Committee approves issuance plan for Los Angeles Wastewater System revenue bonds; city projects roughly $75M in savings

The Energy and Environment Committee on April 1 approved actions to authorize issuance of Los Angeles Wastewater System revenue bonds to refinance short‑term commercial paper and refund outstanding wastewater bonds.

Derek Pearson of the City Administrative Officer’s debt management group told the committee the plan calls for senior bonds not to exceed $800 million and subordinate bonds not to exceed $900 million. The transactions are intended to refinance outstanding wastewater commercial paper, restore LA Sanitation’s commercial‑paper capacity, and refund existing bonds to generate approximately $75 million in projected net present value savings. Pearson said the refunds include a subordinate series expected to be sold in late April and closed in early May (projected net present value savings of about $43 million, roughly 8.23% present value), and a senior series planned for sale and close in late May (projected net present value savings of about $32 million, roughly 6.2%).

Pearson said these are revenue bonds backed solely by the Sewer Construction and Maintenance Fund (SCM) and that the recommendations would not affect the city’s general fund: “These bonds are revenue bonds that are backed solely by the revenues of the sewer construction and maintenance fund or SCM. And thus, there is no impact to the general fund resulting from the recommendations of this report,” he said.

Committee members asked whether last year’s SCM rate increase is related to the transactions; the CAO said the rate increase is not directly tied to this issuance but strengthens the credit story for the bonds. The CAO described the timeline for rating‑agency meetings and said the subordinate sale is expected in late April with closing in early May, followed by the senior sale in late May.

Councilmember Nazarian moved to approve the CAO recommendations and adopt an accompanying ordinance to establish special funds for the bonds. The committee recorded a 3–0 vote (Nazarian, Raman, Padilla present; Yaroslavsky and Geraldo absent). The CAO’s report projects approximately $75 million in combined net present value savings for the refundings and indicated the debt service will be an SCM obligation.