1997 AGN MAR 18 I15 - Laserfiche WebLink

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CITY OF COLTON AGENDA REPORT FOR COUNCIL MEETING OF MARCH 18, 1997 TO: HONORABLE MAYOR AND CITY COUNCIL APPROVAL: MALIK D. FREEMAN, CITY MANAGER�'��C~ FROM: THOMAS K. CLARKE, UTILITY DIRECTOR SUBJECT: FARECAL FINANCING DATE: MARCH 11, 1997 BACKGROUND The City of Colton is a participant in a joint powers agency (JPA) known as FARECal, Financing Authority for Resource Efficiency of California. From time to time, the JPA will organize a financing for its members for a variety of projects. There is currently an opportunity for the City to participate in a financing which would benefit the Electric Utility and the Water Utility. DISCUSSION/ANALYSIS The Electric Utility has an opportunity to refinance its electric revenue bond at an interest rate below what was available when the bond was sold. If you will recall, the interest rate for the non -rated, non- insured debt was 7.5%. It is projected that the interest rate under the FARECal deal will be in the 5.8% range. At this level the annual debt service savings will be about $100,000 over the life of the debt. This would amount to an approximate 7.0%o savings. Staff is convinced that this represents a substantial savings which may not be available if interest rates rise or financial conditions change. Likewise, the Water Utility has a window of opportunity which would allow for the implementation of a much needed Capital Improvement Program (CIP) to construct and replace some major components on the water system to enhance the reliability and deliverability of water service." The specifics of the CIP are attached, but in essence, staff is recommending that the City participate in the FARECal program in the amount of $10 million. This would allow for the implementation of a comprehensive financial plan similar to those adopted and initiated in the Electric and Wastewater utilities. In addition, staff will be making recommendation to the Colton Public Financing Authority for the necessary approval of the documents for the outstanding Electric Revenue Bond, Series 1995. RECOMMENDATION That the Colton City Council approve the necessary documents for the Water and Electric issues and participate in the FARECal program. Attachments: Please refer to attachments provided with the Colton Public Financing Authority packet. Copies of the Preliminary Official Statement have been filed with the City Clerk and provided to the City Council under separate cover. Page 1 of 1 Item No. 15