Newport News clears up to $33m Waterworks refinancing

Newport News clears up to $33m Waterworks refinancingNewport News City Council has authorized up to $33 million in water revenue refunding bonds to refinance eligible outstanding Waterworks debt. The authority is contingent on achieving at least 3% net-present-value savings on the principal amount refunded.

Council approved Resolution 26-138 authorizing issuance of up to $33 million in water revenue refunding bonds.

Proceeds may refinance all or part of the city's 2016 and 2017 Water Revenue Refunding Bonds, plus other Water Revenue Bonds selected by the City Manager in consultation with the city's financial advisor.

The city will only complete a refinancing if it produces net-present-value savings of at least 3% of the related refunded principal.

The bonds would be secured by Waterworks system revenues, rather than the city's full-faith-and-credit taxing power.

Newport News City Council has authorized the issuance of up to $33 million in Water Revenue Refunding Bonds, giving Newport News Waterworks standing capacity to refinance outstanding debt if market conditions produce sufficient savings. The September 22 approval, Resolution 26-138, permits the city to refund and redeem all or part of its outstanding Water Revenue Refunding Bonds, Series 2016 and Series 2017. It also permits refinancing of other Water Revenue Bonds selected by the City Manager in consultation with the city's financial advisor, PFM Financial Advisors LLC. The authorization does not require an immediate transaction. According to the staff report, PFM conducts analyses of the city's outstanding bonds to identify refinancing opportunities. The city requires net-present-value debt-service savings of at least 3% of the principal amount of the bonds being refunded before proceeding. The resolution authorizes either a competitive or negotiated sale. The bonds may not be sold for less than 97% of principal, excluding underwriting compensation, and their true interest cost may not exceed 5%. The City Manager is authorized to establish maturities, interest rates, redemption terms and other transaction details within the resolution's parameters. Maturities cannot extend beyond the final fiscal year in which the refunded bonds are scheduled to mature. The resolution also permits the City Manager to determine whether the transaction requires a debt-service reserve fund. The refunding bonds would be backed by revenues from the Waterworks system, subject to operating expenses, as well as pledged funds and accounts established under the city's water bond resolution. The bond documents specify that the securities are not full-faith-and-credit general obligations of Newport News and do not carry a right to compel use of the city's ad valorem taxing power. Newport News Waterworks is the regional water provider for more than 410,000 people in Newport News, Hampton, Poquoson, York County and part of James City County. The refinancing authority provides a mechanism to restructure eligible Waterworks debt when the city's savings requirement can be met.