The Redwood City Council on Monday voted unanimously to refinance certain water facilities by authorizing the issuance and sale of up to $16.26 million in Water Revenue Refunding Bonds.
The 2013 Bonds had a 10-year call protection period that has now expired. This allows the City and its public financing authority (PFA) to issue refunding bonds at a lower cost, using the proceeds to redeem the outstanding 2013 Bonds.
The bond resolution allows the city manager to proceed with a negotiated bond sale if the bond amount doesn’t exceed $16.26 million, the underwriting discount stays below 1.5%, and the net present value savings are at least 3%.
The City buys its drinking water from the San Francisco Public Utilities Commission (SFPUC). However, the city needs more water than it’s guaranteed to get. To solve the problem, the city started a water recycling project in 2005. The project included installing water recycling equipment and storage tanks at the Silicon Valley Clean Water Authority (SVCW) treatment facility in Redwood Shores. The city also built a system to distribute recycled water for irrigation and industrial use around Redwood Shores and Seaport Boulevard.
To finance the $72 million project, bonds totaling $35.79 million in 2005, $26 million in 2006, and $15.15 million in 2007 were issued. These bonds were later refinanced at lower costs: the 2005 bonds in 2013, the 2006 bonds in 2015, and the 2007 bonds in 2017.
At Monday’s meeting, the City Council voted to approve several bonds linked to the 2024 bond issuance.
The Redwood City Public Financing Authority (PFA) will issue the 2024 bonds. The terms of the bonds are outlined in an agreement between the PFA and U.S. Bank Trust Company, which will manage the bonds on behalf of the bondholders.
The City will pay the bonds in installments under an installment purchase contract by making installment payments to the PFA from its water enterprise’s net revenues.