AgdaPkt 2012-01-09 - Laserfiche WebLink

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8.A. - Page 2 Since the inception of the CFD, there have been no delinquencies in the payment of special taxes. On December 12, 2011 the Council approved the appointment of the financing team that will be preparing the documents for this transaction and selling the Bonds. ANALYSIS Refunding bonds are typically sold to take advantage of lower interest rates and reduce debt service payments. The Government Finance Officers Association's (GFOA) "Best Practice" recommendation is that a refunding generate cash flow savings with a net present value ("NPV") (i.e., have value in current dollars) equal to at least three percent of the amount of refunding bonds issued in order to justify the expenditure of resources necessary to implement the refunding. NPV savings estimates based on current interest rates are approximately six percent. However, there can be no assurance that current rates will hold until the refunding bonds are sold and that savings of this magnitude will be achieved. The 2000 Bonds may only be redeemed on the dates March 1 and September 1. 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 this date. It is anticipated that not more than $6.9 million of bonds will need to be issued to refund the existing outstanding bonds. The first installment of taxes received in December and the current debt service reserve fund will be used to retire outstanding 2000 Bonds and reduce the refunding bond issue size. The proposed refunding calls for the final payment on the refunding bonds to be made in September 2016 which is one year earlier than the final payment scheduled for the 2000 Bonds. TONIGHT'S ACTIONS Principal documents relating to the proposed refunding bonds are substantially complete. The Council is being asked to approve those documents in substantially final form in order to allow staff to implement the sale of refunding bonds. With the exception of the preliminary official statement, which is attached, all other documents are on file with the City Clerk. Summary descriptions of all documents are included as an attachment to this staff report (Attachment 2). The resolution staff recommends that the Council approve will authorize the underwriter to distribute the preliminary official statement. The resolution also provides that the refunding bonds may be sold if the following conditions are met: the principal amount of the total bonds issued in connection with the refunding does not exceed $6.9 million, the underwriter's discount does not exceed 0.9% of the par amount of refunding bonds sold, and the NPV savings are equal to or greater than the GFOA's best practice minimum of three percent of the amount of refunding bonds issued. The requested bond authorization is larger than the estimated preliminary bond size to allow for changes to