WATER SUPPLY PLANNING COMMITTEE

ITEM:		ACTION ITEM
3.	CONSIDER EXPENDITURE OF FUNDS TO CONTRACT WITH UNDERWRITER FOR MONTEREY PENINSUAL WATER SUPPLY PROJECT
Meeting Date:			November 5, 2013	Budgeted:	Yes
From:			David J. Stoldt	Program/	Cal-Am Desal Project
			General Manager	Line Item No.:	1-9-1
Prepared By:			David J. Stoldt	Cost Estimate:	Not to exceed $60,000
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: The July 31, 2013 Settlement Agreement among 16 parties in the Application A. 12-04-019 to the California Public Utilities Commission approved the use of public Water Rate Relief Bonds (also described as “Securitization”) for financing a portion of the desalination project.

In order to advance the financing concept further and to provide expert support during the December 2 and 3, 2013 hearings with Administrative Law Judge Minkin, the General Manager and General Counsel believe that it is important to retain the same third party expert that provided earlier testimony in support of its financing proposals.

The District would contract with an underwriter for the eventual bond issue, but pay for services required during the next 18 months as an advance against the future underwriting fee. The fee for underwriting, assuming credit ratings of at least BBB+ and a term not exceeding 30 years, will be negotiated in the future, but will not exceed 0.6% or $6/bond. The expenditures under this authorization would be applied against that future fee. If the bonds are never issued, then the District will have paid from budgeted funds under project 1-9-1.

RECOMMENDATION: The General Manager recommends that the Water Supply Planning Committee recommend the Board of Directors approve the hiring of Raymond James Associates to provide lead underwriting services for the Water Rate Relief Bonds, with near-term services not to exceed $60,000 over the next 18 months, paid as an advance against future underwriting fees. The District will retain the right to add other firms to the underwriting team (co-managers).

EXHIBIT

None

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