MEMORANDUM TO: DHCCP Steering Committee Members, Alternates SLDMWA Board of Directors, Alternates FROM: Pablo Arroyave, Chief Operating Officer DATE: January 6, 2021 RE: Refunding the Outstanding San Luis & Delta-Mendota Water Authority Refunding Revenue Bonds (DHCCP Development Project), Series 2013A BACKGROUND Due to the significant drop in interest rates in the spring of 2020, the Authority and affected water districts are considering refinancing debt issued in 2013. The DHCCP Bonds under consideration for refunding (refinancing) were issued in 2013 for a total amount of $37,550,000; $28,935,000 is currently outstanding. Westlands Water District agreed to pay 100% of the principal and interest with eight other financing participants (participants) each paying a portion. The Authority receives those payments and in turn, reimburses Westlands. The participants are Westlands, Broadview, Laguna, Eagle Field, Mercy Springs, Byron Bethany, Pacheco, Panoche and San Luis districts. This arrangement would continue after refinancing. In the October 2020 Board of Directors Meeting, the Board adopted a resolution (Resolution 2020-471) authorizing the execution and delivery of refunding revenue bonds and approving the execution and delivery of certain documents in connection therewith and certain other matters. Through adoption of the Resolution, the Board approved the Indenture of Trust, Purchase Contract, and Escrow Agreement in substantial form. Subsequently, staff moved forward in finalizing various documents consistent with Board direction. Since October 2020, 7 participants have opted in to the refinancing, two participants have chosen to prepay their amount owed, and all participants have supported proceeding with the refinancing. In addition, in its December 15, 2020 meeting, Westlands Water District’s Board of Directors approved their Resolution No. 129-20, Approving the Westlands Water District Portion for the San Luis & Delta-Mendota Water Authority’s Preliminary Official Statement for the San Luis & Delta-Mendota Water Authority Refunding Revenue Bonds (DHCCP Development Project), Series 2021B San Luis & Delta-Mendota Water Authority Refunding revenue Bonds (DHCCP Development Project), Series 2021B Preliminary Official Statement, Substantially in the Form Presented, Approving the Execution and Delivery of Certain Documents in Connection Therewith, and Authorizing Certain Other Matters. Memo to DHCCP Steering Committee and SLDMWA Board of Directors January 6, 2021 Page 2 of 2 ISSUE FOR DECISION Whether the Board should adopt the proposed Resolution Authorizing the Preparation and Distribution of a Preliminary Official Statement and the Preparation, Execution, and Delivery of an Official Statement with Respect to Refunding Revenue Bonds to Refund the Outstanding San Luis & Delta-Mendota Water Authority Refunding Revenue Bonds (DHCCP Development Project), Series 2013A, Authorizing the Execution of Certain Documents, and Authorizing Certain Other Actions in Connection Therewith. RECOMMENDATION Staff recommends that the Authority adopt the proposed Resolution. ANALYSIS Refinancing of the 2013 debt is expected to save the participants up to $3.073 million over the life of the debt and up to $145,000 per year (generates approximately $1.78 million in net present value savings as of January 5, 2021). This amount will change depending on market conditions at pricing and assumes both Byron Bethany and Laguna pay off its allocable portion of the obligation prior to refunding. ATTACHMENTS 1. Draft Resolution, including Exhibit A (Preliminary Official Statement) 2. Resolution 2020-471 SAN LUIS & DELTA-MENDOTA WATER AUTHORITY RESOLUTION NO. 2021-___ RESOLUTION AUTHORIZING THE PREPARATION AND DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT AND THE PREPARATION, EXECUTION, AND DELIVERY OF AN OFFICIAL STATEMENT WITH RESPECT TO REFUNDING REVENUE BONDS TO REFUND THE OUTSTANDING SAN LUIS & DELTA-MENDOTA WATER AUTHORITY REFUNDING REVENUE BONDS (DHCCP DEVELOPMENT PROJECT), SERIES 2013A, AUTHORIZING THE EXECUTION OF CERTAIN DOCUMENTS, AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the San Luis & Delta-Mendota Water Authority (the “Authority”), a joint exercise of powers authority duly organized and existing under and pursuant to the Constitution and laws of the State of California, has previously issued refunding revenue bonds (the “2013 Bonds”) that are currently outstanding in the aggregate principal amount of $28,935,000 to refinance a portion of certain development costs of a conveyance and water conservation project on behalf of Authority members who executed the San Luis & Delta-Mendota Water Authority Delta Habitat Conservation and Conveyance Program Activity Agreement (the “Activity Agreement”); and WHEREAS, the Board of Directors of the Authority (the “Board”) previously adopted Resolution No. 2020-471 authorizing the issuance of refunding revenue bonds (the “Bonds”) to refinance the 2013 Bonds to reduce the interest rate paid by such Activity Agreement members; and WHEREAS, the Board now desires to authorize the preparation and distribution of a preliminary official statement and the preparation, execution and delivery of an official statement with respect such Bonds; and WHEREAS, the Board does hereby determine that authorizing (1) the issuance of revenue bonds to refinance a portion of the cost of the DHCCP Project, (2) the execution of certain documents, and (3) all steps that are reasonably convenient or necessary to issue revenue bonds, does not constitute a project or projects under CEQA because the proposed actions represent administrative activities of the Authority that will not result in direct or indirect physical changes in the environment (Section 15378(b)(5) of the CEQA Guidelines); further, where it can be seen with certainty that there is no possibility that the proposed action in question may have a significant effect on the environment, the proposed action is not subject to CEQA (Section 15061(b)(3) of the CEQA Guidelines). NOW, THEREFORE, BE IT RESOLVED, AS FOLLOWS, THAT: SECTION 1. Findings. The Board hereby specifically finds and declares that the actions authorized hereby constitute and relate to public affairs of the Authority and that the statements, findings and determinations set forth above and in the preambles of the documents approved herein are true and correct. SECTION 2. Preliminary Official Statement and Official Statement. The preparation and distribution of the Preliminary Official Statement (excluding the section of the Preliminary Official 4835-4867-9376v4/022910-0011 Statement titled “CONTINUING DISCLOSURE” and Appendix A to the Preliminary Official Statement (collectively, the “Westlands Portion of the Official Statement”)) (the “Authority Portion of the Preliminary Official Statement”), substantially in the form attached hereto as Exhibit A, is hereby approved. The Executive Director and Chief Operating Officer are each hereby individually authorized to make such changes, insertions and omissions to Authority Portion of the Preliminary Official Statement as may be recommended or approved by General Counsel or Stradling Yocca Carlson & Rauth, a Professional Corporation, as bond counsel (“Bond Counsel”), and is authorized and directed to execute and deliver a certificate relating to the Authority Portion of the Preliminary Official Statement in accordance with Rule 15c2-12 promulgated under the Securities Exchange Act of 1934; provided, however, that such certificate shall not include a certification as to any portion of the Preliminary Official Statement pertaining to Westlands Water District, including but not limited to the Westlands Portion of the Official Statement. The Chair or Vice Chair (each an “Authorized Officer”) is each hereby individually authorized and directed to execute, approve and deliver the Authority Portion of the final Official Statement in the form of the Authority Portion of the Preliminary Official Statement which, upon execution as authorized herein, is made a part hereof as though set forth in full herein, with such changes, insertions and omissions as may be recommended or approved by General Counsel or Bond Counsel and approved by such Authorized Officer, said execution and delivery being conclusive evidence of such approval. The underwriter of the Bonds named in the Authority Portion of the Preliminary Official Statement is hereby authorized to distribute copies of said Authority Portion of the Preliminary Official Statement to persons who may be interested in the initial purchase of the Bonds and are directed to deliver copies of any Authority Portion of the final Official Statement to all actual initial purchasers of the Bonds. SECTION 3. Other Actions. Each Authorized Officer, the Treasurer of the Authority, the Executive Director, Chief Operating Officer and any other proper officers of the Authority, acting singly, are each authorized and directed to do any and all things and to execute and deliver any and all documents and certificates which such officers may deem necessary or advisable in order to consummate the sale, execution and delivery of the Bonds, and otherwise effectuate the purposes of this Resolution, and such actions previously taken by such officers are hereby ratified and confirmed. SECTION 5. Effect. This Resolution shall take effect immediately. 2 4835-4867-9376v4/022910-0011 PASSED, APPROVED AND ADOPTED this 14th day of January, 2021, by the Board of Directors of the San Luis & Delta-Mendota Water Authority. AYES: