The Underwriters have provided the following for inclusion in the Official Statement in connection with the offering of the 2015A Bonds: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their respective responsibilities to investors under the federal securities laws, as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.
THE PURCHASERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT MAY STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2015A BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
While the Water Authority maintains a website for various purposes, none of the information on the Water Authority’s website is intended to assist investors in making an investment decision or to provide any continuing information with respect to the 2015A Bonds.
INTRODUCTION ... 1
WATER AUTHORITY DEBT ... 1
PLAN OF REFUNDING ... 4
THE 2015A BONDS ... 6
General ... 6 Redemption ... 6
Notice, Rescission and Effect of Redemption ... 7
SOURCES AND USES OF FUNDS ... 8
SECURITY AND SOURCES OF PAYMENT ... 8
General ... 8
Pledge of Net Water Revenues ... 8
Deposit of Net Water Revenues ... 9
Net Water Revenues ... 9
Application of Water Revenues Under the General Resolution ... 10
Rate Covenant ... 11
Additional Parity Obligations ... 11
General Resolution Amendments ... 12 Limitations on Remedies ... 12
DEBT SERVICE SCHEDULE ... 14
THE WATER AUTHORITY ... 15
Organization, Purpose and Powers ... 15
Member Agencies ... 15
Board of Directors, Management and Employee Relations ... 16
WATER AUTHORITY SERVICE AREA ... 19
WATER AUTHORITY WATER SUPPLY ... 20
Local Water Supplies ... 22
Water Transfers ... 23
Quantification Settlement Agreement ... 23
Water Purchases from The Metropolitan Water District of Southern California ... 27
MWD Water Supply ... 28
Current California Drought ... 36
Future Water Supply ... 37
MEMBER AGENCY WATER USAGE ... 44
Water Use by Member Agencies ... 44
Water Reclamation, Reuse and Groundwater Recovery ... 48
WATER AUTHORITY WATER FACILITIES ... 48
Water Conveyance Facilities ... 48
Water Storage ... 50
Water Treatment Facilities ... 52 Seismic and Wildfire Considerations ... 52
Safety and Security ... 53
Insurance ... 53
Energy ... 53
THE CAPITAL IMPROVEMENT PROGRAM ... 54
Projects in the Capital Improvement Program ... 55
Cost Management Strategy ... 56
FINANCIAL OPERATIONS ... 56
Water Authority Water Rates and Charges ... 56
Other Water Authority Charges... 57
Bankruptcy or Financial Failure of a Member Agency ... 58
Other Water Authority Sources of Funds ... 58 Cost of MWD Water ... 59
Cost of IID Water ... 62
Cost of Water Conserved from Canal Lining Projects ... 62
Cost of Seawater Desalination Water from Carlsbad Project ... 63
Fixed Rate Debt ... 63
Variable Rate Debt ... 63
Financial Commitments Related to the Carlsbad Project ... 64
Future Financial Commitments Related to the QSA ... 66
Financial Management Policies ... 66
Cash and Investments ... 67
Investment Policy ... 67
HISTORICAL OPERATING RESULTS ... 67
Water Authority Revenues ... 67
Operating Expenses and Depreciation and Amortization ... 69
Summary of Historical Operating Results ... 69
PROJECTED OPERATING RESULTS ... 72
Projected Operating Revenue ... 75
CONSTITUTIONAL LIMITATIONS ... 78
Article XIIIA ... 78
Articles XIIIC and XIIID ... 79
Proposition 26 ... 81
Other Initiative Measures ... 81 TAX STATUS ... 81
CONTINUING DISCLOSURE ... 83
RATINGS ... 83
VERIFICATION OF MATHEMATICAL COMPUTATIONS ... 83
UNDERWRITING ... 84
LITIGATION ... 84
CERTAIN LEGAL MATTERS ... 84
FINANCIAL ADVISOR ... 84
INFORMATION CONCERNING THE METROPOLITAN WATER DISTRICT OF SOUTHERN
CALIFORNIA ... 84
MISCELLANEOUS ... 85
APPENDIX A – WATER AUTHORITY FINANCIAL STATEMENTS ... A-1 APPENDIX B – ECONOMY OF SAN DIEGO COUNTY ... B-1 APPENDIX C – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ... C-1 APPENDIX D – FORM OF CONTINUING DISCLOSURE AGREEMENT ... D-1 APPENDIX E – BOOK-ENTRY SYSTEM ... E-1 APPENDIX F – FORM OF APPROVING OPINION OF BOND COUNSEL ... F-1
$____________*
San Diego County Water Authority Water Revenue Refunding Bonds,
Series 2015A
INTRODUCTION
This Official Statement, including the cover page and Appendices hereto, is provided to furnish certain information in connection with the offering of San Diego County Water Authority Water Revenue Refunding Bonds, Series 2015A (the “2015A Bonds”), in the aggregate principal amount of $____________*.
The 2015A Bonds are secured by a pledge of Net Water Revenues (defined below). Payment of the 2015A Bonds from Net Water Revenues is on a parity with the payment of the Contracts (defined below) presently outstanding or hereafter incurred by the Water Authority in accordance with the General Resolution (defined below).
The 2015A Bonds constitute limited obligations of the Water Authority, payable solely from Net Water Revenues, and neither the full faith and credit nor the taxing power of the Water Authority, the State of California or any of its political subdivisions is pledged for the payment thereof.
The 2015A Bonds are being issued by the Water Authority to refund a portion of the Water Authority’s obligations under the 2008A Installment Sale Agreement (defined below) and the 2010A Contract of Indebtedness (defined below). See THE CAPITAL IMPROVEMENT PROGRAM and PLAN OF REFUNDING.
The 2015A Bonds are being issued pursuant to the County Water Authority Act of the State of California and all laws amendatory thereof or supplemental thereto, including Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (collectively, the “Act”) and an Indenture, dated as of May 1, 2015 (the “Indenture”), between the Water Authority and U.S. Bank National Association as trustee (the “Trustee”).
Brief descriptions of the 2015A Bonds, the security and sources of payment for the 2015A Bonds and the Water Authority and its Capital Improvement Program are provided herein. Such descriptions do not purport to be comprehensive or definitive. Definitions of certain capitalized terms used herein may be found in APPENDIX C – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - Certain Definitions. All references made to various documents herein are qualified in their entirety by reference to the forms thereof, all of which are available for inspection at the office of the Water Authority’s Clerk of the Board of Directors.