1994 AGN SEP 06 I32 - Laserfiche WebLink

Browse Search

CITY OF COLTON AGENDA REPORT For Council Meeting of September 6, 1994 TO: Honorable Mayor, City Council, and City Manager FROM: Michael J. Williams, City Treasurer b'� �'' Date: 9/6/94 SUBJECT: REQUEST CITY COUNCIL APPROVAL TO ASSEMBLE FINANCING TEAM AND PREPARE FOR ELECTRIC REVENUE BOND SALE BACKGROUND The Colton Electric Utility has developed a financing plan, including the rates and the budget, which includes the use of borrowed funds for capital improvements on the electrical system. Most of the funds will be used for the construction of the new substation, new transmission facilities and additional distribution plant. Part of the investment will be directly assigned to the county hospital. The remainder of the capital expense will be used to relieve load on existing substations and provide added system stability and reliability, and to be held in reserve to accommodate additional load growth on the west side of the city. STATEMENT OF THE PROBLEM In order to commence with the revenue bond issue, a financing team has to be put together to size, document and sell the bonds. This team consists of a Financial Advisor, Bond Council, and an Underwriter who will serve the City to package and market the bonds. A Financial Advisor has been engaged to assist the city in the development of the financial plan, sizing of the issue and the method of marketing the debt in the most efficient and economic manner for the City. In addition, Requests for Proposals have been distributed to qualified legal firms to provide Bond Council Services. Once the appropriate documents are prepared, the Financial Advisor has suggested that the City enter into a competitive bidding process for the selection of the Underwriter. The delay in the budget adoption has somewhat delayed the schedule of the revenue bond sale. However, any further delays could pose some economic and operating problems. The market and current interest rates are favorable for the City to proceed with the transaction. It is uncertain that this will be the case for an extended period. Therefore, it would be in the City's best interest to proceed before the market changes. In addition, the Electric Utility has to have funds to make some substantial purchases for equipment and construction to maintain the electric service Page 1 of 2 Item No. 04