HomeMy WebLinkAbout11/26/97 BAKERSFIELD
CITY MANAGER'S OFFICE
MEMORANDUM
November 26, 1997
TO: H ONO RABLE MAYOR AND CITY C~J~
SUBJECT: GENERAL INFORMATION ' [
1. Attached is the analysis done by Moody's Investors Service in rating the proposed
$13,600,000 sewer revenue bonds for the Treatment Plan No. 3 expansion. The
comments are very favorable about our financial management practices.
2. The appeal relating to the clean up of property at 3418 Anderson Street has been
withdrawn, so this matter will not appear on the December 17th Council agenda.
3. A response to a Council referral regarding the status of street repairs on McDonald
and American Way is enclosed.
4. At this time, I have no new information regarding the work stoppage at the arena.
Hopefully, it will come to a conclusion next week.
5. CalTrans keeps finding new red tape on the Amtrack station project. Staff continues
to cut through it and make progress.
6. We will need to supplement the pool of money for the URM program, as applicants
are obligating the existing cash. Because it was going slowly, we had moved money
out temporarily to use on other projects. Now it's time for a CBDG amendment to
restore some of it.
Happy Thanksgiving/
AT:rs
cc: Department Heads
Pamela McCarthy, City Clerk
Trudy Slater, Administrative Analyst
MEMORANDUM
TO: ALAN TANDY, CITY MANAGER
FROM: GREGORY J. KLIMKO, FINANCE DIRECTOR//~-'~
DATE: NOVEMBER 25, 1997
SUBJECT: MOODY'S RATING- SEWER BONDS 1997 (Al)
Attached is the analysis done by Moody's in rating the proposed $13,600,000 sewer revenue
bonds for Treatment Plant No. 3 expansion.
11/'24/97 1-7:09 ET REF: NOOD9442.0001 FR:HOODYS T0:8053253760 Page 1 of 3
$TTN:~ Greg Klimko
Bakersfield
MOODY'S RATES BAKERSFIELD, CA SEWER BONDS A1
Bakersfield (City of)'CA
Municipality
California
Moody's Rating
Issue Rating
Sewer Revenue Bonds, Series 1997 A1
Sale Amount $13,635,000.00
Expected Sale Date 12/02/97
Rating Description Sewer Revenue Bonds
NEW YORK, November 24, 1997 -- A~ A1 rating has been assigned to the City of
Bakersfield's sewer revenue bonds, reflecting the system's strong balance
sheet; long-range financial planning, which includes a debt structure designed
to acco~odate additional capacity expansion in the future; and high levels of
debt service coverage.
ON-GOING INVESTMENT FROM REVENUE, AND CASH AVAILABLE TO OFFSET CONSTRUCTION,
CREATE VERY STRONG BALANCE SHEET
Bakersfield has financed a large share of its wastewater system on a
pay-as-you-go basis out of operating revenues and connection fees. The 1996
debt ratio was only 23%. Moody's projects that the system's debt ratio will
rise to about. 45% with the current transaction and a concurrent state loan.,
though this level is still moderate given the state of the physical plant upon
project completion.
The projects currently being financed will provide additional capacity at both
of Bakersfield's current facilities, as well provide various system upgrades.
About $13.3 million will be funded out of the current bond issue, with an
additional $15.3 million financed by a 20-year, lo~-interest state loan. An
additional $14 million is being contributed towards construction from cash
accumulated by the system.
RAPID PAYOUT TO ACCOMMODATE FUTURE BORROWING
The current capital program will, among other things, finance new capacity of
about 8 million gallons a day. Based on rates of growth contained in the
city's projections, additional treatment capacity would be required beginning
in 2008. Accordingly, the current issue is structured to mature in 2007, which
would allow the system to support debt service on a new issue to finance
further capacity %rithin the current revenue structure.
HIGH PROJECTED COVERAGE LEVELS
· The principal sources of system revenues in 1997 were user charges (66%),
connection fees (17%), and interest earnings on the system's considerable cash
reserves (14%). Interest income is projected to decline to 3% of revenues in
1998, in part from the use of cash on hand towards construction.
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Coverage of debt service by all revenues is projected to be two times or
greater. Debt service coverage from operating revenues net of connection fees
is projected to be 1.55 times or greater over the next five years. The city's
current forecast indicates that, with a second issue in 2007 to finance
further capacity expansion, coverage from operating revenues alone would fall
to sum sufficient for several years.
Given previous development activity and the city's land use plan, connection
fee projections appear reasonable. To the extent development were to slow, the
additional financing in 2007 would be deferred as well.
The rate covenant under this transaction is weaker than expected coverages.
The city covenants to maintain rates to provide 1.15 times coverage of bonds
and the state loans. Revenues under this test include connection charges.
Despite the weak covenant, Moody's expects actual coverages to be much higher,
and has incorporated that expectation into our rating.
DESPITE PERIODIC RATE INCREASES, COST OF SERVICE REMAINS BELOW AVERAGE
Sewer rates for Bakersfield are $110 a year, as compared to the state-median
of $179. Connection fees are $1,500, compared to the state median of $2,000.
ECONOMY IS DIVERSIFYING FROM HISTORIC CONCENTRATIONS IN AGRICULTURAL AND
PETROLEUM INDUSTRIES
Bakersfield is the major city of Kern County, the fourth most productive
agricultural county in the state. The agricultural basis is reflected in the
major employers, many of which are packing and processing plants, and in the
relatively high unemployment rates. The favorable growing conditions, and the
availability of federal, state and local surface water and a significant
underground acquifer for most of the county, position the region for
reasonable stability in this sector. In addition, the city is just south of
one of the largest oil production' fields in the continental United States,
which is also reflected in its employment base, as many petroleum-related
companies are located within the city
Because of the relatively low cost of land and housing, the city has
experienced significant growth in population and in commercial development
over the past decade. Business growth has included the relocation of
facilities from coastal urban areas of the state, such a8 the relocation of
State Farm Insurance Company's back-office functions. Assessed valuation grew
steadily throughout the recession, outpacing population growth by an average
of 1.5% a year.
The sewer system's customer base is well diversified. Only one customer
represents a significant share of user charges, the Nestle Ice Cream Co. at
2.5%. The top ten customers total 5.2% of user charges.
MINIMAL PROPOSITION 218 CONSIDERATIONS
The city's sewer charges are collected on the property tax bill and may be
subject to Proposition 218's requirements for property related fees and
charges. The system appears to meet the substantive test that fees reflect the
cost of service. While transfers to the general fund, which may be prohibited,
will continue through 1999, they are being phased out. If found to be a
property-related service, rate increases would be subject to notice and public
hearing, and could be stopped by a majority protest. The current rates were
adopted before the November approval of the constitutional amendment, and are
not scheduled to be increased until FY 2000-1, when the requirements of the
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measure should be more clear. In addition, the current billing system,
utilizing the assessor's role, would provide for easy administration of any
public notice.
ANALYSTS:
David A. Brodsly, Analyst, Public Finance Group, Moody's Investors Service
Kenneth Kurtz, Senior Credit Officer, Public Finance Group, Moody's Investors
Service
CONTACTS:
Journalists: (212) 553-0376
Research Clients: (212) 553-1625
MEMORANDUM
November 25, 1997
TO: ALAN TANDY, CITY MANAGER /,,~/~,,,~._
FROM: JACK HARDISTY, DEVELOPMENT SERVICES DIREC,T/61~,
v/
SUBJECT: APPEAL BY JESSIE BOWDEN - 3418 ANDERSON STREET
The property at 3418 Anderson Street has been cleaned up and the appeal has been withdrawn
(see attached). This matter need not appear on the next City Council agenda.
JH:pjt
cc: Pam McCarthy, City Clerk
Attachment - Withdraw of Appeal
m\matl 1-25
RECE VE
B A K E R S F I E L D
November 24, 1997
I,/3YCZ..O~.o~ ,t'~,~.*~/..0~,-~_her_eb_v withdraw my appeal of the City of Bakersfield
Building ~irector~s decision of ~,,~-',',',',',',',~,1997, for the property located at 3418
Anderson Street.
MEMORANDUM
TO: ALAN TANDY, CITY MANAGER
FROM: RAUL ROJAS, PUBLIC WORKS DIRECTOR /~
DATE: NOVEMBER 25, 1997
SUBJECT: COUNCIL REFERRAL WF0017811/001
COUNCILMEMBER SALVAGGIO, WARD 7
STATUS OF REPAIRSONMcDONALD WAY, WEST OF THE KERN
SCHOOLS FEDERAL CREDIT UNIONANDALSO ON AMERICANWAY.
On November 20, 1997 the-Street Maintenance crew started patching
potholes on McDonald Way, American Way, Parkwood Court and Fjord
Street. The street patching project on these streets will be
completed by November 26, 1997. These streets are on the Street
Division's resurfacing list for the summer of 1998.
Some concrete cross-gutters on these streets are in need of
repair. The repairs will be performed in the spring (1998), prior
to the start of the resurfacing project.
o,-- ,, City of Bakersfield *REPRINT*
~ .- '% WORK REQUEST PAGE 1
REQ/JOB: WF0017811 / 001 PROJECT: DATE PRINTED: 11/24/97
REQUEST DATE: 11/19/97
CREW: SCHEDULE DATES
START: ii/21/97
LOCATION: COMPLETION: 12/01/97
GEN. LOC: WARD7 FACILITY NODES
FROM:
FACILITY ID: TO:
REF NBR: COUNCIL
REQ DEPT: CITY COUNCIL REFERRAL PRIORITY: HIGH
REQUESTOR: REFERRAL - SALVAGGIO ORIGIN: CITY COUNCIL REFERRAL
USER ID: PLAWRENCE WORK TYPE: REFERRAL
DESCRIPTION: MCDONALD AND AMERICAN WAYS
REQUEST COMMENTS
***REFERRAL TO PUBLIC WORKS***
SALVAGGIO REQUESTED STAFF AN UPDATE ON PREVIOUS
REFERRAL REGARDING STREET REMEDIATION ON MCDONALD
WAY, WEST OF KERN SCHOOLS FEDERAL CREDIT UNION;
AND AMERICAN WAY.
Job Order Description: MCDONALD WAY AND FJORD.
at~gory: PUBLIC WORKS
asK: RESPONSE TO REFERRAL
Assigned Department: PUBLIC WORKS
START DATE / / COMPLETION DATE / /