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1 RiversideCA.gov
1 RiversideCA.gov
REFUNDING ELECTRIC REVENUE
BONDS, ISSUE OF 2023
City Council
September 19, 2023
Finance Department
RiversideCA.gov
2 Outstanding Electric Bond Issuances for Consideration:
• 2013A Refunding Electric Revenue Bonds
• 2008A and 2008C Variable Rate Refunding Electric
Revenue Bonds
• 2011A Variable Rate Refunding Electric Revenue
Bonds
BACKGROUND
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2 RiversideCA.gov
3 The City’s RPU financing team has developed a comprehensive financing plan for the Electric Utility designed to achieve the following objectives:
1. Refinance outstanding fixed-rate bonds to provide debt service savings
2. Refinance variable-rate debt with fixed-rate debt and terminate the associated interest rate swaps to reduce risk This plan of financing is consistent with the goals and objectives of the Five-Year Rate plan approved by City Council on May 22, 2018, and the City’s Strategic Plan.
BACKGROUND
RiversideCA.gov
4 Core components of the financing plan include:
FINANCING PLAN
Fixed Rate Refinancing of 2008A, 2008C
and 2011A bonds and associated
swaps
Refunding of 2013A Electric
Bonds
Existing 2008A, 2008C and 2011A bonds are
variable rate bonds with associated swap
agreements to form synthetic fixed rate debt
Existing 2013A electric bonds are tax-
exempt fixed rate bonds
Refund all or a portion of 2008A, 2008C and
2011A VRDBs and terminate associate swaps
with fixed rate bonds on a cost-neutral basis to
de-risk debt portfolio
Refund existing bonds with new tax-
exempt fixed rate bonds at a lower
rate to achieve debt service savings
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5 1. Refund $34.4 million of 2013A Bonds for debt service savings
a. 2013A Bonds are eligible to be refinanced on October 1, 2023
b. RPU is proposing a fixed-rate refunding that maintains the current final maturity (2043)
c. At current rates, refunding would generate annual cashflow savings of approximately $320,000 per year through 2043
ELECTRIC PLAN OF FINANCE
RiversideCA.gov
6 2. Fixed-rate refinancing of variabl e rate bonds and swap terminations a. Electric has $100.2 million of outstanding 2008A, 2008C and 2011A variable rate bonds (VRDBs) supported by letters of credit and hedged with interest rate swaps
b. VRDBs have provided a lower cost of borrowing vs. fixed rate bonds, but also have more risks than fixed rate bonds
c. Current opportunity to refinance VRDBs with fixed-rate debt and terminate the interest rate swaps at cost neutral
d. Introduce more stable, predictable rates within the Electric System’s debt portfolio
e. Opportunity is very sensitive to market conditions
ELECTRIC PLAN OF FINANCE
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7 1. City staff from the Public Utilities Department, Finance Department and City Attorney’s Office
2. Bond & Disclosure Counsel: Stradling, Yocca, Carlson & Rauth
3. Municipal Advisor: PFM Financial Advisors, LLC
4. Swap Advisor: Omnicap Group, LLC
5. Underwriters: J.P. Morgan Securities LLC, Barclays
Capital Inc., Siebert Williams Shank & Co., L.L.C. and
Samuel A. Ramirez & Co., Inc.
FINANCING TEAM
RiversideCA.gov
8 Strategic Priority 5 - High Performing Government
Goal 5.4 – Achieve and maintain financial health by addressing gaps between revenues and expenditures and aligning
resources with strategic priorities to yield the greatest impact.
Cross Cutting Threads
STRATEGIC PLAN ALIGNMENT
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9 That the City Council:
1. Conduct a public hearing in consideration of the 2023 Refunding Electric Revenue Bonds Issuance and receive comments to the proposed financing transaction;
2. Approve the City’s Financing Team f or this transactio na n da u t h o r i z et h e Chief Financial Officer or any duly authorized designee to pay the costs of such firms in connection with the issu ance of the 2023 Refunding Electric Revenue Bonds from bond proceeds;
3. Adopt a Resolution and other financing documents referenced herein to authorize the issuance of the 2023 Refunding Electric Revenue Bonds;
RECOMMENDATIONS
RiversideCA.gov
10 4. Delegate to the City's Financing Team, at the time of Bond sale, the determination of specific maturit ies to be refunded, the amount of interest rate swaps to be terminated and the form of new bonds as outlined in Recommendation No. 3 above;
5. Authorize the Mayor, City Manager, and Chief Financial Officer, or their designee, to execute the documents and make certain changes as may be required to close the transaction; and
6. Upon closing of the 2023 Refunding Electric Revenue Bonds, authorize the Chief Financial Officer, or designee, to make the necessary budget adjustments and/or appropriations to properly record the refunding and financing expenses in accordance with governmental accounting standards.
RECOMMENDATIONS
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