SALE AND ISSUANCE OF ELECTRIC REVENUE BONDS IN AN AMOUNT NOT TO EXCEED $53,930,000
The City is proceeding with the first phase of financing for the new thermal generation project for the Ames Municipal Electric Utility. The project includes the acquisition and installation of new reciprocating internal combustion engine (RICE) generation units and the related site, electrical, mechanical, and other improvements necessary to place the units into service.
The Series 2026D Electric Revenue Bonds are expected to provide $50,533,000 for RICE engine purchases and construction costs anticipated through approximately February 2028. In addition, the proposed issuance includes $827,000 for the underwriter’s discount, issuance costs, and rounding, resulting in a current estimated par amount of $51,360,000.
The maximum authorized principal amount is $53,930,000. The difference between the preliminary bond amount and the maximum authorized amount provides flexibility for changes in market conditions, final bond sizing, required reserves, issuance costs, and other financing adjustments that may occur before the bonds are sold.
The Series 2026D Bonds will be payable solely from the net revenues of the City’s Electric Utility. They will not be General Obligation Bonds and will not be supported by the City’s property tax levy. This issuance represents only the first phase of the financing plan for the thermal generation project. Any future financing phases will require separate City Council action.
On the morning of October 13, 2026, the City will accept competitive bids for the bonds in accordance with the terms of the offering documents. The City’s financial advisor, bond counsel, and staff will evaluate the bids. Following this review, staff will recommend that the City Council award the bonds to the bidder offering the lowest borrowing cost in accordance with the established bidding criteria.
A report summarizing the bids will be presented to the City Council that evening. The Council will then be asked to adopt a resolution accepting the best bid and authorizing the sale and issuance of the bonds to the successful bidder. Closing is anticipated to occur on October 29, 2026.
- Adopt the following resolutions as presented, authorizing the issuance of a not to exceed amount of $53,930,000 in Electric Revenue Bonds:
- Resolution providing for the issuance and securing the payment of future Obligations for the purposes of borrowing money for the City’s Municipal Electric Utility
- Resolution authorizing and approving a Loan Agreement and providing for the issuance of Electric Revenue Bonds, Series 2026D and other documents related to the Bonds
- Resolution providing for the issuance and securing the payment of future Obligations for the purposes of borrowing money for the City’s Municipal Electric Utility
- Do not approve the the required resolutions and provide staff with additional direction regarding the project’s financing.
The first phase of the revised financing plan will provide funding for the RICE engines and other project costs anticipated through approximately February 2028. Issuing the debt in phases allows the City to better align its borrowing with the project’s contractual payment schedule and anticipated cash-flow needs.
The proposed Series 2026D Bonds will be payable solely from the net revenues of the Electric Utility and will not be supported by the City’s property tax levy. Adoption of the resolutions will authorize the City to accept the bid providing the lowest borrowing cost and proceed with the Electric Revenue Loan Agreement and issuance of the bonds. Therefore, it is the recommendation of the City Manager that the City Council adopt Alternative No. 1, as described above.