1. WATER REVENUE REFUNDING BONDS SERIES 2017A
January 23, 2017
Finance Committee/City Council

2. Recommendation
1. Find the proposed action is not subject to CEQA as defined in Section of CEQA, and as such, no environmental document is required; 2. Adopt a resolution authorizing the invitation of bids for the purchase of water revenue refunding bonds, 2017A series, approving a notice of intention to sell bonds, a preliminary official statement, and a notice inviting bids; authorizing the publication of a notice of intention to sell bonds and authorizing certain actions in connection therewith;

3. Recommendation (continued)
3. Conduct the first reading of “An Ordinance of the City of Pasadena” authorizing the issuance by the City of not to exceed $17,370,000 aggregate principal amount of City of Pasadena Water Revenue Bonds, 2017A Series, payable out of the Water Fund, and approving the execution and delivery of a fifth supplement to water revenue bond indenture, an escrow agreement and continuing disclosure agreement in connection thereto.

4. Background - 2017A Series Water Revenue Refunding Bonds
In 2007 the City issued its 2007 Water Revenue Bonds in the aggregate principal amount of $21,550,000.
Proceeds were used to finance the continued implementation of the Master Plan and the costs of construction and improvements to the Water System.
Current outstanding principal balance of the 2007 Water Bonds is $17,370,000.
Current average interest rate paid on the bonds is %.

5. Proposed Refunding
Refund the current outstanding $17.37 million principal amount at a lower estimated 3.26% True Interest Cost (TIC).
No new borrowing
No extension to the term of the bonds
Maximum term of 20 years with final maturity in 2036

6. Fiscal Impact
The TIC is estimated at 3.26% based on current market rates.
1.2% less than current 4.46% interest paid on the bonds – average annual d/s savings = $130,000
The current Net Present Value (NPV) savings is estimated at $1.6 million which equates to 9.2% of the outstanding bonds
The bonds will be competitively sold in March 2017
Due to recent interest rates volatility, staff recommends proceeding with the sale of the bonds as long as the transaction is expected to generate at least $1 million in NPV savings.

7. 10-Year U.S. Treasury Rate