2015-36 PROVIDING FOR THE ISSUANCE OF GENERAL OBLIGATION BONDS

Home Browse Search

Item Coversheet Financial Management Financial Management Department 2015 - 09 DATE: 8/12/2015 TO: Honorable Mayor Moore -Wolfe and City Council Members FROM: Tim Gleason, City Manager Gregg D. Zientara, City Treasurer and Director of Finance Page 1 of 2 SUBJECT: Ordinance providing for the issuance of not to exceed $30,000,000 General Obligation Bonds to finance the expansion of the City's water supply by the dredging of Lake Decatur SUMMARY RECOMMENDATION: It is recommended that the City Council approve the attached Parameters Ordinance, which upon Council approval and passage, will authorize the City to issue 2015 Series bond debt, to finance the expansion of the City's water supply by the dredging of Lake Decatur. The General Obligation Bonds issued by authority of Council approval of this ordinance will be abated from the City tax levy in future periods with debt service payments to be made from the net revenues of the City's Water Utility. BACKGROUND: This ordinance will establish not to exceed financing parameters to be used as the maximum limits authorized for the financing offering to potential purchasers of the bonds. The parameters in the ordinance are as follows: Maximum Par Value $30,000,000 Maximum principal payment $ 2,125,000 Maximum coupon rate 6.0% Maximum maturity date March 1, 2035 Maximum call date March 1, 2025 Maximum annual levy $ 2,500,000 Minimum purchase price 98.0% of Par Value exclusive of OID if any The ordinance will authorize the issuance of twenty (20) year bonds up to a maximum of $30,000,000 of principal with an annual debt financing interest rate not to exceed 6.0%. The bonds will mature annually on March 1 with a final maturity date of March 1, 2035. The ordinance sets a maximum annual debt service principal amount of $2,125,000. The parameters as contained in this ordinance are within the financial projections as included in the City's Water pro -forma rate increase and debt service model, and therefore are covered by the water rate increases approved and enacted by Council in Ordinance 2013-20 dated April 1, 2013. This debt issue is the second debt issue associated with the Lake Decatur dredging initiative; the first debt issue was in April, 2014 (Council Ordinance 2014-04) with par value amount of $24,055,000. Proceeds from this second debt issue are expected to fund the dredging initiative from September / October 2015 through the balance of the 2015 dredging season and throughout the entire 2016 dredging season. The third debt issue will occur in Q1, 2017, with a fourth debt issue to follow likely in 2018. With this second debt issue, the City will have raised funds to finance approximately $49 million of the $90 million project. 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. PROJECT DESCRIPTION: There are no known objections to this ordinance request. INPUT FROM OTHER SOURCES: City Department of Water Management, Speer Financial, Inc., debt issuance financial advisor, Raymond James and Associates, Inc. underwriter, Chapman & Cutler, LLP, bond counsel http://decatur.novusagenda.com/AgendaWeb/CoverSheet.aspx?ItemID=199 8/17/2015