Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Utility Bond Financing topic
No spam. Unsubscribe anytime.
Redding approves $65 million utility bond to fund electric infrastructure upgrades
Summary
City council and the Redding Joint Powers Financing Authority approved issuing up to $70 million in revenue bonds (target $65 million) to finance roughly $65 million of investments in the municipal electric utility(REU), citing aging equipment, wildfire risk mitigation and the need to restore reserves.
Redding city leaders on March 18 approved a financing package to issue revenue bonds aimed at modernizing the municipal electric system, replenishing reserves and funding wildfire-mitigation and distribution upgrades.
The Redding Joint Powers Financing Authority (RJ PFA) and the Redding City Council each voted 5-0 to authorize the issuance; the staff recommendation set a $70 million not-to-exceed authorization with a financing target of about $65 million. Assistant Electric Director Joe Bowers told the board that the utility identified roughly $65 million in near-term capital needs including substation improvements, line upgrades, building security and major maintenance at the power plant.
Bowers said the utility pursued municipal revenue bonds to take advantage of tax-exempt pricing available to public utilities and to smooth the impact on customer rates. “This approach takes advantage of REU—s tax-exempt status—so we can access capital at a lower interest rate, which helps keep rate increases smaller and more predictable,” Bowers said. He told the council the financial plan already assumes a modest rate adjustment (a 3% embedded increase) that will cover the debt costs; issuing bonds avoids a one-time 15%–20% surcharge that staff said would otherwise be needed to pay as-you-go.
Staff said the utility secured an AA- credit rating from Fitch Ratings after a local review and site visits; Bowers said comparable California municipal utilities have similar ratings. The underwriter is JPMorgan and US Bank will serve as trustee. Staff estimated a true interest cost in the mid-4% range and noted refinancing is permitted after a 10-year period.
Council members asked how the financing will affect local jobs and near-term cash flows. Bowers said the capital work will be local and contractors will operate in the community; he also said bond proceeds will be deposited in a trustee account and roughly offset by the interest earned there until the funds are spent. He reminded the council the city adopted a reimbursement resolution in August 2023 to allow the utility to spend down reserves and then receive reimbursement when bonds close.
Formal action: the RJ PFA voted to approve the financing authorization; immediately afterward the city council voted to approve the same financing actions. Bowers said the bonds would be priced the week after the meeting, with closing expected in early April and reimbursement to the utility following closing.
