AgdaPkt 2013-05-20 Closed Cancelled and Special

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7.A. - Page 4 indenture and installment purchase contract relating to the future termination of the reserve fund if such action is determined to be in the best interests of the PFA and the C ity. The proposed financing is consistent with the direction provided by Administrative Policy No. 38, Debt Management Policy, Approved by Council March 26, 2007. Future Capital Needs The Community Development department does not see an advantage to increasing the size of this proposed bond issue to finance any capital projects at this time. Consequently, there is not a "new-money" component to the refunding plan. Should longer term capital requirements exceed the enterprise's ability to fund capital improvements on a pay-go basis, projected debt service coverage is sufficiently high that the enterprise should be able to sell additional debt at that time. At current interest rates every $1 million of required project funding will add approximately $75,000 of annual debt service expense for 30 years. Refunding of the 2006 and 2007 bonds will be evaluated periodically, and if economical, could be combined with a future "new- money" funding component to address future capital needs. Bond Documents A summary description of the bond documents can be found in Attachment Three. The indenture of trust, the installment purchase contract, the official notice of sale and the continuing disclosure certificate are on file in the City Clerk's office and available for your review. The preliminary official statement, which is the primary disclosure document, is of particular importance for a legislative body to review and is attached to this staff report as Attachment Six. Next Steps A competitive sale of bonds is scheduled for June 5, 2013 and the bond closing is scheduled for June 20, 2013. No further actions on the part of the City Council are required. ALTERNATIVES The Council may reject staff's recommendation to sell refunding bonds to refinance outstanding bonds, in which case no debt service savings will be realized. FISCAL IMPACT This bond issue is expected to reduce debt service on the 2005 Bonds by approximately $127,500 annually. Staff will continue to monitor the economic feasibility of refunding the 2006 and 2007 water enterprise bonds and may present refunding opportunities to the Council again over the next several years. ENVIRONMENTAL REVIEW This activity is not a project under CEQA as defined in CEQA Guidelines, section 15378, because it has no potential for resulting in either a direct or foreseeable physical change in the environment.