The City of Mt. Shasta (the "City") engaged Weist Law in order to finance the construction of its new $25,000,000 wastewater system improvement project in 2021.
After analyzing all viable legal and financing options, Weist Law worked closely with the City to utilize multiple financing avenues, including state of California (the "State") and federal funding, each with separate grant components to bring down the total cost to the City. The four funding sources utilized for this transaction included 1) a grant and loan from the California State Water Resources Control Board- Clean Water State Revolving Fund ("SRF"), 2) a grant and loan from the United States Department of Agriculture ("USDA"), 3) a revolving line of credit that allowed for bridge financing for the SRF portion of the Project, and 4) Bond Anticipation Notes that provides bridge financing for the first three years of the Project on the USDA portion of the Project.
Weist Law secured all funding sources by quarterbacking meetings with the City, the State, the federal government and the Project engineers. Weist Law also drafted the RFP, financing and procurement documents for all aspects of the financing process.
The transaction was structured as two separate primary transitions and two separate bridge loans because Weist Law had to navigate around the timing requirements of the government agencies, contractors and lenders (as well as the cash management priorities of the City). Between the City and the USDA, bond anticipation notes (“BANs”) were issued largely due to the fact that the USDA financing would only be available towards the end of the Project. Because the State has a 180 day time lag to pay contractor invoices, Weist Law successfully arrange a creative a revolving line of credit that allowed the City to pay contractors on time prior to availability of SRF monies. The revolving line of credit was designed to be a buffer for payments to be made to the contractors, then when the State SRF moneys become available, the State funds are used to repay the revolving line of credit.
Weist Law was able to effectively manage a complex infrastructure Project with multiple parties involved utilizing and harmonizing multiple financing structures to meet the goals and directives of all stakeholders. The team at Weist Law used its experience with innovative financings to structure the deal into a dual series borrowing structure utilizing State and federal funding in order to provide for optimal interest cost savings and time efficiency for the City operations.
The transaction resulted in significant cash flow savings to the City by reducing the cost of borrowing fees.
Due to an innovative legal structure, the City was able to obtain funding for a $25,000,000 Project with no out-of-pocket costs which allowed for cash flow management and cash advances for advance equipment orders leading to additional savings by "unclogging" supply chain disruptions.
The Financing Team at Weist Law was able to secure bridge financing for the first six months of the project in order to pay contractors, then secure SRF State funding to repay that line of credit, and lastly secure USDA funding to complete the project.
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