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Home My WebLink About2001 02 12 Regular D City Manager Authorizations .;. '\> COMMISSION AGENDA ITEM D REGULAR xx CONSENT INFORMATIONAL February 12, 2001 Meeting MGR()lM IDEPT '-/- ~ Autl1orization REQUEST: The City Manager requests that the City Commission authorize the City Manager to: 1) Issue, as soon as possible, no more that $2.5 million in bonds for the Tuscawilla Lighting and Beautification District Special Assessment District and, 2) Refinance, as soon as possible, the Water and Sewer Revenue Bonds Series 1991 and, 3) Refinance, when the percent savings reaches 6% or more, the Water and Sewer Revenue Bonds Series 1992 PURPOSE: Authorization to move forward now with financing will allow the City and its Citizens to take advantage of the current interest rates by: 1) obtaining permanent funding for the TLBD construction and, 2) the refinancing of the Water and Sewer System Series 1991 debt. Authorization to move forward with refinancing for the Water and Sewer System Series 1992 debt when the percent savings reaches 6% or more will allow the City and its Citizens to take advantage of the favorable interest rates at that time as evidenced by the percent savings criteria. CONSIDERATIONS: TLBD Financing . Originally, the TLBD financing was going to consist of a 5 year bond anticipation note (BAN), and then bonds for the remaining period to be issued at a later point in time. However, due to the decrease in interest rates, it now appears favorable to forego the BAN and issue long bonds instead. . Two potential options exist for the TLBD Financing - we can either fund a "Cash Reserve Account" or obtain a "Surety Bond" for the reserve. The Surety Bond would be the more favorable choice; however, we may not be able to obtain one. Therefore; two TLBD scenarios are presented for the Commission's review: . TLBD Long Term Bonds-Cash For Reserve Account ~ Par Amount of Bonds $2,445,000. ~ Level Payments of approximately $160,000 per year through 2029. ~ True Interest Cost of approximately 5.20%. T~ TO . TLBD Long Term Bonds-Surety Bond for Reserve Account );> Par Amount of Bonds $2,275,000. );> Level Payments of approximately $152,000 per year through 2029. );> True Interest Cost of approximately 5.20%. Water and Sewer Revenue Bonds - Series 1991 · The call date of the Series 1991 W&S bonds is not until July 2001; however, through the use of a "forward refunding" we can proceed now with the refinancing and obtain a present value savings of $604,000 or a percent savings of 10.45%. This equates to an annual savings of $45,368. . Par Amount of Bonds $5,780,000. . Interest rates on Series 1991 bonds is 6.3%-6.75% -- Interest rates on the refinancing would be 3.87%-5.0%. . Maturity date not extended. Water and Sewer Revenue Bonds - Series 1992 · The call date of the Series 1992 W&S bonds is not until January 2002. This issue could be refinanced now through the use of a forward refunding; however, the present value savings of $665,691 is only a percent savings of 4.94%. This equates to an annual savings of$35,161. Because this refunding is so far out, the cost of the forward premium draws down the potential interest savings. . Par amount of bonds $13,475,000. · Interest rates on Series 1992 bonds is 5.4%-6. 125%--Interest rates on the refinancing would be 3.97%-5.25%. . Maturity date not extended. FUNDING: Costs of issuance paid from bond proceeds. Debt service paid from assessments and Water and Sewer System Revenues, respectively. See attachment for sources and uses. RECOMMENDATION: TLBD Financing It is recommended that the Commission authorize the City Manager to proceed with the TLBD financing using a team of: . Gardnyr Michael (senior manager), Hanifen Imhoff and William R. Hough & Co. . Allocation will be 60% (senior manager) and 20% for each co-manager. Water and Sewer Refinancing - Series 1991 and 1992 Note that if the W&S 1991 and 1992 refinancings are able to go at the same time (ie. the 1992 refinancing meets the threshold of the 6% or greater criteria) then we would be able to issue one Official Statement for both instead of two separate ones. If this is the case then we would only need only one team as recommended below in the Series 1991 and 1992 option. Hanifen Imhoff is recommended as the senior manager for both issues if they go together at the same time. If this is the case then William R. Hough & Co. would be up next for any future issue as senior manager. ;', " Series 1991 and 1992 It is recommended that the Commission authorize the City Manager to proceed with the Water and Sewer refinancing using a team of: . Hanifen Imhoff (senior manager), Gardnyr Michael and William R. Hough & Co.. . Allocation will be 60% (senior manager) and 20% for each co-manager. Series 1991 Alone It is recommended that the Commission authorize the City Manager to proceed with the Water and Sewer 1991 refinancing using a team of: · Hanifen Imhoff (senior manager), Gardnyr Michael and William R. Hough & Co.. Allocation will be 60% (senior manager) and 20% for each co-manager. Series 1992 Alone It is recommended that the Commission authorize the City Manager to proceed with the Water and Sewer 1992 refinancing using a team of: · William R. Hough & Co. (senior manager), Hanifen Imhoff and Gardnyr Michael. Allocation will be 60% (senior manager) and 20% for each co-manager. ATTACHMENTS: Book - TLBD Financing Alternatives and W &S Refunding Opportunities COMMISSION ACTION: I I I I I I I I I I I I I - i I v~.wV" oJ! ~"" & "'~ . i 'I' 1:' ...'.l ;.' .."" SO} '""'~. !.,'~~.~ .::,i.~V ,"' '.. .\ 1/' . "~~.,~.,,l .. ,.I,\ii ., \,' ~::-'~\ ,,,,,,!~"'~::i .~I ,.' " ,'.., , .,.\[' ". ";;;'.1 ial t:r'" ..:. :1111 III ';1 ~ w"u . ...' ..." 'Po. =:'1~ 1) 'Vf ';,:'( 0-1!Bl!!:'. ,'w~l .- ':~,;ffifil~.l!! ,~,p"m .... :)'~<1'.~~~----'::=~~I:"1- '.. ..' ..,.....--~..,."."""5 . :,.~ ,~;.. ~ ~I" City of Winter Springs, Florida TLBD Financing Alternatives and Water and 5 ewer Refunding Opportunities February 12,2001 I I I I I Public Financial Management Suite 720 201 South Orange Avenue Orlando, FL 32801-3470 407 648-2208 407-648-1323 fax ----- ~ ---------_._-- Summary of TLBD Financing TLBD Long Term Bonds - Cash for Reserve Account · Purpose - fund approximately $2.4 million in capital projects · Structure - Level payments of approximately $160,000 per year through 2029. · True Interest Cost (TIC) of approximately 5.200/0 (current market conditions) City of W!nter Springs, Florida SpecialAssessmentBonds,.Series2.001 ..'~:. . Allocatibnof Funds. . Sources . . Par Amount of Bonds Discoun t Existing Collections & prepay~ents Total Sources . $2,445,000:00 .~., . (20,814.35) . 325.000.00 . $ 2J59,185:65 Uses Project Fund Debt Service Reserve Interest Account Costs of Issuance & Undo Discount Bond Insurance Total Uses $ 2,408,000.00 .165,786.00 57,396.24 83,246.37 . 34.757.04 ..$.2,749,185.65 Cash in Debt Service Reserve Account . -=- dlPFM -- 1 -- --=- I.. _ _ _ _ I I. _ _ _ _ _ _ _ _ _ _ _ _ _ ~ Summary of TlBD Financing TLBD Long Term Bonds - Surety Bond for Reserve Account · . Purpose - fund approximately $2.4 million in capital projects · Structure - Level payments of approximately $152,000 per year through 2029. . True Interest Cost (TIC) of approximately 5.200/0 (current market conditions) Surety Bond instead of cash in Debt Service Reserve . City of Winter Springs, FIQrid~ Spe(:ial Assessment Bonds; Series 2001- Allocation ofFunds'::"~':~ .' . Sources . . Par Amount of BOIl cis .' u .. Discount Existing Collectioris & prepaYOlents Total Sources ' , : " "'$ 2;275,000.O~ ., ,- (19,199.50)"_____ , 325.000.09. . $ 2,~80,800.50 Surety Bond for . Debt S~rvice R.ese;rve' decreases . . amoupt borrowed. Uses Project Fund Debt Service Reserve (Surety Bond) Interest Account - . Costs of Issuance & Unde Discount . Bond Insurance Total Uses $ 2,408,000.00 4,630.94 53,343.23 . 82,567.98 32.258.35 . . $ 2,580,800.50 ' -~ -- E5j!'FM a;:= -.;_ 2 I II .111 IIIIII _ _ ------------- Summary of Financing Water and Sewer Revenue Bonds - Series 1991 ~ . Forward refunding of Series 1991 Bonds - Closing in July 2001 - PV Savings - $604,000 - Percent Savings - 10.450/0 -. .;'--:i . .' Series 1991 Bond~. _,. ~ ~_' . > Par Amount of Series)-9.91Bonds Interest Rates on Series 19'91 Bonds' _:-. $.'5,780,00.0 . -6.:300/0--':: 6:750/0 Series 2001 Bonds --- -~ . Par Amount of Series 2001 Bonds Interest Rates on Series 2.001 Bonds Total Savings . Annual Savings , Present Value Savings- Percent Savin s $6,140,000 _ : _ .3.870/0 - 5.000/0 $ 952,740 $ 45,3 $ 604,079 10.450/0 . Present value savings and -. -p. - c-percenf savings"u ..-- -- .=:= PFl\l -- 3 -- ~=- 11111____----___ Summary of Financing Water and Sewer Revenue Bonds - Series 1992 c~ . Forward refunding of Series 1992 Bonds - Closing in January of 2002 - PV Savings - $665,691 - Percent Savings - 4.940/0 . ~, - - . . -p' -- -; .: Series 1992 Bonds -.', '~--- Par Amount Series 1992 Bonds- ; . Interest Rates on Series 1992 B6hds. .. - . - . -.', ,-- - ,. ,,- --. '. ".-, . - ..., - ... - ,. ., --"~ -. " -$ J3;475,Q09: 5.400/o~6: 125 Series 2001 Bonds' . Par Amount of Series 2001 Bonds . . . Interest Rates on Series 2001 Bonds Total Savings . ~. Annual Savings Present Value Savings Percent Savings . $14,060,000 3.970/0 - 5.250/0 $.685,645 $ 35;161 $ 665,691' 4.940/0 Present value _ sayings. and percent savings - ~ apg[ -- 4 ~=- ------------------- Interest Rate Trends 6.8 6.6 6.4 ... <; 6.2 ~ 6.0 :;; ~ 5.8 ... C 5.6 .... 5.4 5.2 Historical Interest Rates - 1998 to Present 30 Year Treasury and BBI 5.0 ~~~~.~~.A~A..........~ ~'l~' '(~. ."(~- iiS~- ~v '(~- .if~- ij.> .'l~- o,'(~' '(~. ii' 0['1" ~y:. -..... ii' :.;. ~'i:' ii' OJ' ii' -..... ~-.... ~).....; ,-".J :\Y t!.:, ~\.....o..;, '"r... ....~ '!t~1 ,,>\. ~~ .t:, ~.... \..." ....:..~...~ ,,~, ..ti' .".- ,-C ~ ...,~ ~~ ~{. ~~... .~ ,,0::> ,,' ,,~ ". 'i- ~ .." -r:- .~ " '" ,,- - 30 Yr. Treasury - BHI Interest rates have decreased much further for short term maturities than long term maturities. 6.00 5.50 5.00 qJ ... 4.50 ell ~ 4.00 3.50 3.00 Long~term interest rates arE3 approaching the'historicclows of ~. --e~~~y -1.998. --.-__,'_ ___ _,__--'-__~~____~_______.:._:..='__J Interest Rate Trends (past 12 months) 3 5 7 9 11 13 15 17 19 21 23 25 Years to Maturity -1/31/2001 -11/30/2000 7/31/2000 --=- =PFM Ii -- 5 -..e=-