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1 RiversideCA.gov
1 RiversideCA.gov
ELECTRIC REVENUE BONDS, ISSUE
OF 2024
City Council
November 7, 2023
Finance Department
RiversideCA.gov
2 The RPU financing team developed a comprehensive
financing plan for the Electric Utility designed to achieve the following objectives:
1. Finance a portion of the Capital Improvement Program with proceeds of new debt
2. Refinance variable-rate debt with fixed-rate debt and terminate the associated interest rate swaps to simplify the debt portfolio
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
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3 Core components of the financing plan include:
DISCUSSION
Fixed Rate Refinancing of 2008A, 2008C and
2011A bonds and associated swaps
New Money Component
1.Existing 2008A, 2008C and 2011A bonds are
variable rate bonds with associated swap
agreements to form synthetic fixed rate debt
1. Finance $156 million of new
money projects with proceeds of
new fixed‐rate debt
2. 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 simplify debt portfolio
2. Will fund a portion of FY23‐FY27
CIP identified for bond financing
and reimburse the Utility for a
portion of FY22‐24 capital
expenditures
RiversideCA.gov
4 1. Finance $156 million of new money projects
a. $133 million of projects identified in the Five-Year Capital Improvement Program plus $23 million to reimburse Utility for prior capital expenditures
b. Fixed-rate bonds, structured to provide level debt service over a term of 30 years
c. Level debt service of ~$9. 4 million per annum provides budget and rate certainty.
ELECTRIC PLAN OF FINANCE
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5 2. Fixed-rate refinancing of variable 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 borro wing 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. Simplifies Electric System’s debt portfolio
e. Opportunity is very sensitive to market conditions
f. Utility plans to fix out maturities that can be refinanced at a cost neutral with 2023 Bonds, but 2024 Bonds offer a second opportunity to fix out maturities that remain outstanding
ELECTRIC PLAN OF FINANCE
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6 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 Advisory: 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
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7 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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8 That the City Council:
1. Conduct a public hearing to consid er the issuance of the 2024 Electric Revenue Bonds in an amount not-to-exceed $290 million;
2. Approve the City’s Financing Team , as described herein, for this transaction and authorize the Chief Financial Officer or any duly authorized designee to pay the costs of such firms in connection with the issuance of the 2024 Electric Revenue Bonds from bond proceeds;
3. Adopt a Resolution authorizing the issuance of the 2024 Electric Revenue Bonds in an aggregate amount not-to-exceed $290 million;
RECOMMENDATIONS
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9 4. Delegate to the City's Financ ing Team, at the time of Bond sale, the determination of specific maturities to be
refunded, the amount of interest rate swaps to be
terminated and the form of new bonds as outlined in
Recommendation No. 3; and
5. With at least five affirmativ e votes, upon closing of the 2024 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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