A MOTION authorizing the execution and delivery of a continuing covenant agreement in connection with the remarketing of the county's Junior Lien Sewer Revenue Bonds, 2015 Series A and B, in the aggregate principal amount of $100,000,000, establishing certain terms of those bonds, all in accordance with Ordinance 18141, as amended by Ordinance _____; and rescinding Motion 14459.
Thank you. Thank you, Madam Chair. For the record, Patrick Hamacher, counsel, staff items five and six in your packets. Our proposed ordinance 2016 0500 and proposed motion 2016 0501. That the package of legislation taken as a whole continues a program that's been in place for several years, and that is for the wastewater treatment utility to issue instead of long term debt, but to have some portion of their debt portfolio be short term debt. In this case, it allows the department to take advantage of the very low short term debt markets. This program has been in place for many years. Last year at this time, the executive requested an extension of the program, which the council granted but was unclear at that time whether they wanted to continue the program beyond an additional year. So the Council gave the executive a year to study the program. The executive has recommended continuing the variable rate debt program covered by this ordinance. I'm now speaking from the bottom of page or the top of page ten in your staff report. The ordinance allows the issuance of $100 million in variable rate debt. In other words, debt tied to short term interest rates as opposed to long term interest rates. This provides the department a hedge against interest rate risk. The executive staff is estimating that the interest rate on these bonds will be about 1%, as opposed to between four and 5% on long term debt. The financial plans for the wastewater utility allow up to 20% of the outstanding debt to be covered by variable rate bonds with inclusion of this $100 million. 14% of the wastewater debt will be variable rate, so it's well within the policy limit. There's currently about $3.6 billion in outstanding wastewater treatment division debt. The executive has requested an expedition of these two items because the current bond program is expected to expire at the end of November. The proposed motion that is included with the ordinances would approve. Usually you don't know who's going to win the debt when you approve it because it's long term debt and it's essentially a competition on the day of the sale because this is a ongoing program that will roll. They actually know who the selected vendor has been. They've selected State Street Bank as the result of a competitive process where the county received nine bids and their bids were independently evaluated by both the county financial staff and also the county's financial advisor. So taken as a whole, they would continue the existing program. There are no other policy implications of the package before you, and that concludes my staff report. So three quick questions. So how long will this program go and is this program we can have indefinitely? No. This is a. Program that can roll indefinitely. Okay. Consistent with the policy, because it consistent with the wastewater treatment division policy. And approximately how much money do you think this will save us? Well, that's something in this case, what you can do is compare short term to long term. Long term debt is between four and 5%. They're expecting in the short run this to be about 1%. So there's a significant savings there. But because it rolls regularly, it wouldn't it's not really that you would make that comparison over time. If short term rates were to spike, you might just not continue this program. So it's it's a huge savings. In the short term. If it ever stops being a savings, you can roll out of the short term debt into more long term debt. Okay. Any questions from anybody on the council? I'm glad to see that we're doing this. And because of the interest rates being so low, do you think there's going to be any more looking to get us closer to the 20% so we can save more money? I haven't heard of any plans from that. I can I can check with the executive staff. It's it's been kind of the program's been in the kind of $500 million range for a number of years. So that program has stayed the same. What has changed is as we've built bright water, the overall debt of the division has gotten bigger and so the percentage has gone down. So I think there the executive branch is comfortable with the size of the program, but I can ask them that offline and get your answer to that. All right. Councilmember, would you be willing to put both of them together? Are you alright with me taking on both together? Ordinance 2016 500 and Motion 2016 5a1. Which I move. We give a do pass recommendation to ordinances 2016. 505 oh one. Thank you. Are there any questions or comments but that the critical piece calls for the. Thank you, Madam Chair. Council Member Baldacci High Council Member DEMBOSKY Thank you. Council Member Dunn Council Member. Dorset. Council Member. Coles I. Council Member McDermott. High Council Member of the group. I don't have to provide right there. Madam Chair, today, Madam Chair, the vote is six I's and three Council members excused. Council Member Dombrowski, Council member in council member of the Grove. Excellent. Thank you very much. Okay. Sorry. Council member Van Wright, not council member of the government. Okay, great. Thank you. So we're going to go back now. What would you what would you like to do with those items. Since you needed it right away? Expedite. And I think it's okay to put on consent. So let's expedite consent. Thank you, ma'am. Thank you for reminding me on that. Okay. Let's go back up to our special item today. And this is a proclamation for October as Filipino-American History Month. We are very excited. We have many friends in the audience and we're glad to see you with us. And Councilmember Gossett, you are in charge of the proclamation.