ADMINISTRATIVE REPORT
MEETING DATE: July 23, 2025 AGENDA CATEGORY: New Business TO: Honorable Mayor and City Council
FROM: Randy McKeegan, Finance Director
DATE: July 11, 2025
SUBJECT: Wastewater Revenue Refunding Bonds
Resolution authorizing the issuance and sale of not to exceed $65,000,000 in aggregate principal amount of City of Bakersfield, California Wastewater Revenue Refunding Bonds Series 2025A, approving a Sixth Supplemental Trust Indenture, a preliminary Official Statement, a Bond Purchase Contract, an Escrow Agreement, a Continuing Disclosure Certificate and authorizing and directing additional actions in connection with the issuance of the Revenue Refunding Bonds.
RECOMMENDATION:
Staff recommends adoption of resolution.
BACKGROUND:
The City of Bakersfield previously issued Wastewater Revenue Refunding Bonds, Series 2015A in the initial aggregate principal amount of $145,500,000. In 2020, the City had an opportunity to refinance a portion of the outstanding principal amount resulting in a savings of roughly $10 million. The City is once again presented with an opportunity to refinance the remaining outstanding portion of the 2015A series. Based on market conditions as of July 8, 2025, the issuance of the Wastewater Revenue Refunding Bonds, Series 2025A in the anticipated amount of $5 5,795,000 is expected to generate an average annual savings of $758,000 from 2026-2030 and $261,000 in 2031. The result is a gross savings of roughly $4.81 million.
The Resolution for your consideration implements the following:
-Approves a Sixth Supplemental Trust Indenture;
-Approves a Preliminary Official Statement;
-Approves a Bond Purchase Contract;
-Approves an Escrow Agreement;
-Approves a Continuing Disclosure Certificate (Exhibit F in the POS); -Authorizes designated City staff to take such actions necessary to complete the refunding transaction.
Upon the approval of the Resolution, the Preliminary Official Statement (POS) will be updated to include rating agency information and then the updated POS will be distributed to potential investors to solicit their interest in purchasing the bonds. This pre-sale activity by the underwriter usually runs for about two weeks, at which time the bond underwriter will propose a final rate structure to the City based on current market conditions. The City will, with assistance from our Municipal Advisor, review t he proposal and assuming market conditions on that date are still supportive of generating anticipated savings to the Enterprise, the pricing of the bonds will be finalized by execution of the Bond Purchase Contract. The minimum net present value savings threshold shall be no less than 3.0% of the par amount of the bonds.
We anticipate the pricing activity to take place in early August with final closing of the transactions in late August.
The timing of this transaction is important to get into the muni cipal bond market as soon as possible to minimize the risk of rate escalation. City staff as well as the Municipal Advisor, the bond underwriter, and other bond specialists will be in attendance to answer any questions about the transaction.
FISCAL IMPACT:
Anticipated gross savings of $4.81 million
COUNCIL GOAL:
Innovative and Efficient City Government
ATTACHMENTS:
1. 7-7 City of Bakersfield Wastewater Bonds 2025A -- Bond Purchase Agreement.DOCX 103KB
2. Bakersfield 2025 Wastewater Bonds - Continuing Disclosure Certificate-c1-c1.docx 50KB
3. Bakersfield 2025 Wastewater Bonds - Official Statement-c1.doc 1MB
4. Bakersfield Wastewater 2025 Refunding of 2015A Bonds - Escrow Agreement.doc 126KB
5. Bakersfield Wastewater Refunding 2025 - Sixth Supplemental Indenture.doc 191KB
6. Wastewater 2025 Revenue Refunding Bonds.doc