$16,255,000 Water Revenue Bonds and $22,715,000 Wastewater Revenue Bonds, July 2020
The City of Calexico (“City”) successfully issued Water and Wastewater Revenue Bonds through the Calexico Financing Authority to finance the construction of improvements to the City’s Water and Wastewater systems, as well as to refund previously outstanding Water Revenue Bonds for savings. The Bonds were successfully sold in July 2020 with a “AA” rating from Standard and Poor’s having qualified for municipal bond insurance from Assured Guaranty Municipal. The Bonds are repayable over a 30-year period with level debt service and achieved an “All-In True Interest Cost” of 2.73%, an outstanding rate for the City that will enable it to provide high-quality Water treatment/distribution and Wastewater collection/treatment to its residents for decades to come.
KTS was engaged as the City’s Municipal Advisor in 2018 and worked in concert with the City and its engineering consultants to devise a comprehensive plan of finance that included the issuance of debt, targeted expenditure of accrued reserves, and a restructuring of its Water and Wastewater user fees. The comprehensive approach was designed to enable the City to install much needed upgrades to its Water treatment/distribution and Wastewater collection/treatment systems while holding user fee increases to a minimum.
The initial working plan that was devised prior to KTS’s engagement called for the City to implement large rate increases and to spend down each utility’s available cash reserves to pay for the projects. This plan would have left the utilities in a precarious financial position going forward, threatening the City’s ability to respond should there ever be an emergency that needed immediate financial resources.
KTS implemented a strategy that incorporated targeted spending of the reserves, the refinancing for savings of certain outstanding Water system bonds, and the issuance of new money revenue bonds of each system to finance the costs of modernization and upgrades. KTS worked directly with the Finance Commission for the City and won unanimous approval for the financing plan. The plan also resulted in a revamped rate study that projected a modest 2% rate increase (compared to the previously proposed 5%+) over the next five years, which was unanimously approved by the City Council and also passed the Proposition 218 Majority Protest process.