07-23-2018 BPU RPT 09 - Laserfiche WebLink

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W A T E R E N E R G Y L I F RIVERSIDE PUBLIC UTILITIES aid& P U BLIC UTILITIES Board Memorandum BOARD OF PUBLIC UTILITIES DATE: JULY 23, 2018 ITEM NO: 9 SUBJECT: REIMBURSEMENT RESOLUTION —WATER UTILITY ISSUE: Approve a Reimbursement Resolution to provide the use of future bond proceeds instead of reserve funds for capital financing requirements for the Water Utility's Five -Year Capital Improvement Program (CIP), increasing the previous reimbursement resolution from Fifty Million Dollars ($50,000,000) to Fifty Three Million Dollars ($53,000,000). RECOMMENDATION: That the Board of Public Utilities recommend that City Council adopt a Reimbursement Resolution to provide the future option of using bond funds instead of reserve funds for capital financing requirements for the Water Utility, to allow reserve funds to be used for capital needs in the interim period, and increasing the previous reimbursement resolution from $50,000,000 to $53,000,000. BACKGROUND: The Water Utility requires capital improvement projects to maintain system reliability, secure new water resources, serve new residential and commercial developments and refurbish the water system. Because these capital improvements are long-term in nature, they are primarily funded through bond financing. The basic philosophy of using bond financing for capital projects is that repayment of the bond is made over the life of the project (usually 20 to 30 years) by the customers that use them. The Water Utility has been using reserve funds for capital needs since proceeds from its 2009 Water Revenue Series B Bonds were depleted in April 2015. In order to reimburse capital improvement expenditures funded by reserves with future bond proceeds, a Reimbursement Resolution must be adopted by the Board of Public Utilities (Board) and City Council. This Reimbursement Resolution does not require that the Water Utility issue bonds in the future, but provides maximum flexibility for financial planning purposes, and provides the legal basis for reimbursement of reserve funds used for capital projects with bond proceeds issued at a later date. On May 15, 2015, the Board recommended and on May 19, 2015, City Council adopted Reimbursement Resolution No. 22849 declaring its official intent to reimburse qualified capital expenditures relating to the Water Utility's Five -Year CIP from anticipated bond proceeds, for a total amount not to exceed $50,000,000. Page 839