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State Water Resources Control Board approves refunding of 2016 Clean Water SRF bonds
Summary
The State Water Resources Control Board unanimously approved a resolution to sell 2026 Series Clean Water State Revolving Fund refunding bonds to redeem callable 2016 bonds (about $158 million outstanding), with estimated net present value savings of roughly $16.3 million to be redirected into new Clean Water SRF financings.
The State Water Resources Control Board on Feb. 18 unanimously approved a resolution authorizing the sale of 2026 Series Clean Water State Revolving Fund (SRF) refunding bonds to redeem the series sold in 2016.
Assistant Deputy Director Josh Zees of the Division of Financial Assistance presented the proposal, saying the 2016 series has approximately $158 million in outstanding principal and is callable on April 1, 2026. Zees said the board’s financial adviser estimated net present value savings of roughly 10%, about $16.3 million, and noted the SRF Debt Management Policy directs refundings to provide at least 3% NPV savings. "It's like refinancing your mortgage," Zees said, describing a refunding as paying off higher‑cost debt early and replacing it with lower‑cost obligations.
Why it matters: Refunding at a lower interest cost can free SRF capacity to finance additional clean‑water projects, including loans and principal forgiveness targeted to disadvantaged communities. Zees said the proposal would redirect estimated savings toward new SRF financings under the board’s long‑term funding strategy.
Key details presented by staff included: the potential maximum par amount was the $158 million outstanding balance of the 2016 bonds; an illustrative all‑in true interest cost around 2.36%; and a planned competitive sale with bid opening on March 5 and closing by March 19, subject to market conditions. Zees cautioned the projected savings are estimates and the exact savings will be known at time of sale.
Legal and administrative structure: staff described the preliminary official statement, a continuing disclosure agreement, a notice of sale, and a Series 2026 indenture as standard financing documents. The bonds would be secured by the SRF pledge pool (loan repayments) and follow existing debt tests and tax‑exempt rules.
Board action: After the presentation, a motion to adopt the resolution was moved and seconded. Roll‑call voting recorded unanimous approval: Sean Maguire — Aye; Laurel Firestone — Aye; Nicole Morgan — Aye; Doreen D'Adamo — Aye; Joaquin Esquivel — Aye. The board adopted the resolution authorizing the refunding sale.
Next steps: Staff expects the proposal to go to the state’s infrastructure bank (IBank) the following week and proceed with a competitive sale in early March if market conditions remain favorable.
