AHPIA-2016/09/13ANAHEIM HOUSING AND PUBLIC IMPROVEMENTS AUTHORITY
REGULAR MEETING OF SEPTEMBER 13, 2016
The Anaheim Housing and Public Improvements Authority regular meeting was called to
order at 5:26 P.M. in City Council Chambers located at 200 S. Anaheim Blvd. for a joint
public comment session with the Anaheim City Council. The meeting notice, agenda and
related materials were duly posted on September 9, 2016.
Present: Chairman Tom Tait and Authority Members: Lucille Kring, Kris Murray, Jordan
Brandman, and James Vanderbilt.
Staff Present: City Manager Paul Emery, Acting City Attorney Kristin Pelletier, and
Secretary Linda Andal.
ADDITIONS/DELETIONS TO THE AGENDA: None
PUBLIC COMMENTS:
Cynthia Ward suggested staff explain the differences in various bond types and restricted
funds.
CONSENT CALENDAR: At 7:29 P.M., Chairman Tait moved to approve the consent
calendar as presented, seconded by Authority Member Brandman. Roll Call Vote: AYES —
5 (Chairman Tait and Authority Members: Kring, Murray, Brandman, and Vanderbilt). NOES
- 0. Motion Carried.
HP1188 1. Approve minutes of Housing and Public Improvements Authority meeting of August
9, 2016.
END OF CONSENT CALENDAR
B137.1 2. Consider two resolutions by the Anaheim Housing and Public Improvements
Authority (AHPIA) and two resolutions by the Anaheim City Council, authorizing the
issuance (AHPIA) and approving the issuance (City Council) of Revenue Bonds,
Series 2016-A (Water System Project) and related items, in the aggregate principal
amount not to exceed $45,000,000, and Revenue Bonds, Series 2016-A (Electric
Utility Distribution System (EUDS) Improvements, 2016-B (EUDS Refunding), and
2016-C (EUDS Refunding) (Taxable), and related items, in the aggregate principal
amount not to exceed $383,000,000.
Housing and Public Improvements Authority Action:
B137.1 2-A. RESOLUTION NO. AHPIA 2016-002 A RESOLUTION OF THE BOARD OF
DIRECTORS OF THE ANAHEIM HOUSING AND PUBLIC IMPROVEMENTS
AUTHORITY, (i) authorizing the issuance of not to exceed $45,000,000 aggregate
principal amount of revenue bonds, Series 2016-A (Water System Project) of said
authority; (ii) approving the forms and authorizing the execution of an Indenture of
Trust, an Installment Purchase Agreement, a Purchase Contract and other related
documents; (iii) approving the execution and delivery of an Official Statement; and
(iv) approving certain actions in connection therewith.
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Page 2 of 4
RESOLUTION NO. AHPIA 2016-003 A RESOLUTION OF THE BOARD OF
DIRECTORS OF THE ANAHEIM HOUSING AND PUBLIC IMPROVEMENTS
AUTHORITY, (i) authorizing the issuance of not to exceed $383,000,000 aggregate
principal amount of Revenue Bonds, Series 2016-A (Electric Utility Distribution
System Improvements), Revenue Refunding Bonds, Series 2016-B (Electric Utility
Distribution System Refunding) and Revenue Refunding Bonds, Series 2016-C
(Electric Utility Distribution System Refunding) (Taxable) of said authority; (ii)
approving the forms and authorizing the execution of an Indenture of Trust, an
Installment Purchase Agreement, a Purchase Contract and other related documents;
(iii) approving the execution and delivery of an Official Statement; and (iv) approving
certain actions in connection therewith.
City Council Action:
B137.1 2-B. RESOLUTION NO. 2016-178 A RESOLUTION OF THE CITY COUNCIL OF
THE ANAHEIM, (i) approving the issuance of not to exceed $45,000,000 aggregate
principal amount of Revenue Bonds, Series 2016-A (Water System Project) of the
Anaheim Housing and Public Improvements Authority; (ii) approving the forms and
authorizing the execution of an Installment Purchase Agreement, an Indenture of
Trust, a Continuing Disclosure Agreement, a Purchase Contract and other related
documents; (iii) approving the delivery of an Official Statement; and (iv) approving
certain actions in connection therewith.
RESOLUTION NO. 2016-179 A RESOLUTION OF THE CITY COUNCIL OF
THE ANAHEIM, (i) approving the issuance of not to exceed $383,000,000 aggregate
principal amount of Revenue Bonds, Series 2016-A (Electric Utility Distribution
System Improvements), Revenue Refunding Bonds, Series 2016-B (Electric Utility
Distribution System Refunding) and Revenue Refunding Bonds, Series 2016-C
(Electric Utility Distribution System Refunding) (Taxable) of the Anaheim Housing
and Public Improvements Authority; (ii) approving the forms and authorizing the
execution of an Installment Purchase Agreement, an Indenture of Trust, Escrow
Agreements, a Continuing Disclosure Agreement, a Purchase Contract and other
related documents; (iii) approving the delivery of an Official Statement; and (iv)
approving certain actions in connection therewith.
Brian Beelner, Public Utilities Assistant General Manager Finance & Administration,
provided background information that the City's public utility provided water and electricity to
over 100,000 households and served over 350,000 residents and 15,000 businesses
ranging from world-class entertainment and tourist attractions to critical medical facilities to
small, family-owned businesses. He explained this required a significant investment in
capital infrastructure with the utility already having invested approximately $1.2 billion in
electric and water infrastructure to serve customers. Mr. Beelner explained the Utility used a
variety of funding mechanisms, such as low-interest rate, tax-exempt municipal bonds for
large-scale, long-lasting infrastructure projects. He advised that bonds issued by the
Utilities Department do not impact the City's general fund.
Mr. Beelner explained the proposed action would allow the City and Authority to take
advantage of low interest rates to continue ongoing bond strategy by refinancing older, more
expensive debt to reduce future interest payments, shortening the term of existing debt by
approximately three years, investing in new infrastructure to support the growing city, and
Housing & Public Improvement Authority Minutes of September 13, 2016
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replacing outdated or aging water and electrical infrastructure to improve reliability. He
explained that bonds were used to more equitably spread the cost of improvements to
customers over the 30 year life of the constructed infrastructure in lieu of current customers
subsidizing future customers by bearing the full financial burden of the projects. Widely
used throughout the utility industry, the issuance of bonds is a financial strategy that allows
rates to remain low and stable without sacrificing the capital needed to operate. Mr. Beelner
explained that credit rating agencies had affirmed the city's current credit ratings based on
its use of and access to bonds and current interest rates were near an all-time low, which by
refinancing three existing electric bonds would provide projected savings to the city of
approximately $80.5 million.
In addition to refinancing existing debt, Mr. Beelner explained staff was proposing the
issuance of $145 million in electric and water bonds to pay for much needed replacement of
aging infrastructure including wires, transformers, switches, and substation improvements
on the electric side and replacement of seven to eight miles of water pipe each year, the
rehabilitation and expansion of the water treatment facility, and the construction of deep,
high -efficiency wells. He continued that by accessing low-interest bonds the Utilities
Department was able to maintain service levels and competitive rates that benefited
Anaheim residents and businesses. He highlighted plans for the current fiscal year, as
follows: approximately $100 million on electric infrastructure improvements and upgrades
primarily on substations, wires, poles, transformers and underground conversions; over $5
million for the Solar for Schools program to install solar panels at school sites, providing
shaded carports and contributing to the 50% renewable energy target mandated by the
State for 2030; and expansion and rehabilitation of the water treatment facility near Oak
Canyon to allow the city to purchase untreated water from the Metropolitan Water District at
50% less cost than treated water.
Mr. Beelner explained that of the projected $225 million for planned electric infrastructure,
$129 million would be funded through bonds and on the water side, $60 million of the
planned spending of $73 million over the next three years would be provided by bonds. He
concluded the proposed bond issuance would support high quality service by the Utilities
Department at competitive prices given the highly regulated industry, would take advantage
of the current market environment to refinance existing debt, and would save customers
approximately $80 million.
In response to Authority Member Vanderbilt, Mr. Beelner explained there was a short
window for selling the bonds based on the current state of the utility and the city before
information became stale and investors would be less interested. Dukku Lee, Public Utilities
General Manager, explained the department periodically met with credit rating agencies to
review revenue outlooks, usage outlooks, technological issues in the industry, and
legislative matters to make sure the numbers and projections were still accurate. Mr.
Beelner then confirmed for Authority Member Vanderbilt that Council had previously
authorized the refinancing of 2007 bonds, only a portion of which occurred due to market
conditions, which is why staff was seeking re -authorization.
Chairman Tait shared his concerns about the overall debt of the city and utility but
recognized the majority of this proposal was refinancing existing debt to save roughly $80
million in interest costs which was approximately $40 million in present value. He expressed
his belief that while this would add to overall debt, the benefits of cost -savings and system
reliability outweighed his concern and he offered his support stating it a prudent way to
move forward.
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Authority Member Murray thanked staff for their advanced planning to continue providing
sustainable resources to residents while keeping rates low.
MOTION: Vice Chair Kring moved to approve Item No. 2-A, resolutions of the Anaheim
Housing and Public Improvement Authority, seconded by Authority Member Brandman.
Approved Vote: 5-0.
MOTION: Mayor Pro Tem Kring moved to approve Item No. 2-13, resolutions of the City
Council, seconded by Council Member Brandman. Approved Vote: 5-0.
ADJOURNMENT: There being no further business, Chairman Tait adjourned the meeting of
the Anaheim Housing and Public Improvements Authority at 7:49 P.M.
Rctfully submitted,
Linda N. Andal, CMC
Secretary, Anaheim Housing and Public Improvements Authority