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8.A. - Page 5 of 51 February 1, 2024 ("'$43.1 million). $64,995,000 of the 2015 bonds are outstanding and all bear interest at 5.00%. These bonds may be redeemed at SVCW's option on or after August 1, 2025. The outstanding bonds would be redeemed with the proceeds of refunding bonds. Treasury regulations prohibit the use of tax-exempt bonds to refund outstanding tax-exempt bonds if the refunding bonds are sold more than 90 days before the first optional redemption date. Tax-exempt bonds cannot be used to refund any of the SVCW's outstanding revenue bonds. Taxable bonds, however, may be issued at any time to refund outstanding tax-exempt bonds. FISCAL IMPACT Refunding bond proceeds would be held in escrow and invested in federal securities until the first optional call dates, with the principal and interest on the refunding escrow used to pay interest on the refunded bonds until the call dates, at which time the escrow would be applied to redeem the outstanding bonds. The difference in interest rate between the refunded bonds and the escrow investment rate, combined with the length of time the escrow must remain in place until the first call date, measures the "efficiency" of the escrow. The longer the escrow, the lower the efficiency. In today's low interest rate environment, even the sale of taxable refunding bonds would provide financial benefit. A full refunding of both bond issues is estimated to reduce Redwood City ("RWC") debt service payments by approximately $278,000 annually, totaling $7.49 million in future value savings over the life of the bond issues. Measured in today's dollars, the refunding of the bonds would generate net present value savings of approximately $5.17 million. The following table breaks this down by bond issue and shows the escrow efficiencies: Savings to Redwood City 2014 and 2015 Bond Refundings ($ Millions) Bond Issue RWC Future Value Savings RWC Net Present Value Savings Percent of Refunded Bonds Escrow Efficiency 2014 $4.84 $3.36 11.6% 61% 2015 $2.65 $1.81 5.4% 37% Combined $7.49 $5.17 8.3% 50% ENVIRONMENTAL REVIEW This activity is not a project under California Environmental Quality Act (CEQA) as defined in CEQA Guidelines, section 15378, because it has no potential for resulting in either a direct or reasonably foreseeable indirect physical change in the environment. Page 5 of 6 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore 671