REPORT TO COUNCIL
SUBJECT
Title
Action Related to the City's Variable Rate Demand Electric Revenue Bonds, Series 2008 B
Report
BACKGROUND
The City and MUFG Bank, Ltd (formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd., the "Bank") entered into a Reimbursement Agreement dated November 1, 2012, as amended by the First Amendment to Reimbursement Agreement dated September 30, 2015 (collectively, the "Agreement") in connection with the City's issuance of $86,600,000 of Variable Rate Demand Electric Revenue Bonds, Series 2008 B (the "Bonds"). Pursuant to the Agreement, the Bank issued an Irrevocable Transferable Letter of Credit ("LOC") dated November 1, 2012, as amended by the Amended and Restated Fee Letter dated September 30, 2015 (collectively, the "Letter of Credit"), to provide credit support (i.e. collateral) for the Bonds. Funds from the original bond issue in 1991 were used to fund the Grizzly Hydroelectric Project.
The LOC provides credit enhancement to the Bonds in the event of default by the City. In addition, the LOC provides liquidity support in the event that any Bonds are tendered by the bondholders and are not able to be remarketed. Thus the LOC enhances the value of the Bonds for benefit of both the City and bondholders.
The LOC is scheduled to expire on October 30, 2018 and staff is requesting authorization to extend the LOC by three months to January 29, 2019 in order to continue to provide credit support on the Bonds while City staff pursues opportunities to refinance the Bonds by the end of 2018. The Bonds indenture requires the City to provide written notice to the Trustee, and give the Trustee instructions to send notice to the Remarketing Agent, the Tender Agent, and the Credit & Liquidity Provider of either the extension or the termination of the LOC at least 35 days prior to the current expiration date of October 30, 2018.
DISCUSSION
Staff is currently reviewing potential refinancing alternatives with respect to the Bonds, i...
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