Staff along with Gilmore Bell as our Bond Counsel and PFM serving as our Municipal Advisor has created a refunding option for the outstanding Series 2012A and 2012F Electric bonds. In January of 2022, the City engaged Morgan Stanley as the Underwriter for the debt refunding to further refine the plan and to assist with selling the debt. 

The Ordinance authorizes the City to borrow up to $85 million for the purpose of refunding outstanding Series 2012A and 2012F Bonds. The Ordinance further authorizes the officers of the City to execute all documents and take actions to complete the transaction.  The officers of the City are only able to complete the transaction if the results of the sale are within the following parameters:

• The maximum principal amount of the Series 2022 Bonds shall not exceed $85,000,000. 
• The True Interest Cost of the Bonds shall not exceed 4.0%.
• The weighted average maturity of the Bonds shall be between 8.0 years and 11.0 years.
• The final maturity date of the Bonds shall be not later than the year 2037.
• The Underwriter’s discount shall not exceed 1.0% of the principal amount of the Bonds.
• The Bonds shall be subject to optional redemption prior to maturity beginning not later than 2032.

• February 24, 2022: PUAB recommended approval

• February 25, 2002: Reviewed with Audit and Finance Committee

The refunding debt will be a long-term obligation of the City payable from annual appropriations of available Electric System revenue and considered a debt security. The financing team has developed the Preliminary Official Statement (POS). The POS is the document used by the issuer to give information about the price of the bond, the maturity date, interest rate, and all other important information to potential buyers. 

The City is responsible for including information within the POS that reasonable investors would consider to be important in making an investment decision. This information includes relevant financial and operating information as well as legal and tax considerations. The POS includes how the City plans to repay the debt. 

As part of the transaction, the City will be making disclosers in compliance with the antifraud provisions of the Securities Act of 1933 and Rule 10b-5 of the Securities Act of 1934.  Primary market disclosure practices for municipal securities have developed as a result of these antifraud provisions, federal regulation of broker-dealers through the Securities and Exchange Commission (SEC) Rule 15(c)2-12, and other regulations of market participants by the Municipal Securities Rulemaking Board (MSRB).

The governing body is urged to review the POS and be aware that Federal antifraud laws prohibit making material misstatements or omissions of material facts if those facts are necessary to avoid a misleading statement. If the City fails to comply with these disclosure requirements the City may be subject to regulatory actions and/or monetary fines.

Revenues generated from electric operations are sufficient to pay related debt service.

Market conditions continue to rapidly change and it is difficult to estimate the final savings. The latest estimates ran showed the refunding can generate up to a net present value savings of $8.9 million. However, interest rates continue to be volatile and savings could be reduced from this estimate.