TO: Napa-Vallejo Waste Management Authority Board of Directors
FROM: Chris Celsi, Executive Director
REPORT BY: Chris Celsi, Executive Director
SUBJECT: Resolution authorizing execution and delivery of a loan agreement for the new C&D Building.
RECOMMENDATION
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Approve and adopt a resolution authorizing execution and delivery of a loan agreement to provide funds necessary to construct the new construction and demolition building. [weighted vote]
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EXECUTIVE SUMMARY
KNN Public Finance, LLC (“KNN”), acting as Napa-Vallejo Waste Management Authority’s registered municipal advisor, conducted a lender Request for Term Sheet Proposals (“RFP”) process to solicit financing proposals for the upcoming Construction & Demolition Recycling Facility project. KNN worked closely with Authority staff and its financing team to draft a RFP document that summarizes the key features of the Authority, the solid waste system, the C&D project, financing structure, and terms and conditions for the 2025 Loan Agreement. The RFP solicited interest rates and terms and conditions for a financing term of 10-years and 15-years from direct purchase lenders.
The RFP was distributed to a total of 28 institutions on August 26, 2025, and an Addendum was circulated to the same group on September 4, 2025. The Addendum provided responses to a number of credit-related questions received from RFP recipients. KNN received 7 responses on September 8, 2025. A summary of the responses is attached to this staff report. Webster National Bank (“Webster”) provided the overall lowest fixed tax-exempt interest rates for both financing terms: 3.8% for a 10-year financing term and 4.15% for a 15-year financing term. The Webster proposal also included the following pre-payment options i.) for the 10-year term, the loan is not callable in years 1-5, and then is callable at no premium thereafter, and ii.) for the 15-year term, the loan is not callable in years 1-5, and then is callable at a 1% premium in years 6 and 7, and then is callable at no premium thereafter. Any prepayment must occur on a payment date and must be for the entire remaining amount of the loan.
Based upon the response from Webster, KNN has provided the following good faith estimates, in accordance with California Government Code Section 5852.1.
10-year Term 15-year Term
Principal Amount: $20,175,000.00 $20,175,000.00
True Interest Cost: 3.801% 4.151%
Finance Charge: $175,000.00 $175,000.00
Amount of Proceeds to be Received: $20,000,000.00 $20,000,000.00
Total Payment Amount: $24,488,767.92 $27,361,563.65
The proposed interest rates are locked through the anticipated closing date of the financing, October 10, 2025. The Webster proposal is subject to formal credit approval.
Staff Recommendation:
Authority staff recommend moving forward with the 10-year financing option, which has the lower overall borrowing cost and total interest paid, as compared to the 15-year option.
The 2025 Loan Agreement pledges net revenues of the solid waste enterprise (gross revenues less operation and maintenance expenses) toward debt service, requires the Authority to maintain solid waste disposal rates sufficient to meet certain debt service coverage levels, as set forth in more detail in the agreement.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
Yes |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
This loan is the difference between the Authority’s available cash on hand and the cost of the new C&D Facility. |
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Is the general fund affected? |
Yes |
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Future fiscal impact: |
Future payments on the loan until fully paid. |
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Consequences if not approved: |
Will not be able to construct new C&D Facility |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: On August 6, 2020, the Authority adopted the Final IS/Addendum, the mitigation measures and the mitigation monitoring program for the Project pursuant to Resolution No. 2021-02. This subsequent discretionary approval related to the Project does not involve any change in circumstances, project changes, or new information of substantial importance which would warrant further environmental review pursuant to CEQA Guidelines section 15162.