Title
Resolution Making Certain Findings and Determinations, Authorizing the Filing of an Application With the Local Government Commission, Requesting the Local Government Commission to Sell Bonds at a Private Sale and Approving the Financing Team in Connection With the Issuance of Revenue Refunding Bonds by the City
Body
Department: Finance and Legal
Council District: All
Public Hearing: No
Advertising Date/By: N/A
Contact 1 and Phone: Richard Lusk, Finance Director, 373-2077
Contact 2 and Phone: Tom Carruthers, City Attorney, 373-2320
PURPOSE:
To authorize the issuance and sale of up to $37.0 million Water and Sewer Combined Enterprise System Revenue Refunding Bonds in May 2015 to refinance certain outstanding bonds to a lower rate of interest. The bonds will be issued subject to City Council authorizing application to the Local Government Commission requesting their approval of the issuance of these bonds.
BACKGROUND:
The proposed bond issue consists of refinancing $35.8 million in outstanding bonds to a lower interest rate, in the aggregate, to reduce debt service costs over the next 14 years. The City will refinance $25.8 million fixed rate bonds issued in 2007, maturing in 2029, with an average interest rate of 4.8%, and convert $10.0 million of the City's $70.7 million variable rate bonds, maturing in 2021, to fixed rate bonds. The variable rate bonds are being refinanced to reduce the City's variable interest rate exposure, in consultation with bond rating agencies. This will maintain the percentage of outstanding variable rate bonds below the City's 30% maximum debt policy objective. Based on current market rates we expect to sell the refunding bonds at an average net interest rate of 2.5%. Debt service savings are projected to exceed $3.0 million over the remaining 14-year term of the bonds.
The revenue refunding bonds will be issued pursuant to a supplemental trust agreement with U.S. Bank (bond trustee) and a bo...
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