Finance and Management Services
www.santa-ana.org/finance
Item # 14
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
April 2, 2024
TOPIC: Bond Counsel and Disclosure Counsel Related to Water Revenue Bonds
AGENDA TITLE
Legal Services Agreement with Best Best & Krieger LLP for Bond Counsel and Disclosure Counsel for Potential Water Enterprise Revenue Bond Issuance (Non- General Fund)
RECOMMENDED ACTION
Authorize the City Manager to execute an agreement with Best Best & Krieger LLP for bond counsel and disclosure counsel services related to a potential water enterprise revenue bond issuance for a not-to-exceed amount of $88,000 for a term expiring September 30, 2025 (Agreement No. A-2024-XXX).
GOVERNMENT CODE §84308 APPLIES: Yes
DISCUSSION
The City’s 2019 Water Enterprise rate study indicated the future need to issue debt and raise capital for improvements to the City’s water delivery system. Over the last several years, the Water Enterprise has been making progress on improvements, such as well rehabilitation, pump stations, and the Advanced Metering Infrastructure (AMI) project.
Following an updated analysis by the water rate study consultant, it has been determined that at least $30 million in additional capital is needed to maintain the delivery of vital water projects.
The water enterprise has existing revenue bonds issued in 2014, which refunded 2004 bonds and provided additional capital for improvement projects. The potential 2024 revenue bonds would likely refund the 2014 bonds and provide the additional capital.
In preparation of funding future improvements via a bond, the City is gathering a bond team. Best Best & Krieger LLP (BBK)’s attorneys are experienced to provide the services and have worked on past City bond issuances. The City’s Financial Advisor, Urban Futures, Inc., has compared the proposed fees to recent bond issuances for other agencies and found them to be competitive. If bonds are issued, BBK’s fees will be paid from bond proceeds. If bonds are not issued, the Water Enterprise will be
Bond Counsel and Disclosure Counsel for Potential Water Enterprise Revenue Bonds April 2, 2024
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obligated to pay BBK $25,000 plus up to $3,000 of out-of-pocket expenses for services rendered.
Staff expects to bring a bond issuance proposal to the City Council over the next several months. Bonds cannot be issued without City Council approval.
FISCAL IMPACT
If bonds are issued, bond counsel and disclosure counsel will be paid from bond proceeds. If no bonds are issued, the Water Enterprise will pay up to $28,000 from account 06017645-62300 (Water Admin & Engineering, Contract Services- Professional).
EXHIBIT(S)
1. Agreement
Submitted By: Kathryn Downs, FMSA Executive Director
Approved By: Tom Hatch, Interim City Manager