(1)AR 061207 Issuance of Revenue Bonds

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CITY OF COLTON AGENDA REPORT FOR THE JOINT MEETING OF THE COUNCIL FOR THE CITY OF COLTON AND THE COLTON PUBLIC FINANCING AUTHORITY MEETING OF JUNE 12, 2007 TO: Honorable Mayor and Council Members FROM: Jeannette Olko, Electric Utility General Manager SUBJECT: Request Approval for the Issuance of Revenue Bonds and Related Actions DATE: June 7, 2007 BACKGROUND: The Electric Utility recently completed a 10 -Year Master Plan for the transmission and distribution system that identifies certain capital improvement projects that will help to improve and maintain the reliability and integrity of the electric system. In an effort to obtain financing for the highest priority project identified in the plan while maintaining current debt service payments, the Electric Utility explored the possibility of a transaction in the amount of approximately $17 million to fund new money requirements for the North Substation ("the Project") and to refund certain 1997 obligations issued through the Financing Authority for Resource Efficiency of California ("FARECal"). The new money portion of the 2007 transaction is being issued to provide the funds for the acquisition, construction, installation and equipping of the Project for the City's Electric System. In addition, $3.2 million from the sale of land will be used for the project. The North Substation, which is located in the northern part of the city near the intersection of 8"' Street and Laurel Street, is currently supplied by a 12.47kV feeder. A 4.6 -MVA transformer reduces the voltage to 4.16 -kV. There is currently one remaining 4.16 -kV feeder that supplies load in the area. The existing equipment will be removed, and a new 69/12.47kV substation will be constructed. Because the existing site is too small, additional land will have to be obtained to allow for the 69kV ring bus, the two power transformers, and the new metal -enclosed 12.47kV circuit breaker and bus switchgear. North Substation will have five 12.47kV feeders to supply four planning grids. As such, each planning grid will be supplied by one feeder. The Project will relieve existing overloaded conditions on the northern portion of the city and will supply load currently fed from distant substations to the south. This Project will improve reliability and will allow for a more cost-effective operation of the system. The City currently has outstanding debt issued through FARECal, specifically, the Certificates of Participation, 1997 Series ("1997 Certificates"). The 1997 Ceritificates maturing 2012 to 2021 have an interest rate coupon ranging from 5.5% to 6.0% and an optional redemption feature provide for redemption on or after April 1, 2007 at 102% of par. A refunding of this portion of the outstanding 1997