REPORT TO COUNCIL
SUBJECT
Title
Actions Relating to the Issuance of the City's Electric Revenue Refunding Bonds, Series 2018 A
Report
BACKGROUND
From time to time, the City has issued Revenue Bonds in order to raise funds that support long-life, high-cost capital projects for the Electric Utility. Projects have included new generation such as the City-owned Donald Von Raesfeld Power Plant and new high voltage transmission lines. Because such projects have long in-service use, potentially 25 years or more, it is appropriate that the cost to construct be paid by current and future ratepayers who benefit from the project over the lifetime of project. Bonds have also been issued to allow the refunding/refinancing of previous bond issuances when justified for cost savings, interest rate reductions, and other risk reductions.
In May 2009, the City issued Series 2008 B Bonds pursuant to the Original Subordinated Electric Revenue Bond Indenture as amended and supplemented by the Fifth Supplemental Indenture where The Bank of New York Mellon Trust Company, N.A. is the successor Trustee. The Series 2008 B Bonds were originally issued as variable rate bonds in the aggregate principal amount of $86,600,000, for the purpose of refunding a portion of the City's then outstanding Subordinated Electric Revenue Refunding Bonds, Series 1998 A. As of September 30, 2018, $54,580,000 principal amount of the Series 2008 B Bonds remains outstanding.
In September 2006, in anticipation of the issuance of the Series 2008 B Bonds, the City entered into an interest rate swap agreement with Bear Stearns Capital Markets Inc. Related to the financial crisis in late 2000, Bear Stearns Companies was sold to JPMorgan Chase Bank, N.A. (JPMorgan). Therefore, in 2009, the swap agreement was novated or "transferred" to JPMorgan in an initial notional amount of $83,440,000. The Interest Rate Swap Agreement was entered into by the City for the purpose of receiving amounts expected to be app...
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