01-10-2022 BPU RPT 06 - Laserfiche WebLink

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RIVERSIDE PUBLIC UTILITIES Board Memorandum BOARD OF PUBLIC UTILITIES DATE: JANUARY 10, 2022 SUBJECT: AMENDED AND RESTATED SUBORDINATE LINE OF CREDIT AGREEMENT FOR AN AMOUNT NOT TO EXCEED $60 MILLION TO SUPPORT THE WATER AND ELECTRIC UTILITY FOR A COST OF $475,000 FOR THREE AND A HALF YEARS ISSUE: Consider approval to adopt a resolution to amend and restate a Subordinate Revolving Credit Agreement for the Water and Electric Utility in an amount not to exceed $60 million. RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council: 1. Amend and extend an existing subordinate line of credit with the Water Utility for $25 million, and with the Electric Utility for $35 million, for an additional three and a half years, for an estimated cost of $475,000; 2. Adopt a resolution to amend and restate the existing Subordinate Revolving Credit Agreement with U.S. Bank National Association for the Water and Electric Utility; 3. 4. Authorize the City Manager, or designee, to execute all documents related to this transaction. BACKGROUND: On May 22, 2018 the City Council approved the Electric and Water Utility Five-Year Rate Plan for Riverside Public Utilities (RPU). Within the plan, one method for keeping rate increases as low as possible was to use a Subordinate Line of Credit to maintain operating liquidity, allowing the Electric and Water utilities to spend cash reserves to fund capital projects while maintaining compliance with the Riverside Public Utilities Cash Reserve Policy. RPU has not drawn upon the Subordinate Line of Credit. The Subordinate Line of Credit is used, in lieu of cash, to maintain the overall liquidity and reserve levels necessary to meet RPU' s reserve policy and maintain strong bond ratings. On January 22, 2019 City Council approved a $60,000,000 Subordinate Line of Credit Agreement with US Bank, NA (US Bank) to support the Electric and Water utilities. The agreement was executed on February 1, 2019.