$5.225 Million Electric System Revenue Refunding Bonds, Series 2014
The Bonds are being issued for the purpose of refunding, on a current basis, the 2014 through 2030 maturities of the City’s Series 2010A Taxable Electric System Revenue Bonds (Build America Bonds-Direct Pay). The City joins a number of other Wisconsin municipalities taking advantage of extraordinary redemption provisions to refund their direct-pay Build America Bonds (BABs). The BAB program originally offered a federal interest rate subsidy of 35%; however, those subsidy payments were reduced during last year’s federal sequestration budget cuts. A lesser reduction of 7.2% has been implemented for fiscal 2014. With sequestration cuts in place and a relatively low interest rate environment, the city could realize considerable savings refunding the BABs with tax-exempt debt.
The Series 2014 Bonds are payable only from and secured by a pledge of Net Revenues derived from the operation of the City’s Electric System. Furthermore, the City covenants to maintain Net Revenues sufficient to cover annual debt service at least 1.25x and show at least 1.25x coverage on any existing and proposed bond issues. The Bonds are also secured by a debt service reserve account, which shall be funded at the lesser of: (a) 10% of the proceeds of the Bonds, (b) maximum annual debt service on the Bonds in any future Bond Year; and (c) 125% of average annual debt service on the Bonds. Total revenue bond debt service coverage after tax equivalent transfers was 1.40x in fiscal year 2013. The Bonds are non-rated.
The City of Black River Falls, with a 2010 U.S. Census population of 3,618 and a current estimated population of 3,600, comprises an area of 1,699 acres and is located approximately 130 miles southeast of the Minneapolis-St. Paul metropolitan area.