2018-16 Providing the Issuance of not to excee $29,000,000 General Obligation Bonds, Series 2018, for Dreding of Lake Decatur and New Fire Stations

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Item Coversheet Page 1 of 2 5ra1-Zv18 Financial Management DATE: 5/14/2018 MEMO: Letter to the Decatur City Council Financial Management Department#2018-04 TO: Honorable Mayor Moore Wolfe and City Council Members FROM: Tim Gleason,City Manager Gregg D.Zientara,City Treasurer&Director of Finance SUBJECT: Ordinance providing for the issuance of not to exceed$29,000,000 General Obligation Bonds,Series 2018,to finance expansion of the City's water supply by the dredging of Lake Decatur,the building and equipping of three new fire stations for the City and the prepayment of certain outstanding obligations of the City,authorizing designated officials to sell said bonds by the execution of one or more notifications of sale,providing for the levy and collection of a direct annual tax sufficient to pay the principal and interest on said bonds and authorizing the sale of said bonds to Raymond James&Associates,Inc. 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 2018 Series bond debt,to finance the expansion of the City's water supply by the dredging of Lake Decatur, to finance the construction of three new fire stations, and to finance the prepayment of the outstanding Busey Bank obligations related to the rehabilitation of four fire stations. That portion of the General Obligation Bonds issued by authority of Council approval of this ordinance for dredging 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. Debt Service related to that portion of the General Obligation Bonds issued for construction of new fire stations and for the refunding of the outstanding Busey Bank obligations will be paid from the City tax levy. BACKGROUND: This ordinance will establish not to exceed financing parameters to be used as the maximum limits authorized for the financing offering to Raymond James&Associates.The parameters in the ordinance are as follows: Maximum Par Value $29,000,000 Maximum principal payment $ 2,600,000 Maximum coupon rate 6.0% Maximum maturity date March 1,2038 Optional call date not later than March 1,2028 Maximum annual levy $ 2,700,000 Minimum purchase price 98.0%exclusive of OID The ordinance will authorize the issuance of twenty(20)year bonds up to a maximum of$29,000,000 of par value principal with an annual debt financing interest rate not to exceed 6.0%. The bonds will mature annually on March 1 with a maximum final maturity date of March 1,2038.The ordinance sets a maximum annual debt service principal amount of$2,600,000. 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 fourth 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; the second debt issue was in September, 2015 (Council Ordinance 2015-63)with par value of$23,305,000;the third debt issue was in November,2016(Council Ordinance 2016-70)with par value of$22,205,000. https:Hdecatur.novusagenda.com/AgendaWeb/CoverSheet.aspx?ItemID=1527 5/21/2018