, 2026. This phase of trial is limited to San Miguel CSD’s pueblo right defense to Plaintiffs’ claims. Once that trial is complete, the case will be submitted to the court for a final order.
Drought and Conservation Measures
Templeton CSD adopted Ordinance 2014-1 in March 2014 which comprehensively overhauled water conservation requirements. Also in March 2014, Templeton CSD entered into Stage 1 Conservation Requirements of the Ordinance. From April through the end of 2014, the District saw a reduction in water demand of about 15% as compared to 2013. On May 19, 2015, Templeton CSD adopted Ordinance No. 2015-2 amending its water conservation standards and requirements to authorize the board of directors to implement any water conservation measures mandated or necessitated by applicable State regulatory requirements by resolution.
The revenue forecast of Templeton CSD for Fiscal Years 2025-26 and 2026-27 anticipate small increases in revenue due to a few additional connections with water usage by existing customers remaining the same.
4 Water Connections
The following table shows the growth in the number of water connections, excluding recycled water connections, to the Templeton CSD Water System for the five most recent fiscal years.
Table A4-1
Templeton CSD
Water Connections
For Fiscal Years Ended June 30, 2022 through 2026
Fiscal Year Ended (June 30) Connections % Increase/(Decrease)(1) 2022 2,967 --
2023 3,000 1.11%
2024 3,003 0.10
2025 3,027 0.80
2026 3,034 0.23
(1) Percentage changes are manually calculated.
Source: Templeton CSD.
Water Deliveries
The following table presents a summary of water deliveries, excluding recycled water deliveries, for the Templeton CSD Water System in acre-feet per year for the five most recent fiscal years.
Table A4-2
Templeton CSD
Water Deliveries in Acre-Feet Per Year
For Fiscal Years Ended June 30, 2022 through 2026
Fiscal Year Ended (June 30) Total % Increase/(Decrease)(1) 2022 1,315.23 --
2023 1,159.76 (11.82)%
2024 1,172.28 1.08
2025 1,244.43 6.15
2026 1,254.96 0.85
(1) Percentage changes are manually calculated.
Source: Templeton CSD.
Water Sales Revenues
The following table shows annual water sales revenues from water sales, excluding recycled water sales, for the five most recent fiscal years for which data is available.
5 Table A4-3
Templeton CSD
Water Sales Revenues
For Fiscal Years Ended June 30, 2021 through 2025
Fiscal Year Ended (June 30) Sales Revenues % Increase/(Decrease)(1) 2021 $3,045,641 --
2022 3,072,180 0.87%
2023 2,983,474 (2.89)
2024 3,040,226 1.90
2025 3,141,226 3.32
(1) Percentage changes are manually calculated.
Source: Templeton CSD.
Largest Customers
The 10 largest customers of the Templeton CSD Water System accounted for approximately 7.3% of water sales from the Templeton CSD Water System, and less than 2.3% of total Templeton CSD revenues in the Fiscal Year ended June 30, 2025. The annual payments by these customers for Fiscal Year 2024-25 ranged from $11,724 to $41,907.
Water System Rates and Charges
Templeton CSD water rates are comprised of a monthly minimum charge and a unit charge based on the amount of water used. Templeton CSD also charges for disconnections and reconnections to the Templeton CSD Water System, and for construction meter rentals. Templeton CSD currently charges connection fees for new connections to the Templeton CSD Water System.
Monthly Minimum Charge. Templeton CSD’s monthly minimum charge is paid by all customer classes and, with the exception of multiple unit customers, is based on meter size. The monthly minimum charge, as of June 30, 2026 is as follows:
Table A4-4
Templeton CSD
Water Monthly Minimum Charge
Meter Size
(in inches) Monthly Service Minimum Charge†
5/8 or 3/4 $29.68
1 41.89
1 ½ 72.43
2 & Hydrant 109.07
3 206.77
4 316.69
6 622.03
Private Fire 316.69
† Multiple unit customers pay a monthly minimum charge for each additional unit.
Source: Templeton CSD.
6 Unit Charge. Templeton CSD charges a monthly charge based on the number of hundred cubic feet (HCF) used and calculated at the rate as of June 30, 2026 shown on the following schedule.
Quantity in HCF Charge (per 100 CF)
0-10 $1.41
11-14 2.76
15-20 3.45
21+ 4.28
Source: Templeton CSD.
Rate Increases. The rate increases for residential customers for the last five years are set forth in the following table.
Table A4-5
Templeton CSD
Water Sales Rates
For Fiscal Years Ended June 30, 2022 through 2026
Fiscal Year Ended (June 30)
Water Monthly
Base Rate*Increase
2022 $29.68 $0.97
2023 29.68 0.00
2024 29.68 0.00
2025 29.68 0.00
2026 29.68 0.00
* Does not include usage 5/8 or ¾” meter.
Source: Templeton CSD.
Collection Procedures. Templeton CSD is on a monthly billing cycle for water service. Payment is due by the 19th of the month following the billing cycle, and is considered delinquent if not paid by that date. If payment is not received, a late notice is mailed to the customer and a one-time basic 10% penalty of the charge, rate, or fee due (collectively, the “charges”) is assessed. Thereafter, an additional 1% penalty per month is added to all delinquent amounts and basic penalties until such time as the delinquent charges and penalties are paid. Any account that is more than 60 days overdue is subject to shut-off. No less than (7) business days before discontinuation of water service for nonpayment, Templeton CSD shall contact the customer on the account by telephone or written notice. At least 5 business days before the scheduled shut-off of residential service, Templeton CSD is required to make a reasonable attempt to contact an adult residing at the premises, and if that cannot be accomplished, by giving notice by mail, in person, or by posting in a conspicuous location a notice of discontinuation of service. Customers that are still delinquent as of noon on the shut-off day will have their meters locked, and a $50.00 reconnection fee is added to the balance due. In order to restore service, the balance of the account, including past due amounts, the current due amount, and all fees must be paid in full. As of June 30, 2025, delinquent payments account for less than 1/2% of total revenues of the Templeton CSD Water System.
Connection Fees. Templeton CSD charges connection fees for improvement or expansion of water treatment and distribution facilities to meet the requirements of community growth. The current connection fee for single family residences and commercial and industrial units are $46,527 per water unit of use.
7 Future Water System Improvements
Templeton CSD projects making various capital improvements to the Templeton CSD Water System of approximately $23,269,800 starting in 2018 to 2038. These projects will be funded through connection fees, grants, loans and revenues.
The capital improvement plan described above does not include costs for a planned replacement of the spillway at San Antonio Dam. The spillway replacement is proposed to be undertaken by the Monterey County Water Resources Agency. The Flood Control District may be required to contribute up to approximately 32.3%, or about $25.2 million (estimated as of 2025), of the costs of the spillway replacement. The Flood Control District would charge through such costs, if any, proportionally to the Participants under the Delivery Contracts, including the Delivery Contract with Templeton CSD. Spillway replacement project costs are expected to be incurred beginning in 2028. If Templeton CSD is required to contribute, it currently expects to fund its share of such costs from the Water Operating Fund (which is primarily funded by water rates) assuming the costs of the spillway improvements are financed and subsequently billed by the Flood Control District over a period of 20 or more years. Currently, whether and how much the Flood Control District and, correspondingly, the Participants, including Templeton CSD, will pay, and the funding sources for such payments, have not been determined and may change as the foregoing parties deliberate on proposals for the spillway replacement project at San Antonio Dam.
Cybersecurity
Templeton CSD relies on a complex technology environment to conduct its daily operations. As a recipient and provider of personal, confidential, and sensitive information Templeton CSD and its departments experience multiple cybersecurity threats which include but are not limited to, social engineering, malware, denial-of-service and other attacks on endpoints.
Templeton CSD has put several preventive measures in place to safeguard against cybersecurity threats. These measures include cybersecurity awareness training, firewalls, email filtering, web content filtering, endpoint protection, and ensuring that operating systems, network equipment, and endpoint devices are up-to-date with the latest patches. Additionally, advanced segmentation and monitoring techniques are employed to detect and respond to potential threats within the network, while real-time endpoint detection and response systems help identify and mitigate any malicious activity on devices.
There have been no material cybersecurity incidents in the past five years.
Templeton CSD currently maintains insurance coverage with respect to certain information security and privacy liability claims. However, Templeton CSD is not required to maintain cybersecurity insurance.
Future cybersecurity attacks could affect the operations and finances of Templeton CSD, including its ability to meet payment obligations under its Delivery Contract.
8 FINANCIAL INFORMATION OF TEMPLETON COMMUNITY SERVICES DISTRICT Budgetary Process
Templeton CSD utilizes accounting principles appropriate for an Enterprise Fund to record its activities. Accordingly, revenues and expenses are recognized on an accrual basis of accounting. Templeton CSD’s books and records include a water fund, sewer fund, drainage fund, solid waste fund, fire fund, a parks and recreation fund, a street lighting fund, and an administrative fund.
Financial Statements
The most recent audited financial statements of Templeton CSD, prepared by Nigro & Nigro, PC, independent certified public accountants are included under the heading “AUDITED FINANCIAL STATEMENTS.” The independent auditor’s letter concludes that the Financial Statements present fairly, in all material respects, the financial position of the business-type activities of Templeton CSD as of June 30, 2025, and the respective changes in financial position, where applicable, and cash flows thereof for the year then ended, in accordance with accounting principles generally accepted in the United States of America.
The summary operating results contained under the caption “–Operating Results” are derived from the audited financial statements (excluding certain non-cash items and after certain other adjustments) and are qualified in their entirety by reference to such statements, including the notes thereto.
Operating Results
The following table is a summary of operating results of the Templeton CSD Water System for Fiscal Years ended June 30, 2021 through June 30, 2025. These results have been derived from the Templeton CSD financial statements but exclude certain receipts which are not included as Revenues under the Delivery Contract and certain non-cash items and include certain other adjustments.
9 Table A4-6
Templeton CSD Water System
Operating Results
For Fiscal Years Ended June 30, 2021 through 2025
2020-21 2021-22 2022-23 2023-24 2024-25
Water Sales $3,045,641.00 $3,072,180.00 $2,983,474.00 $3,040,226.00 $3,141,226.00 Non-Operating
Revenue 50,983.00 (179,054.00) 104,487.00 739,594.00 884,027.00 Plant Operating
Expenses(1) (1,610,175.00) (1,543,067.00) (1,861,218.00) (1,452,388.00) (1,461,653.00) Treated water
sales (228,193.00) (211,034.00) (267,186.00) (268,605.00) (225,361.00) Transfer outAdministration (581,793.00) (532,181.00) (583,766.00) (415,905.00) (436,827.00) Depreciation
Expense - - - $(319,370.00) $(323,265.00)
Net Revenue $ 676,463.00 $606,844.00 $375,791.00 $1,323,552.00 $1,578,147.00 (1) Includes payments made to the Flood Control District pursuant to the Templeton Delivery Contract. See “Security and Sources of Payment for the Bonds–The Delivery Contracts” in the forepart of this Official Statement.
Source: Templeton CSD.
10 Management’s Discussion and Analysis
The following discussion relates to certain items in the table above.
Gross Revenues. Templeton CSD recognizes revenue from user fees, service charges, program fees and rental fees as they are earned. Taxes and assessments are recognized as revenue based upon amounts collected on behalf of Templeton CSD by the County.
Operations and Maintenance Costs. As part of the operation and maintenance of its water system, Templeton CSD routinely repairs line breaks, installs new services, monitors and records: tank levels, line pressures, chlorine levels and water demand flows. In addition, Templeton CSD routinely maintains and repairs: natural gas engines and electric motors for well pumps, five vehicles, one dump truck, backhoe, and other assorted equipment and machinery.
No Outstanding Long-Term Templeton CSD Water System Indebtedness Other than the Bonds, there is no outstanding long-term debt payable from revenues of the Templeton CSD Water System.
Investment Policy
Templeton CSD is authorized to make investments authorized by Section 53652 of the California Government Code to invest in obligations of the United States Treasury, and its agencies and instrumentalities. The investment policy of Templeton CSD is more restrictive than the California Government Code. The policy only allows Templeton CSD to invest in the California Local Agency Investment Fund (LAIF), California Cooperative Liquid Assets Securities System (CLASS), FDIC insured accounts, National Credit Union Administration insured accounts, United States Treasury Bills, Notes, Certificates of Indebtedness, United States Federal Agency or Unites States government-sponsored enterprise obligations and investments collateralized pursuant to Section 53652 of the California Government Code.
Insurance
Templeton CSD is a member of the Special District Risk Management Authority (SDRMA), a riskpooling self-insurance authority, created under provisions of Sections 6500 et seq. of the California Government Code, to arrange and administer programs of insurance for pooling of self-insured loses and to purchase excess insurance coverage. Templeton CSD participates in the general and auto liability programs and public officials’ and employees’ errors and omissions, maintaining liability coverage at the total risk financing limit of $10 million with a combined single limit at $10 million per occurrence.
Employees and Employee Benefits
As of June 30, 2026, Templeton CSD employed 24 full-time equivalent employees and had an average head count of 60 employees per month including part-time/temporary employees.
Pension Benefits
Plan Descriptions. Qualified employees are covered under a multiple-employer defined benefit pension plan maintained by agencies of the State known as the California Public Employees’ Retirement System (CalPERS). Templeton CSD has engaged with CalPERS to administer the following pension plans for its employees: the Miscellaneous Plans and Safety Plans. Eligible Templeton CSD Water System
11 employees participate in the Miscellaneous Plans. CalPERS issues publicly available reports that include a full description of the pension plan, benefit provisions, assumptions and membership information that can be found on the CalPERS website.
Benefits Provided. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. The provisions and cost of the Templeton CSD Miscellaneous Plans and benefits in effect for the measurement period ended June 30, 2025, are summarized as follows:
Miscellaneous Plans
Hire Date Prior to January 1, 2013
With Prior Service
On or After
January 1, 2013
Without Prior Service
On or After
January 1, 2013
Benefit formula 3.0% @ 60 2.5% @ 55 2.0% @ 62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Monthly for life Retirement Age 50 - 67 & up 50 - 67 & up 52 - 67 & up
Monthly benefits, as a % of eligible
compensation
2.0% to 3.0% 2.0% to 2.5% 1.0% to 2.5%
Required member contribution rates 8.000% 8.000% 6.750% Required employer contribution
rates
17.330% 13.410% 7.870%
Source: Templeton CSD Financial Statements June 30, 2025.
Contribution Description. Section 20814(c) of the California Public Employees’ Retirement Law (the “PERL”) requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CalPERS annual actuarial process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions. For the year ended June 30, 2025, total employer contributions to the Miscellaneous Plans were $187,043 and total member contributions were $118,965.
For additional information regarding the plans, including, actuarial methods and assumptions, discount rate, pension liability and expense, see Note 10 of the financial statements.
Other Postemployment Benefits
Templeton CSD’s defined benefit other postemployment benefits (OPEB) plan, Templeton Community Services District Other Postemployment Benefits Plan (the “OPEB Plan”), provides OPEB for all permanent full-time general and public safety employees of Templeton CSD. The OPEB Plan is a singleemployer defined benefit OPEB plan administered by the California Employers’ Retiree Benefit Trust (CERBT). The contribution requirements of Templeton CSD are established and may be amended annually by the Board of Directors. Templeton CSD’s Board of Directors had previously established a policy of funding the Annual Required Contribution (ARC) on a pay as you go basis, under which contributions to
12 the OPEB plan are generally made at the same time and in the same amount as retiree benefits and expenses become due. However, Templeton CSD has made discretionary contributions to CERBT in the past and is currently withdrawing funds from the CERBT program to pay for annual retiree health benefits. No discretionary contributions were made for the year ended June 30, 2025. For additional information regarding OPEB, see Note 9 of the financial statements.
AUDITED FINANCIAL STATEMENTS
The following are the complete financial statements of Templeton CSD for the Fiscal Year ended June 30, 2025. Only the gross revenues of the Templeton CSD Water System are pledged to pay the obligations of Templeton CSD under its Delivery Contract. The inclusion of the complete financial statements of Templeton CSD does not imply that any revenues of Templeton CSD other than those of the Templeton CSD Water System are pledged or available to make any payments under the Delivery Contract.
NRF Draft 7/23/26
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
PRELIMINARY OFFICIAL STATEMENT DATED AS OF _________, 2026 NEW ISSUE – BOOK ENTRY ONLY RATINGS: S&P: [“___” (Insured)]; “___” (Underlying) [DAC LOGO] (See “RATINGS” herein.)
In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel, under existing law, and subject to the matters described in “TAX MATTERS” herein, interest on the 2026 Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross income of the owners thereof for federal income tax purposes and is not included in the federal alternative minimum tax on the owners thereof who are individuals. It is also the opinion of Bond Counsel that under existing law, interest on the 2026 Bonds is exempt from personal income taxes of the State of California. See “TAX MATTERS” herein. $[PAR]*
SLO COUNTY FINANCING AUTHORITY
(COUNTY OF SAN LUIS OBISPO, CALIFORNIA)
NACIMIENTO WATER PROJECT
REVENUE REFUNDING BONDS,
2026 SERIES A
Dated: Date of Issuance Due: September 1, as shown on inside cover page The SLO County Financing Authority (the “Authority”), a joint exercise of powers authority established pursuant to an agreement between the County of San Luis Obispo, California (the “County”) and the San Luis Obispo County Flood Control and Water Conservation District (the “Flood Control District”), is issuing $[PAR] principal amount of SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “2026 Bonds”) to: (i) provide funds to refund all of the SLO County Financing Authority Nacimiento Water Project Revenue Refunding Bonds, 2015 Series A (the “2015 Bonds”) outstanding on the date of issuance of the 2026 Bonds; [(ii) purchase a municipal bond insurance policy for the 2026 Bonds;] and (iii) pay certain costs associated with the issuance of the 2026 Bonds, all as more fully described herein. See “PLAN OF REFUNDING” and “ESTIMATED SOURCES AND USES OF FUNDS.” The 2015 Bonds were issued to advance refund a portion of the Authority’s then outstanding Nacimiento Water Project Revenue Bonds, 2007 Series A, thereby refinancing the costs of the acquisition, construction and equipping of certain public capital improvements within the County, generally comprising the Nacimiento Water Project (the “Nacimiento Project”).
The 2026 Bonds will be issued and secured pursuant to the terms of an Indenture of Trust, dated as of September 1, 2007 (the “Original Indenture”), previously supplemented and amended, and as further supplemented and amended by the Third Supplemental Indenture of Trust dated as of [October 1], 2026 (the “Third Supplemental Indenture” and together with the Original Indenture, as previously supplemented and amended, the “Indenture”), each by and between the Authority and U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee”).
The 2026 Bonds are obligations of the Authority payable solely from and secured by Revenues (as defined in the Indenture) The Revenues consist primarily of gross water sales revenues of the Water Enterprises of the Participants (each as defined herein) payable to the Flood Control District pursuant to individual Water Delivery Entitlement Contracts, as amended (each, a “Delivery Contract”), between the Flood Control District and the respective Participant, and pledged by the Flood Control District pursuant to the terms and conditions of a Pledge Agreement, dated as of September 1, 2007 (the “Pledge Agreement”), by and between the Flood Control District and the Authority. Pursuant to each Delivery Contract, each Participant pledges the gross water sales revenues of its Water Enterprise (as defined herein) to pay the obligations under its Delivery Contract, including its pro rata share of the costs of the Nacimiento Project, Additional Capital Project Costs, Capital Projects Installment Debt Service, Master Water Contract Costs, Capital Reserve Costs, Operation and Maintenance Variable Energy Costs (each as defined herein) and other costs associated with the Nacimiento Project, and each Participant is obligated to make its respective payments under its Delivery Contract to the Flood Control District regardless of the failure of the Flood Control District to deliver water to the respective Participant. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–Pledge Agreement” and “–The Delivery Contracts.” In addition to the 2015 Bonds, the Authority previously issued 2007 Taxable Bonds and 2018 Bonds (each as defined herein) and may issue Additional Bonds secured on a parity with the 2007 Taxable Bonds, the 2018 Bonds and the 2026 Bonds. The 2007 Taxable Bonds, the 2018 Bonds, the 2026 Bonds and any Additional Bonds are referred to as the “Bonds.” The 2026 Bonds will be issued in book-entry form only, in authorized denominations of $5,000 and integral multiples thereof and will be initially issued and registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the 2026 Bonds. Purchasers will not receive certificates representing their interests in the 2026 Bonds. Payments of principal of and interest on the 2026 Bonds will be made by the Trustee to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the 2026 Bonds. See APPENDIX F– “DTC AND THE BOOK-ENTRY ONLY SYSTEM.” The principal of the 2026 Bonds is payable on September 1 of each year as set forth on the inside cover page hereof. Interest on the 2026 Bonds is payable semiannually on each March 1 and September 1, commencing March, 1 2027.
The 2026 Bonds are subject to optional redemption as more fully described herein.* See “The 2026 Bonds–Redemption Provisions.” [The scheduled payment of principal of and interest on the 2026 Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the 2026 Bonds by [Insurer]. See “BOND INSURANCE” and APPENDIX G–“SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”]
* Preliminary; subject to change.
[Insurer Logo]
_______________________
MATURITY SCHEDULE
On Inside Cover Page
_______________________
THE 2026 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM REVENUES OF THE
AUTHORITY CONSISTING PRIMARILY OF PAYMENTS MADE BY THE PARTICIPANTS TO THE FLOOD CONTROL
DISTRICT UNDER THE DELIVERY CONTRACTS AND RECEIVED BY THE AUTHORITY PURSUANT TO THE PLEDGE AGREEMENT. THE 2026 BONDS ARE NOT A DEBT OF THE AUTHORITY, THE FLOOD CONTROL DISTRICT, THE
PARTICIPANTS, THE COUNTY, OR THE STATE OF CALIFORNIA, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE AUTHORITY SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF, OR INTEREST ON THE 2026 BONDS, EXCEPT FROM THE FUNDS PROVIDED UNDER THE INDENTURE AND THE PLEDGE AGREEMENT. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA, OR
ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE AUTHORITY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE 2026 BONDS. THE AUTHORITY HAS NO TAXING POWER.
This cover page contains information for quick reference only. It is not a summary of this issue. Potential investors are advised to read the entire Official Statement to obtain information essential to making an informed investment decision with respect to the 2026 Bonds. For a discussion of certain risk factors associated with investment in the 2026 Bonds, see “CERTAIN RISKS TO BOND OWNERS” as well as other factors discussed throughout this Official Statement.
The 2026 Bonds will be offered when, as and if executed, delivered, and received by the Underwriter, subject to the approval as to their legality by Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel, and certain other conditions. Norton Rose Fulbright US LLP, Los Angeles, California is also acting as Disclosure Counsel for the Authority. Certain legal matters will be passed upon for the County by County Counsel and for the Underwriter by Anzel Galvan LLP, San Francisco, California, Underwriter’s Counsel. It is anticipated that the 2026 Bonds in book-entry only form will be available through the facilities of DTC in New York, New York, on or about ________, 2026.
Loop Capital Markets
Dated: __________, 2026
MATURITY SCHEDULE
$[PAR]*
SLO COUNTY FINANCING AUTHORITY
(COUNTY OF SAN LUIS OBISPO, CALIFORNIA)
NACIMIENTO WATER PROJECT
REVENUE REFUNDING BONDS,
2026 SERIES A
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield Price CUSIP No.†
2027 $ % %
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
C
* Preliminary; subject to change.
† CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by FactSet Research Systems Inc. on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. None of the County, the Underwriter, their agents, or counsel is responsible for the selection or uses of the CUSIP numbers, and no representation is made as to their correctness on the applicable Bonds or as included herein. The CUSIP numbers of specific maturities is subject to change following the issuance of the 2026 Bonds as a result of various actions, including, but not limited to, a refunding in whole or in part or as the result of the procurement of a secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the 2026 Bonds.
C Priced at par call on September 1, 20___.
No dealer, broker, salesperson or other person has been authorized by the County or the Authority to give any information or to make any representation other than those contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of the 2026 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the 2026 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts.
Information contained in APPENDIX A–“THE PARTICIPANTS” has been obtained from the respective Participant. All other information set forth herein has been obtained from the County or the Authority and from other sources and is believed to be reliable but is not guaranteed as to accuracy or completeness. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the County, the Authority or the Participants since the date hereof. This Official Statement is submitted in connection with the sale of the 2026 Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the County. All summaries of the documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. All capitalized terms used herein, unless noted otherwise, shall have the meanings prescribed in the Indenture and the Pledge Agreement. This Official Statement, including any supplement or amendment hereto, is intended to be deposited with the Electronic Municipal Market Access site maintained by the Municipal Securities Rulemaking Board.
Any statement made in this Official Statement involving any forecast or matter of estimates or opinion, whether or not expressly stated, is intended solely as such and not as a representation of fact. Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended (the “Securities Act”). Such forward-looking statements are generally identified by use of the words “plan,” “project,” “expect,” “estimate,” “budget” or other similar words. Such forward-looking statements include, but are not limited to, statements contained under the caption “PLAN OF REFUNDING” and in APPENDIX A–“THE PARTICIPANTS.” Such forward-looking statements refer to the achievement of certain results or other expectations or performance which involve known and unknown risks, uncertainties and other factors. These risks, uncertainties and other factors may cause actual results, performance or achievements to be materially different from any projected results, performance or achievements described or implied by such forward looking statements. Neither the County nor the Authority plans to issue updates or revisions to such forward-looking statements if or when the expectations, events, conditions or circumstances on which such statements are based, occur, or if actual results, performance or achievements are materially different from any results, performance or achievements described or implied by such forward-looking statements.
The 2026 Bonds have not been registered with the Securities and Exchange Commission by reason of the provisions of Section 3(a)(2) of the Securities Act of 1933, as amended. The registration or qualification of the 2026 Bonds in accordance with applicable provisions of Securities Laws of the states in which these Bonds have been registered or qualified, and the exemption from registration or qualification in other states, shall not be regarded as a recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of the securities or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense.
The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
The Underwriter may offer and sell the 2026 Bonds to certain dealers, institutional investors and others at prices lower than the public offering prices stated on the inside cover page hereof, and said public offering prices may be changed from time to time by the Underwriter.
The County, the Flood Control District and each Participant maintains a website. Unless specifically indicated otherwise, the information presented on those websites is not incorporated by reference as part of this Official Statement and should not be relied upon in making investment decisions with respect to the 2026 Bonds. [[INSURER] (the “2026 Insurer”) makes no representation regarding the 2026 Bonds or the advisability of investing in the 2026 Bonds. In addition, the 2026 Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the 2026 Insurer, supplied by the 2026 Insurer and presented under the heading “BOND INSURANCE” and APPENDIX G–”SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”]
SLO COUNTY FINANCING AUTHORITY
James W. Hamilton, CPA, County Auditor-Controller-Treasurer-Tax Collector, Chair Matthew P. Pontes, County Chief Executive Officer, Secretary Katie Girardi, San Luis Obispo County Pension Trust Executive Director, Member
PARTICIPANTS
Atascadero Mutual Water Company
City of El Paso de Robles
City of San Luis Obispo
Templeton Community Services District
SPECIAL SERVICES
Norton Rose Fulbright US LLP
Los Angeles, California
Bond Counsel and Disclosure Counsel
KNN Public Finance, LLC
Berkeley, California
Municipal Advisor
U.S. Bank Trust Company, National Association
Los Angeles, California
Trustee
i
TABLE OF CONTENTS
Page Page
INTRODUCTION .......................................................... 1 General; Purpose; Authority for Issuance............... 1 The Nacimiento Project.......................................... 2 The Authority ......................................................... 2 The Flood Control District ..................................... 2 The Participants...................................................... 2 Security and Sources of Payment........................... 3 Additional Bonds ................................................... 4 Certain Risk Factors............................................... 5 Continuing Disclosure............................................ 5 Reference to Documents ........................................ 5 THE FLOOD CONTROL DISTRICT............................ 6 General................................................................... 6 Nacimiento Dam .................................................... 6 PLAN OF REFUNDING................................................ 8 ESTIMATED SOURCES AND USES OF FUNDS .... 10
THE 2026 BONDS....................................................... 12 General................................................................. 12 Redemption Provisions ........................................ 12 Redemption Procedures........................................ 12
SECURITY AND SOURCES OF PAYMENT FOR
THE BONDS................................................................ 13 General................................................................. 13 Flow of Funds ...................................................... 13 Pledge Agreement ................................................ 14 The Delivery Contracts ........................................ 15 Covenants Under the Delivery Contracts............. 19
Reserve Fund........................................................ 27 Investments of Amounts on Deposit Under the
Indenture ......................................................... 28 Existing Obligations of the Participants............... 28 Additional Bonds ................................................. 28 Indenture Events of Default and Remedies.......... 29
Limited Obligations ............................................. 30 [BOND INSURANCE.................................................. 31 Bond Insurance Policy ......................................... 31 CERTAIN RISKS TO BOND OWNERS .................... 32
General................................................................. 32 Statutory and Regulatory Impact.......................... 32 No Obligation to Tax............................................ 32 Drought................................................................ 32 Climate Change ................................................... 35 Earthquakes, Floods, and Other Disasters ........... 35 Wildfires .............................................................. 36 Water Quality and PFAS...................................... 36 [Risks Associated with Bond Insurance............... 37 Investment of Funds............................................. 38 Limitations on Remedies and Bankruptcy ........... 38
Cybersecurity....................................................... 38 Limited Liability of Authority to the Owners...... 39
Changes in Law ................................................... 39
CONSTITUTIONAL AND STATUTORY
LIMITATIONS ON TAXES AND
APPROPRIATIONS .................................................... 39 Article XIII A of the California Constitution ....... 39 Article XIII B of the California Constitution....... 40 Article XIII C and Article XIII D of the California
Constitution .................................................... 41 Future Initiatives.................................................. 43 FINANCIAL STATEMENTS...................................... 43 CONTINUING DISCLOSURE ................................... 43 Flood Control District.......................................... 43 The Participants................................................... 44 TAX MATTERS.......................................................... 44 LITIGATION............................................................... 46 Steinbeck Vineyards and Eidemiller.................... 46 Authority and Flood Control District................... 47 Participants .......................................................... 47 LEGAL MATTERS ..................................................... 47 MUNICIPAL ADVISOR............................................. 48 RATINGS..................................................................... 48 UNDERWRITING....................................................... 48 MISCELLANEOUS..................................................... 48
ii
INDEX OF MAPS AND TABLES
Page
Table 1 – 2015 Bonds to be Refunded...........................................................................................................................9 Table 2 – Estimated Sources and Uses of Funds.........................................................................................................10 Table 3 – Debt Service Schedule.................................................................................................................................11 Table 4 – Nacimiento Capital Installment Debt Service Allocation............................................................................18 Table 5 – Delivery Contract Payments........................................................................................................................21 Table 6 – Delivery Entitlement Share..........................................................................................................................22 Table 7 – Capital Reserve and Operation and Maintenance Costs..............................................................................23 Table 8 – Nacimiento Project and Bond Legal Structure ............................................................................................26
APPENDICES
APPENDIX A-THE PARTICIPANTS......................................................................................................................A-1 Appendix A1-Atascadero Mutual Water Company ..................................................... A1-1 Appendix A2-City of El Paso De Robles..................................................................... A2-1 Appendix A3-City of San Luis Obispo ........................................................................ A3-1 Appendix A4-Templeton Community Services District .............................................. A4-1 APPENDIX B-THE DELIVERY CONTRACTS......................................................................................................B-1 APPENDIX C-FORMS OF PRINCIPAL LEGAL DOCUMENTS...........................................................................C-1 APPENDIX D-FORMS OF CONTINUING DISCLOSURE AGREEMENTS.........................................................D-1 APPENDIX E-PROPOSED FORM OF BOND COUNSEL OPINION ....................................................................E-1 APPENDIX F-DTC AND THE BOOK-ENTRY ONLY SYSTEM .......................................................................... F-1 [APPENDIX G-SPECIMEN MUNICIPAL BOND INSURANCE POLICY.......................................................... G-1]
iii
Unit Map for Nacimiento Water Project
1 OFFICIAL STATEMENT
$[PAR]*
SLO COUNTY FINANCING AUTHORITY
(COUNTY OF SAN LUIS OBISPO, CALIFORNIA)
NACIMIENTO WATER PROJECT
REVENUE REFUNDING BONDS,
2026 SERIES A
INTRODUCTION
This Introduction contains only a brief summary of the terms of the 2026 Bonds being offered and a brief description of this Official Statement. A full review should be made of the entire Official Statement, including the inside cover through the Appendices. All statements contained in this Introduction are qualified in their entirety by reference to the entire Official Statement. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings given to such terms as set forth in the Indenture (defined below). See APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS.”
General; Purpose; Authority for Issuance
This Official Statement, which includes the cover page through the Appendices hereto (the “Official Statement”), provides certain information concerning the issuance by the SLO County Financing Authority (the “Authority”) of $[PAR]* principal amount of SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “2026 Bonds”).
The proceeds from the issuance of the 2026 Bonds will be used to: (i) provide funds to effect a current refunding of all of the SLO County Financing Authority Nacimiento Water Project Revenue Refunding Bonds, 2015 Series A (the “2015 Bonds”) outstanding on the date of issuance of the 2026 Bonds; [(ii) purchase a municipal bond insurance policy for the 2026 Bonds;] and (iii) pay certain costs associated with the issuance of the 2026 Bonds, all as more fully described herein. See “PLAN OF REFUNDING” and “ESTIMATED SOURCES AND USES OF FUNDS.”
The 2015 Bonds were issued to advance refund a portion of the Authority’s then outstanding Nacimiento Water Project Revenue Bonds, 2007 Series A, thereby refinancing the costs of the acquisition, construction and equipping of certain public capital improvements within the County of San Luis Obispo, California (the “County”), generally comprising the Nacimiento Water Project (the “Nacimiento Project”).
The 2026 Bonds will be issued and secured pursuant to the terms of an Indenture of Trust, dated as of September 1, 2007 (the “Original Indenture”), previously supplemented and amended, and as further supplemented and amended by the Third Supplemental Indenture of Trust, dated as of [October 1], 2026 (the “Third Supplemental Indenture” and together with the Original Indenture, as previously supplemented and amended, the “Indenture”), each by and between the Authority and U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee”). The Authority is a joint exercise of powers authority established pursuant to an agreement between the County and the San Luis Obispo County Flood Control and Water Conservation District (the “Flood Control District”).
The 2026 Bonds are obligations of the Authority payable solely from and secured by Revenues (as defined in the Indenture). The Revenues consist primarily of gross water sales revenues of the Water Enterprises of the Participants (each as defined herein) payable to the Flood Control District pursuant to individual Water Delivery Entitlement Contracts, as amended (each, a “Delivery Contract”), between the Flood Control District and the respective Participant. Pursuant to each Delivery Contract, each Participant has covenanted to pay its pro rata share of various capital expenses relating to the funding of design costs, engineering, planning, mapping, acquiring easements and right-of-way, and construction in connection with the Nacimiento Project, including Additional Capital Project Costs, Capital Projects Installment Debt Service, Master Water Contract Costs, Capital Reserve Costs, Operation and
* Preliminary; subject to change.
2 Maintenance Costs, Variable Energy Costs (each as defined herein) and other costs associated with the Nacimiento Project.
Pursuant to a Pledge Agreement dated as of September 1, 2007 (the “Pledge Agreement”), by and between the Flood Control District and the Authority, the Flood Control District pledges the Capital Projects Installment Debt Service from each Participant, the Flood Control District’s Net Revenues, and all amounts in the Water Fund (each as defined in the Pledge Agreement) to the Authority. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–Pledge Agreement” and “–The Delivery Contracts.”
The Nacimiento Project
The Nacimiento Project consists of a multi-port sloping intake facility at Lake Nacimiento with a pump station, two intermediate pump stations, three storage tanks, a control system, and approximately 45 miles of transmission pipeline ranging from 36-inches to 12-inches in diameter, with the ability to deliver 15,750 acre-feet of raw water each year to communities within the County, including the Participants (defined below). The Nacimiento Project became operational on January 7, 2011.
The Authority
The Authority is a joint exercise of powers authority established pursuant to an agreement between the County and the Flood Control District. See “THE AUTHORITY.” The Flood Control District
The Flood Control District was formed in 1945 through the enactment of the San Luis Obispo County Flood Control and Water Conservation District Act. See “THE FLOOD CONTROL DISTRICT.” The Participants
The Participants to the Delivery Contracts are: (i) Atascadero Mutual Water Company (“AMWC”), (ii) City of El Paso de Robles (“Paso Robles”), (iii) City of San Luis Obispo (“SLO”), and (iv) Templeton Community Services District (“Templeton”).
The County of San Luis Obispo Service Area 10, Zone A (“CSA 10”), Bella Vista MHP, LLC (“Bella Vista”), and SMR Mutual Water Company (“SMR”) have also entered into Water Delivery Entitlement Contracts with the Flood Control District, however, those contracts do not provide payments or security for the 2026 Bonds, and none of CSA 10, Bella Vista, or SMR are Participants.
The Flood Control District entered into a Water Delivery Entitlement Contract, dated as of August 17, 2004, as amended, with AMWC (the “AMWC Delivery Contract”); a Water Delivery Entitlement Contract, dated as of August 17, 2004, as amended, with Paso Robles (the “Paso Robles Delivery Contract”); a Water Delivery Entitlement Contract, dated as of August 17, 2004, as amended, with SLO (the “SLO Delivery Contract”); and a Water Delivery Entitlement Contract, dated as of August 17, 2004, as amended, with Templeton (the “Templeton Delivery Contract” and collectively with the AMWC Delivery Contract, the Paso Robles Delivery Contract, the SLO Delivery Contract and the Templeton Delivery Contract, the “Original Water Delivery Entitlement Contracts”). Each Original Water Delivery Entitlement Contract was amended by the Memorandum of Understanding (First Amendment to Nacimiento Project Water Delivery Entitlement Contract), the Second Amendment to the Nacimiento Project Water Delivery Entitlement Contract, and the Third Amendment (Full Allocation) to the Nacimiento Project Water Delivery Entitlement Contract (the “Third Amendment,” and as so amended, collectively, the “Existing Water Delivery Entitlement Contracts”), pursuant to which each Participant, CSA 10, Bella Vista, and SMR agreed to pay its share of various capital expenses relating to the funding of design costs, engineering, planning, environmental mitigation, equipping new facilities and/or construction efforts, accounting services, project administration and management, installation, grading, razing and building the Nacimiento Project. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–The Delivery Contracts” and APPENDIX A–“THE PARTICIPANTS.”
3 The Flood Control District also entered into a Water Delivery Entitlement Contract, dated as of October 24, 2006, as amended (the “CSA 10 Delivery Contract”), by and between the Flood Control District and the County, acting on behalf of CSA 10; a Water Delivery Entitlement Contract, dated as of April 2016 with Bella Vista (the “Bella Vista Delivery Contract”); and a Water Delivery Contract, dated as of April 2016 with SMR (the “SMR Delivery Contract,” and collectively with the Existing Water Delivery Entitlement Contracts, the CSA 10 Delivery Contract, the Bella Vista Delivery Contract, the “Delivery Contracts”). CSA 10, Bella Vista, and SMR have no obligation with respect to the Bonds, and the CSA 10 Delivery Contract, the Bella Vista Delivery Contract, and the SMR Delivery Contract do not provide payments or security for the 2026 Bonds.
Security and Sources of Payment
The 2026 Bonds will be obligations of the Authority payable solely from and secured by the Revenues and any other amounts held in the funds and accounts established pursuant to the Indenture (excepting the Rebate Fund); provided, however, that amounts on deposit in the Tax-Exempt Reserve Account are available to pay debt service solely on Bonds issued pursuant to the Indenture, the interest upon which is excluded from gross income for purposes of federal income taxation, including the 2018 Bonds and the 2026 Bonds (collectively, the “Tax-Exempt Bonds”).
As defined in the Indenture, the term “Revenues” means: (i) all amounts derived from the Pledge Agreement, and (ii) investment income with respect to the funds and accounts established under the Indenture, except for investment earnings on the Rebate Fund. Pursuant to the Pledge Agreement, the Flood Control District has pledged the Water Revenues (defined herein) pursuant to the respective Delivery Contracts to the Authority under the terms and conditions of the Pledge Agreement.
As used herein, the term “Water Revenues” means, collectively, the Capital Projects Installment Debt Service due from each Participant, including Delinquent Debt Service Payments and the interest thereon, together with the Net Revenues of the Flood Control District. As provided in the Delivery Contracts, and in order to carry out and effectuate the pledge and lien contained therein, the Flood Control District has covenanted that all Water Revenues will be received by the Flood Control District in trust and deposited when and as received into the Nacimiento Water Fund, which fund the Flood Control District maintains and holds in trust separate and apart from other funds so long as any Bonds remain unpaid. During the term of the Pledge Agreement, the Flood Control District is required to withdraw amounts from the Nacimiento Water Fund on each Payment Date for deposit into the Revenue Fund to be applied by the Trustee to pay interest then coming due and maturing or called principal of the 2026 Bonds. Revenues of each Participant consist principally of gross water sales revenues of the Participant’s Water Enterprise (as defined herein). See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–The Delivery Contracts.” To date, there have been no Delinquent Debt Service Payments by the Participants.
Under its Delivery Contract, the respective Participant has: (i) covenanted, inter alia, to pay its share of various capital expenses relating to the funding of design costs, engineering, planning, environmental mitigation, equipping new facilities and/or construction efforts, accounting services, project administration and management, installation, grading, razing and building of the Nacimiento Project; (ii) severally and not jointly, pledged certain revenues (collectively, the “Capital Projects Installment Debt Service,” as more particularly defined in the Pledge Agreement) to be collected by their respective water enterprises (collectively, the “Water Enterprises”); (iii) pledged the gross water sales revenues of its respective Water Enterprise to the payment of total Nacimiento Project Construction Costs; (iv) established rates and charges sufficient to pay its obligations under its Delivery Contract; and (v) made certain other covenants with respect thereto. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–The Delivery Contracts–Gross Pledge and Covenants of Participants” and APPENDIX B–“THE DELIVERY CONTRACTS.”
Subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture, all of the Revenues and any other amounts (including proceeds of the sale of the Bonds) held in the funds and accounts established pursuant to the Indenture (excepting the Rebate Fund) are pledged by the Authority to secure the full and timely payment of the principal of and interest and premium, if any, of the Bonds, and amounts owing to the respective Insurer of the 2007 Taxable Bonds and the 2018 Bonds (each defined below), in accordance with their terms and the provisions of the Indenture. Such pledge constitutes a lien on and security interest in such assets.
4 The obligation of the Flood Control District to make payments to the Authority under the Pledge Agreement is a special obligation of the Flood Control District payable solely from Water Revenues, the Nacimiento Water Fund and other funds described in the Pledge Agreement, and does not constitute a debt of the Flood Control District or of the State of California or of any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction.
THE 2026 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM
REVENUES OF THE AUTHORITY CONSISTING PRIMARILY OF PAYMENTS MADE BY THE
PARTICIPANTS TO THE FLOOD CONTROL DISTRICT UNDER THE DELIVERY CONTRACTS AND RECEIVED BY THE AUTHORITY PURSUANT TO THE PLEDGE AGREEMENT. THE 2026 BONDS ARE NOT
A DEBT OF THE AUTHORITY, THE FLOOD CONTROL DISTRICT, THE PARTICIPANTS, THE COUNTY
OR THE STATE OF CALIFORNIA, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE AUTHORITY SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF, OR INTEREST ON THE 2026 BONDS, EXCEPT FROM THE FUNDS PROVIDED UNDER THE INDENTURE AND THE PLEDGE AGREEMENT. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF
THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE AUTHORITY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE 2026 BONDS. THE AUTHORITY HAS NO TAXING POWER.
Outstanding Parity Bonds. The Authority has previously issued under the Indenture, and there will be outstanding following the refunding of the 2015 Bonds, the SLO County Financing Authority Nacimiento Water Project Revenue Bonds, 2007 Series B (Taxable) (the “2007 Taxable Bonds”), in the principal amount of $25,660,000 and the SLO County Financing Authority Nacimiento Water Project Revenue Refunding Bonds, 2018 Series A (the “2018 Bonds”), in the principal amount of $21,745,000. The 2007 Taxable Bonds and the 2018 Bonds are secured by Revenues on a parity with the 2026 Bonds.
The scheduled payment of the principal of and interest on the 2007 Taxable Bonds is insured by a financial guaranty insurance policy issued by National Public Finance Guarantee Corporation, successor to MBIA Insurance Corporation (the “2007 Insurer”). The scheduled payment of principal of and interest on the 2018 Bonds is guaranteed under a separate municipal bond insurance policy issued concurrently with the delivery of the 2018 Bonds by Build America Mutual Assurance Company (the “2018 Insurer”). See “PLAN OF REFUNDING.” Reserve Fund. Pursuant to the Indenture a reserve fund, which includes a Tax-Exempt Reserve Account and a Taxable Reserve Account (each a “Reserve Account” and together, the “Reserve Fund”) was established as security for the Tax-Exempt Bonds and the Taxable Bonds, within each Reserve Account funded in an amount equal to the applicable Reserve Requirement (as defined herein). Amounts on deposit in the Tax-Exempt Reserve Account are available to pay debt service solely on the 2018 Bonds and the 2026 Bonds. Amounts on deposit in the Taxable Reserve Account are available to pay debt service solely on the 2007 Taxable Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–Reserve Fund.”
[Bond Insurance. Concurrently with the issuance of the 2026 Bonds, [INSURER] (the “2026 Insurer”) will issue its Municipal Bond Insurance Policy for the 2026 Bonds (the “Policy”). The Policy guarantees the scheduled payment of principal of and interest on the 2026 Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement.
The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.]
Additional Bonds
The Authority may issue one or more additional series of Bonds secured by a pledge of Revenues on a parity with the 2026 Bonds. The Indenture does not require satisfaction of any debt service coverage ratio condition to issue Additional Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–Additional Bonds.”
5 Certain Risk Factors
An investment in the 2026 Bonds involves risk. For a discussion of certain risk factors associated with investment in the 2026 Bonds, see “CERTAIN RISKS TO BOND OWNERS” as well as other factors discussed throughout this Official Statement.
Continuing Disclosure
Flood Control District. The Flood Control District has covenanted for the benefit of the beneficial owners of the 2026 Bonds to provide certain financial information and operating data relating to the Flood Control District by no later than March 31 of each year commencing with the report due on March 31, 2027 for the Fiscal Year ended June 30, 2026 (each a “Flood Control District Annual Report”), and to provide notices of the occurrence of certain specified events. The Annual Report and notices of specified events will be filed by the Flood Control District or Digital Assurance Certification, L.L.C., as dissemination agent to the Flood Control District with the Municipal Securities Rulemaking Board (the “MSRB”) through its Electronic Municipal Market Access (“EMMA”) site. See “CONTINUING DISCLOSURE” and APPENDIX D–“FORMS OF CONTINUING DISCLOSURE AGREEMENTS–SAN LUIS OBISPO COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT CONTINUING DISCLOSURE AGREEMENT.” These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12.
Participants. Each Participant has covenanted to provide certain financial and operating data relating to such Participant by no later than nine months following the end of the fiscal year of each Participant commencing with the report due in 2027 for the respective fiscal year ended in 2026 (each a “Participant Annual Report”). Each Participant Annual Report will be filed by the Participant or the Flood Control District, as dissemination agent to each Participant, with the MSRB through its EMMA site.
The fiscal year-end for AMWC is April 30 and the fiscal year-end for Paso Robles, SLO, and Templeton is June 30. See “CONTINUING DISCLOSURE” and APPENDIX D–“FORMS OF CONTINUING DISCLOSURE AGREEMENTS–PARTICIPANTS CONTINUING DISCLOSURE AGREEMENTS.” Reference to Documents
The summaries and descriptions in this Official Statement of the Indenture, the 2026 Bonds, the Pledge Agreement, the Delivery Contracts, the Continuing Disclosure Agreements, and other agreements relating to the 2026 Bonds are qualified in their entirety by reference to such documents, and the descriptions herein of the 2026 Bonds are qualified in their entirety by the form thereof and the information with respect thereto included in such documents.
All capitalized terms used herein, unless noted otherwise, shall have the meanings prescribed in the Indenture and the Pledge Agreement. See APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS.”
THE AUTHORITY
General
The Authority was created pursuant to a Joint Exercise of Powers Agreement, dated as of August 15, 2000 (the “Joint Powers Agreement”), between the County and the Flood Control District. The Joint Powers Agreement was entered into pursuant to the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title I of the California Government Code. The Authority was created to issue bonds for the purpose of financing all or a portion of the costs of the purchase, construction, expansion, improvement, or rehabilitation of any real or other tangible property for the County and the Flood Control District and to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations to provide financing and refinancing for such capital improvements of the County and the Flood Control District. The Joint Powers Agreement may be amended at any time, or from time to time, except as limited by contract with the holders of bonds issued by the Authority or certificates of participation in payments to be made by the Authority or its members or by applicable regulations or laws of any jurisdiction having authority, including to provide for the addition of new parties.
6 Governance and Management
Pursuant to the Joint Powers Agreement, the Authority is administered by a three-member Board of Commissioners, two of whom are appointed by the County and one who is appointed by the Flood Control District.
The current Commissioners of the Authority are:
Member Title
James W. Hamilton, CPA, County Auditor- Controller-Treasurer-Tax Collector Chair Matthew P. Pontes, County Chief Executive Officer Secretary Katie Girardi, SLO Pension Trust Executive Director Member County Counsel serves as the Legal Advisor to the Authority. The Chief Executive Officer of the County currently serves as the Authority’s Secretary.
THE FLOOD CONTROL DISTRICT
General
The Flood Control District was formed in 1945 pursuant to State Legislation through the enactment of the San Luis Obispo County Flood Control and Water Conservation District Act. The Flood Control District is Countywide and has as its governing body the Board of Supervisors. Other key staff include: the Director of Public Works, Public Works Finance Division Manager, Utilities Division Manager, and Nacimiento Water Project Supervising Engineer. The purposes of the Flood Control District are:
to provide for the control, disposition, and distribution of the flood and storm waters of the Flood Control District and the flood and storm waters of the streams that flow into the Flood Control District;
to prevent the waste or diminution of the water supply to the Flood Control District; to conserve flood and storm waters by spreading, storing, retaining, and causing these waters to percolate into Flood Control District soils;
to retain these waters for beneficial use, such as the purchase and sale thereof within the Flood Control District;
to protect watercourses, watersheds, public highways, life and property from damage or destruction from these waters; and
to provide for recreation activities incidental to and in connection with said purposes.
The County Public Works Department manages and operates the Nacimiento Project on behalf of the Flood Control District. In addition, the Public Works Department manages over 50 separate facilities and special districts, including two dams, four wholesale water systems, three retail water systems, two water treatment plants, and three sewer treatment plants.
Nacimiento Dam
Overview. Nacimiento Dam and Reservoir (“Nacimiento”) is located in the northern part of the County and owned and operated by the Monterey County Water Resources Agency (the “MCWRA”), as successor-in-interest to the Monterey County Flood Control and Water Conservation District for the combined goals of flood protection, water conservation, operation of the Salinas Valley Water Project, and recreation, with safety being the primary consideration.
7 Nacimiento, completed in 1957, is an earthfill dam with a height of 215 feet above the streambed and a crest length of 1,650 feet. When Nacimiento is full (elevation 800 feet) it has a maximum storage capacity of 377,900 acrefeet, is 18 miles long, and has about 165 miles of shoreline, making it the largest reservoir in the County. The maximum elevation during flood stage is 825 feet, with a maximum temporary capacity of 538,000 acre feet and a temporary surface area of 7,149 acres.
Master Water Contract. The Flood Control District and MCWRA entered into an agreement, dated October 19, 1959, as amended (collectively, the “Master Water Contract”), pursuant to which MCWRA agrees, among other things, to provide up to 17,500 acre feet of water per year from Nacimiento to the Flood Control District.
Pursuant to the Master Water Contract, none of the Authority, the County, or the Flood Control District is liable for any maintenance costs for Nacimiento.
Extensive repairs and upgrades were made to the Nacimiento spillway in the 1970s, and additional upgrades were completed in the early 2000s that included: a new gate system; raising and strengthening spillway chute walls; anchoring the chute walls with “sister” walls; strengthening and anchoring approach channel walls; modifying the High-Level Gate Operations System with an upgraded mechanical system; and strengthening the bridge pier with steel reinforced concrete.
[DSOD Review. In light of the lessons learned from the March 2017 failure of the Lake Oroville spillways incident, in September 2017, the State Division of Safety of Dams (the “DSOD”) released updated information on the 1,249 dams under its jurisdiction, including Nacimiento. The updated DSOD information (the “2017 DSOD Update”) for each dam included: (i) downstream hazard classifications; (ii) condition assessment; and (iii) reservoir restriction status, reflecting the most recent physical inspections and comprehensive re-evaluations by DSOD engineers and engineering geologists, and technical analyses performed by dam owners at that time. Downstream Hazard Classification. The downstream hazard classification identified for a dam is based solely on the size of the dam’s reservoir and population that would be impacted by a dam failure; it does not reflect the condition of the dam or its structures.
8 The hazard classification is used in part to prioritize development of inundation maps and emergency action plans. Dams are classified as high hazard if at least one person is at risk downstream in the event of a dam failure, and extremely high hazard if the loss of human life is considerable. Using this standard, the Nacimiento downstream hazard was classified as extremely high hazard. Condition Assessments. DSOD dam condition assessments are based on five condition ratings from the U.S. Army Corps of Engineers National Inventory of Dams, with some minor modifications.
The ratings include satisfactory, fair, poor, unsatisfactory, and not rated. Dams rated as satisfactory have no identified deficiencies. Dams rated as fair, poor or unsatisfactory have at least one identified deficiency.
Nacimiento was rated satisfactory, meaning it had no identified deficiencies. Dam condition assessments may change from year to year as repair work is completed or new deficiencies are identified. Reservoir Restrictions. The 2017 DSOD Update for Nacimiento did not contain any reservoir restrictions at the time.
Following the 2017 DSOD review, MCWRA, with oversight from the DSDOD, completed necessary repair work for the Nacimiento and Lake San Antonio spillways. The repairs that were completed permitted full operations of Nacimiento and water storage.
Assembly Bill No. 1270 (“AB 1270”), signed by the Governor on February 26, 2018, requires the DSOD to, among other things, annually inspect each fiscal year all dams, groins, abutments, spillways, outlet works, and toe areas, other than those classified as low hazard potential.
Based on the information shared with the County in July 2025, Nacimiento continues to hold a satisfactory rating from the DSOD, meaning no deficiencies were identified that would alter the dam’s regulatory condition or operational status. As part of ongoing DSOD oversight, Monterey County has identified a series of required damsafety projects necessary to maintain compliance with current dam-safety standards. These projects include spillway rehabilitation, spillway evaluation and repairs, plunge-pool erosion control, low-level outlet improvements, embankment seismic stability evaluation and implementation, spillway bridge maintenance, and related structural and operational upgrades.
The list of Nacimiento dam-safety subprojects provided in July 2025 includes eleven components with a combined estimated cost of approximately $83.8 million (2023 dollars) and an associated unfunded need of roughly $73 million after accounting for identified grant funding. These dam-safety and spillway projects are under the responsibility and jurisdiction of the MCWRA, which continues coordination with DSOD on required assessments and compliance actions.
Because Nacimiento is owned and operated by the MCWRA, none of the Authority, the County, or the Flood Control District has conducted an independent assessment of Nacimiento, nor do any of them have an obligation to so. None of the Authority, the County, or the Flood Control District can make any prediction as to the safety or condition of Nacimiento, nor can any assurances be given regarding the accuracy of updates from the DSOD or the conclusions contained therein, or the effect AB 1270 will have on future operations of Nacimiento.][to be confirmed]
PLAN OF REFUNDING
The proceeds of the 2026 Bonds will be used by the Authority to provide funds to (i) refund all of the 2015 Bonds outstanding on the date of issuance of the 2026 Bonds; [(ii) purchase a municipal bond insurance policy for the 2026 Bonds; and (iii) pay certain costs associated with the issuance of the 2026 Bonds. See also “ESTIMATED SOURCES AND USES OF FUNDS.”
The Authority issued $107,115,000 original principal amount of the 2015 Bonds pursuant to the Original Indenture, of which $80,160,000 aggregate principal amount is currently outstanding. The 2015 Bonds maturing on September 1, 2026 in the principal amount of $4,680,000 will be maturing before the issuance of the 2026 Bonds. A portion of the proceeds from the issuance of the 2026 Bonds will be deposited with the Trustee which, together with
9 certain moneys on deposit under the Indenture, will be sufficient and will be used to pay on [___], 2026, the date of issuance of the 2026 Bonds, the redemption price equal to 100% of the principal amount of the 2015 Bonds to be refunded, plus accrued and unpaid interest thereon to such date.
The following table details the maturity dates and principal amounts of the 2015 Bonds expected to be refunded by the 2026 Bonds. The particular maturities and principal amounts of such maturities of the 2015 Bonds to be refunded will be determined by the Authority in its sole discretion at the time of sale of the 2026 Bonds.
Table 1
2015 Bonds to be Refunded
$75,480,000*
SLO County Financing Authority
Nacimiento Water Project Revenue Refunding Bonds
2015 Series A
Dated Date: August 19, 2015
Redemption Date: [___], 2026
Redemption Price: 100%
Maturity
(September 1) Principal Amount Interest Rate CUSIP†
2027 $ 2,395,000 5.000% 798693DJ3
2027 2,500,000 3.000 798693DT1
2028 3,605,000 5.000 798693DK0
2028 1,500,000 3.125 798693DU8
2029 1,170,000 5.000 798693DL8
2029 4,145,000 3.250 798693DV6
2030 5,370,000 5.000 798693DM6
2030 185,000 3.375 798693DW4
2031 2,300,000 5.000 798693DN4
2031 3,500,000 3.500 798693DX2
2032 4,565,000 5.000 798693DP9
2032 1,500,000 3.625 798693DY0
2033 3,850,000 5.000 798693DQ7
2033 2,500,000 3.625 798693DZ7
2034 4,135,000 5.000 798693DR5
2034 2,500,000 3.750 798693EA1
2037T 11,500,000 5.000 798693EB9
2038T 18,260,000 4.000 798693DS3
* Preliminary; subject to change.
† CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by FactSet Research Systems Inc. on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services.
T Term Bonds.
10 ESTIMATED SOURCES AND USES OF FUNDS
The proceeds to be received from the sale of the 2026 Bonds are estimated to be applied as set forth in the following table:
Table 2
Estimated Sources and Uses of Funds
Sources of Funds:
Par Amount of 2026 Bonds $
[Net] Original Issue Premium
Funds held under the Indenture
Total Sources
Uses of Funds:
Redemption of Refunded 2015 Bonds(1) $
Costs of Issuance(2)
Underwriter’s Discount
Total Uses $
(1) See “PLAN OF REFUNDING.”
(2) Includes fees of the County, Bond and Disclosure Counsel, the Municipal Advisor, the Trustee, [the premium for the municipal bond insurance policy,] fees relating to the credit ratings, printing, accounting and other costs associated with the issuance of the 2026 Bonds. [Remainder of page intentionally left blank.]