Stockton Public Financing Authority
Wastewater Revenue Refunding Bonds
Series 2024 (the “2024 Bonds”)
City Council / Stockton Public Financing Authority
July 9, 2024
Agenda Item 15.5
"Independent Registered Municipal Advisor"
1 Existing Parity Obligations of the City’s Wastewater FundWater Infrastructure Finance and Innovation Act (“WIFIA”)Loan Number: N18126CAPrincipal Payments: September 1, 2030 to September 1, 2051Remaining Amount: $108,000,000Interest Rate: 1.20%Purpose: Repaid Bond Anticipation Notes sold to fund the Regional Wastewater Control Facilities Modification Project___________________________________________________________________________________California Department of Water ResourcesSRF Loan Number: D2001045Principal Payment: December 31, 2024 to December 31, 2051Remaining Amount: $46,800,000Interest Rates: 0.90%Purpose: Used to pay project costs associated with the Regional Wastewater Control Facilities Modification Project________________________________________________________________• The 2024 Bonds are being issued to refund the outstanding:Stockton Public Financing AuthorityWastewater Revenue Refunding Bonds, Series 2014 (the “2014 Bonds”)• The 2024 Bonds will be on parity with both the WIFIA Loan and the SRF Loan• The 2024 Bonds will be amortized over the same remaining term as the 2014 Bonds (no extension) 2 Estimated Financing Summary (Assumes Market Interest Rates as of May 14)$29,620,000Outstanding 2014 Bonds (1)$28,615,000Principal Amount of the 2024$34,211,2502014 Bonds Total Debt Service$33,038,0772024 Bonds Total Debt$1,173,173Total Savings$227,225Average Annual Savings (2)$1,055,707Net Present Value Savings ($)3.56%Net Present Value Savings (%) (3)September 1, 2029 (FY 2030)Final Maturity (4)Notes(1) Amount Outstanding After September 1, 2024(2) From Fiscal Year 2026 to Fiscal Year 2030(3) As a Percentage of the Principal Amount of Bonds Refunded(4) Same Final Maturity as the 2014 Bonds (No Extension)The Resolutions establish a minimum cash flow savings target of $150,000 per year (FY 2026 to FY 2030) which equates to 2.38% net present value savings. While the transaction currently meets the standards establish in the City’s debt policy at > 3.00% net present value savings, the minimum cash flow target would require a waiver from the City’s debt policy by utilizing “Section XVI: Exceptions To These Policies”:“The City may find in limited and exceptional instances that a waiver to any of the above stated policies is warranted given identified special City benefits to be derived from such waiver. Such waivers may be granted by the City Manager or CFO with the approval of the City Attorney, if provisions waived are not material, and shall be granted only by action of the City Council if as to material provisions and shall be based upon stated policies as warranted given identified special City benefits to be derived from such specific public purpose, economic and/or health and safety findings.” 3 Estimated Costs of IssuanceTotalPartyRole$52,000.00 Hawkins Delafield & Wood LLPBond / Disclosure Counsel1,500.00 Hawkins Delafield & Wood LLPBond Counsel Expenses (NTE)62,500.00 Del Rio Advisors, LLCMunicipal Advisor750.00 Del Rio Advisors, LLCMunicipal Advisor Expenses (NTE)29,500.00 Standard & Poor's CorporationRating Fee1,000.00 U.S. BankTrustee (Acceptance Fee)2,750.00 U.S. BankTrustee (Annual Fee)3,000.00 U.S. BankTrustee (Counsel Fee)2,500.00ComputerShareEscrow Agent5,000.00 TBDPrinting of Official Statement15,372.97Misc.Rounding Adjustment / Miscellaneous$178,762.97 Total Estimated Costs 4 Estimated Savings
5 Proposed 2024 Bonds, Financing Team and Remaining ScheduleProposed 2024 Bonds$28.615 million public offeringProposed same amortization term as the 2014 Bonds (no extension)Estimated fixed Costs of Issuance of $178,762.97Estimated Bond Insurance and Surety Premium of $184,959.23Estimated Underwriter’s Discount of $140,213.50 (0.49% of the refunding principal amount)Financing TeamBond / Disclosure Counsel: Hawkins Delafield & Wood LLPMunicipal Advisor: Del Rio Advisors, LLCCo-Underwriters: Hilltop Securities and Oppenheimer & Co. Inc.Trustee: U.S. Bank Trust Company, National AssociationProposed Financing ScheduleActionDateCity Council / Authority Board MeetingTuesday July 9thPrint and Post the Preliminary Official StatementWeek of July 29thSell the BondsWednesday August 14thPrint and Post Final Official StatementDocuments ExecutedWeeks of August 19thand August 26thTransaction ClosesWednesday September 4th 6 Documents for Review and Approval2024 Indenture:An agreement between the Authority and U.S. Bank Trust Company, National Association (“U.S. Bank”) as Trustee. This document governs all the terms and conditions of the 2024 Bonds including the role of U.S. Bank as Trustee, the principal payments along with the interest rates on the individual maturities, the redemption provisions of the 2024 Bonds, establishes the funds and accounts for the 2024 Bonds, establishes the City obligations for continuing disclosure reporting, arbitrage rebate and annual CDIAC reporting, and remedies for bondholders in an event of default. 2024 Installment Purchase Contract:An agreement between the Authority (seller) and the City (purchaser) whereby the City will purchase from the Authority the Wastewater System improvements funded with proceeds of the 2014 Bonds. In exchange, the City agrees to make installment payments to the Authority. The installment payments are equal to the debt service on the 2024 Bonds. Official Statement (Including the Continuing Disclosure Certificate):The Official Statement is the primary document used by the Underwriter to market the 2024 Bonds to investors. The official statement describes the 2024 Bonds in detail and all the information used by investors to make an informed purchase decision. The official statement, in the preliminary form presented, is deemed final pursuant to Rule 15c-2-12 under the Securities Exchange Act of 1934.Bond Purchase Contract:An agreement between the City, the Authority and the Underwriters, pursuant to which the Underwriters agree to purchase the 2024 Bonds from the Authority, on the terms and conditions set forth therein. It provides certain conditions for closing that must be met prior to the closing and funding of the 2024 Bonds and will be executed on the date of pricing. 7 Resolutions for ConsiderationResolution of the City of Stockton:This Resolution authorizes the form of and the execution and delivery of an Installment Purchase Contract, Bond Purchase Contract, Continuing Disclosure Certificate and Official Statement all relating to the issuance of the 2024 Bonds and approving certain actions in connection therewith. Resolution of the Stockton Public Financing Authority:This Resolution authorizes the issuance and sale of the 2024 Bonds in an aggregate principal amount not to exceed $32,000,000; approves the form of and authorizes the execution and delivery of an Indenture, an Installment Purchase Contract, a Bond Purchase Contract, and an Official Statement all relating to the issuance of the 2024 Bonds and approving certain actions in connection therewith.The Resolutions also approve the execution of all documents and other actions related to the issuance of the 2024 bonds and that the Chair of the Authority (Mayor), Executive Director of the Authority (City Manager), Treasurer of the Authority (Chief Financial Officer) or their designee be authorized to take appropriate and necessary actions to carry out the purpose and intent of the Resolutions. 8 Questions and Discussion