Council directs staff to prepare $20M utility bond offering with 25-year term

Universal City's financial advisor presented a financing plan for a $20 million utility revenue bond to fund a Public Works annex and water-infrastructure projects and asked the council for direction on the repayment term.

"My name is Victor Quiroga. I'm with Specialized Public Finance," the bond advisor said, summarizing the plan and timeline. He told the council the transaction is a revenue bond secured by utility-system revenues (not property tax) and that the city must maintain certain covenants, including a minimum debt-service coverage ratio. Quiroga said the city currently shows strong coverage on existing debt (about 4.64x) and that modeled average annual debt service for a $20 million issuance would be roughly $1,560,000 on a 20-year term and about $1,410,000 on a 25-year term.

After discussion about trade-offs between paying bonds off sooner and limiting rate impacts, councilmembers expressed a preference for a 25-year term as a middle ground. The mayor pro tem directed staff to proceed with the offering documents and to return to council on Aug. 18 with actual bid results for the council to consider locking the interest rate.

Quiroga outlined the next steps: enter the bond market on the morning of Aug. 18, present bid tabulations to council that evening, and complete closing in mid-September if the council approves the award. No final bond sale was authorized at the meeting; the council provided direction on term and asked staff to continue work with advisors.