Aug 27, 2026 Utilities Commission - Special Meeting - Revised

[00:00:02]

UH, GOOD EVENING EVERYONE.

UH, WELCOME TO THE PUBLIC

[CALL TO ORDER]

IT'S THURSDAY, AUGUST 27TH.

UH, WE'RE GOING TO, UH, RUN THROUGH THIS, UH, THIS MEETING QUICKLY BEFORE WE GET TO THE, TO THE, UH, UH, SPECIAL PRESENTATION, THE PROP TWO 18, UH, FOLLOWING THIS MEETING.

SO IF YOU'LL JUST INDULGE US FOR A FEW MINUTES.

UM, THIS MEETING IS NOW CALLED THE ORDER.

IF WE COULD PLEASE HAVE TY SANG LEAD US IN

[PLEDGE OF ALLEGIANCE]

PLEASE STAND AND STATE THE FLAG PLEDGE.

I PLEDGE ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA AND YOU, THE REPUBLIC FOR WHICH HE STANDS, ONE NATION UNDER GOD, INDIVISIBLE, WITH LIBERTY JUSTICE FOR ALL.

THANK YOU, TY.

DINA, MAY WE PLEASE

[ROLL CALL]

PRESENT VICE PRESIDENT CORDERO.

HERE.

SECRETARY PARKIN.

HERE.

COMMISSIONER MCGUIRE HERE.

COMMISSIONER AUSTIN HERE.

THANK YOU.

WE HAVE A QUORUM.

THANK YOU.

UH, WE'VE GOT

[1. 26-55918 Recommendation to adopt Resolution No. UT-1567, authorizing the issuance and/or incurrence of City of Long Beach, California Senior Gas Revenue Short Term Obligations from time to time in the form of a Revolving Line of Credit with Wells Fargo Bank N.A. in an aggregate principal amount not to exceed $60,000,000 outstanding at any one time; approving a master senior indenture, a first supplemental senior indenture, a credit agreement, a fee agreement, and certain related documents; and authorizing the general manager to execute all related documents.       Suggested Action: Approve recommendation. ]

UH, WE ARE GOING TO, UH, I'LL READ EACH OF THE ITEMS, UH, BUT WE HAVE A SINGLE PRESENTATION, UH, THAT WE'RE GOING TO HEAR, UH, AND THEN EACH OF THE ITEMS WILL BE VOTED ON SEPARATELY.

UH, SO ITEM NUMBER ONE WILL BE ADOPT RESOLUTION NUMBER UT 1 5 6 7, AUTHORIZING THE ISSUANCE AND OR INCURRENCE OF CITY OF LONG BEACH, CALIFORNIA SENIOR GAS REVENUE SHORT-TERM OBLIGATIONS FROM TIME TO TIME IN THE FORM OF A REVOLVING LINE OF CREDIT WITH WELLS FARGO BANK AND A, IN AN AGGREGATE PRINCIPLE AMOUNT NOT TO EXCEED $60 MILLION OUTSTANDING AT ANY ONE TIME APPROVING A MASTER SENIOR INDENTURE, A FIRST SUPPLEMENTAL SENIOR INDENTURE A CREDIT AGREEMENT, A FEE AGREEMENT, AND CERTAIN RELATED DOCUMENTS, AND AUTHORIZING THE GENERAL MANAGER TO EXECUTE ALL RELATED DOCUMENTS.

AGENDA ITEM NUMBER TWO

[2. 26-55919 Recommendation to adopt Resolution No. UT-1568, authorizing the issuance and/or incurrence of City of Long Beach California Senior Sewer Revenue Short Term Obligations from time to time in the form of a Revolving Line of Credit with Wells Fargo Bank N.A. in an aggregate principal amount not to exceed $45,000,000 outstanding at any one time; approving a fourth supplemental senior indenture, a credit agreement, a fee agreement and certain related documents; and authorizing the General Manager to execute all related documents.       Suggested Action: Approve recommendation. ]

MAY I PLEASE HAVE A MOTION AND A SECOND ON ITEM NUMBER ONE AND NUMBER TWO, MOTION TO APPROVE.

SECOND.

ALRIGHT, THANK YOU COLIN.

GERALD DEJO FOR THE PRESENTATION.

GOOD EVENING COMMISSIONERS.

EVENING TODAY WE ARE PRESENTING TWO AGENDA ITEMS. SO ONE FOR THE PROPOSED REVOLVING LINE OF CREDIT FOR THE GAS FUND AND THE OTHER FOR THE PROPOSED LINE OF CREDIT FOR THE SEWER FUND.

FIRST I'LL START WITH A BRIEF OVERVIEW.

THE LINES OF CREDIT WILL PROVIDE FOR INTERIM TAX EXEMPT FINANCING, WHICH ALLOWS FOR THE UTILITIES DEPARTMENT TO DRAW ON THE LINES OF CREDIT TO ADDRESS CRITICAL INFRASTRUCTURE NEEDS.

FUNDS WILL BE AVAILABLE OVER A THREE YEAR PERIOD WITH INTEREST ONLY PAYMENTS DUE ON ACTUAL AMOUNTS DRAWN WITH THE LINES OF CREDIT.

WE WILL BE INCREMENTALLY DRAWING DOWN ON FUNDS AS EXPENDITURES OCCUR.

SO THIS IS AS OPPOSED TO ISSUING LONG-TERM DEBT ON THE FRONT END, UM, AND PAYING THE FULL, UH, AMORTIZED COST FROM THE START.

THIS FINANCING STRATEGY SUPPORTS THE BROADER OBJECTIVE AS HIGHLIGHTED IN THE INFOGRAPHIC TO THE RIGHT, WHICH USES DEBT MANAGEMENT AS A MEANS TO BALANCE INFRASTRUCTURE NEEDS WITH UTILITY RATE STABILITY.

CONTINUING WITH THE LINE OF CREDIT OVERVIEW, THIS SLIDE PROVIDES A SPECIFIC TERMS FOR EACH FUND.

THE GAS LINE OF CREDIT WILL NOT EXCEED 60 MILLION AND THE SEWER LINE OF CREDIT WILL NOT EXCEED 45 MILLION FOR GAS PROCEEDS WILL SUPPORT PIPELINE REPLACEMENT, CATHODIC PROTECTION, AND OTHER CRITICAL FACILITY NEEDS.

AND FOR SEWER, THE FINANCING SUPPORTS PIPELINE AND LIFT STATION IMPROVEMENTS, INCLUDING PLAN PROJECTS BEING ADVANCED AHEAD OF THE 2028 OLYMPICS.

BOTH LINES HAVE A THREE YEAR TERM ENDING IN SEPTEMBER, 2029 AND WILL BE USED TO REIMBURSE CAPITAL EXPENDITURES INCURRED ON OR AFTER MARCH 14TH, 2026.

THERE IS A ONE-TIME COST ASSOCIATED WITH ESTABLISHING EACH OF THE LINES, WHICH WILL BE ABSORBED WITHIN CURRENT BUDGETED RESOURCES IN FISCAL YEAR 26.

ANNUAL FEES WILL BE SUBJECT TO THE ACTUAL AMOUNTS UTILIZED AND THE VARIABLE INTEREST RATE.

SO AT MINIMUM, ASSUMING NO FUNDS ARE DRAWN, THE ANNUAL FEE IS ESTIMATED AT 152,000 FOR GAS AND 114,000 FOR SEWER.

AND THIS FEE WILL BE ASSESSED ON THE UNUSED PORTION OF OUR LINES, THE MAXIMUM ANNUAL FEE.

SO

[00:05:01]

THIS SLIDE PROVIDES AN OVERVIEW OF THE CAPITAL IMPROVEMENT SPENDING PLAN FOR EACH FUND.

THIS PLAN AS WELL AS THE DEBT STRATEGY WAS INCORPORATED INTO THE FINANCIAL PROJECTIONS PRESENTED DURING OUR FISCAL YEAR 27 BUDGET PLANNING SESSIONS.

THE TABLE SHOWS ANTICIPATED SPENDING AND TIMING, WHICH DIFFERS BETWEEN THE TWO FUNDS WITH SEWER HAVING A PARTICULARLY SIGNIFICANT NEED IN FISCAL YEAR 27.

THE LINE OF CREDIT PROVIDES US THE ABILITY TO MATCH OUR BORROWING MORE CLOSELY WITH ACTUAL PROJECT EXPENSES THAN BEGINNING IN FISCAL YEAR 29 AT THE CLOSE OF THE LINE OF CREDIT.

SO WHEN THE LINE OF CREDIT MATURES, THE PLAN IS TO REFINANCE THE LINE OF CREDIT WITH LONG-TERM BONDS TO SUPPORT THE REMAINING MULTI-YEAR CAPITAL PROGRAM.

SO OUR FOR, FOR OUR PROJECTED DEBT COVERAGE RATIO, WHICH INCLUDES THE LINE OF CREDIT.

UM, THIS FIRST SLIDE HERE IS FOR GAS.

UH, THE DEBT SERVICE COVERAGE IS A KEY FINANCIAL BENCHMARK THAT IS CONSISTENTLY TRACKED BY OUR DEPARTMENT AS WELL AS CREDIT RATING AGENCIES.

AND AT MINIMUM, EACH FUND MUST GENERATE NOT NET OPERATING REVENUES SUFFICIENT TO FUND 125% OR 1.25 TIMES ITS DEBT COVERAGE.

THE EXTRA 25% IS AVAILABLE IN CASE OF ANY FLUCTUATIONS IN EXPENSE AND REVENUES.

THIS AND THE NEXT SLIDE, UH, SHOWS OUR PROJECTED DEBT SERVICE COVERAGE FOR EACH FUND, ASSUMING THE SAME FIVE YEAR OPERATING PROJECTIONS PRESENTED AS PART OF OUR FISCAL YEAR 27 BUDGET PLANNING SESSIONS WITH UPDATED ESTIMATES FOR THE ANNUAL COSTS ASSOCIATED WITH THE LINE OF CREDIT, AND THEN LATER, UM, IN FY 29, THE ISSUANCE OF LONG-TERM BONDS.

AS A NOTE, THESE ESTIMATES DO ASSUME OUR ESTIMATED MAXIMUM ANNUAL FEE, ASSUMING A FULL DRAWDOWN, SO IT IS THE, UH, CONSERVATIVE APPROACH TO ASSESSING OUR DEBT COVERAGE RATIO.

THE PROJECTED DEBT CUR DEBT SERVICE COVERAGE RATIO IS HIGHLIGHTED IN BLUE AT THE BOTTOM OF THIS SLIDE.

AND FOR GAS FUND, THIS IS WELL ABOVE OUR 1.25, UH, COVERAGE FOR SEWER FUND.

WE ARE ALSO ABOVE OUR 1.25 TIMES DEBT COVERAGE, WHICH ALSO INCLUDES COVERING OUR SENIOR 2016 A BONDS, WHICH ARE SCHEDULED TO RETIRE IN FISCAL YEAR 36.

SO IN THIS CASE, AS WELL AS IN THE GAS FUND, THE PROJECTED DEBT COVERAGE RATIO INDICATES THAT THE CAPITAL FINANCING PLAN IS FINANCIALLY SUSTAINABLE IN THE LONG, LONGER TERM, EVEN WHEN ASSUMING OUR, UH, ESTIMATED MAXIMUM ANNUAL COST.

AND AS WE COME TO A CLOSE OF THIS PRESENTATION, I DO WANNA HIGHLIGHT THE FINANCING TEAM WHO WORKED WITH THE UTILITIES DEPARTMENT TO STRUCTURE THE AND DOCUMENT THE FINANCING TERMS AGREEMENTS, AS WELL AS ALL OF OUR CLOSING REQUIREMENTS.

UH, WE HAVE THE CITY OF LONG BEACH'S FINANCIAL MANAGEMENT DEPARTMENT, TREASURY BUREAU, WHICH INCLUDES JESSE ORTEGA, TREASURY OPERATION OFFICER WHO JOINS ME TODAY, TAC ROCK, OUR BOND COUNCIL, OUR MUNICIPAL ADVISOR CAN AND PUBLIC FINANCE.

AND FINALLY, WELLS FARGO BANKING AS WELL AS THEIR COUNSEL, CHAPMAN AND CUTLER.

FOUR NEXT STEPS FOLLOWING BOARD CONSIDERATION TODAY.

THE NEXT STEP WILL BE CITY COUNCIL APPROVAL.

THIS WEEK WE DID RECEIVE WORD THAT THE COUNCIL MEETING DATE HAS BEEN SHIFTED BY THE CITY FROM SEPTEMBER 15TH TO SEPTEMBER 22ND.

AND WITH THAT CHANGE, THE CLOSING DATE HAS ALSO SHIFTED FROM THE 22ND TO THE 29TH.

SO IMMEDIATELY AT CLOSING, THE LINES WILL BE AVAILABLE FOR UTILITIES TO DRAW DOWN TO SUPPORT OUR CAPITAL EXPENDITURES INCURRED DURING FISCAL YEAR 26.

IN CLOSING, THE TWO RECOMMENDATIONS PRESENTED TO THE BOARD TODAY IS FIRST TO ADOPT RESOLUTION NUMBER UT 1 5 6 7 AUTHORIZING THE ISSUANCE AND OR INCURRENCE OF THE CITY OF LONG BEACH, CALIFORNIA SENIOR GAS REVENUE SHORT-TERM OBLIGATIONS FROM TIME TO TIME IN THE FORM OF A REVOLVING LINE OF CREDIT, WOULD WELLS FARGO BANK IN THE AMOUNT NOT TO EXCEED 60 MILLION? AND AGENDA NUMBER TWO, TO ADOPT RESOLUTION NUMBER UT 1 56 8 AUTHORIZING THE ISSUANCE AND OR INCURRENCE

[00:10:01]

THANK YOU, GERALDINE, ARE THERE ANY PUBLIC COMMENTS? SEEING NONE, MOVE ON TO COMMISSIONER COMMENTS.

ANY COMMISSIONER COMMENTS, SIR? GERALDINE, THANK YOU VERY MUCH.

UM, COUPLE OF QUESTIONS.

IN THE, UM, MASTER SENIOR TRUST AGREEMENT IN DENTURE FOR THE GAS FUND REVENUE, IT, IT SETS UP A FUNDING, UH, DEBT SERVICE.

IS THAT, SO IT'S, CAN YOU JUST, IT'S A WATERFALL ON HOW WE ARE OB OBLIGATING OURSELVES BY AGREEING TO THIS ON REPAYMENT OF THIS DEBT.

SO, UH, IN THE MASTER INDENTURE, UM, IT DOES SET UP THE USE OF FUNDS.

SO, UM, OVERALL THE MASTER INDENTURE, UH, SETS UP OUR ENTIRE FRAMEWORK FOR DEBT.

AND SO IT DOES SPECIFY, UH, THE WATERFALL, UM, AS YOU PUT IT, OF FUNDS AND OUR USE OF FUNDS.

OKAY.

AND THEN ONE THING THAT YOU SAID, WHEN WHEN WE GO TO FIND TO CHANGES FROM A LETTER OF CREDIT TO LONG-TERM BONDS IN FY 29, WOULD WE JUST BE REFINANCING WHAT WE BORROWED UNDER THE LETTER OF CREDIT OR ARE YOU ANTICIPATING WE WOULD TAKE OUT ADDITIONAL FUNDS FOR FUTURE CAPITAL IMPROVEMENTS? AT THIS TIME, THE, UH, PLAN IS TO REFINANCE WHAT WE BORROWED.

UM, AND, UH, AT THAT POINT TOO, AND AS WE GET CLOSER TO MATURITY, UH, WE WILL ALSO HAVE TO ASSESS, UH, THE TOTAL AMOUNT THAT WE WILL HAVE TO FINANCE.

SO WHETHER THAT INCLUDES ADD, HAVING ADDITIONAL FUNDS, UH, SHOULD OUR UPDATED FIVE YEAR PROJECTION OR A FIVE YEAR CAPITAL PLAN, UH, BE CHANGED, SO OKAY.

AND THEN BE EVALUATED.

THEN THE LAST QUESTION IS HOW, WHEN DO YOU START LOOKING AT REFINANCING TO THE LONG TERM BONDS? LIKE IT SEEMS LIKE IT TAKES A LONG TIME ALMOST IMMEDIATELY, OR WHAT, UM, WE WOULD START, SO, UM, AS WE WERE WRAPPING UP THE LINE OF CREDIT AND GETTING TO THIS POINT TODAY, UM, I DID NOTE THAT THIS WOULD BE SOMETHING THAT WE WOULD START TO HAVE TO WORK ON ALMOST IMMEDIATELY.

SO A LITTLE BIT OF BREATHING ROOM, BUT, UM, THERE ARE GOING TO BE CERTAIN QUESTIONS THAT WILL NEED TO WAIT OR ARE PENDING CLOSER TO MATURITY DATE.

SO THAT DOES INCLUDE, UM, OUR EACH FUND'S FISCAL POSITION AS WELL AS, UM, JUST THE MARKET ENVIRONMENT AS WELL.

OKAY.

AND THEN JUST THANK YOU FOR ALL YOUR WORK ON THIS.

IT'S, I MEAN, IT'S A LOT OF WORK AND, AND IT SEEMS LIKE GAS, THE $60 MILLION IS THE WAY I READ THE LETTER.

WE ARE ESTIMATING 1.5 MILLION, MAYBE OUR PAYMENT IN OUR THIRD YEAR.

SO MAYBE 40 MILLION OF THAT, 35 MILLION OF THAT WE IS WHAT CONSERVATIVELY WE'RE ESTIMATING, BORROWING NOT THE WHOLE 60 OR DO YOU SEE US YOU MAYBE USING THE ENTIRE 60.

SO THE 60 MILLION THAT IS, UM, AND FOR, AND THE 45 MILLION RIGHT.

REPRESENT OUR, REPRESENTS OUR MAX BORROWING CAPACITY.

SO HOW MUCH WE WILL ACTUALLY DRAW DOWN WILL BE DEPENDENT ON ACTUAL RATE OF SPEND AND, UM, PROJECT TIMELINES.

SO, UM, WITH THAT, UM, OUR NUMBERS, OUR FIGURES THAT WE HAVE, UM, TODAY AND ALSO, OR WHAT IS LISTED AS OUR ANNUAL COSTS THAT WE HAVE, UH, ESTIMATED AS PART OF OUR MULTI-YEAR PROJECTION, UM, THOSE ALIGN MORE CLOSELY TO THE, UH, FIRST, AT LEAST FOR THE FIRST THREE YEARS.

WELL, SO IT MAKES SENSE TO DO THE LETTER OF CREDIT TO SEE WHAT, HOW MUCH, INSTEAD OF BORROWING THE ENTIRE AMOUNT UPFRONT.

ABSOLUTELY.

THAT IS THE, UH, ONE OF THE BENEFITS OF A LINE OF CREDIT.

IT DOES PROVIDE THAT FLEXIBILITY.

PERFECT.

THANK YOU.

THANK YOU SECRETARY PARKIN.

ANY OTHER COMMISSIONER COMMENTS? OKAY, GREAT.

UH, SO WE'VE GOT A MOTION ON ITEM, UH, NUMBER ONE, ADOPT RESOLUTION NUMBER UT 1 5 6 7.

UH, THIS IS A RESOLUTION, SO WE NEED A ROLL CALL VOTE.

DINA, MAY WE HAVE A ROLL CALL? VOTE FOR AGENDA ITEM NUMBER ONE.

UH, VICE PRESIDENT CORDERO? YES.

SECRETARY PARKING? YES.

COMMISSIONER MCGUIRE? YES.

COMMISSIONER AUSTIN? YES.

PRESIDENT SCOTT.

AYE.

THANK YOU.

THANK YOU.

AND ITEM NUMBER TWO, ADOPT RESOLUTION NUMBER UT 1 5 6 8.

WE HAVE A MOTION AND A SECOND.

MAY WE PLEASE HAVE A ROLL CALL? VOTE VICE PRESIDENT CORDERO.

YES.

SECRETARY PARKIN.

AYE.

COMMISSIONER MCGUIRE? YES.

COMMISSIONER AUSTIN? YES.

AND PRESIDENT SCOTT.

AYE.

THANK YOU.

THANK YOU VERY MUCH BOTH OF THE RESOLUTIONS.

PASS, UH, MOVING ON TO PUBLIC COMMENT.

THANK YOU,

[PUBLIC COMMENT Opportunity to address the Utilities Commission on non-agenda items. Each speaker is limited to three minutes to make their comments unless extended by the Board.]

UH, MOVING ON TO PUBLIC COMMENT.

IS THERE ANYONE WISHING TO SPEAK ON A NON AGENDA ITEM? GREAT.

[00:15:01]

ARE THERE ANY ANNOUNCEMENTS?

[ANNOUNCEMENTS]

UH, SO IN THAT CASE, UH, THE SPECIAL MEETING FOR THIS EVENING

[ADJOURNMENT]

I BELIEVE WE WILL TAKE JUST A FEW MINUTES.

OH, WELL I GUESS, UH, WE'VE GOT ABOUT 14 MINUTES.

13 MINUTES.

UH, RECESS, UH, BEFORE WE BEGIN THE PROP TWO 18 HEARING, THANK YOU.