FROM: Robert Thompson, General Manager
Originator: Wally Ritchie, Director of Finance
SUBJECT:
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WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2025A
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GENERAL MANAGER'S RECOMMENDATION
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RECOMMENDATION: Recommend to the Board of Directors to:
Authorize the General Manager to issue new fixed rate Certificates of Participation, to be referred to as Wastewater Refunding Revenue Obligations, in an amount sufficient to refund up to $109,935,000 of Wastewater Refunding Revenue Obligations, Series 2016A.
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BACKGROUND
A portion of Orange County Sanitation District's (OC San) debt portfolio will soon be subject to optional redemption. As interest rates are lower than the coupons on the outstanding debt, there is a potential opportunity to refinance the outstanding debt to reduce interest costs for OC San. The Wastewater Refunding Revenue Obligations Series 2016A (2016 Revenue Obligations) are subject to optional redemption on February 1, 2026. Under current market conditions, a refunding of $109,935,000 of the outstanding 2016 Revenue Obligations would generate more than 3% net present value savings (the minimum percentage required by OC San's debt policy).
RELEVANT STANDARDS
* Comply with OC San Debt Policy - Financial Management and Procedure 201-3-1; net present value savings are at least three (3) percent of the par amount of the refunded bonds from refunding outstanding bonds
PROBLEM
The 2016 Revenue Obligations are currently accruing interest at 5.00% rates, which are higher than current market yields. The 2016 Revenue Obligations will soon be available for optional redemption on February 1, 2026. Not refunding the 2016 Revenue Obligations on, or before, such date would result in OC San paying above market rates on the 2016 Revenue Obligations.
PROPOSED SOLUTION
Assuming current market conditions as of June 16, 2025, OC San could refund the 2016 Revenue Obligations for present value debt service savings, net of...
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