MERCED IRRIGATION DISTRICT FINANCING AUTHORITY Citigroup ELECTRIC SYSTEMREVENUEBONDS,SERIES2017A
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PRELIMINARY OFFICIAL STATEMENT JULY 20, 2017 NEW ISSUE – BOOK-ENTRY ONLY RATINGS: See the caption “RATINGS” In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described in this Official Statement, interest (and original issue discount) on the 2017A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the 2017A Bonds is exempt from State of California personal income tax. See the caption “TAX MATTERS” with respect to tax consequences relating to the 2017A Bonds. $19,990,000* MERCED IRRIGATION DISTRICT FINANCING AUTHORITY ELECTRIC SYSTEM REVENUE BONDS, SERIES 2017A Dated: Date of Delivery Due: October 1, as shown on inside cover The Merced Irrigation District Financing Authority Electric System Revenue Bonds, Series 2017A are being issued by the Authority pursuant to an Indenture of Trust, dated as July 1, 2017, by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee, and will be payable from the sources described herein. The 2017A Bonds are being issued: (i) to provide funds to finance the design, acquisition and construction of certain capital improvements to the Electric System of the Merced Irrigation District, a member of the Authority; (ii) to purchase a municipal bond insurance policy to guarantee payment of the principal of and interest on the 2017A Bonds; (iii) to purchase a debt service reserve insurance policy for deposit in the Reserve Fund; and (iv) to pay the costs of issuing the 2017A Bonds, all as more fully described herein. Interest due on the 2017A Bonds is payable semiannually on April 1 and October 1 of each year, commencing October 1, 2017, until the maturity thereof. The 2017A Bonds are being issued in fully registered book-entry form and initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York. Purchasers will not receive certificates representing their interest in the 2017A Bonds. Individual purchases will be in principal amounts of $5,000 and integral multiples thereof. Payments of principal of and interest on the 2017A Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the 2017A Bonds. The 2017A Bonds are subject to optional, mandatory sinking fund and extraordinary redemption prior to maturity as described in this Official Statement. The 2017A Bonds are limited obligations of the Authority. The 2017A Bonds are payable solely from Authority Revenues and from certain other amounts on deposit in funds and accounts under the Indenture. Authority Revenues consist primarily of Series 2017A Installment Payments received by the Authority from the District pursuant to an Installment Purchase Agreement, dated as of July 1, 2017, by and between the District and the Authority. The obligation of the District to make the Series 2017A Installment Payments is a special obligation of the District payable solely from Net Electric System Revenues of the District’s Electric System. After the prepayment of the District’s 2012 Electric System Bonds on or before the date of issuance of the 2017A Bonds from District reserves, as further described herein, the District will have approximately $55,170,000 aggregate principal amount of Bonds outstanding payable from Net Electric System Revenues on a parity with the 2017A Bonds. The District owns and operates a Water System and Hydroelectric System but the revenues of the District’s Water System and Hydroelectric System are not pledged to the Series 2017A Installment Payments and Series 2017A Installment Payments are not payable from revenues of the District’s Water System or Hydroelectric System. The District has covenanted not to incur additional obligations payable from Net Electric System Revenues senior to the Series 2017A Installment Payments. The District may incur additional obligations payable from Net Electric System Revenues on a parity with the Series 2017A Installment Payments, subject to the terms and conditions of the Installment Purchase Agreement. The scheduled payment of the principal of and interest on the 2017A Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the 2017A Bonds by ASSURED GUARANTY MUNICIPAL CORP. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA OR ANY PUBLIC AGENCY THEREOF OR ANY MEMBER OF THE AUTHORITY IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL AMOUNT OR REDEMPTION PRICE OF, OR INTEREST ON, THE 2017A BONDS. THE AUTHORITY HAS NO TAXING POWERS. THE 2017A BONDS DO NOT CONSTITUTE A DEBT, LIABILITY OR OBLIGATION OF THE STATE OF CALIFORNIA OR ANY PUBLIC AGENCY THEREOF (OTHER THAN THE AUTHORITY) OR ANY MEMBER OF THE AUTHORITY IN CONTRAVENTION OF ANY STATE OF CALIFORNIA CONSTITUTIONAL OR STATUTORY PROVISION. THE OBLIGATION OF THE DISTRICT TO MAKE THE SERIES 2017A INSTALLMENT PAYMENTS IS A SPECIAL OBLIGATION OF THE DISTRICT PAYABLE SOLELY FROM NET ELECTRIC SYSTEM REVENUES OF THE DISTRICT AND OTHER FUNDS DESCRIBED IN THE INSTALLMENT PURCHASE AGREEMENT, AND DOES NOT CONSTITUTE A DEBT OF THE DISTRICT OR OF THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE DISTRICT IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE DISTRICT HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. This cover page contains certain information for quick reference only. It is not a complete summary of the 2017A Bonds. Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on the cover of this Official Statement shall have the meanings ascribed thereto herein. MATURITY SCHEDULE – See Inside Cover Page The 2017A Bonds are offered when, as and if issued and received by the Underwriters, subject to the approval of the valid, legal and binding nature of the 2017A Bonds by Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the Underwriters by their counsel, Gilmore & Bell, P.C., for the Authority and the District by Phillip R. McMurray, Esq., General Counsel to the District and the Authority, for the Insurer by its counsel and for the Trustee by its counsel. It is anticipated that the 2017A Bonds will be available for delivery through the facilities of The Depository Trust Company on or about August 8, 2017. Citigroup Caldwell Sutter Capital, Inc. Dated: July __, 2017 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered prior accepted, be buy them delivered is Statement Official the time to the to offers nor may sold, be not securities These may This Preliminary amendment. or completion to are subject herein contained the information and Statement Official solicitation or of, these securitiesany jurisdiction in in which such offer, any sale nor shall there be buy, to Under no circumstances shall this Preliminary to sell or the solicitation of an offer Official Statement constitute an offer form. in final be unlawful. sale would * Preliminary, subject to change. MATURITY SCHEDULE $19,990,000* MERCED IRRIGATION DISTRICT FINANCING AUTHORITY ELECTRIC SYSTEM REVENUE BONDS, SERIES 2017A Maturity Date Principal Interest (October 1) Amount Rate Price Yield CUSIP† $ % % $_____ ______% Term Bonds Due October 1, 20__, Price ___, Yield ___%, CUSIP _____ * Preliminary, subject to change. † CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright © 2017 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by Standard & Poor’s CUSIP Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service Bureau. CUSIP® numbers are provided for convenience of reference only. Neither the District nor the Purchaser takes any responsibility for the accuracy of such numbers. NO DEALER, BROKER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OR SALE OF THE 2017A BONDS, OTHER THAN AS CONTAINED IN THIS OFFICIAL STATEMENT, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE AUTHORITY, THE DISTRICT OR THE UNDERWRITERS. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE DESCRIBED ON THE COVER PAGE OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THE 2017A BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OR SALE. THE OFFICIAL STATEMENT IS NOT TO BE CONSTRUED AS A CONTRACT WITH THE PURCHASERS OF THE 2017A BONDS. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of this information.