AgdaPkt 2012-06-18 Special - Laserfiche WebLink

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6.3. B. - Page 2 The 2000 Bonds may only be redeemed on an interest payment date, each March 1 and September 1. In order to maximize savings to the Owners, staff's objective is to refund the bonds in time to effect a redemption of the 2000 Bonds on their next interest payment date, September 1. (It is possible that there would be no savings if the refunding is delayed beyond this date.) To accomplish this, the refunding bonds must be sold and closed by August 2. Although the Council has already approved the sale of refunding bonds to redeem the 2000 Bonds, that bond sale was unexpectedly delayed due to Starwood's difficulties in extending its property loans. Because of the passage of time since the Council's last approval actions in January on this matter, bond counsel has determined that it would be advisable for the Council to approve a resolution acknowledging the delay and restating its intention to accommodate the Owners through the sale of refunding 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 4.6%. 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. Tonight's Actions Principal documents relating to the proposed refunding bonds were approved in substantially final form on January 9, 2012. The Council is being asked to acknowledge that the sale of bonds was delayed and to reaffirm its intention to sell refunding bonds to effect a September 1, 2012 redemption of the 2000 Bonds. With the exception of a new preliminary official statement that will be revised to reflect new property ownership information, all documents are on file with the City Clerk and are the same versions of those prepared in January of this year. Bond counsel and disclosure counsel have advised staff that the necessary updates to the preliminary official statement do not reflect material changes to the security underlying the proposed refunding bonds, and that it is not necessary for the City Council to re-approve the distribution of a revised preliminary official statement. That document will be revised and distributed after the Council's action tonight. Summary descriptions of all documents were included in the January 9, 2012 staff report, which is attached hereto for reference (Attachment 2). Future Actions No future action is required by the City Council. The bond sale is expected to take place in July and the 2000 Bonds to be redeemed on September 1, 2012.