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ii FlNANCDAL STATEMENT JP Morgan Chase current rate for an 8-year bond is 2 07%with no call provision Because JP Morgan Chase will not lock into an interest rate until the City closes the transaction, staff is requesting authorization to issue the bonds with an interest rate not to exceed 2 2% since it is possible interest rates will increase by the time the City closes this transaction That said, if the final interest rate is 2 07%, the annual payments will be as follows Maturity Date Debt Service February 1, 2018 $976,798 February 1, 2019 $1,015,999 February 1, 2020 $1,017,783 February 1, 2021 $1,019,153 February 1, 2022 $1,020,109 February 1, 2023 $1,020,651 February 1, 2024 $1,015,779 February 1, 2025 $1,015,597 The total interest expense would be $680,021 In addition, the City will pay legal and financial advisor expenses of $73,000 associated with preparing and reviewing the loan documents the cost of which is included in the proposed Bonds BACKGROUND The base Pleasanton-DERWA agreement was executed November 2013 with Amendment #1 (maintaining the existing Val Vista Park connection) executed in September 2015 Section 5 3 of the base Pleasanton-DERWA agreement outlines the process and conditions for Pleasanton's recently completed DERWA expansion project, the Sixth Filter, as well as the process and conditions for future facilities expansion project(s) at the DERWA Recycled Water treatment plant The main purple pipe project has been completed, and as a result, there are approximately 135 irrigation customers who are in varying stages of permitting their connection to the RW system over the next year Pleasanton's current share of DERWA RW, as a result of the recently completed Sixth Filter Project, is 1 9 mgd, however Pleasanton's RW maximum day demand forecast is approximately 4 2 mgd, after the connection of all the remaining RW irrigation customers from all of the Purple Pipe Project phases In order to meet forecasted RW demands for all of the City's new RW irrigation customers, the City of Pleasanton needs to participate in funding the DERWA treatment plant facilities expansion project (DERWA Project) On December 20, 2016, the City Council authorized the Notice to Proceed for DERWA Project, as well as allocated funds and payment agreement between DERWA and the City At that time, staff advised Council of its intention to seek private placement financing from JP Morgan Chase to pay the City's portion of the DERWA Project's costs In addition, City Council adopted a resolution on December 20, 2016 that declared its intent to reimburse itself with proceeds from the future debt Page 2 of 4