Oxnard activist objects to wastewater financing

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By Larry Stein

re: UTF presentations and Minutes

Oxnard Wastewater Treatment Plant

Please note my attachment: Debt Service

It pertains to the expected rate to be paid on newly issued bonds of 6%. If we have the projected cash reserves in place prior to issuing new debt, the interest rate should be closer to 4% instead of the projected 6%. Also note the difference in total interest paid between 20 years and 30 years, while the difference in debt service is nominal. Considering the city’s policy of paying for long term capital improvement projects with 50% cash, the debt requirements being proposed by staff seem to violate city’s policy.

The projected interest rate would attract many investors- a 6% tax exempt yield. Many investors would like a 4% tax exempt yield. I do not think the rate payers are getting sound advice from the city’s bond counsel.
Respectfully submitted,
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Lawrence Paul Stein
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NAME DATE AGENDA EVENT
Utilities Task Force March  2, 2017 – 04:00 PM Agenda

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Tom

The city is certainly not getting a bargain, but it is much better than the expectation for the Oxnard School District’s Measure D bonds, approved by voters last November, that would allow the district to issue $142,500,000 in bonds.

From the Sample Ballot and Voter Information Pamphlet
Presidential General Election
Tuesday, November 8, 2016:

“The best estimate from official sources of the total debt service, including the principal and interest, that would be required to be repaid if all the bonds are issued and sold will be approximately $478,680,000.”, a ratio of 3.36 to 1.

The expected ratio of city bonds sold at 6.00% varies between 1.74 and 2.18 depending on the bond period.