FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Assistant General Manager
SUBJECT:
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WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2021A
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GENERAL MANAGER'S RECOMMENDATION
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RECOMMENDATION:
Authorize the General Manager to issue new fixed rate Certificates of Participation, to be referred to as Wastewater Refunding Revenue Obligations, in (1) an amount sufficient to refund $102,200,000 of Revenue Refunding Certificate Anticipation Notes, Series 2018A maturing on August 15, 2021 and (2) an additional amount sufficient to refund, subject to market conditions, up to $61,575,000 of Wastewater Refunding Revenue Obligations, Series 2011A.
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BACKGROUND
Revenue Refunding Certificate Anticipation Notes, Series 2018A
The borrowing cost on the current outstanding Revenue Refunding Certificate Anticipation Notes Series 2018A (2018A CANs) is fixed for 33.5 months and the entire $102,200,000 plus interest becomes due and payable on August 15, 2021. The Orange County Sanitation District (Sanitation District) is responsible for a total repayment, including interest due, of $104,755,000 or the Sanitation District could choose to refinance the 2018A CANs. Due to the current near historically low tax-exempt cost of fixed rate debt, staff does not recommend the use of $105 million of reserves to repay the 2018A CANs.
In March 2006, the Sanitation District issued $200 million of variable rate Certificates of Participation (COP), Series 2006 (2006 COPs). Alternatively, the Sanitation District could have issued debt, at an estimated cost of 4.54%, on a fixed rate basis in 2006 ("2006 Fixed Rate"). For the initial 27 months through August 2008, the average variable rate on the 2006 COPs was 2.95% or 0.22% less than the SIFMA index (weekly market index of tax-exempt variable rate obligations). As the global financial crisis took hold of the markets in the late summer of 2008, there was a significant increase in the var...
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