Title
Financing for Construction (B)
This item is related to financing for costs of acquisition and construction.
Explanation
We have a current need to fund for Costs of Acquisition and Construction for up to the next two years. Our recommendation, in consultation with Public Financial Management (PFM), our Financial Advisor, is to issue up to $105 million of taxable debt and up to $100 million of tax-exempt debt to fund a portion of these construction costs through fixed-rate bonds.
For the financing described above, the optimal structure will depend on market conditions existing at the time of execution. Thus, since it is not absolutely clear which type of financing structure is best for us, we recommend that staff and our Financial Advisor continue to monitor the market to select the best alternative at the time of pricing.
GRU staff and our Financial Advisor recommend that any of the transactions referred to above that entail the issuance of bonds be accomplished through a negotiated sale of those bonds. It is recommended that Goldman Sachs serve as Senior Manager. Goldman Sachs has continued to bring significant value to the Utility in the form of solid recommendations for financing opportunities, familiarity with our bond resolution, innovative work concerning future debt structures, and expertise in rating agency criteria and considerations. In addition, upon the advice of our Financial Advisor, we can appoint additional Co-Managers as appropriate, if their addition will enhance the distribution of the bonds.
Since interest rates were near historical lows late last year, with the assistance PFM, we monitored various options available to capture the benefit of the then favorable environment, even though we did not need the construction funds at that time. We reviewed various options that allowed us to obtain some cost certainty, and potentially generate significant savings by financing future bond needs at then current market rates. The swa...
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