WATER AND
POWER
2023 Electric
Bond Financing
City Council
January 24, 2023
Purpose of Bond Issuance
Issue up to $120M of tax-exempt bonds to:
• Modernize the electric system
• Meet sustainability goals
2 3
Impact of Inflation & Supply Chain Issues
• Inflation ranges from 6.5% to 9.1% in 2022
• Significant increase in material prices:
• Copper coils - 64%
• Plastic conduit - 125%
• Plastic - 57.7%
• Metals - 35.5%
• Precast concrete products - 12.8%
• Concrete - 9.9%
4 Impact of Inflation on Projects
• Golden State Substation – increased
from $9M to $17M (89%)
• Willow Substation – increased from
$17M to $22M (29%)
• Transformers (overhead, padmount,
submersible) – increased between
25% and 50%
• Renewable Solar + Energy Storage
Project offers - increased by 71% 5
CIP Projects Proposed for Bond Funding
6 CIP Projects Proposed for Bond Financing
($ in 000’s) Financing Est. IRA
credits*
Modernize electric distribution lines 31,000
Willow Substation, net of AIC 22,000
Citywide local solar with storage 16,240 6,960
4kV to 12kV conversions 16,500
Golden State Rebuild, net of insurance 10,400
Regional Intermodal Transportation Center Solar with
Storage 8,190 3,510
Other improvements 10,970
Debt service reserve, cost of issuance, underwriter discount 4,700 Total Projects Financing 120,000 10,470
* 30% of total project credits from the Inflation Reduction Act (IRA) program Willow Substation
• Demolition of existing substation
and construction of new substation
• Manage flow of electricity in Media
District zone
• Higher capacity to serve increasing
demand
• Cost estimate: $36M, offset by
$14M of aid in construction
7 4kV to 12kV Conversions
8 • Convert existing 4kV circuits to 12kV
standards
• Higher voltage will reduce operating line
losses
• Supports reliability and safety goals.
• Cost estimate: $16.5M
Golden State Rebuild
• Rebuild due to transformer fire in April 2020
• Backup for Ontario Substation
• Higher capacity to serve increasing demand
• Operating and maintenance expenses only marginally more with larger capacity
• Cost estimate, net of
insurance reimbursement:$10.4M
9 Citywide Solar with Storage
10 • Solar generation + energy storage systems within the city • Generate energy near/at load saves on transmission needs and cost
• Meet California’s renewable portfolio standards
• Support sustainability goals
• Cost estimate: $20M
• Demonstration site for various types of energy storage technology • Install 400kW to 600kW of solar
• Add more EV charging ports on campus
• Awarded $125,000 by the American Public Power Association to partially fund iron flow battery with 6-8 hours of storage • Cost estimate: $2.5M
EcoCampus Solar
11 Regional Intermodal Transportation
Center Solar with Battery Storage
• Install 2.0MW to 2.5MW of
solar generation plus 4-hour
energy storage at the airport
• Supply power to about 560
households or 50% of the
airport terminal’s load
• Cost estimate: $11.7M
12 Modernize Electric Distribution Lines &
Equipment
• System replacements and
upgrades
• Overhead and
underground distribution
lines replacement
• Underground utility
district
• Cost estimate: $31M
13 Reasons for Financing
• Increased capital expenditures
over next three years
• Support sustainability goals
• Consistent with citywide financial
policies
• Allow electric fund to phase-in rate
increases
14 Historical Interest Rate
15 Source: PFM’s Public Power Pricing Report – January 16, 2023
Projected Capital Spending
16 $25.0 $21.1 $27.4
$49.2
$89.9
$56.8
$47.5 $44.6 $47.3
-
10.0 20.0
30.0 40.0
50.0 60.0
70.0 80.0
90.0 100.0
2020 2021 2022 2023 2024 2025 2026 2027 2028
Total next 3
years - $194M
Bond Servicing Cost
• Financing amount: $120M
• Tax-exempt, maximum 30-year fixed rate bonds
• True interest cost: 4.3%
• Average annual debt service: $7.9M
17 Use of 2023 Bond Proceeds
18 Use of bond proceeds ($ in 000’s)
Capital spending 115,330
Debt service reserve 4,000
Cost of issuance 430
Underwriter discount 240
Total 120,000
Rate Impact of the 2023 New Debt
19 • 2023 Electric bonds average annual Debt
Service: $7.9M
• Rate impact: 4.5%
Electric Fund Debt Service
20 0.0
2.0 4.0
6.0 8.0
10.0 12.0
14.0 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 Millions ($)
Series 2023 (2-Years
Interest Only)
Series 2010B
FYE
June 30
Cash Balance (in millions $)
21 Leverage Ratio: Debt Service Coverage
22 Leverage Ratio: Debt ratio
23 Recommendation
Staff requests that the Burbank City Council
adopt the resolution approving the issuance of
the 2023 electric bonds not to exceed $120M for
electric system capital investments and to
authorize the approval and execution of certain
documents in connection with such issuance in
accordance with the resolution .
24 Evilia Waloejo
Financial Planning and Risk Manager
[email protected]
(818) 238-3739
25 Questions?