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City Council agenda item regarding refinancing of outstanding electric revenue bonds, proposing fixed interest rates for 5-year term to achieve savings and reduce finance charges.
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Electric Revenue Refunding Bonds Series 2019A June 10, 2019 – City Council – Item 18
Background • In 2009, the City issued $40,655,000 Electric Revenue Refunding Bonds to refinance the then outstanding balance of its 1998 Series; • Current outstanding balance of the 2009 series is $15,885,000; • Next scheduled principal payment of $3,260,000 is due on 8/1/2019 which reduces the outstanding principal of the bonds to $12,625,000; • Current coupons paid on the bonds range from 4% to 5%; • Current market yield is approximately 1.37%; • On August 1, 2019, the outstanding balance on the 2009 series becomes redeemable;
Refunding Plan • The proposed 2019A Electric Revenue Bonds will be issued with fixed interest rates and sold on a competitive basis; • The term will be 5 years matching the term of the current outstanding bonds. There will be no extension to the term. • Based on current market yield of 1.37% on the bonds, the expected PV savings is estimated at $750,000 or 6% of the refunded principal; • $160,000 annual debt service savings for FY 2021 through 2025.
Fiscal Impact Present Value savings of $750,000 or 6% Annual savings of $160,000 True interest cost is estimated at 1.37% Amount of proceeds to be received is estimated to be $12,855,937.75 Total P&I is estimated to be $13,323,850 to the final maturity Finance charges associated with this transaction is estimated to be $268,380
Recommendation City Council Adopt a Resolution authorizing the invitation of bids for the purchase of Electric Revenue refunding Bonds, series 2019A, approving a notice of intention to sell bonds, a preliminary official statement, a notice inviting bids, authorizing the publication of a notice of intention to sell bonds, and authorizing certain actions in connection therewith; and
Recommendation • Conduct the first reading of “AN ORDINANCE OF THE CITY OF PASADENA AUTHORIZING THE ISSUANCE BY THE CITY OF NOT TO EXCEED $12,625,000 AGGREGATE PRINCIPAL AMOUNT OF CITY OF PASADENA ELECTRIC REVENUE REFUNDING BONDS, 2019A SERIES, PAYABLE OUT OF THE LIGHT AND POWER FUND, AND APPROVING THE EXECEUTION AND DELIVERY OF A TENTH SUPPLEMENT TO ELECTRIC REVENUE BOND FISCAL AGENT AGREEMENT, A CONTINUING DISCLOSURE AGREEMENT, AN ESCROW AGREEMENT, AND OTHER DOCUMENTS IN CONNECTION THEREWITH.
