2017-52 Ordinance Providing Issuance of General Obligation Refunding Bonds for the Sale of the Bonds to Raymond James & Associates

Home Browse Search

Item Coversheet Page 1 of 2 In Financial Management DATE: 10/8/2017 MEMO: Letter to the Decatur City Council Financial Management Department 2017-10 TO: Honorable Mayor Moore Wolfe and City Council Members FROM: Tim Gleason,City Manager Gregg Zientara,City Treasurer&Director of Finance SUBJECT: Ordinance providing for the issuance of not to exceed$6,800,000 of general obligation refunding bonds of the City, for the levy of taxes to pay the bonds and for the sale of the bonds to Raymond James&Associates,Inc. SUMMARY RECOMMENDATION: It is recommended that the City Council approve the attached Ordinance,which upon Council approval,will authorize the City to refund the 2008 Series bond debt,refinancing the old 2008 issued debt into new 2017 issued debt. The refinancing is projected to save the city $0.4 million in interest financing costs,at current rates,over the remaining seven(7) year life of the debt instrument.The 2008 Bonds will be called for redemption on December 15,2017.The 2017 refunding bonds will mature through December 15,2024,the final maturity of the 2008 Series bonds. The City will use the BrechnitzGroup as an agent for sale of bonds to investors,Raymond James&Associates as the underwriter; Speer Financial,Inc.as financial advisor;and Chapman and Cutler,LLP,as bond counsel. BACKGROUND: The 2008 Series bonds were issued by the City of Decatur on December 15,2008,to finance certain water utility and O1dTowne TIF projects. The projects funded with the proceeds of the 2008 Series bond included West Main Street and North Water Street rehab and streetscape; water utility projects including dam repairs, Lake Toco pump and pipe infrastructure, water main replacements and system improvements Current bond market conditions with low interest financing rates coupled with the 2008 Series Call Date of December 15, 2017, places the City in a favorable position to refund and refinance the 2008 Series debt. The following chart provides a summary of the key metrics affecting the City decision to refinance the debt issue.The numbers are preliminary and subject to finalization upon the date of bond sale. 2008 Series Old debt New debt Outstanding debt$ 6,435,000 6,135,000 Coupon interest rates 4.25%to 4.50% 3.00%to 4.00% Average interest rate 4.36% 2.309% Maturity date December,2024 December,2024 Payment dates June 15 Interest only Interest only December 15 Principal+interest Principal+interest Interest savings 455,355 Interest savings 412,483 (NPV) https:Hdecatur.novusagenda.com/AgendaWeb/CoverSheet.aspx?ItemID=1300 10/16/2017