28 September 22, 2026
Honorable Mayor and City Council
City of Long Beach
California
RECOMMENDATION:
Recommendation to adopt Resolution of the City Council of the City of Long Beach approving the issuance from time to time by the Board of Public Utilities Commissioners, on behalf of the City of Long Beach, senior sewer revenue short-term obligations issued pursuant to the terms of a senior indenture and a credit agreement and certain related documents which provide for a revolving line of credit in an amount not to exceed $45,000,000 outstanding at any time, for a maximum period of three years, to bridge finance various capital projects for the City of Long Beach. (Citywide)
DISCUSSION
The Long Beach Public Utilities Department (LBPUD) has developed plans to support increased investments in sewer infrastructure including pipelines, lift station rehabilitation, and water main improvement projects. Certain critical sewer improvement projects are being advanced ahead of the 2028 Olympic and Paralympic Games. The proposed funding strategy for financing capital projects along with financial projections was presented to the Board of Utilities Commissioners in LBPUD’s FY27 Budget Planning Sessions. Utilities staff expects continued stable and level investment based on a programmatic approach that is aligned with the updated Sewer Master Plan.
The Board proposes, and City staff recommend, that City Council adopt resolution of the City Council of the City of Long Beach Approving the Issuance from time to time by the Board of Public Utilities Commissioners, on behalf of the City of Long Beach, senior sewer revenue short- term obligations issued pursuant to the terms of a senior indenture and a credit agreement and certain related documents which provide for a revolving line of credit in an amount not to exceed $45,000,000 outstanding at any time, for a maximum period of three years, to bridge finance various capital projects for the City of Long Beach, approving the forms and authorizing execution of related documents and approving related official actions (referred to here as the “Sewer Fund Revolving Line of Credit”).
The Sewer Fund Revolving Line of Credit will provide interim tax-exempt financing for project expenditures incurred as of March 14, 2026. Once established, the Sewer Fund Revolving Line of Credit will enable the LB Public Utilities Department to have the maximum amount of financial flexibility by allowing Utilities staff to time draws to match project spending. This short-term financing tool will help Utilities staff manage cash flows by allowing for interest- only payments on drawn amounts, so that debt amortization will be in better alignment with any future rate adjustments. Eventually, the LBPUD anticipates taking out the Sewer Fund Revolving Line of Financial Management
411 W. Ocean Boulevard, 6th Floor, Long Beach, CA 90802 (562) 570-6425
Honorable Mayor and City Council
September 22, 2026
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Credit with long-term revenue bonds.
The Sewer Fund Revolving Line of Credit will have a maximum term of three years. The total cost to establish the Sewer Fund Revolving Line of Credit, including municipal advisor fees, bank and bond counsel fees, and trustee fees, is estimated to be $110,035, all of which are one-times fees. Separately, and in order to maintain this credit line, the Sewer Fund will be assessed an unused balance fee and a used balance fee. The actual costs will vary depending on usage and depending on market rates at any given time. Should Utilities staff not seek to make any draws, annual estimated costs will total $114,100. Should Utilities staff seek to draw the maximum amount, annual estimated costs will be $1,900,000. While the above minimum and maximum illustrate some bounded limits to annual costs, we can expect Utilities to time draws to be in line with construction spending only borrowing what is needed and when needed.
A Citywide Request for Qualifications (RFQ) was issued on February 25, 2026, to establish a Pool of Revolving Line of Credit Providers. City staff from all affected departments (Financial Management, Public Works, Harbor, Utilities, and Airport) in conjunction with the City’s municipal advisors, (KNN Public Finance LLC, Public Resources Advisory Group, Inc., Frasca & Associates, LLC, and PFM Financial Advisors, LLC) compiled a list of over 25 potential firms to invite them to and submit their qualifications. Ultimately, six providers were qualified to participate in the Pool. On June 2, 2026, a Request for Information (RFI) was sent to the Pool requesting responses related to the Sewer Fund Revolving Line of Credit along with an update of proposed interest rates and terms. The City received four responses, of which Wells Fargo offered the most advantageous options.
The Board of Public Utilities Commissioners approved Resolution UT-1568 on August 27, 2026, authorizing the establishment of the Line of Credit (Attachment B).
This matter was reviewed by Deputy City Attorney Ashleigh Stone on September 4, 2026 and by Revenue Management Officer Valerie Valentine on September 04, 2026.
TIMING CONSIDERATIONS
The Board of Utilities Commissioners approved the Line of Credit and all authorizing documents on August 27, 2026. City Council action is requested on September 22, 2026, to ensure that the Sewer Fund Revolving Line of Credit is available for the Long Beach Public Utilities Department to maintain sufficient liquidity for its infrastructure improvement projects, including a draw on the Sewer Fund Revolving Line of Credit before the fiscal year ends on September 30, 2026.
FISCAL IMPACT
Total aggregate principal amount for the revolving line of credit will not exceed $45,000,000 outstanding at any one time. The one-time costs to establish the Sewer Fund Revolving Line of Credit are estimated at $110,035 and will be absorbed within current resources budgeted in the Sewer Fund Group in the Utilities Department. In addition to one-time costs, the Line of credit will have a fee for the utilized and unutilized balance of the line. The fee for the utilized balance of the line will be formula based at 80 percent of daily SOFR (Secured Overnight Financing Rate) Honorable Mayor and City Council
September 22, 2026
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plus a spread of 45 basis points. Based on interest rates as of 8/12/2026, interest rates are estimated at 4.1 percent. This is a daily and variable rate that adjusts on a daily basis. A commitment fee of .25 percent (25 basis points) will be assessed on any unutilized balance on the line of credit.
Following issuance, the estimated annual cost will range from approximately $114,100, assuming no funds are drawn and only a commitment fee is incurred, to approximately $1,900,000 in interest-only payments based on full utilization of the line. As of midyear estimates, staff anticipates a drawdown of $2,700,000 to reimburse the Sewer Fund Group for FY 26 capital expenditures. However, this amount will be based on actual capital expenditures incurred prior to fiscal year close. The Utilities Department will continue to make draws over the three-year term of the Sewer Fund Revolving Line of Credit with the expectation of utilizing a bond sale and bond proceeds to pay off the Sewer Fund Revolving Line of Credit and fix out costs over a 30- year term. Prior to the bond financing, the City Council will have an opportunity to review, evaluate and approve the bond sale. This recommendation has no staffing impact beyond the normal budgeted scope of duties and is consistent with existing City Council priorities. There is no local job impact associated with this recommendation.
SUGGESTED ACTION:
Approve recommendation.
Respectfully submitted,
Kevin Riper
Director
Financial Management
ATTACHMENTS – RESOLUTION -LONG BEACH SEWER - 2026 LOC - CITY COUNCIL RESOLUTION ATTACHMENT A - BOARD OF PUBLIC UTILITIES COMMISSIONERS APPROVED RESOLUTION UT-1568
ATTACHMENT B - CREDIT AGREEMENT (SEWER SYSTEM)
ATTACHMENT C - LONG BEACH SEWER- 2026 LOC - FOURTH SUPPLEMENTAL SENIOR INDENTURE
ATTACHMENT D - FEE AGREEMENT (SEWER SYSTEM)