Utility Committee Agenda and Packet 2020 10 13

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to compare City Financing to Pool Financing. The City hasn't directed them to consider a term of financing yet so he went with a 20 year debt. The big unknown is Louisville doesn't have a utility bond rating debt outstanding. Just for Council benefit, Louisville has approached utility financing by combining the three utilities (water, sewer and storm). He explained how the combined revenue was pledged and that's the credit that will be rated if we were to sell our own bonds. Now the Sub -District pooled rating is a guess too. Right now we are assuming the rating will be more/less equivalent. We won't be in a position to know the rating until we commit to something. Mr. Manire thinks that the projections will come in fairly close with present value basis. So one choice won't be better or worse than the other with what we know so far. There is a couple things we identified that are part of a Pool Financing package that we wouldn't choose if the City did their own bonds. They are expecting the debt service reserve in their Pool Financing and he recommended avoiding that and would approach the City's bond issue not a debt service reserve. That's a small impact in terms of debt service differential but it is a distinction between the two. Within the Allotment Contract with the Sub - District there is a significant reserve requirement as well. So you're carrying a debt burden that we quantify with Poll Financing but the Sub - District would require Long participants to fund a Liquidity Reserve to be held by the Sub -District and that's another full year of debt service. He went on to say that wouldn't be efficient because there is higher payments with the Long Program but feels the cash flow is more front loaded. Page 20 — Mr. Manire continued explaining that the terms available have not been decided but were provided on a 20 or 30 year financing term. The Operating Reserve is not a choice between one debt mechanisms or another there are certain operating terms and certain funds we will be responsible for as a participant in the project on an O&M basis that are not debt related. As far as the Capital Fund there are additional reserves we are responsible for and we should get the benefit of those at the end. So in the pool bond the financing burden would be shared with a number of participants so that's a smaller cost. We would carry the full debt service cost load with the City financing. Mr. Peterson agreed and continued to explain the items listed. Mr. Manire stated on the Debt Service Funding that is cost of issuance, financing cost and the Liquidity fund is Internal funding which is a requirement of the Sub -District that we would pay at the front end of the program. Mr. Johnson added that with the August 13th update of the Contract, it does state 30%. Mr. Manire continued with the Subordinate Loan Lien, this is water conservation fund and is a small influence on the program but we have to account for it. So our numbers came in very close. He said his understanding is they are expecting to pay no principle on the first 5 years in the pool bonding program and that's a modification he wasn't aware of when he ran the numbers. Mr. Manire stated that until we get a commitment from the District we can only model these numbers. Councilmember Lipton asked if we can work on this and parallel these options so that at some point we 7