$900 Million in Unplanned Borrowing

In fiscal year 2016, MWD approved two unplanned debt authorizations totaling $900 million. The first authorized $500 million in long-term debt and the second $400 million in short-term taxable commercial bank lines of credit.

$500 Million in Unplanned Long-Term Debt

Date AuthorizedResolution/Ordinance AdoptedNew Authorization?Ordinance & Debt DescriptionAmount approved to issue ($ in Millions)Issued forAuthorized Amount Remaining ($ in Millions)
10/13/15Ordinance No. 149
(Page 1-2 of Attachment 1)
Yes ($500M authorized)Authorizing ordinance to issue debt$0CIP expenses - reimburse past ones (in fiscal years 2015 and 2016) and cover future ones$500
Additional Descriptions & Sources

From Page 3 of authorizing memo: "will have no direct financial impact to Metropolitan, but will allow the Board to take future action(s) to fund a portion of Metropolitan's CIP with revenue bonds. Future board action is required for the approval of future bond issues."

"will enable the Board to authorize bond sales to fund future CIP expenditures and to reimburse for pay-as-you-go-funded CIP expenditures."
11/10/15Twenty-First Supplemental Resolution to the Master Revenue Bond Resolution (Resolution 9197)No - under Ordinance No. 149 adopted on 10/13/2015Water Revenue Bonds, 2015 Authorization$250 (actual issuance: $208)$208M: CIP expenses - reimburse ones made since May 2015 and cover ones for fiscal year 2016 (not aligned with budget that called for 100% cash-funding CIP)$292
Additional Descriptions & Sources

From Page 1 of authorizing memo: "Bond proceeds would fund a portion of projected Capital Investment Plan (CIP) expenditures, primarily for fiscal year (FY) 2015/16, and the reimbursement of capital projects that have been funded from the General Fund and the Replacement and Refurbishment (R&R) Fund, since May 2015. Bond proceeds would also fund all or a portion of the cost of issuance associated with the Water Revenue Bonds. Metropolitan's Board adopted, on October 13, 2015, Ordinance No. 149, determining that the interests of Metropolitan require the use of revenue bonds up to an aggregate amount of $500 million to fund a portion of CIP expenditures through FY 2017/18."

From Page 1 of subsequent memo: "On November 10, 2015, the Board authorized the Twenty-First Supplemental Resolution to MetropolitanÕs Senior Debt Resolution for the issuance of up to $250 million of Water Revenue Bonds, of which $208 million was issued on December 17, 2015."

From Page A-35 of June 22, 2016 Offering Statement Appendix A: "On December 17, 2015, Metropolitan issued $208,255,000 Water Revenue Bonds, 2015 Authorization Series A, to reimburse pay-as-you-go expenditures for CIP expenditures for fiscal year 2014-15 and fiscal year 2015-16 and for future CIP expenditures."

From Page 9 of Attachment 3 in fiscal years 2015 and 2016 biennial budget authorization memo: "Cash Funded Capital. The CIP is proposed to be funded by current operating revenues (budgeted PAYGo) and by drawing down the R&R fund balance. The PAYGo funding for FY 2014/15 has been budgeted at $245 million. In FY 2015/16, PAYGo funding has been budgeted at $221 million and in addition to a $47 million draw from the R&R fund will fund the $268 million CIP."
12/13/16Second Supplemental Subordinate Resolution to the Master Subordinate ResolutionNo - under Ordinance No. 149 adopted on 10/13/2015Subordinate Water Revenue Bonds, 2016 Authorization$175$175M: replenish unrestricted reserves used to purchase Delta Islands (which MWD considers a CIP expense)$117
Additional Descriptions & Sources

From Page 1 of authorizing memo: "The Second Supplemental Subordinate Resolution to the Master Subordinate Resolution (the Second Supplemental Subordinate Resolution) would authorize the issuance of up to $175 million of Subordinate Water Revenue Bonds, 2016 Authorization (Bonds), provide the terms and conditions for the sale and issuance of the Bonds, and provide for transaction documents. Transaction documents include trust agreements, bond holder agreements, bond purchase contracts and other agreements between Metropolitan and a financial institution providing for purchase or liquidity support of the Bonds. The proceeds from the sale of the Bonds would reimburse the purchase of the Delta Islands. This purchase was approved by the Board on March 8, 2016. Since the land purchase closed on July 18, 2016, Metropolitan used its unrestricted reserves to purchase the Delta Islands and the proposed financing would reimburse reserves for the land purchase"

"The Bonds proposed under the Second Supplemental Subordinate Resolution would be issued under Ordinance No. 149, adopted by the Board on October 13, 2015. The Board determined, in Ordinance No. 149, that the interests of Metropolitan require the use of revenue bonds up to an aggregate amount of $500 million to fund a portion of capital expenditures."

$400 Million in Unplanned Taxable Commercial Bank Lines of Credit

Date AuthorizedResolution/Ordinance AdoptedNew Authorization?Ordinance & Debt DescriptionAmount approved to issue ($ in Millions)Issued forAuthorized Amount Remaining ($ in Millions)
3/8/2016Short-Term Revenue Certificates Resolution (Resolution 9201)Yes
($400M Authorized)
short-term certificates$250 $250M: replenish unrestricted reserves $150
Additional Descriptions & Sources

From Page 1 of authorizing memo: "The Certificates would be issued to pay or finance any expenditure authorized by law including funding operation and maintenance expenditures, expenses Metropolitan is obligated by law to spend, replenishing financial reserves, financing the construction of any project authorized by the Board, and refunding or refinancing the Certificates and any other debt obligations."

Audio of CFO Breaux’s comments at March 7, 2016 Finance and Insurance Committee meeting starting at 20:56: "At that time, I think as I discussed before, we would intend to move approximately $250 Million out of our unrestricted reserves that’s set aside right now for the San Diego County Water Authority litigation. Move that into a separate designated fund outside of our unrestricted reserves, and at the same time then borrow on this line of credit to invest to put it back into our unrestricted reserves."

From Page A-47 of Offering Statement Appendix A description: “In April 2016, Metropolitan drew $125 million from each Short-Term Revolving Credit Facility (as defined below), for a total of $250 million, and deposited these amounts in Metropolitan’s unrestricted financial reserves.”
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