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EUGENE CITY COUNCIL AGENDA ITEM SUMMARY Adoption of Resolution 4844 Authorizing the Issuance and Sale of Water Utility System Revenue Bonds in the Aggregate Principal Amount of Not to Exceed Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000) for the Purpose of Advance Refunding or Defeasing Certain Outstanding Water Utility System Revenue Bonds; and Providing for Certain Details and Related Matters Meeting Date: June 27, 2005 Agenda Item Number: 2D Department: Central Services Staff Contact: Dee Ann Hardt www. cl. eugene, or. us Contact Telephone Number: 682-5041 ISSUE STATEMENT The Eugene Water and Electric Board (EWEB) is requesting authority to proceed with the refinancing of the Series 2000 Water Revenue Bonds in order to achieve interest cost savings. Unexpended bond proceeds of the Series 2002 Water Revenue Bonds will also be used to reduce the outstanding principal amount of the bonds. BACKGROUND On September 13, 1999, the City Council adopted Resolution No. 4601 authorizing EWEB to issue up to $36 million of Water Utility System Revenue Bonds to improve the water utility system. Pursuant to that resolution, EWEB subsequently issued the Series 2000 Water System Revenue Bonds in the amount of $21,405,000. There is currently $19.5 million outstanding of these bonds. On April 8, 2002, the City Council adopted Resolution No. 4712 authorizing EWEB to issue up to $11 million for the purpose of developing and constructing a ground water backup water supply. Pursuant to that resolution, EWEB subsequently issued the Series 2002 Water System Revenue Bonds in the amount of $10 million. Market interest rates are favorable at the current time. An advance refunding of the Series 2000 bonds is projected to provide debt service savings. In addition to proceeding with a refunding for interest rate savings, EWEB would also like to apply unexpended bond proceeds to reduce the amount of Series 2002 bonds outstanding. EWEB drilled several test wells to demonstrate the availability of ground water in sufficient quantities to obtain 20 million gallons per day of sustained production. While the test wells proved sufficient water at the well sites, evaluation of the test results also indicated that the shallower wells of surrounding water districts were significantly affected. This has prompted an extended negotiation over water rights in the area surrounding the proposed well field. L:\CMO\2005 Council Agendas\M050627\S0506272D.doc