TITLE
Recommendation to adopt resolution to issue Water Revenue Bonds Series 2010A in an amount not to exceed $26,000,000, acting through its Board of Water Commissioners (the Board), to refund certain Water Revenue Bonds Series 1997A, previously authorized by the City and issued by the Board, fund the Reserve Fund, and pay the cost of issuance for the Series 2010 Bonds. (Citywide)
DISCUSSION
The City of Long Beach Water Department proposes to issue Water Revenue Refunding Bonds Series 2010A (Series 2010A Bonds) in an aggregate principal amount not to exceed $26,000,000, at a coupon rate not to exceed 5 percent, for the purpose of refunding a portion of Water Revenue Refunding Bonds Series 1997A (Series 1997A Bonds). The Series 2010A Bonds will be secured by and payable from the revenues of the Water Enterprise Fund. The objective of this debt restructuring is to reduce debt service costs as a result of lower interest rates.
The Series 1997A Bonds were issued on October 15, 1997, in the amount of $46,945,000, with an average interest rate of 5.195 percent to refund outstanding 1994 Water Revenue Bonds issued to finance the design and construction of the groundwater treatment plant, and to refund the outstanding 1987 Water Revenue Refunding Bonds. The Water Department's Groundwater Treatment Plant construction was completed and went into operation on May 1, 1997.
Proceeds from the Series 2010A Bonds, together with monies released from the Series 1997A Debt Service Reserve Fund, will be used to refund $24,290,000 aggregate principal of the Series 1997A Bonds, fund a reserve account, and pay the cost of issuing the Series 2010A Bonds. The Series 1997A Bonds include $5,175,000 of non-callable bonds that will remain outstanding through their maturity in 2015. The net present value savings of this refinancing is approximately $1,600,000.
These estimated savings could potentially be used for the development of water conservation and education programs between the Water Department and the Parks, Recreation & Marine Department; the details of such programs are under development. This refunding does not extend the term from the Series 1997A Bonds.
The Board of Water Commissioners approved Resolution WD-1272 on August 12, 2010, authorizing the issuance and sale of Water Revenue Refunding Bonds, Series 2010A (Attachment A).
This matter was reviewed by Assistant City Attorney Heather Mahood on August 23, 2010, and Budget Management Officer Victoria Bell on August 24, 2010.
TIMING CONSIDERATIONS
City Council action is requested on September 7, 2010 in order to facilitate processing of required documents and benefit from currently advantageous interest rates.
FISCAL IMPACT
There is no impact on the General Fund as this is an obligation of the Water Fund (EF 310) and will be repaid from net revenues of the Water Fund. There are no local jobs impacted by this action.
SUGGESTED ACTION
Approve recommendation.
BODY
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LONG BEACH APPROVING THE ISSUANCE OF WATER REVENUE REFUNDING BONDS BY THE BOARD OF WATER COMMISSIONERS, ON BEHALF OF THE CITY OF LONG BEACH.
Respectfully Submitted,
LORI ANN FARRELL
DIRECTOR OF FINANCIAL MANAGEMENT/CFO
KEVIN L. WATTIER
GENERAL MANAGER
WATER DEPARTMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER