20201117 Regular City Council Meeting - Packet (3) November 17, 2020
Item 10
Staff Presentation
BLX Group
Financial
Services
City Council Meeting
November 17, 2020
City Policy and Strategic Planning
➢ City policy drives projects that require financing
➢ Projects are brought forward under the
leadership of City Administration
➢ The role of any financial advisor is not strategic
planning, but financing projects as requested by
City Administration
Introduction to BLX Group
➢ Municipal Securities Rulemaking Board (MSRB)
registered municipal advisor
➢ Over 2,500 local government clients nationwide
� Consulting and advisory services on over two trillion of
debt, investments, and derivatives transactions
Representative clients — State of California, City of Los
Angeles, County of Los Angeles, City of San Francisco
� Assigned Vernon team — over 85+ years of relevant public
finance experience
BLX Group LLCs Services
� November 5, 2003 BLX was engaged by the City to
provide various financial advisory, consulting, and
research services related to the City's debt and capital
financing plans and/or transactions. Specific projects,
assignments, and tasks requested of BLX by the City were
at the City's discretion
� BLX had performed financial services for the City
previously in connection with the Malburg Generating
Station
August 2, Soso BLX was part of consultant team
assembled by Eric Fresch to "explore non-traditional
methods to raise capital for the Light and Power utility"
Projects
Natural Gas Prepay Transaction
Aimed to reduce Vernon's exposure to long-term
fluctuations in the gas market and manage the gas needs
for the Malburg Generating Station
� In line with long-term strategy of providing reliable
electricity, in terms of supply and price, to the business
community
Assumed that gas price would remain highly volatile
over the next several years
Projects (cont . )
Power Purchase Tolling Agreement (PPTA)
BLX advised the City (i.) on the potential impact of the
MGS sale and PPTA on the City's credit rating; (2) worked
with City management to analyze the impact of the PPTA
on the electric utility's long term financial forecast
Kern County
� BLX aided the City with credit rating transactions after
the purchase of Kern County land
Barclays Capital was financial advisor for sale of
Tehachapi land to NextEra Energy in February 2010
Vernon Utilities Department Historical
Resource Procurement Plan and Credit
Risk Management Policy
Resolution 7296 adopted by City Council on March 30, lggg established brokerage accounts to enable
the Vernon Utilities Department to trade in electricity commodity futures and options on futures
Resolution 7489 adopted by City Council on February 15, 2000 named allowable transactions that the
Utilities Department could use to meet the objective of low-cost energy at low-to-moderate risk
included:
Y Futures
➢ Forwards
➢ Swaps
➢ Contracts for differences
➢ Options
➢ Market position management
Per the notes to the financial statements (FYs 2000 & 2008) the City was actively engaged in financial
instruments as part of its hedging activity in the electric and gas utilities
Conclusion
➢ Projects are brought forward under the
leadership of City Administration and require
financing
The role of any financial advisor is not to provide
expertise in commodity trading or strategic
planning, but financing projects as requested by
City Administration