AgdaPkt 2013-05-20 Closed Cancelled and Special

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7.B. - Page 3 budgeted for the July 15, 2013 2003 Bonds lease payment and the proceeds from the bank's purchase of the refunding lease to pay off the 2003 Bonds on July 15, 2013. Lease payments may not be prepaid prior to maturity. Given that this obligation will be completely paid off on July 2018, staff does not view the lack of prepayment option as problematic. Bond Documents Summary descriptions of the bond documents can be found in Attachment Three. Copies of the principal financing documents are on file with the City Clerk. Prior Council Actions This refunding was discussed with the Council Finance Committee (Council Members Jeff Ira, lan Bain, and John Seybert) at their February 25, 2013 meeting. The Committee approved the Finance Director's recommendation to explore refunding these bonds and to engage the public finance professionals to assist with the requisite analysis Council approved the Bank's commitment letter on May 6, 2013 and the City Manager executed the commitment letter on May 7tn The proposed financing is consistent with the direction provided by Administrative Policy No. 38, Debt Management Policy, Approved by Council March 26, 2007. Next Steps Financing documents will be executed subsequent to their approval by the Council. The closing is expected to take place on May 30, 2013. ALTERNATIVES The Council may reject staff's recommendation to refund the 2003 Bonds. In the event the City does not close the transaction, pursuant to a commitment letter it executed with the bank on May 7t", it has agreed to pay the bank out-of-pocket expenses incurred to date, bank legal expenses up to a $7,500 maximum and lending commitment breakage fees, which will depend on the cost to the bank of "unwinding" the funding transaction it made when the City accepted the terms of the commitment letter. FISCAL IMPACT The refunding will result in gross future debt service reductions of approximately $2.288 million and a reduction in annual future lease payments of approximately $282,000 which will benefit the Capital Outlay Fund. Net present value savings are approximately $257,000 (see above table). 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.