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ADMINISTRATIVE COMMITTEE |
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7. |
AUTHORIZE CONTRACT FOR
FINANCIAL CONSULTANT RELATED TO CONTRIBUTION OF PUBLIC FUNDS FOR CALIFORNIA
AMERICAN WATER DESALINATION PROJECT |
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Meeting Date: |
September 9, 2013 |
Budgeted: |
Yes |
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From: |
David J. Stoldt |
Program/ |
TBA |
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General Manager |
Line Item No.: |
TBA |
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Prepared By: |
David J. Stoldt |
Cost Estimate: |
To be Reported at Meeting |
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General Counsel Approval: N/A |
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Committee Recommendation: The Administrative Committee reviewed this item on September 9, 2013 and recommended _______________. |
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CEQA Compliance: N/A |
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SUMMARY: In October 2012, both the District and the Mayors’ Authority submitted “Public Agency Participation Proposals” to California American Water (Cal-Am) as part of the CPUC proceeding A.12-04-019. The District submitted both Governance Concepts and an Evaluation of Capital Financing Alternatives. Since that time, the District has worked with the Authority in promoting the District’s idea of a contribution of public financing to decrease the cost to ratepayers.
In the July 31, 2013 ”Large” Settlement Agreement the Parties agreed to proceed with a form of public contribution known as Securitization. This form of financing could entail $44 million to $119 million of debt issues by the District and secured by payments of another debt issuance issued by a special purpose entity and secured by surcharges on the Cal-Am bill. There are many layers of complexity and specialized consulting services are required. The section of the Settlement Agreement relating to Securitization is attached as Exhibit 7-A. The District has entered into discussions with Charles Atkins to serve in the role of consultant to the District for this purpose. Mr. Atkin’s biography is attached as Exhibit 7-B. A proposed scope of services and fee structure (Exhibit 7-C) will be presented at the Committee Meeting. Costs will be recovered from the issuance of the debt, however if the debt is not issued, then the District will have incurred a portion of the costs out-of-pocket. The debt will only be issued if, at the time of the financing, significant savings to the ratepayers can be shown.
RECOMMENDATION: The General Manager recommends that the Committee recommend that the Board of Directors approve the hiring of Charles Atkins to provide financial services consulting and the expenditure of up to $__________.
ADDITIONAL BACKGROUND: The District previously hired Raymond James and Associates, an investment banking firm represented by Robert Larkins, and Sidley Austin, a Bond Counsel law firm represented by Eric Tashman, to serve on this financing team. It is fully expected that those to firms will remain part of the overall Securitization team.
7-A Overview of Settlement
Agreement as it relates to a Securitization Public Contribution
7-B Biography of Charles Atkins
7-C Scope of Services and Fee Proposal (To Be Provided at Committee Meeting)
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