AgdaPkt 2016-10-24 Closed and Joint SA PFA HHCC

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8.3.C. - Page 2 and 10.57%, respectively. The average annual debt service savings on the 2007 bonds are estimated to be approximately $105,000 per year for the 18 year life of the proposed bonds, which is equal to the remaining life of the 2007 Bonds. ANALYSIS The Financing Plan Staff recommends that the City hire the same financing team that successfully refinanced the 2006 Water Revenue bonds in 2015. The team would include William Euphrat Municipal Finance, Inc. as municipal advisor, Jones Hall as bond counsel, and Quint and Thimmig as disclosure counsel. The fees they have proposed are in line with what they charged on previous bond sales. Staff recommends conducting a competitive sale process, therefore an underwriter is not recommended to be hired at this time. The proposed refunding bonds would use the same legal structure used to sell the original bond issues and the 2013 and 2015 refunding bonds, and like all of the prior bond issues, would be offered for sale to underwriters pursuant to a sealed bid electronic auction. The City would sell the bonds to the underwriter that submits the bid with the lowest true interest cost, a measure of interest cost that takes into account the time value of money. Savings are driven by interest rate levels and the demand for the City's bonds on the day they are sold. The City's water enterprise bonds are rated Aa3 by Moody's Investors Service and AA- by Standard and Poors Corporation, which are considered strong credit ratings. Because good credit quality utility revenue bonds are in high demand at present, bidding demand can be expected to be robust for the bonds, although market conditions and competing bond sales on the day of the sale will influence the results of the sale. The City received eight bids for its 2013 water refunding bonds and four bids for its 2015 water refunding bonds. Net present value savings are total future savings that have been discounted into present (2017) dollars. Based on current interest rates, the 2007 bonds are expected to have NPV savings of approximately 14.8%. If, after bonds are priced, the best bid for the 2017 refunding bonds does not produce NPV savings of at least 3%, all bids will be rejected and the 2007 bonds will not be refunded. The following table shows present estimates of NPV savings and average annual savings. The NPV savings calculation has taken into account the costs of issuance and underwriter's discount, totaling approximately $309,300, which would be paid at the closing from the bond proceeds. Average NPV Savings NPV % Annual Savings 2007 Bonds $1,466,375 14.81% $105,000 The following chart tracks interest rates since March 2016 and shows that while rates have evidenced movement, they have not been particularly volatile during this period. The 2007 bonds are expected to retain material savings through the sale date.