To: Sonoma County Board of Supervisors, Sonoma Water Board of Directors and the Sonoma County Public Financing Authority Board Members
Department or Agency Name(s): County Administrator Office, Auditor-Controller/Treasurer-Tax Collector, Sonoma Water, and Sonoma County Public Financing Authority
Staff Name and Phone Number: Terri Somers 707-565-6489; Erick Roeser 707-565-3295
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Sonoma County Energy Independence Program Semi-Annual Bonding Authorization
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Recommended Action:
Recommended action
A) Acting as the Board of Supervisors: Adopt Resolutions authorizing the Treasurer to invest in bonds issued by the Sonoma County Public Finance Authority, setting interest rates, and authorizing execution of various related agreements with the Sonoma County Public Finance Authority, including a bond purchase agreement and a loan agreement.
B) Acting as the Board of Directors of the Sonoma County Water Agency: Adopt Resolutions withdrawing funds from the Sonoma County Treasury Pool and authorizing the withdrawn funds to be invested in Sonoma County Energy Independence Program bonds as a long-term Sonoma Water investment.
C) Acting as the Board of Directors of the Sonoma County Public Finance Authority: Adopt Resolutions approving agreements with the County, authorizing continued issuance and sale of revenue bonds to fund the Sonoma County Energy Independence Program, and setting interest rates.
end
Executive Summary:
The Sonoma County Energy Independence Program (the “Program”) is required to come to the Board twice a year to authorize continued issuance of bonds that fund the Program. Staff is requesting authorization to issue bonds and enter into related financing agreements to continue the Program through March 31, 2025. An annual update on the Program <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=6707806&GUID=8ED2E471-E1D8-409E-819B-65C7DA769B75> came to the Board on June 4, 2024.
Discussion:
In March 2024, your Board authorized the issuance of bonds related to the Program for the period of April 1, 2024 to September 30, 2024. Reauthorization is needed ensure the continuance of an alternative financing mechanism that allows property owners to install improvements that contribute to the reduction of greenhouse gas emissions through the built environment, make buildings healthier, more durable and resilient to natural disasters.
Over its fifteen-year history, the Program has cumulatively funded over $108 million in residential and commercial property improvements.
In June 2024, your Board authorized an increase in the fixed interest rate for the Program assessment contracts from 7.49 percent to 7.99 percent, effective July 3, 2024 after 5:00 PM, with 4.00 percent to remain allocated to Program operations. Interest rates for new bonds will be increased from 3.49 percent to 3.99 percent with this new bonding cycle.
Bond Issuance
The Program is bond financed and must be reauthorized per State statute. Since the bonds carry a final maturity in excess of 5 years, Government Code section 53601 requires that your Board approve and authorize the Treasurer to make these dedicated investments. The Board previously established a $60 million program limit that reflects the total bond funding commitment from the Treasury ($45 million) and Sonoma Water ($15 million) collectively. There is currently $31 million in outstanding bonds and $29 million in available funding.
Due to the nature of the bonds issued by the Authority, including variations in term lengths, bond issue dates and capitalized interest, interest cannot be accurately estimated in advance of issuing bonds. The Authority does not incur any financing charges or fees paid to third parties, except for a small amount (expected to be less than $200) paid to the California Debt and Investment Advisory Commission in connection with filings for the bonds and $1,750 paid to outside legal counsel for the monthly bond issuance.
Authority bonds associated with Program contracts executed after July 3, 2024 are at a fixed interest rate of 3.99 percent. The total aggregate principal amount of bonds outstanding cannot exceed $60 million. The current outstanding aggregate principal amount of bonds is $31 million and the Authority may issue up to $29 million in additional bonds. In March 2024 the Board authorized bonds to be issued by the Authority that were subsequently purchased (invested) by the Treasury on behalf of the Treasury Pool and Sonoma Water for the purposes of the Program. The current Sonoma Water ($15 million) bonding commitment has been met. All bonding is currently directed to the Treasury Pool until Sonoma Water’s outstanding bond amount decreases below $15 million, at which time Sonoma Water will resume its investment in Authority bonds.
With this item, staff is requesting authorization to issue bonds and enter into related financing agreements to continue the Program for the period of October 1, 2024 to March 31, 2025.
Strategic Plan:
This item directly supports the County’s Five-year Strategic Plan and is aligned with the following pillar, goal, and objective.
Pillar: Climate Action and Resiliency
Goal: Goal 2: Invest in the community to enhance resiliency and become carbon neutral by 2030
Objective: Objective 2: Provide $20 million in financing by 2026 that incentivizes property managers and renters to retrofit existing multi-family housing towards achieving carbon neutral buildings.
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
6/4/24 - Sonoma County Energy Independence Program Update, and Annual Interest Rate Determination
3/26/24 - Sonoma County Energy Independence Program Semi-Annual Bonding Authorization
9/19/23 - Sonoma County Energy Independence Program Semi-Annual Bonding Authorization
06/12/23 - Board authorization for the approval of Skylane LLC’s Sonoma County Energy Independence Program (SCEIP) financing application in the amount of up to $751,990.00 05/23/23 - Sonoma County energy Independence Program Update, Approval of Program Operational Changes, and Annual Interest Rate Determination
3/14/23 - Sonoma County Energy Independence Program Semi-Annual Bonding Authorization
Fiscal Summary
Narrative Explanation of Fiscal Impacts:
Fiscal Impact: None
Narrative Explanation of Staffing Impacts (If Required):
None
Attachments:
1: Resolution authorizing the Public Financing Authority to issue and sell Sonoma County Energy Independence Program contractual assessment revenue bonds - Oct 2024
2: County Resolution Authorizing the Treasury to Invest in Sonoma County Energy Independence Program contractual assessment revenue bonds - Oct 2024
3: County Resolution Approving Loan Agreements - Oct 2024
4: Sonoma Water Resolution Authorizing the Sonoma Water Funds to Invest in Sonoma County Energy Independence Program contractual assessment revenue bonds - Oct 2024
5: County Resolution consenting to Water Agency investment in Sonoma County Energy Independence Program contractual assessment revenue bonds - Oct 2024
6: County Resolution Determining Interest Rates - 3.00%
7: Authority Resolution Determining Interest Rates - 3.00%
8: County Resolution Determining Interest Rates - 1.99% (October Authorization)
9: County Resolution Determining Interest Rates -2.99%
10. Authority Resolution Determining Interest Rates for 2.99% (October Authorization)
11. Authority Resolution Determining Interest Rates for 1.99% (October Authorization)
Related Items “On File” with the Clerk of the Board:
• Agreement 1: Form of Bond Purchase Agreement for Approval (October 2024 Authorization)
• Agreement 2: Form of Loan Agreement for Approval (October 2024 Authorization)