AgdaPkt 2013-05-06 - Laserfiche WebLink

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6.2.C. - Page 2 million) to be released and be utilized by the City to essentially reduce future annual debt service costs. The City sent requests for private placement proposals to eight banks and received three expressions of interest. BBVA Compass Bank submitted the most attractive proposal, which the City's financial advisor evaluated against the likely savings that would accrue (if bonds were sold at the time of the analysis) with a public sale of refunding bonds. Due to the lower issuance costs associated with a private placement, the NPV savings associated with the BBVA Compass Bank proposal exceed the likely savings the City might realize with a public sale. Based on current rates, the private placement with BBVA Compass Bank continues to have better economics than those projected with a public sale of refunding bonds. ANALYSIS The refunding will be accomplished pursuant to a lease of the City's fire station located at 755 Marshall Street, which presently serves as one of the leased assets for the 2003 Lease Revenue Bonds. The other 2003 Lease Revenue Bonds leased assets (the Red Morton Community Center and adjacent park facilities and the City's Main Library and adjacent parking lot) will be released from the lien of the 2003 Lease Revenue Bonds estate. The Bank will buy a leasehold interest in a refunding lease on the 755 Marshall Street fire station in amount sufficient to pay off all of the outstanding 2003 Lease Revenue Bonds, and the new lease will be substituted for the prior lease. The terms and conditions of the new lease have been negotiated with the Bank and final documents have been submitted to the City Attorney's office for review prior to the Council's consideration at its next meeting on May 20, 2013. Council Finance Committee The potential benefit of undertaking a refunding of the 2003 Lease Revenue Bonds was presented to the Council's Finance Committee at its February 25, 2013 meeting, at which time the committee directed staff to present this matter to the full Council for consideration at a subsequent date. Prior Council Actions On March 25, 2013 the Council approved the retention of William Euphrat Municipal Finance, Inc. as financial advisor and Nossaman, LLC as bond counsel to provide professional support for this transaction. Requested Action The Council's authorization to execute the commitment letter will lock in the interest rate on the refunding lease at a spread of 1.02 percentage points over a financial index published by the US Treasury known as the 3-Year London Interbank Overnight Rate (LIBOR) Swap Index. The effective rate will be set as of the date the City executes the commitment letter, which is expected to be May 7. If NPV savings are less than 3% of the principal amount of the refunding lease (approximately $98,000), the City Manager will not sign the commitment letter. Executing the commitment letter will also bind the City to its terms and obligate the City to pay certain Bank expenses if the transaction