May 20 2010
Stone & Youngberg, a leading underwriter of California bonds, announced that it completed a $19.7 million renewable energy financing program for the City of Brea.
Under the terms of a contract with Chevron Energy Solutions, the City will use the proceeds of the financing program to install 1.8 megawatts of photovoltaic (PV) solar systems at three City facilities and various energy efficiency improvements, including HVAC and interior lighting upgrades at City-owned buildings. Additionally, proceeds of the bonds will fund City-wide street light energy efficiency upgrades. The City expects that the energy conservation program will reduce carbon emissions by about 40% at the three facilities with the new solar installations, in addition to providing annual cash flow savings for the City’s General Fund. In connection with the installation of photovoltaic systems, the City expects to receive approximately $4M in California Solar Initiative (“CSI”) incentives.
Stone & Youngberg served as underwriter and placement agent for the financing program, which included $12.7 million of Water System tax-exempt and Build America Bonds, $2.4 million of Lease Revenue Build America Bonds and $4.6 million of New Clean Renewable Energy Bonds.
“This financing program provides the City the means to complete the renewable energy program, reduce our carbon foot print, diminish our reliance on conventional energy sources and realize financial savings for the City”, said city manager Tim O’Donnell.
"Stone & Youngberg worked with the City and its team to come up with an innovative financing program. We were able to combine a number of moving parts into an approach that makes economic sense for the City,” said Bill Gallardo, the financial services director of the City of Brea.
“The City’s bonds were well received by investors,” said Jim Cervantes, managing director at Stone & Youngberg. “We were able to sell the two relatively small Build America Bonds series with flexible redemption features at rates that were comparable to much larger and more liquid issues. The inclusion of Build America Bonds and the Clean Renewable Energy Bonds in the financing program provided significant debt service savings to the City.”
Anna Van Degna, vice president at Stone & Youngberg added, “The City was able to take advantage of the recent changes to tax credit bond law in the 2010 Hiring Incentives to Restore Employment (HIRE) Act passed by Congress. These changes allowed the City to structure its New Clean Renewable Bonds as taxable bonds with a 62% interest subsidy. The inclusion of New Clean Renewable Energy Bonds and Build America Bonds into the financing program helped the City achieve an effective borrowing rate of 3.9% over the 25 year term of the financings.”
Source: http://www.syllc.com/