Fiscal Note
Each piece of legislation that appropriates funds, creates position authority, or will create a financial impact through policy direction or otherwise, requires a fiscal note. The fiscal note should be drafted by department staff and should include all relevant financial information. After preparation by departmental staff, the Department of Finance will review and make necessary revisions before transmittal to Council.
|
Department: |
Contact
Person/Phone: |
DOF Analyst/Phone: |
|
Finance |
Joe McGovern 4-3675 |
Michael van Dyck 4-8347 |
|
Legislation Title: |
|
AN ORDINANCE relating to the electric system of The City of Seattle; authorizing the issuance of short-term debt in the principal amount of not to exceed One Hundred Twenty-Five Million Dollars $125,000,000 outstanding at any time to pay for or finance system expenses pending the receipt of system revenues; providing for the terms, conditions, covenants, security and manner of sale of such short-term debt; and describing the lien of such short-term debt relative to the lien of the outstanding municipal light and power revenue obligations of the City. |
|
Summary of the
Legislation: |
|
This ordinance authorizes the City
Light Department to secure a short-term credit facility of up to $125 million
to refinance the Department's debt to the City's Cash Pool. Due to the anticipated lower interest rate
on this facility, interest costs to the Department are expected to be
considerably lower than the cost of continuing to borrow from the Cash Pool. |
Appropriations (in $1,000’s):
|
Fund Name and
Number |
Department |
Budget Control Level* |
2002 Appropriation |
2003 Anticipated Appropriation |
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
* This is line of business for
operating budgets, and program or project for capital improvements
Notes:
Expenditures (in $1,000’s):
|
Fund Name and
Number |
Department |
Budget Control Level* |
2002 Expenditures |
2003 Anticipated Expenditures |
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
* This is line of business for
operating budgets, and program or project for capital improvements
Notes:
Anticipated Revenue/Reimbursement
(in $1,000’s):
|
Fund Name and
Number |
Department |
Revenue Source |
2002 Revenue |
2003 Revenue |
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
Notes:
Total Permanent Positions Created
Or Abrogated Through Legislation, Including FTE Impact; Estimated FTE Impact for
Temporary Positions:
|
Fund Name and
Number |
Department |
Position Title* |
2002 FTE |
2003 FTE |
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
* List each position separately
|
Do positions sunset
in the future? (If yes, identify
sunset date): |
|
|
|
Background (Include brief description which states the purpose and context of legislation and include record of previous legislation and funding history, if applicable): |
|
In 2000 and 2001, City
Light incurred unusually high power expenses as a result of the turbulence in
Western electricity markets. Since
revenues were not sufficient to cover operating expenses, City Light borrowed
funds on a short-term basis to cover its operating cash deficit. Short-term debt incurred by the Department
for this purpose included a loan of up to $110,000,000 from the City's
Consolidated (Residual) Cash Portfolio, which the City Council authorized in
Ordinance 120673 (December 10, 2001).
As of July 31, 2002, City Light's borrowing from the Cash Pool
amounted to $52 million. City Light's
need for short-term financing of its operating deficit is expected to
increase to about $124 million at the end of April 2003 as City Light repays
the balance of the principal amount of the Revenue Anticipation Notes that
were issued in 2001. City Light pays a financing charge to the Cash Pool at a rate equal to the monthly rate of return on the Pool. In recent months the rate of return on the Cash Pool has been about 5%. Tax-exempt interest rates in credit markets are considerably lower than 5%. City Light could therefore realize savings in interest expense and repay its debt to the Cash Pool by obtaining a credit facility from a financial institution at a lower rate of interest. Banks and other financial institutions have been asked to submit proposals for a credit facility of up to $125,000,000 (a loan, line of credit or other credit arrangement) which would address City Light's operating cash flow requirement over the period of anticipated cash flow deficit. The term of the credit facility would be two years, renewable for an additional two years. It is not possible to determine the actual savings at this time. However, a reasonable range would be $1.7 million - $2.5 million, depending on City Light’s actual deficit and market interest rates. Please see table below. While this ordinance authorizes City Light to secure a credit facility, final approval of the facility will require Council adoption of a separate resolution, which will contain actual terms and conditions. The Debt Management Policy Advisory Committee approved the proposed bank credit facility at its August 28th meeting. The enclosed draft ordinance was prepared by bond counsel, Foster Pepper & Shefelmen PLLC, and reviewed and approved by the City Attorney's office. |
|
MONTH |
ESTIMATED |
CITY CASH- |
BANK LOAN |
|
SAVINGS
COMPARED TO POOL |
|
|
|
|
DEFICIT |
POOL |
Interest Rate
Assumption* |
Interest Rate
Assumption |
|
||
|
|
|
|
Low |
High |
Low |
High |
|
|
|
|
5% |
1.7% |
3.5% |
|
|
|
|
02-Nov |
71,000,000 |
295,833 |
100,583 |
207,083 |
195,250 |
88,750 |
|
|
02-Dec |
77,000,000 |
320,833 |
109,083 |
224,583 |
211,750 |
96,250 |
|
|
03-Jan |
105,000,000 |
437,500 |
148,750 |
306,250 |
288,750 |
131,250 |
|
|
03-Feb |
89,000,000 |
370,833 |
126,083 |
259,583 |
244,750 |
111,250 |
|
|
03-Mar |
118,000,000 |
491,667 |
167,167 |
344,167 |
324,500 |
147,500 |
|
|
03-Apr |
124,000,000 |
516,667 |
175,667 |
361,667 |
341,000 |
155,000 |
|
|
03-May |
108,000,000 |
450,000 |
153,000 |
315,000 |
297,000 |
135,000 |
|
|
03-Jun |
88,000,000 |
366,667 |
124,667 |
256,667 |
242,000 |
110,000 |
|
|
03-Jul |
63,000,000 |
262,500 |
89,250 |
183,750 |
173,250 |
78,750 |
|
|
03-Aug |
54,000,000 |
225,000 |
76,500 |
157,500 |
148,500 |
67,500 |
|
|
03-Sep |
40,000,000 |
166,667 |
56,667 |
116,667 |
110,000 |
50,000 |
|
|
03-Oct |
45,000,000 |
187,500 |
63,750 |
131,250 |
123,750 |
56,250 |
|
|
03-Nov |
35,000,000 |
145,833 |
49,583 |
102,083 |
96,250 |
43,750 |
|
|
03-Dec |
34,000,000 |
141,667 |
48,167 |
99,167 |
93,500 |
42,500 |
|
|
04-Jan |
19,000,000 |
79,167 |
26,917 |
55,417 |
52,250 |
23,750 |
|
|
04-Feb |
4,000,000 |
16,667 |
5,667 |
11,667 |
11,000 |
5,000 |
|
|
04-Mar |
|
- |
- |
- |
- |
- |
|
|
TOTAL |
|
|
|
|
2,953,500 |
1,342,500 |
|
|
|
|
|
|
|
|
|
|
|
*Assumes tax exempt status |
|
|
|
|
|
||
|
The financial cost of not implementing the legislation (Estimate the costs to the City of not implementing the legislation, including estimated costs to maintain or expand an existing facility or the cost avoidance due to replacement of an existing facility, potential conflicts with regulatory requirements, or other potential costs if the legislation is not implemented): |
||||||||
|
|
||||||||
|
Possible alternatives to the legislation which could achieve the same or similar objectives (Include any potential alternatives to the proposed legislation, including using an existing facility to fulfill the uses envisioned by the proposed project, adding components to or subtracting components from the total proposed project, contracting with an outside organization to provide the services the proposed project would fill, or other alternatives): |
|
|
|
Is the legislation subject to public hearing requirements (If yes, what public hearings have been held to date): |
|
|
|
Other Issues (including long-term implications of the legislation): |
|
|
FOR CAPITAL PROJECTS
ONLY
|
Background (Include brief description that states the purpose and context of legislation, the expected useful life, anticipated customers/users, assumed level of LEED or other sustainable design elements. Also include record of previous legislation and funding history, if applicable): |
|
|
Project Name: |
Project Location: |
Start Date: |
End Date: |
|
|
|
|
|
Spending Plan and
Future Appropriations for Capital Projects (Estimate cost of legislation
over time; list timing of anticipated appropriation authority requests and
expected spending plan. Please identify
your cost estimate methodology including inflation assumptions and key
assumptions related to the timing of appropriation requests and expected expenditures. In addition, include the projected costs of
meeting the LEED Silver standard in all facilities and buildings with over
5,000 gross square feet of occupied space.
Also, be sure to include percent for art and percent for design as
appropriate):
|
Spending Plan and Budget |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
Total |
|
Spending Plan |
|
|
|
|
|
|
|
|
Current Year Appropriation |
|
|
|
|
|
|
|
|
Future Appropriations |
|
|
|
|
|
|
|
|
Key Assumptions: |
|
|
Funding source (Identify funding sources including revenue generated from the project and the expected level of funding from each source):
Funding Source |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
Total |
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
|
|
|
Bond Financing Required (If the project or program requires financing, please list type of financing, amount, interest rate, term and annual debt service or payment amount. Please include issuance costs of 3% in listed amount):
Type |
Amount |
Assumed Interest Rate |
Term |
Timing |
Expected Annual Debt Service/Payment |
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
|
Uses and Sources for Operation and Maintenance Costs for the Project (Estimate cost of one-time startup, operating and maintaining the project over a six year period and identify each fund source available. Estimate the annual savings of implementing the LEED Silver standard. Identify key assumptions such as staffing required, assumed utility usage and rates and other potential drivers of the facility’s cost):
O&M |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
Total |
Uses |
|
|
|
|
|
|
|
Start Up
|
|
|
|
|
|
|
|
On-going
|
|
|
|
|
|
|
|
Sources (itemize) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Assumptions: |
|
|
Periodic Major
Maintenance costs for the project (Estimate
capital cost of performing periodic maintenance over life of facility. Please identify major work items,
frequency):
|
Major Maintenance Item |
Frequency |
Cost |
Likely Funding Source |
|
|
|
|
|
TOTAL |
|
|
|
|
Funding sources for replacement of project (Identify possible and/or recommended method of financing the project replacement costs): |
|
|