HomeMy WebLinkAboutMinutes - City Council - 2002-02-19 - Special Meeting
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Special Meeting
Redding City Council
Community Room
777 Cypress Avenue
Redding, CA 96001
February 19,2002 12:00 p.m.
The Special Meeting of the City Council was called to order by Mayor Kight with the following
Council Members present: Cibula, McGeorge, Pohlmeyer and Stegall.
Also present were City Manager Warren, Assistant City Manager Perry, Deputy City Manager
Starman, Electric Utility Director Feider, City Treasurer Clark, Finance Officer Strong, Electric
Resource Financial Manager Graves, and Electric Resource Planner Watros.
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1. Workshop re "Financing Plan for Electric Utility Bonds and Generating Unit No.5 at the
Redding Power Plant"
(D-050 & E-120-150-675)
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The Finance Team of Tom Graves (Redding Electric Utility's Financial Manager), Steve Strong
(City Finance Officer), Allyn Feci Clark (City Treasurer), Virginia Rutledge (Financial Advisor,
Public Financial Management), Dan Hartman (Investment Banker, Solomon Smith Barney, and Rick
Hiscocks (Bond Counsel, Orrick, Herrington, and Sutcliffe) presented the Financing Plan to Council
as follows:
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. Objectives and Elements of the Financing Plan are to preserve financial liquidity, implement
new bond covenants with greater flexibility, and take advantage of the current low interest
rate environment by financing 50% of Redding power plant improvements,
refinancing/defeasance of Series 1992A and Series 1993A bonds as well as refinancing for
debt service savings.
. Summary of Economics - New Money for Redding Power Plant Improvements by cash
funding 50% of the improvements at the Redding Power Plant and fund the remaining
amount through bonds.
. Overview of outstanding bonds-1992A is non-callable with an interest rate of 6.45% and
1993A is callable on June 1,2003 with interest rates of 5% to 5.75%.
. Contemplated indenture changes - will afford Redding Electric Utility (REU) significant
operating flexibility in a volatile market and will enhance REU's competitive position.
. Historical interest rates.
. Summary of Economics - Refinancing of Series 1993A and half of s~ries 1992A, and the
aggregate Finance Plan.
. Creating a fixed rate through floating-to-fixed London Inter-Bank Offered Rate (LIBOR)
Exchange possibly as low as 4.035%.
. Fixed rate exchange can generate substantial savings over traditional fixed rate bonds.
. Overview of outstanding principal - Financing plan.
. Recommended Financing Plan - new debt service takes into account a portion of Series
1992A bonds to be cash defeased.
The Finance Team provided a summary and recommendation of the Finance Plan as well as possible
primary risks with mitigation measures provided, such as variable rate bond risks to be mitigated by
bond insurance and use of auction rate securities.
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No action was taken.
02/19/2002
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ADJOURNMENT
There being no further business, at the hour of 1: 15 p.m., Mayor Xight declared the meeting
adjourned.
APPROVED
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2/19/2002
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