5.1 ERMUSR 07-10-2018 - Laserfiche WebLink

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Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Theresa Slominski, Finance and Office Manager MEETING DATE: AGENDA ITEM NUMBER: July 10, 2018 5.1 SUBJECT: Bond Sale Resolution ACTION REQUESTED: Adopt,by motion,Resolution No. 18-9 providing for the competitive negotiated sale of$10,000,000 Electric Revenue Bonds, Series 2018A,and request that the City Council sell the 2018A Electric Bonds in August 2018,per the attached resolution. BACKGROUND: As mentioned in my June staff update, we are moving forward with our final payment buy-in to the Minnesota Municipal Power Agency(MMPA) by bonding this year, and we are estimating another$10 million. We have been working with our financial consultants, Springsted,to bring the sale information forward this commission meeting. DISCUSSION: Due to the determined funding date to MMPA of September 28, 2018, along with summer schedules and holidays, it was necessary to start the process a month earlier to ensure timely funding, and so things are moving faster than originally communicated. As stated last month, a projected final buy-in amount will be provided July 12,2018 from MMPA. To accommodate our commission meeting on July 10, 2018, we have the resolution worded for an anticipated amount of$10 million with an authorization to modify upon receipt of final numbers July 12,2018. Springsted has provided information on the 2018A bonding for $10 million. Given the City of Elk River is the qualified entity to issue bonds,the resolution must be approved by the City Council to be effective. We have the necessary resolutions for the Utility Commission and City Council to act upon in order to authorize the sale of these bond issues. Successful action from the Utility at the July 10,2018 meeting would bring it before the City Council on July 16,2018 for action. The resolutions are attached for your review. The award of the bonds by the Utility Commission would come back for a special meeting to be held on August 29, at 3:00 p.m. Thank you in advance for your flexibility to accommodate this special meeting! FINANCIAL IMPACT: We have been planning for this migration to MMPA for several years now. In 2013 we joined MMPA and entered into agreement to purchase power from them starting October 2018 (when our agreement with Connexus/GRE ends). At that time we estimated approximately 10% lower purchase power costs with MMPA, and estimates ran last year approximated 8% lower costs. 2017 purchased power costs were $25 million, so that is an estimated savings of$2 million at 8%. Our 2016A bond payments are an average of$680,000 with a 20 year term, and we are Page 1 of 2 48