State Water Board approves refunding of 2016 Clean Water SRF bonds to free capital for new loans

The State Water Resources Control Board unanimously adopted a resolution on Feb. 18 authorizing the sale of 2026 series refunding bonds to refinance outstanding 2016 Clean Water State Revolving Fund (SRF) bonds.

Josh Zees, assistant deputy director in the Division of Financial Assistance, presented the proposal and the rationale for refunding. Zees said the 2016 series had roughly $158,000,000 in outstanding principal, an original par near $410,000,000, and a final maturity date of Oct. 1, 2035. He told the board the series becomes callable on April 1, 2026, and that the state’s financial adviser had produced an analysis indicating market conditions were favorable for refunding and estimated net present value savings of approximately $16.3 million, above the board’s 3% SRF Debt Management Policy threshold.

Zees described the proposed transaction documents—the preliminary official statement, continuing disclosure agreement, notice of sale, and series 2026 indenture—and a calendar that aims for a competitive sale with a bid opening on March 5 and possible closing by March 19. He said the new bonds would be secured by the SRF pledge pool (loan repayments) and that the exact par amount would depend on available cash and tax-exempt compliance considerations.

Following the presentation an unidentified board member moved to adopt the item and a roll-call vote recorded Sean Maguire (Aye), Laurel Firestone (Aye), Nicole Morgan (Aye), Vice Chair Doreen D'Adamo (Aye) and Chair Joaquin Esquivel (Aye). The board adopted the resolution unanimously to proceed with the refunding and the associated bond documents.

The board did not provide additional substantive changes to the proposed structure at the meeting; staff indicated estimated savings are preliminary and final savings will depend on market conditions at the time of sale.