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CITY OF GLENDALE, CALIFORNIA
REPORT TO THE CITY COUNCIL
AGENDA ITEM
Report: Introduction of the Ordinance Authorizing Issuance of Electric Revenue Bonds.
1. Ordinance authorizing the issuance of not to exceed $230,000,000 aggregate principal amount of the City of Glendale Electric Revenue Bonds 2024 Series, and $70,000,000 Aggregate Principal Amount of City of Glendale Electric Revenue Bonds, 2024 Refunding Series, Payable Out of the Electric Works Revenue Fund, and approving certain other actions in connection therewith.
2. Resolution of Appropriation
COUNCIL ACTION
Item Type: Action Item
Approved for December 19, 2023 calendar
EXECUTIVE SUMMARY
Glendale Water and Power (GWP) intends to issue revenue bonds in three tranches of approximately $166 million in February 2024, the first quarter of fiscal year 2025 and the first quarter of fiscal year 2026 primarily to support the Grayson Repower project, as well as provide funding as necessary for the Scholl Biogas Renewable Generation Project, City-Owned Solar Projects, and certain distribution system improvements as they relate to the City’s Zero-Carbon Energy initiatives. GWP also intends to issue bonds to refund the 2013 Refunding Bonds ($13.4 million) and the 2013 Bonds ($49.7 million) for a present value savings of approximately $7.3 million.
RECOMMENDATION
That City Council introduce the Ordinance authorizing the issuance of bonds, and approve the resolution of appropriation to cover costs associated with the issuance of the bonds.
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ANALYSIS
GWP seeks to construct the Grayson Repowering Project, the Scholl Canyon Landfill Biogas Renewable Generation Project, and to acquire and/or construct as necessary certain improvements to the City’s electric public utility, such as 4kv to 12kv feeder upgrades, solar generation facilities installed on city properties, substation improvements, meter upgrades, vault replacement and transmission and distribution improvements and pole replacements.
As GWP does not have unrestricted cash reserves to fund these efforts and they cannot be funded through operations alone, GWP proposes to issue debt in the form of electric revenue bonds of approximately $500 million over the next three years. The first issuance in the amount of $166 million is expected to close in February 2024 and the next two issues are planned for fiscal years 2025 and 2026.
GWP also intends to refinance the outstanding $13.4 million of 2013 Refunding Bonds and the $49.7 million of 2013 Bonds for a savings of approximately $10.2 million (present value of $7.3 million savings). Additionally, the electric revenue bonds will provide funds to make a deposit to a debt service reserve fund, and to pay the costs of issuance of the New Money Bonds. The maximum debt service on the bonds after the first issuance of $166 million is projected to be approximately $21.9 million, an increase of $9.7 million over the current debt service.The maximum debt service will increase to approximately $32.2 million after the second bond issuance and will increase to approximately $42.5 million after the third bond issuance.
STAKEHOLDERS/OUTREACH
Not Applicable
FISCAL IMPACT
The issuance of the revenue bonds will increase interest cost approximately $2.5 million in fiscal year 2024 and issuance costs are estimated to be $400,000. Therefore, staff is requesting an appropriation of $2,900,000 from the Electric Surplus Fund balance.
Future expenses will be requested as part of the annual budget process. The appropriation request is outlined below:
Requesting Appropriation
Amount From (Account
String)
To (Account String) Funding Source
$2,500,000 GL: 27900-5810-
GWP-0000
GL: 47050-5820-
GWP-4505-P0000-
Net Position,
Electric Surplus
Fund Balance
$400,000 GL: 27900-5810-
GWP-0000
GL: 43110-5820-
GWP-4505-P0000-
Net Position,
Electric Surplus
Fund Balance
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ENVIRONMENTAL REVIEW (CEQA/NEPA)
Not applicable for the action requested as the action does not involve a project for the purposes of California Environmental Quality Act
CAMPAIGN DISCLOSURE
Not Applicable.
ALTERNATIVES TO STAFF RECOMMENDATION
Alternative 1: The City Council may choose not to authorize the actions requested and recommended in this report.
Alternative 2: The City Council may consider any other alternative not proposed by staff
ADMINISTRATIVE ACTION
Submitted by:
Mark Young, General Manager – Glendale Water and Power
Prepared by:
Scott Mellon, Assistant General Manager - Power Management Approved by:
Roubik R. Golanian, P.E., City Manager
EXHIBITS/ATTACHMENTS
Ordinance Bond Issuance