1. ELECTRIC REVENUE REFUNDING BONDS SERIES 2016A
Presented by
Matthew Hawkesworth
Director of Finance
September 12, 2016
Finance Committee/City Council

2. 2016A Series Electric Revenue Refunding Bonds – Executive Summary
1- Refund current outstanding estimated $60 million balance on the existing Bank of America Line of credit 2- Borrow $30 million additional funds to complete improvements on the Electric Distribution System 3- Refund a substantial portion of the 2008 Electric Revenue Bonds to realize significant savings

3. Background – Line of Credit
In 2014, City Council approved the Bank of America Line of Credit (LOC) as a short- term financing mechanism for the construction of the remaining cost of the GT5 repowering project
The LOC served its purpose and saved ratepayers approximately $3.4 million in interest expense
Staff also indicated in 2014 that upon completion of the project, the LOC will be refunded or “taken out” with a long term fixed rate financing
Staff’s recommendation is to refund the LOC by the issuance of the recommended 2016 Electric Revenue Refunding Bonds

4. New Proceeds for the Distribution System
Borrow additional $30 million through this transaction to fund cost related to the Distribution System
Distribution Projects that will be funded include:
Cable Replacement and Testing
Power Distribution Capacity and Reliability Program
4kV Distribution System Conversion
Replacement and Upgrade of Electric Equipment/Facilities
Proceeds of the 2016A Bonds are expected to be used to finance a portion of the Council adopted 5-year CIP
Upgrade distribution components and major facilities
Consistent with PWP’s long-term practice to fund capital projects with approximately 30% cash and 70% bond financings.

5. Refunding the 2008 Series for Economic Benefits
Take advantage of current low interest rates
Potential to refund $47.13 million of the $ million outstanding bonds in today’s interest rate environment
Current rates on the 2008 series range from 4%-5%
Potential to refinance them at 2.75% rate
Estimated NPV savings of $6.5 million or 13.7% of the outstating debt
Refunding is sensitive to interest rates. Every increase or decrease in rates by 0.25% translates to a $1 million shift in NPV savings
The Refunding will not extend the current term on the bonds

6. 2016A Electric Revenue Refunding Bonds
Not to exceed $140 million
Will be sold on a competitive basis with maximum term of 30 years
Average life will be 16.7 years with final maturity in FY2046
All-in True Interest Cost is estimated to be 3.06% based on current markets
Debt service payments will be made from the Power Fund and are included in the FY2017 budget appropriations

7. Recommendation 1- Find the proposed action is not a project to CEQA as
defined in Section of CEQA, and as such, no
environmental document pursuant to CEQA is required
for the project
2. Adopt a resolution authorizing the invitation of bids for
the purchase of electric revenue refunding bonds,
2016A series, approving a notice to sell bonds, a
preliminary official statement, a notice inviting bids,
authorizing the publication of a notice of intention to sell
bonds and authorizing certain actions in connection
therewith;

8. 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 $140 million aggregate principal amount of City of Pasadena Electric Revenue Bonds, 2016A series, payable out of the Light and Power Fund, and approving the execution and delivery of a ninth supplement to electric revenue bonds fiscal agent agreement, an escrow agreement and continuing disclosure agreement in connection thereto.