City Council Agenda
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Memo to: |
Manteca City Council |
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From: |
Matthew Boring, Finance Director |
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Prepared by: |
Melissa Munoz, Interim Assistant Finance Director |
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Date: |
March 17, 2026 |
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Subject: |
2026 Water Revenue Refunding Bonds |
Recommendation:
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Adopt a resolution of the City Council of the City of Manteca approving, authorizing and directing issuance of bonds to refinance outstanding obligations of the City’s Water System for savings.
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Background:
On December 11, 2012, the City of Manteca issued $35.84 million Water Revenue Refunding Bonds, Series 2012 (the “2012 Bonds”). The 2012 Bonds were issued to assist the City in prepaying the remaining outstanding payments of the Authority Series 2003A Installment Payments, fund a debt service reserve fund, and pay for the costs of issuance. The 2012 Bonds are currently outstanding in the amount of $18.02 million, carry a 5.00% coupon rate, and may be prepaid at any time without penalty.
Staff is seeking City Council approval to refinance all the outstanding 2012 Bonds for interest rate savings with the issuance of 2026 Water Revenue Refunding Bonds (the “2026 Bonds”).
Discussion:
The proposed Resolution recommended for adoption by the City Council authorizes the issuance of the 2026 Bonds, appoints professionals to assist with the financing, and approves all documents and actions needed to authorize the sale of the 2026 Bonds, including the following substantially final form financing documents together with any changes or additions deemed advisable and approved by an Authorized Officer. Certain information in these documents will be finalized after the bond sale.
• Indenture of Trust - Establishes the terms of the 2026 Bonds, including payment and redemption provisions, the definition and pledge of revenues to pay the 2026 Bonds, rights and duties of the Trustee (U.S. Bank Trust Company, National Association), remedies upon a default in the payment of the 2026 Bonds, and other provisions.
• Bond Purchase Agreement - The agreement between the City and the Underwriter (Samuel A. Ramirez & Co., Inc.) that defines the terms and conditions under which the Underwriter will purchase the 2026 Bonds.
• Preliminary Official Statement - This is the City’s document pursuant to which the 2026 Bonds will be offered for purchase by the public by the Underwriter. This document must contain all facts material to the 2026 Bonds, the City and the City’s water system (with certain permitted exceptions to be completed in the final Official Statement) and must not omit any such material facts.
• Continuing Disclosure Certificate - An agreement by the City to provide annual financial information and notice of certain material events to investors, allowing the Underwriter to comply with federal securities disclosure requirements.
The Resolution also sets forth certain not-to-exceed parameters for the 2026 Bonds, including a principal amount not exceeding $16 million, an underwriter’s discount not exceeding 0.85% of par, and net present value savings achieved by issuance of the 2026 Bonds of at least 3.0%. These parameters provide flexibility in the event of changes in market conditions.
Fiscal Impact:
Based on market rates as of March 2, 2026, refinancing the 2012 Bonds with a proportional savings structure (and without extending the final maturity) is estimated to generate net present value savings of approximately $1.55 million, or 8.62% of the refunded principal amount. Total cash flow savings are estimated to be $4.76 million through Fiscal Year 2033-34. These savings are net of costs of issuance.
Pursuant to Government Code Section 5852.1, good faith estimates provided by the underwriter and the municipal advisor must be disclosed at a public meeting before the authorization of the 2026 Bonds. The table below summarizes those estimates and includes additional information.
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2026 Bonds |
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Principal Amount: Final Maturity: True interest cost: |
$13,995,000 December 1, 2033 2.31% |
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Finance charge: |
$371,585 |
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Amount of refunding proceeds received: |
$18,285,565 |
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Average annual debt service: Total debt service payment amount: |
$2,235,996 $17,092,950 |
* These are good faith estimates only and are based on market rates as of March 2, 2026. Final results will likely differ based on market conditions as of the actual sale date and other factors. However, for the financing to proceed, the not-to-exceed parameters described in the previous section must be met.
If the proposed Resolution is approved, the sale of the 2026 Bonds is expected to occur during the week of March 23, 2026, with a delivery/closing date on or about April 9, 2026, and redemption of the 2012 Bonds expected on May 11, 2026.
Documents Attached:
1. Attachment 1 - Resolution
2. Attachment 2 - Form of Indenture of Trust
3. Attachment 3 - Form of Bond Purchase Agreement
4. Attachment 4 - Form of Preliminary Official Statement (with Form of Continuing Disclosure Agreement attached as Appendix C)