Item 2C: Approval of EWEB Bond Issue

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Action: Resolution 4931 Authorizing the Issuance and Sale of Electric Utility System Revenue Bonds in Aggregate Principal Amount of not to Exceed Eighty-Five Million Five Hundred Thousand Dollars ($85,500,000) for the Purposes of Financing Improvements to the Electric Utility System and Providing for Related Matters Meeting Date: February 25, 2008 Agenda Item Number: 2C Department: Central Services Staff Contact: Sue Cutsogeorge www.eugene-or.gov Contact Telephone Number: 682-5589 ISSUE STATEMENT The Eugene Water & Electric Board (EWEB) is requesting authority to proceed with the issuance of Electric Utility System Revenue Bonds in the amount of $85.5 million for the purposes described below. BACKGROUND On February 13, Ken Beeson from EWEB presented information to the council on the relocation of EWEB water and electric utility operations and engineering functions to a new site in west Eugene. Mr. Beeson described the scope of the project, the sustainability measures to be incorporated into the project and the timeline. He also presented information about the public process to-date, the impact on ratepayers from the project, and the costs and funding for the project. At this meeting, the council is requested to authorize $85.5 million of Electric System Revenue Bonds. The bonds issued pursuant to this authorization will provide funds for design and construction work associated with the relocation of EWEB water and electric utility operations and engineering related functions to a new site in west Eugene, to fund necessary reserves for the bonds and to pay the costs of issuance of the bonds. The resolution limits the use of the bond proceeds to only this project; EWEB cannot use any excess proceeds for other EWEB capital projects. EWEB approved the related financing resolution unanimously at its February 5 board meeting. EWEB is expecting to issue bonds in two series for this project. The first series will be sold for $54 million in 2008 and will cover the first two years of project costs. The second issue will be sold in 2010 and will be for a maximum of $31.5 million. Proceeds from the sale of excess property are expected to be used to either reduce the amount of bonds to be issued in 2010 or to pay off bonds issued for the project, depending on the timing of the sale of the property. Based on project budget assumptions, the combined electric and water rate impact related to this project is estimated to be about 2.3% or approximately 1.6% for electric customers and 8.7% for water customers. This equates to about $52 per year for a typical residential customer (single family home, electric heat). Actual rate increases related to the project will occur gradually and will depend on the amount and timing of (1) construction expenditures, and (2) any credits from the sale of surplus property F:\CMO\2008 Council Agendas\M080225\S0802252C.doc