2002 AGN JUL 02 I24 - Laserfiche WebLink

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Item #24 CITY OF COLTON AGENDA REPORT FOR THE JOINT MEETING OF THE CITY COUNCIL FOR THE CITY OF COLTON AND THE COLTON PUBLIC FINANCING AUTHORITY MEETING OF JULY 2, 2002 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: DILU DE ALWIS, FINANCE DIRECTOR �'� TOM CLARKE, UTILITY DIRECTOR `� �(�v� TK C. SUBJECT: APPROVAL OF ISSUANCE OF REVENUE BONDS AND RELATED ACTIONS DATE: JUNE 24, 2002 BACKGROUND On May 21, 2002, the City Council authorized the City to enter into a contract with E.I. Colton LLC, a Delaware limited liability company (the "Contractor"), for the acquisition, construction and installation of a gas-fired simple cycle combustion turbine nominally rated at 43 megawatts (the "Projecf'). The purpose of the Project is to: (1) replace approximately 35 megawatts of capacity and associated energy that will be lost due to the impending termination of power supply contracts between the City and each of the City ot Pasadena, Bonneville Powe� Administration and Idaho Power Company and (2) provide additional capacity for the City to meet its future energy needs. The estimated cost of the Project is approximately $42 million, exclusive of the debt service reserve and issuance costs. Given its costs, the City will need to finance the Project through the issuance by the Colton Public Financing Authority (the "Authority') of revenue bonds (the "2002 Bonds"). On June 18, 2002, the City Council authorized the first reading of two Ordinances (the "2002 Ordinances") that must be in effect before the Authority can sell the 2002 Bonds. The second reading will occur at the July 2, 2002 meeting. The Agenda report filed with the City Council in connection with the 2002 Ordinances indicated that the City and its financing team were in the process of developing the necessary documentation for the 2002 Bonds, including the 2002 Installment Purchase Agreement, an Indenture of Trust, a Preliminary Official Statement and a Notice of Sale (the "2002 Bond Documents"). DISCUSSION/ ANALYSIS The City Council is requested to authorize and approve the issuance of the 2002 Bonds for the Project and to take various related actions. The issuance of the 2002 Bonds will allow the City to spread the costs of Project over a period not to exceed 30 years. This approach has the least impact on electric rates and effectively allocates the costs of the Project to those customers who will benefit from it. Bond Size. The maximum 2002 Bonds size of $50 million will include the estimated Project cost, debt service reserve and costs of issuance. The actual amount of 2002 Bonds issued will probably be less than this amount.