AgdaPkt 2006-01-23 - Laserfiche WebLink

Browse Search

/é?-ð The project will be designed to allow up to 3,238 acre-feet of recycled water to be produced and delivered should demand so warrant. The costs of the various components of the project and the sequencing of the bond sales are shown in Attachment I. The Financing Structure The City will use its non-profit financing authority, the Redwood City Public Financing Authority (the "PFA") to implement the financing. The PFA will sell the water system improvements to the City as they are financed pursuant to Installment Purchase Contracts. The PFA will sell water revenue bonds to raise the funds to advance the City the purchase price for each portion of the project so financed. Repayment of the various purchase prices will be in installments over time, together with interest thereon, as documented by Installment Purchase Contracts, and will be equal in amount to debt service on the water revenue bonds sold to fund each installment purchase price. The City's obligation to make these installment payments will be a special fund obligation of the water fund, with no recourse to the general fund. The PFA will pledge the installment payments it receives from the City as security to repay the water revenue bonds. While the City could use its charter powers to sell revenue bonds secured by the water fund, the charter requires voter approval for charter authorized revenue bonds. The charter authorizes the City to enter into installment purchase arrangements without voter approval. No voter approval is required for the sale of bonds by the PFA. The 2005 Bonds received ratings of AA- by Standard and Poor's Corporation, A+ by Fitch Ratings, and A 1 by Moody's Investors Service. The proposed 2006 Bonds are expected to receive the same ratings. The 2005 Bonds were additionally insured by a municipal bond insurance policy purchased by the underwriter of those bonds. Issuance of an insurance policy increases the rating on the bonds to Aaa/AAA and thereby lowers the interest rates on the bonds. The City will submit the 2006 Bonds for bond insurance review. The 2006 Bonds will be offered to underwriters in an auction format, with the purchase of bond insurance at the option of the bidding underwriters. The underwriter that submits a bid with the lowest true interest cost ("TIC") will be awarded the bonds. The TIC is the discount rate which, when applied to all future payments by the City of principal and interest on the bonds, is equal to the purchase price paid by the underwriter for the bonds. The resolution approving the sale of the bonds authorizes the City Manager or the City Finance Director to award the bonds to the low bidder provided that the TIC does not exceed five and one-half percent (5.5%), the par amount of bonds does not exceed $26 million, and the final maturity of the bonds does not exceed 30 years. Smaller than anticipated SFPUC rate increases in 2005 have provided the water enterprise with 2006 debt capacity that is slightly larger than what was anticipated when the Water Financing Plan and FY 2005/06 budget were prepared. As interest rates are expected to rise in the next year and interest rates for the reinvestment of unexpended bond proceeds are currently at or in excess of the expected bond yield, staff 3