Item Number: 12
City Council / Board of Directors
Written Communications
Meeting of: October 6, 2026
Submitted By:
Asdghik Keyvanian, Director of Finance / City Treasurer
Subject:
Redemption of the Outstanding Baldy Mesa Water District Parity Certificates of Participation (Water System Improvement Project), Series 2006 Recommendation:
That the Honorable Board of Directors adopt Resolution No. VWD 26-015, approving the full early redemption of the outstanding Baldy Mesa Water District Parity Certificates of Participation (Water System Improvement Project), Series 2006, and authorizing the General Manager, or their designee, to execute the required instruction letter to the Trustee and take all other necessary actions to effectuate the full early redemption.
Fiscal Impact:
The total fiscal impact of the proposed early redemption is estimated at $6,400,604.44, consisting of $6,305,000 for the outstanding principal balance and estimated accrued interest through the redemption date of $95,604.44. The outstanding principal balance will be funded from the Baldy Mesa Bonds & Notes Payable Account 4110202-26200.
Accrued interest through the redemption date will be funded from the Baldy Mesa Debt Service Interest Account 4110202-54120.
Strategic Plan Goal:
This item aligns with Goal A. Financial Sustainability - foster fiscal health through disciplined long-term planning, cost control, increased revenues, and cost recovery. The proposed early redemption will reduce the Victorville Water District’s outstanding debt and eliminate future interest costs, while allowing future revenues previously dedicated to debt service to be redirected toward water system improvements and other projects within the District.
Background:
On August 15, 2007, the former Victor Valley Water District (VVWD) and Baldy Mesa Water District (BMWD) were consolidated to create what is now the Victorville Water District (the District). This consolidation established the District as a subsidiary of the City of Victorville, pursuant to Resolution No. 2977 issued by the Local Agency Formation Commission (LAFCO) for the County of San Bernardino. All liabilities, including the debt obligations of the former Victor Valley Water District and Baldy Mesa Water District, were assumed by the District and the City effective July 1, 2007.
Prior to the consolidation, on March 1, 2006, the BMWD issued $13,070,000 in Parity Certificates of Participation (the Certificates) to finance water system improvements within the BMWD service area. The Certificates have stated interest rates ranging from 3.20% to 5.00% and an original final maturity of August 1, 2036. Annual debt service is a special limited obligation of the District, payable from and secured by a pledge of a lien on the District’s net revenues. Principal and interest payments are due each August 1st, and interest-only payments are due each February 1st.
On April 27, 2026, the District Board held a workshop to review preliminary Rate Study findings. As part of that discussion, the Board reviewed a proposed five-year water rate schedule that included the repayment of the remaining debt associated with the Baldy Mesa Water District’s 2006 Certificates of Participation. Repayment of the remaining Certificates would eliminate the associated debt service and allow revenues previously dedicated to debt service to be redirected to water system improvements and other District needs. The 2026 Water Rate Study and associated water rate and fee changes were subsequently adopted by the Board on July 21, 2026.
Discussion:
As of August 1, 2026, the outstanding principal amount of the Certificates is $6,305,000.
The District has sufficient available funds to fully redeem the outstanding Certificates prior to their stated maturity. Early redemption will eliminate the District’s remaining debt service obligation and associated future interest payments, resulting in an estimated $1,745,995.56 in interest cost savings. It will also allow future revenues that would otherwise be dedicated to debt service to be used for water system improvements and other projects within the District, providing greater flexibility to address infrastructure needs and other priorities.
Pursuant to the Trust Agreement, the Certificates may be optionally prepaid in full prior to their stated maturity, without a redemption premium or penalty, on any date at a prepayment price equal to the outstanding principal amount plus accrued interest through the redemption date. The District is proposing to fully redeem the remaining $6,305,000 in outstanding Certificates prior to their stated maturity. For a full early redemption, the Trustee has advised that they require an instruction letter with at least 45 days’ advance notice to process the redemption and provide the required notice to Certificate holders, which must be provided no more than 60 days and no less than 30 days prior to the redemption date. Sufficient funds must also be deposited with the Trustee prior to distribution of the redemption notice.
If approved, staff anticipates providing the required written instruction letter to the Trustee on October 7, 2026, with the earliest anticipated redemption date of Monday, November 23, 2026. The instruction letter will specify the redemption date, redemption amount, and Certificates to be redeemed. The final redemption amount will consist of the outstanding principal plus accrued interest through the redemption date.
After the instruction letter is submitted, the Trustee will provide staff with the final redemption amount. Staff will then arrange for the required funds to be submitted to the Trustee by wire transfer to complete the redemption on the specified redemption date.
Staff recommends that the Board of Directors adopt Resolution No. VWD 26-015, approving the full early redemption of the outstanding $6,305,000 principal amount of the Baldy Mesa Water District Parity Certificates of Participation (Water System Improvement Project), Series 2006, and authorizing the General Manager, or their designee, to execute the required instruction letter to the Trustee and take all other necessary actions to effectuate the full early redemption.
Staff remains available for any questions the District Board may have.
Prepared By:
Alex M. Garcia, Finance Analyst
Attachments: A. Resolution No. VWD 26-015
B. Instruction Letter
C. Trust Agreement