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8.B. - Page 2 <br /> ANALYSIS <br /> Plan of Finance <br /> The 1999 Bonds can be efficiently refinanced (or "refunded") with lower interest cost <br /> bonds to produce lower debt service payments and aggregate net present value (NPV) <br /> savings. Net present value savings are total future savings that have been discounted <br /> into present (2015) dollars. NPV savings will depend on interest rates at the time <br /> refunding bonds are sold, but are presently estimated at approximately $655,222, or <br /> 8.45% of the amount of refunding bonds sold, nearly triple the Government Finance <br /> Officers Association (GFOA) recommended "best practices" 3% minimum NPV savings. <br /> The average annual debt service savings (future dollars) are estimated to be <br /> approximately $61 ,500 per year for the 15-year life of the proposed bonds, which is <br /> equal to the remaining life of the 1999 Bonds. <br /> The NPV savings calculation has taken into account and is net of the costs of issuance <br /> and underwriter's discount, which together total approximately $181,533, and which <br /> would be paid at the closing from the bond proceeds. <br /> The proposed refunding bonds will use the same legal structure used to sell the 1999 <br /> Bonds and the GE loan. The proposed refunding bonds will be secured by the Port's <br /> net revenues and will be on a parity basis with the GE loan. The bonds will be sold to <br /> Raymond James, which will then distribute the bonds to the public. <br /> ALTERNATIVES <br /> Not authorizing the Port to issue refunding bonds would require the Port to continue <br /> paying debt service on the 1999 Bonds. No savings would be realized. <br /> FISCAL IMPACT <br /> Limited Obligation — Revenue bonds issued by the Port are limited obligations of the <br /> City secured solely by the Net Revenues of the Port enterprise fund. The Port's assets <br /> are not pledged to the bonds, nor are they at risk in the event of default. Should the <br /> Port default on its bonds, bondholders may not force a liquidation of Port assets by <br /> accelerating the bonds and demanding payment in full. Under no circumstances is the <br /> City's general fund obligated to pay debt service on the bonds. <br /> Expected Debt Service Savings — Debt service on the proposed bonds will depend on <br /> the interest rate at the time the bonds are priced. Based on current interest rate <br /> estimates, the Port's annual debt service will be reduced, resulting in savings of <br /> approximately $61,500 annually. <br /> City Subvention Payment Subordinated to Bonds — In connection with the issuance of <br /> the 1999 Bonds the City agreed to subordinate to the 1999 Bonds and any parity bonds <br /> issued under the 1999 Bonds master indenture the annual subvention payment made <br /> by the Port to the City. The Port has successfully made this payment to the City every <br /> year since the issuance of the 1999 Bonds. The sale of refunding bonds will improve <br />