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City of Davis PRELIMINARY water rate STRUCTURES

B ARTLE W ELLS A SSOCIATES. Independent Public Finance Advisors. City of Davis PRELIMINARY water rate STRUCTURES. URAC Meeting June 5, 2014. Financing scenarios. Scenario 1: Market Bond Rates – Conservative Interest Rates

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City of Davis PRELIMINARY water rate STRUCTURES

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  1. BARTLEWELLSASSOCIATES Independent Public Finance Advisors City of Davis PRELIMINARY water rate STRUCTURES URAC Meeting June 5, 2014

  2. Financing scenarios • Scenario 1: Market Bond Rates – Conservative Interest Rates • 30 year market rate bonds for the revised CIP, but at the same conservative interest rates we assumed one year ago. The combined total includes the CPG water purchases. • Scenario 2: Market Bond Rates – Current Market Interest Rates • 30 year market rate bonds for the revised CIP, but with the first 2015 market rate bond issuance at current market rates for an A+ water revenue bond. All other series are at the same conservative interest rates we used one year ago. The combined total includes the CPG water purchases. • Scenario 3: 20 year term SRF Loan • Includes accrued interest during the construction period. The combined total includes the CPG water purchases. • Scenario 4: 30 year term SRF Loan • Includes accrued interest during the construction period. The combined total includes the CPG water purchases.

  3. INTEREST RATE ASSUMPTIONS • The interest rate assumptions for the 2016, 2017, 2018 and 2019 bond issues are the same in all scenarios, as shown below: • 2016: 6% • 2017-2019: 6.25% • For the conservative scenarios (Scenario 1), 5.5% was used for the 2015 bond issue. • For the current bond market rate scenarios (Scenarios 1 & 2), a scale with an average weighted coupon of 4.42% was used. The only difference between the conservative and current rate scenarios is the interest rate assumed on the 2015 issue. • Under current market conditions, for an A-rated water credit, the average weighted coupon would not exceed 4.25%. • SRF Loans – Interest rate equal to ½ of State’s GO Bond Rate (~ 2%)

  4. DEBT SERVICE ESTIMATES

  5. 2011 Water consumption

  6. SINGLE FAMILY RESIDENTIAL – USE IN EACH TIER

  7. Rate structure options • RATE STRUCTURES • Conventional – SFR 3 Tiers with Tier 1: 0-10 ccf/month • Conventional – SFR 3 Tiers with Tier 1: 0-18 ccf/month • Conventional - Different Uniform Tiers by Customer Class • (Alternative: Single Uniform Tier for All Customers) • Conventional - Seasonal Tiers (Same for All Classes) • ASSUMPTIONS • All structures assume 40% fixed / 60% variable revenue recovery • All structures assume debt service for Scenario 2 (Market Rate Bonds at Current Market Rates) • Rates are preliminary for discussion purposes only. BWA will update revenue and expense projections, consumption data, and customer information.

  8. DRAFT RATES – CONVENTIONAL SFR 3 TIERS (TIER 1: 0-10 CCF)

  9. DRAFT RATES – CONVENTIONAL SFR 3 TIERS (TIER 1: 0-18 CCF)

  10. DRAFT RATES – CONVENTIONAL UNIFORM TIER

  11. DRAFT RATES – SEASONAL RATES

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