Redding approves up-to-$70 million bonds to fund electric utility upgrades

The Redding Joint Powers Financing Authority and the Redding City Council on Tuesday approved issuing installment-sale bonds of up to $70 million to finance roughly $65 million in planned electric-system upgrades, including distribution replacements, substation work and power-plant maintenance.

The votes followed a joint public hearing and a presentation by Joe Bowers, assistant electric director, who described the work as part of a strategic plan to “maintain reliability” and mitigate wildfire risk. Bowers told the board the city had spent reserves to begin the work and would use the bond proceeds to “immediately reimburse ourselves, bring our reserves back up to a healthy level.”

The projects cited include replacement of aging underground and overhead distribution lines, substation improvements, building and security upgrades and major maintenance at the city’s power plant. Bowers said the utility has identified about $65 million in work that should be completed over the next several years and explained the financing logic: issuing tax‑exempt municipal bonds — expected to price near 4% — spreads costs to future beneficiaries and avoids a short, large rate surcharge now.

Bowers said the city’s financial advisers obtained a Fitch double-A-minus rating for the financing after site visits and a review of operating and supply conditions. He described the financing as revenue bonds payable from the utility’s revenues rather than general-obligation bonds requiring voter approval.

The financing structure uses the Redding Joint Powers Financing Authority as issuer; JP Morgan was named as purchaser/underwriter and U.S. Bank as trustee in documents attached to the staff report. The draft documents included a preliminary official statement, a purchase contract, the trust agreement and an installment sale agreement between the JPA and the city.

Council members and the authority commissioners asked detailed questions about timing, local job impacts and whether the city would earn any interest while bond proceeds waited to be spent. Bowers said most construction work and contracting would happen locally, that proceeds would be managed in a trustee account earning near-Treasury rates, and that tax-exempt bond proceeds must be spent mostly within three years.

After public comment and brief deliberation the JPA voted 5-0 to approve the resolution authorizing the sale and to authorize staff to finalize documents; the City Council then voted 5-0 to approve the same actions. Bowers and Director Zettle were thanked by council for the work on the financing.

What the vote means: the city intends to issue the bonds and expects to use the proceeds to reimburse previously spent reserves and fund the next phase of capital work. Staff said repayment of the bonds is embedded in the utility’s existing rate plan — a modest rate increase already assumed in prior planning — and that the debt profile will decline substantially in about 10–15 years as older debt retires.

The council approved the financing authorization; the next steps in the schedule presented by staff included posting the final official statement, a competitive pricing date, and a closing targeted in early April, after which the city would draw proceeds to reimburse and fund projects.

Votes at a glance - Redding Joint Powers Financing Authority resolution authorizing bonds up to $70,000,000: approved (5-0) - Redding City Council resolution authorizing delivery of documents and approval of terms: approved (5-0)

Ending: With financing approved, staff will finalize the official statement and proceed to market; councilors said they expect to monitor project spending and report back on the schedule for major capital items.