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File #: 2020-1034    Version: 1 Name:
Type: Information Item Status: Filed
File created: 4/9/2020 In control: BOARD OF DIRECTORS
On agenda: 4/22/2020 Final action: 4/22/2020
Title: COVID-19 FINANCIAL IMPACT UPDATE
Sponsors: Lorenzo Tyner
Attachments: 1. Agenda Report, 2. Message from OCERS - Response to COVID, 3. Understanding California's Property Taxes
Related files: 2020-1046
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Assistant General Manager

SUBJECT:

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COVID-19 FINANCIAL IMPACT UPDATE
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GENERAL MANAGER'S RECOMMENDATION

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RECOMMENDATION:

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BACKGROUND

The Board of Directors requested a staff report on potential financial impacts related to COVID-19. Staff has summarized the potential financial impacts to date.

ADDITIONAL INFORMATION

Revenues

The Orange County Sanitation District (Sanitation District) has a broad-based revenue program. Although 85% of its income comes from two sources (65% from general user fees and 20% from property taxes), the income is collected from nearly one million different users. This distribution reduces the potential impact on the Sanitation District by any individual ratepayer. Additionally, both of these revenues are collected through the County of Orange (County) semi-annual property tax collection process. At present, the County has announced no change to its collection of these fees or the disbursement of funds to the Sanitation District as a result of COVID-19. We anticipate receiving our next County apportionment later this month.

The Sanitation District does receive 15% of its revenues from other sources that may be negatively impacted. However, those revenues are also broad-based, split between various permittees, other government agencies, and interest income. As such, any risk to Sanitation District revenue should be manageable. However, should the pandemic continue, this risk would increase.

Investment Portfolio

The Sanitation District portfolios remain conservatively positioned and are weathering the volatility in the markets fairly well given the circumstances.

However, all indications are that the short-term impact of the shutting down of major portions of the US economy due to the COVID-19 virus are going to be material.

We have already seen a large monetary policy response from the Federal Re...

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