Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Water Bonds Refunding topic
No spam. Unsubscribe anytime.
La Habra authorizes water revenue refunding bonds; officials warn market volatility could reduce savings
Summary
The council authorized resolutions allowing the La Habra Utility Authority to issue 2025 water revenue refunding bonds to refinance 2013 bonds and potentially save the water utility money, but staff said recent market volatility has reduced projected savings and timing is uncertain.
The La Habra City Council and the La Habra Utility Authority voted April 21 to authorize proceedings that would allow the utility authority to issue water revenue refunding bonds, series 2025, to refinance outstanding 2013 water revenue bonds if market conditions permit.
City staff and the financing team told the council the proposed refunding would use net revenues of the water system (not the general fund) and would not extend the bonds' maturity beyond the existing final maturity date of Nov. 1, 2043. James Sabian, the municipal advisor on the project, said staff had secured a double-A rating on the water system and presented an analysis showing potential savings under favorable market conditions.
At the April 10 analysis point cited in staff materials, the team estimated gross savings of roughly $1 million and about $57,000 in annual debt-service savings, with net present value savings near $824,000 (about 5.68 percent). Sabian and the city's finance staff said recent market movements since that date have reduced the projected savings: one speaker noted the annual savings estimate had dropped to about $47,000 and net present value savings had declined below the city's 5 percent policy floor. Sabian described the current market as "not normal conditions" and said the team would monitor daily and move to price the bonds only when conditions reached an acceptable threshold.
City staff described the proposed financing structure: a 10-year optional call, no reserve fund, parity with the 2019 water bonds, and a requirement in the covenants that rates be set to at least 125 percent debt service coverage. Staff said the refunding would be structured so new debt would remain on parity with existing water-system debt and the transaction would include customary documents: a supplemental indenture, a bond purchase agreement, continuing disclosure certificate, preliminary official statement and an escrow agreement.
Council discussion centered on market timing and the city's credit strength. Staff noted the city had strong liquidity in the water fund and maintained the double-A rating from Standard & Poor's. Staff and the municipal advisor said pricing had been tentatively scheduled for early May with close about two weeks after pricing but emphasized the team would remain flexible and delay pricing until market conditions improved. If savings could not meet the city's policy threshold, staff said the city could postpone the refunding and revisit at a later date.
Votes at a glance: - Motion to approve resolutions authorizing issuance and sale of La Habra Utility Authority Water Revenue Refunding Bonds, Series 2025, and related financing documents: motion carried unanimously (recorded as "Motion carried unanimously").
