Title
Resolution Authorizing Extension of the Existing Liquidity Agreement with respect to GRU Variable Rate Utilities System Revenue Bonds 2019 Series C (B)
**This item was presented to the UAB on March 10, 2022.**
Explanation
GRU’s debt portfolio contains a mix of fixed rate and variable rate debt. In order to obtain the lowest interest rate GRU maintains liquidity facilities to secure its outstanding publicly issued variable rate demand bonds. These liquidity facilities provide cash to pay investors that tender their bonds, in the event of a market disruption that precludes remarketing of the bonds.
The liquidity facility on our 2019 Series C Bonds currently issued by Bank of America, N.A. expires April 25, 2022. Our financial advisor, PFM Financial Advisors, LLC, has engaged in discussions with Bank of America regarding terms for extension of the facility. Bank of America was agreeable to a three year extension of the facility at terms favorable to GRU.
Fiscal Note
The cost of the four-year extension is 34 basis points, a reduction of six basis points compared to the current three year agreement.
Recommendation:
The City Commission approve 1) the resolution authorizing an extension of the existing liquidity facility with Bank of America, N.A. for Variable Rate Utilities System Revenue Bonds, 2019 Series C, subject to the approval of the City Attorney as to form and legality 2) the form of the first amendment to the Letter of Credit and Reimbursement Agreement for the liquidity facility and 3) the amended and restated fee letter.
At their March 10, 2022, meeting, the UAB voted unanimously to advise the City Commission to approve the recommendation.