AgdaPkt 2011-12-12 - Laserfiche WebLink

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6.3.A. - Page 3 ANALYSIS The Bonds may only be redeemed on two dates, March 1, 2012 or September 1, 2012. Maximum savings will be achieved if the refunding bonds can be sold in time to effect a March 1, 2012 redemption. It is possible that there would be no savings if the refunding is delayed beyond March 1, 2012. The existing bonds mature on September 1, 2017. It is not expected that this date will be extended under the proposed refunding. Given current interest rates, it is expected that $6.355 million of refunding bonds will need to be sold to refund the $8.655 million of bonds that are currently outstanding. The Council Finance Committee was briefed on this matter at their November 14 meeting and indicated their support for this refunding and the financing team recommended by staff. ALTERNATIVES Financing Team The Council may reject staff's recommendation to engage the firms presented in this report to provide the professional services needed to successfully sell refunding bonds. Staff will need to obtain proposals from other firms since staff does not have the expertise to perform these functions. Obtaining proposals from other firms will delay the issuance of refunding bonds by up to two months without any guarantee that staff will be able to identify firms that can provide comparable services at less cost. A delay of this length will not allow a March 1, 2012 bond redemption and would necessitate delay of the refunding to September 1, 2012. FISCAL IMPACT If bonds are not sold, a$30,000 deposit with the City funded with surplus special taxes will pay for all non-contingent costs associated with preparing refunding bonds for sale. If bonds are sold, the deposit will be applied to the sources of funds necessary to refund bonds. The cost for each member of the financing team is as follows: Non-Contingent Fees: William Euphrat Municipal Finance, financial advisor' $ 5,000 Nossaman, bond counsel $ 12,500 City of Redwood City $ 12,500 Contingent Fees: City of Redwood City $ 12,500 1 The financial advisor's total fee is $45,000. Time and materials will be charged up to a maximum of $5,000 if the financing is abandoned. 2 Bond counsel's total fee is $50,000. Time and materials will be charged up to a maximum of $12,500 if the financing is abandoned. 3 The City's total fee will be $25,000. Time and materials will be charged if the financing is abandoned. $12,500 is an estimate of the amount that would be non-contingent.