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Riverside extends letter of credit for water revenue bonds to avoid costly refinancing; three‑year renewal estimated at $259,000
Summary
Council approved extending the PNC Bank letter of credit that supports the city's variable‑rate water revenue bonds (Series 2011A), citing about $24 million outstanding and a market test showing renewal costs competitive versus forced refinancing.
The City Council approved staff’s recommendation to extend the existing PNC Bank letter of credit that supports the city's variable‑rate refunding water revenue bonds (Series 2011A), a move staff said avoids forced repayment or refinancing at higher fixed rates.
Staff reported that the facility was set to expire in November and that about $24 million remained outstanding on the bonds. The financing team and municipal advisor tested the market and recommended renewing the letter of credit for three years at an estimated aggregate cost of $259,000. Staff noted that forced refinancing into fixed‑rate debt would likely raise borrowing costs and could have a credit‑rating impact that would increase future borrowing expenses for the utility.
Supporters framed the renewal as a low‑cost way to preserve favorable variable‑rate financing and to protect ratepayers from higher costs associated with alternative financing options. The council approved the extension and authorized execution of documents to close the transaction, directing that costs be charged to the water debt‑related fiscal accounts.
