Bureau of Financial Services

Kenneth L. Rust, Director

1120 S.W. Fifth Avenue, Rm. 1250

Portland, Oregon 97204

(503) 823-5288

FAX (503) 823-5384

TDD 823-6868

CITY OF PORTLAND

OFFICE OF MANAGEMENT AND FINANCE

     Vera Katz, Mayor

Timothy Grewe, Chief Administrative Officer

 MEMORANDUM

TO:  Mayor Vera Katz

   Commissioner Jim Francesconi

   Commissioner Randy Leonard

   Commissioner Dan Saltzman

   Commissioner Erik Sten

   City Auditor Gary Blackmer

FROM:  Tim Grewe

DATE:  December 26, 2003

SUBJECT:  Ordinance Authorizing Water Revenue Bonds to Refund Outstanding Bonds and to Finance New Water System Improvements; Prohibits Use of Proceeds for Mt. Tabor Open Reservoir Project or Burial of Reservoirs

Attached is an Ordinance for first reading by Council on January 7, 2004. The Ordinance authorizes the issuance of Water System Revenue Bonds (the “2004 Water Revenue Bonds”) pursuant to City Charter Section 12-201. Under the City Charter, the proposed ordinance will be read at two consecutive Council meetings and, if approved upon second reading, will become effective 30 days later, unless referred by citizen initiative.

Proceeds of the 2004 Water Revenue Bonds will be used for the following purposes:

o  To provide $40 million for capital costs of the City’s Water System, as more fully described in Section 1.A.1 of the proposed ordinance. However, as provided in Section 1.B of the proposed ordinance, no portion of the proceeds of the 2004 Water Revenue Bonds may be used for the City’s Mt. Tabor open reservoir project, or for burial of any of the City’s existing open reservoirs.

o  To repay the Water Bureau’s outstanding line of credit.

o  To refund all or a portion of the City’s Water System Revenue Bonds, Series 1993.

o  To pay the estimated costs of obtaining credit enhancement, funding reserves and issuing the 2004 Water Revenue Bonds.

The Ordinance delegates to the Debt Manager certain tasks including establishing the final principal amounts, maturity schedules, interest rates, and other terms related to the sale of the bonds; applying for and purchasing municipal bond insurance, reserve sureties, or other reserve equivalents; and executing documents. The Ordinance also authorizes certain amendments to the Master Water Bond Ordinance.

Questions concerning this Ordinance may be addressed to Eric Johansen at 823-6851.