At the Oct. 27 Ramona Municipal Water District (RMWD) Board meeting, the directors approved a resolution adopting a change to the district budget for fiscal year 2009-10, and approved a resolution for the district to participate in the Proposition 1A Securitization Program.
RMWD Chief Financial Officer David Barnum said the revised budget of $30,178,901 includes changes discussed in the Oct. 13 budget workshops. There are no rate changes in the revised budget, he noted.
Changes reflect revenue projects, declining water sales, declining property tax revenues and cost savings due to staff reduction, said Barnum.
The board was presented with a resolution authorizing a purchase and sale agreement with the intent of participating in the Prop. 1A Securitization Program.
Prop. 1A, passed by California voters in 2004, ensured local property tax and sales tax revenues remain with local government for local services. However, these provisions could be suspended if the governor declared a fiscal necessity and two-thirds of the legislature concurred.
In July, the emergency suspension of Prop. 1A was passed by the legislature and signed by the governor. Because of this, the RMWD had to contribute 8 percent, which was approximately $435,000 of property tax revenue, as a three-year loan. The state is required to repay the loan plus 2 percent interest by June 30, 2013.
The California State Legislature recently passed a cleanup bill, SB67, which allows local agencies to participate in a securitization program through a financing (bond offering) to occur in November. Local agencies will be able to sell their respective Prop. 1A receivables to the California Statewide Communities Development Authority (California Communities).
General Manager Ralph McIntosh told the board that through this program the district would receive two installments in January and in May 2010.
“If all goes well, we’ll get our money back,” he said.
Barnum said the bond offering is at no cost to the district.
“It provides us security in that it puts us arm’s length from the state of California,” said Barnum.
According to information provided by Barnum, bondholders will have no recourse to RMWD if the State of California does not make the Prop. 1A repayment.