In 2009 and 2010, the Brea Public Financing Authority (the "Authority) in conjunction with the City of Brea (the "City") issued the following Bonds to finance improvements to the City’s Water System that are now eligible to be refunded:
- $12,855,000 (original principal amount) 2009 Water Revenue Refunding Bonds, Series A (the “2009A Bonds”), of which $8,135,000 remain outstanding and will be refunded;
- $12,945,000 (original principal amount) 2009 Water Revenue Bonds, Series B (Federally Taxable - Build America Bonds - Direct Payment) (the “2009B Bonds” and together with the 2009A Bonds, the “2009 Bonds”), all of which remain outstanding and will be refunded;
- $2,410,000 (original principal amount) 2010 Water Revenue Bonds (Solar and Energy Efficient Projects), Series A, all of which have been paid off; and
On May 21, 2019, staff recommended and the City Council adopted Resolution 2019-033 approving the institution of proceedings to refinance the outstanding 2009 (Series A & B) and 2010 (Series B) Water Revenue Bonds of the Authority (the “2009 and 2010 Water Bonds”) by issuing refunding bonds. On July 16, 2019, the City Council will consider the authorization and sale of The City of Brea 2019 Water Revenue Refunding Bonds (the “2019 Water Refunding Bonds”) which would be issued under the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the “Refunding Bond Law”).
The 2009 Authority Bonds are subject to prepayment and redemption on any date on or after July 1, 2019, and the 2010 Authority Bonds are subject to prepayment and redemption on any date on or after July 1, 2020. If authorized for issuance by the City Council, the proceeds of the 2019 Water Refunding Refunding Bonds will be deposited with The Bank of New York Mellon Trust, N.A., as trustee for the 2009 Authority Bonds and the 2010 Authority Bonds and escrow agent (the “Escrow Agent”) under an Escrow Agreement. Thererfore, staff recommends the Authority Board of Directors adopt the attached Resolution which approves the refunding of the 2009 Authority Bonds and the 2010 Authority Bonds in accordance with the provisions of the Escrow Agreement among the City, the Authority and the Escrow Agent.
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The outstanding 2009 and 2010 Water Bonds total $30,690,000. Staff is recommending that the City refinance the outstanding 2009 and 2010 Water Bonds bonds by issuing $26,645,000 in City of Brea 2019 Water Revenue Refunding Bonds in order to reduce the City's average annual debt service payments by $216,829. These are estimated savings based on current market conditions and subject to change. Additionally the 2009 and 2010 Water Bonds are being refunded within their existing term (final maturity). The anticipated savings from this refunding are expected to be used to stabilize water rates by offsetting future operational cost increases. There is no impact to the City's General Fund.
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