Title
Resolution authorizing an Independent, Credentialed, Third-Party Review of the 2008 Pittsburgh Water and Sewer Authority Variable Rate Bond Swap Deal and 2006 bond refinancing at a cost not to exceed fifteen thousand dollars ($15,000) and providing for the payment thereof.
Whereas, in 2008 the Pittsburgh Water and Sewer Authority (PWSA) sold $320m in variable rate bonds; and
Whereas, these bonds exposed PWSA ratepayers to at least the following areas of risk:
• Variable Rates
• Annual renewal of Liquidity Facility
• Bankruptcy
• SWAPs
• Credit rating of the SWAP providers
• SWAP providers failing to pay
• Credit Rating of the Bond Insurer; and
Whereas, the risk exposure is for each and every day for the life of the issuance; and
Whereas, Dexia Credit Local and JP Morgan have said that they would not extend their standby bond purchase agreements past the expiration date of June 11, 2009 causing potentially disastrous consequences for the authority; and
Whereas, the almost 2,000 pages of closing documents are opaque and too difficult for a reasonable citizen to fully comprehend; and
Whereas, the PWSA ratepayers deserve to know and understand fully the risk to which the Authority has exposed them; and
Whereas, the Board of the PWSA has refused to act on this matter;
Body
Be it resolved by the Council of the City of Pittsburgh as follows:
Section 1. The Controller of the City of Pittsburgh will craft and issue a Request for Proposals to hire an independent, credentialed, third-party reviewer to evaluate the 2008 Pittsburgh Water and Sewer Authority Variable Rate Bond Swap Deal and 2006 bond refinancing and complete the review by April 30, 2009 at a cost not to exceed fifteen thousand dollars ($15,000). The reviewer should have the training, experience and expertise to analyze and explain financial derivatives and interest rate SWAPs. Seventy-five hundred dollars ($7,500) to fund the review will be paid out of Year 2009 A...
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