Title
Ordinance in the Amount of $70,665,000 Amending FY 14-15 Water Resources Enterprise Fund for Revenue Refunding Bonds, Series 2014A
Body
Department: Finance
Council District:
Public Hearing:
Advertising Date/By:
Contact 1 and Phone: Richard Lusk, Finance Director, 373-2077
Contact 2 and Phone: Marlene Druga, Deputy Finance Dir., 373-2077
PURPOSE:
To appropriate funds to account for the $70,655,000 revenue refunding bond issue of August 1, 2014 that refunded certain outstanding bonds of the City's Water and Sewer System, resulting in reduced debt service payments projected to exceed $800,000 over the next 20 years.
BACKGROUND:
On June 17, 2014, City Council authorized up to $71.5 million in Water & Sewer Revenue Refunding Bonds to refinance variable rate revenue bonds issued between 1998 and 2009. The bond proceeds of $70.655 million were delivered to the escrow agent/bond trustee (U.S. Bank) on August 1, 2014 pursuant to a bond purchase agreement with Merrill Lynch, Pierce, Fenner & Smith (Bank of America). It is necessary to amend the Water Resources Enterprise Fund to properly account for this transaction and record payment to the escrow agent for redemption of the outstanding bonds.
BUDGET IMPACT:
The projected reduction in annual fees and interest rates should result in a debt service savings in the Water Resources Operating Fund of $800,000 or more over the next 20 years, an average annual savings of $40,000.
RECOMMENDATION / ACTION REQUESTED:
The Finance Department requests City Council approval of the attached budget ordinance amending the FY 14-15 Water Resources Enterprise Fund by $70,655,000 for the Combined Enterprise System Revenue Refunding Bonds, Series 2014A.