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1 RiversideCA.gov1
RiversideCA.gov
PUBLIC HEARING 2025 SEWER REVENUE REFINANCING BONDSCity CouncilAugust 5th, 2025Finance Department RiversideCA.gov2
•City issued $200 million of 2015A Sewer Revenue Bonds in June of 2015–Bond proceeds (1) funded $144 million of Sewer Fund capital improvements and (2) refunded a portion of the 2014 bonds, which were originally issued to fund the Regional Water Quality Control Plant and collection system –$161.1 million of the 2015A Bonds remain outstanding–Final maturity: August 1, 2040–Average coupon (interest rate): 4.9%. •The 2015A Bonds are callable (pre-payable) at no penalty starting August 1, 2025 and can be refinanced (refunded) now for significant savings to the Sewer Fund and its ratepayersBACKGROUND1 2 7/24/2025
2 RiversideCA.gov3
•Financing Team has analyzed a multitude of bond amortization structures to best meet the needs of the Sewer Enterprise–Level annual savings–Upfront savings–Extended term/maturity√Tailored/Sculpted savings with same term as refunded bonds•Based on near term financial pressures (no rate increases for 8 years and increasing costs), the proposed refunding structure will be a hybrid of short-term and long-term savings–Reduces the magnitude of required rate increases on ratepayers while ensuring that City’s legal bond covenants (minimum debt service coverage) are metPLAN OF FINANCE – REFUNDING STRATEGY RiversideCA.gov4
•$17.3 million of cumulative cash flow savings through FY 2041–$8.1 million over next three fiscal years–$9.2 million from FY 2029 to FY 2041 •On a present value basis, this equates to $14.8 million, or 9.6% of the refunded par amount•Actual savings will not be determined until bonds are priced in Mid-August and will fluctuate based on market conditionsESTIMATED REFUNDING SAVINGS* *Estimated refunding results based on rates as of 6/16/2025 3 4
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3 RiversideCA.gov5
•Financing Team includes City Finance, City Attorney, Public Works Sewer and the following parties:FINANCING TEAMRoleCounterparty NameRate ConsultantCarolloBond & Disclosure CounselStradling, Yocca, Carlson & Rauth LLPMunicipal AdvisorNHA AdvisorsCredit Rating AgenciesMoody’s and S&PUnderwriting BanksBofA Securities, Inc. and Cabrera Capital MarketsEscrow Agent/TrusteeUS Bank National Association RiversideCA.gov6
•Good Faith Estimates*–True Interest Cost of the 2025A Bonds: 3.56%–Finance Charge of the 2025A Bonds: $659,114 (0.46% of bond amount)•$259,114 (Estimated Underwriting Fees)•$400,000 (Estimated Fixed Costs of Issuance)–Amount of Proceeds to be Received: $154,974,637–Total Payment Amount of the 2025A Bonds: $206,077,113•Not-to-Exceed (NTE) Amounts in Resolution/Bond Purchase Agreement–NTE Par: $165 million–NTE All-In True Interest Cost: 4.25%–NTE Underwriting Fee: 0.20% of parGOOD FAITH ESTIMATES & NTE PARAMETERS*Estimated results based on rates as of 6/16/2025 5 6
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4 RiversideCA.gov7
That the City Council:1. Conduct a public hearing in consideration of the 2025A Refunding Sewer Revenue Bond issuance and receive comments to the proposed transaction;2. Approve the City’s Financing Team for this transaction and authorize the City Manager, Chief Financial Officer or any duly authorized designee to pay the cost of issuance in connection with the bonds from bond proceeds;3. Adopt a Resolution and other financing documents referenced herein to authorize the issuance of the 2025A Refunding Sewer Revenue BondsRECOMMENDATIONS RiversideCA.gov8
4. Delegate to the City’s Financing Team, at the time of Bond sale, the determination of specific maturities to be refunded;5. Authorize the City Manager, Chief Financial Officer or any duly authorized designee to execute the documents and make certain changes as may be required to close the transaction; and6. With at least five affirmative votes, upon closing of the 2025A Sewer refunding Revenue Bonds, authorize the City Manager, Chief Financial Officer or any duly authorized designee, to make the necessary budget adjustments and/or appropriations to properly record the refunding and financing expenses in accordance with governmental accounting standards. RECOMMENDATIONS7 8