TITLE
Recommendation to adopt resolution approving the issuance from time to time by the Board of Water Commissioners, on behalf of the City of Long Beach, Subordinate Sewer Revenue Obligations issued pursuant to the terms of a credit agreement and related documents which provide for a Revolving Line of Credit in an amount not to exceed $20,000,000 outstanding at any time. (Citywide)
DISCUSSION
The City of Long Beach Water Department (LBWD) proposes to establish a Revolving Line of Credit (Line of Credit) in an amount not to exceed $20,000,000 for the purpose of replacing the 2009 Senior Sewer Revenue Commercial Paper Notes (CP Notes). The debt service for the Line of Credit will be secured by and payable from a subordinate lien on the revenues generated from charges to customers for sewer usage. The objective of replacing the CP Notes is to reduce debt service costs as a result of lower interest rates for the Line of Credit.
The CP Notes were approved by the City Council on June 2, 2009 in an amount not to exceed $20,000,000. The CP Notes were issued for the rehabilitation, replacement and improvement of deficient and aging sewer facilities, which is a major priority of the LBWD, in order to maintain sewer system reliability and to be in compliance with new California Waste Discharge Requirements.
Proceeds from the Line of Credit will be used to pay off $4,000,000 of outstanding principal on the CP Notes, to fund ongoing sewer capital improvement program costs and to pay costs of issuance associated with the Line of Credit. LBWD will suspend the issuance of commercial paper notes under the existing commercial paper program, but shall reserve the right to issue obligations in the future senior to its obligations created under the Line of Credit. Due to current market conditions, staff has been able to secure a three-year Line of Credit from Wells Fargo Bank, National Association. The cost of issuance for this new Line of Credit is approximately $85,000...
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