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Home My WebLink About2002 03 25 Regular A Financing Alternatives COMMISSION AGENDA ITEM A REGULAR X CONSENT INfORMATIONAL M~rch ?S, ?On? Meeting MGR ~ IDEPT A lIthori7}ltion REQUEST: City Manager Requesting the City Commission Review the 3 financing Alternatives for the Oak Forest Special Assessment District Bank Note and Authorize Staff to Proceed with the Financing Recommendation From the City's Financial Advisor. PURPOSE: The purpose of this agenda item is to present to the City Commission the 3 financing alternatives proposed by the City's financial advisor for the Oak Forest Special Assessment District Bank Note and authorize the related financing recommendation in an effort to ensure that the City is negotiating the best possible structure on behalf of the assessment residents. CONSIDERATIONS: The City currently has an outstanding bank note with Bank of America related to the capital financing for the Oak Forest Special Assessment Project. This note was issued in June of2000 and matures in June of2005. The note was structured to pay interest only on a semi-annual basis with a balloon payment due at maturity. However, prepayments of principal are being made as capital assessments are collected during this 5-year timeframe. The balance on the note currently is $610,907. The capital assessments were structured to be received over a 30 year period therefore it is necessary to consider alternative financing means as assessment collections. are slated to occur over a 25 year period beyond the date the balloon payment is due. 3/25/2002 Commission Agenda Item A Regular Page 2 Our Financial Advisor, David Moore, with Public Financial Management, has prepared the attached memo that outlines 3 possible options and his related recommendation along with 2 schedules that support his position. RECOMMENDATION: The City's financial advisor is recommending that the City maintain the existing note with the Bank at a 4.67% interest rate and at maturity (June 1,2005) either renegotiate with the bank to extend if rates are favorable, or have the City of Winter Springs payoff the note and in turn be repaid by assessment collections over time. ATTACHMENTS: Memo from David Moore PFM with financing alternatives and recommendation. Bond Debt Service Schedule - Capital Improvement 30-year note Bond Debt Service Schedule - 2002 Bonds to Replace 2000B Bank Note COMMISSION ACTION: Suite 720 201 South Orange Avenue Orlando. FL 32601-3470 407 646-2206 407-646-1323 fax www.pfm.com -- .-=- -=== P .t'M ===== '===- 'Public Fin.Ulci~1 M.lf1o~~'Jo(;IYICt1t -- '" - 1-I\o....I~J;I,..I'(: 11".',r..:.ln".JO. ....st....;.,. I ":'. March 15,2002 Memorandum To: Louise Frangoul, Director of Finance From: David Moore cc: Ron McLemore, City Manager Re: City of Winter Springs Oak Forest 2000B Capital Improvement Note Public Financial Management has prepared an analysis to determine alternative financing options for the Oak Forest capital improvements. The City currendy has a Capital Improvement Revenue Note, Series 2000B (the "2000B Note") to fund the improvements. The 2000B note was originally issued in June of 2000 for $723,262 and matures on June 1,2005. Due to the pledge of assessments over 30 years, the City would like to extend the amortization of the 2000B Note. To do this the City has three options: . Option 1: Let current note mature in 2005 and renegotiate with the bank at the maturity in June 2005. Bentjits - Preserve low 4.67% interest rate. Market rates have increased since the issuance of the 2000B Note. Risks - City is concerned about what will happen in 5 years at maturity. Exposure to interest rate risk. . Option 2: Renegotiate with the bank today to extend the note to have a 10-year maturity. Structure payments with a 30-year level amortization but have a balloon payment at maturity (10 years). At maturity, the City could enter into a new 10-year note with the same structure or retire the note with City funds. The City would reimburse itself with assessment payments. Bentjits - Get 30-year amortization payment levels. Risks - The bank may not issue a 30-year note. Therefore, at the end of each 10-year period we must renegotiate with the bank and the City is exposed to interest rate risk. . Option 3: Issue 30-year bonds secured by assessment proceeds. Bentjits - Get 30-year locked in payments and interest rates. Risks - Cost to City is high to issue approximately $600,000 in bonds. Also, the City's interest rate cost would be much higher than is currendy locked in on the Series 2000B Note. The debt service would increase by $180,000. City of Winter Springs Oak Forest 2000B Note Page 2 .....- '=PFM -- -- -- -- ~- Recommendation: The City should leave the existing note outstanding and extend the maturity in 2005 (Option 1). At the maturity of the note, the City could refinance with the bank or simply pay off the note and step in as the "bank" for the nominal remaining principal amount (approximately $600,000). Issuing traditional fixed rate obligations (Option 3) would be very expensive and complex because of the assessment structure. BOND DEBT SERVICE Capital Improvement Capital Improvement 30-year note Period Annual Ending Principal Interest Debt Service Debt Service 07/0 I /2002 01/0 I/2003 14,264.66 14,264.66 07/01/2003 11,018 14,264.66 25,282.66 39,547.32 o I/O I/2004 14,007.38 14,007.38 07/0 I/2004 II ,532 14,007.38 25,539.38 39,546.76 01/01/2005 13,738.11 13,738.11 07/0 I/2005 12,071 13,738,11 25,809.11 39,547.22 o I/O I/2006 13,456.25 13,456,25 07/0 I /2006 12,634 13,456.25 26,090.25 39,546.50 01/01/2007 13,161.25 13,161.25 07/0 I/2007 13,225 13,161.25 26,386.25 39,547.50 o I/O 1/2008 12,852.45 12,852.45 07/01/2008 13,842 12,852.45 26,694.45 39,546.90 01/01/2009 12,529.24 12,529.24 07/0 I /2009 14,488 12,529.24 27,017.24 39,546.48 01/01/2010 12,190.94 12,190.94 07/01/2010 15,165 12,190.94 27,355.94 39,546.88 01/01/2011 11,836.84 11,836.84 07/0 I/20 I I 15,873 11,836.84 27,709.84 39,546.68 o I/0I/201 2 11,466.20 11,466.20 07/01/2012 16,615 11,466.20 28,081.20 39,547.40 01/0 I /20 13 11,078.24 11,078.24 07/0 I/20 13 17,390 11,078.24 28,468,24 39,546.48 01/0I/2014 10,672.19 10,672.19 07/0I/2014 18,203 10,672.19 28,875.19 39,547.38 o I/O I /20 15 10,247.15 10,247.15 07/01/2015 19,053 10,247.15 29,300.15 39,547.30 o 1/0I/20 I 6 9,802.26 9,802.26 07/01/2016 19,942 9,802.26 29,744.26 39,546.52 0I/OI/2017 9,336.61 9,336.61 07/0I/2017 20,874 9,336.61 30,210.61 39,547.22 01/0 1/201 8 8,849.21 8,849.21 07/01/2018 21,849 8,849.21 30,698.21 39,547.42 01/01/2019 8,339.03 8,339.03 07/01/2019 22,869 8,339.03 31,208.Q3 39,547.06 0I/0I/2020 7,805.04 7,805.04 07/0I/2020 23,937 7,805.04 31,742.04 39,547.08 01/01/2021 7,246.11 7,246.11 07/0 I/2021 25,055 7,246.11 32,30 l.ll 39,547.22 01/01/2022 6,661.08 6,661.08 07/01/2022 26,225 6,661.08 32,886.08 39,547.16 01/01/2023 6,048.72 6,048.72 07/0 I /2023 27,450 6,048.72 33,498.72 39,547.44 01/01/2024 5,407,77 5,407.77 07/01/2024 28,731 5,407.77 34,138.77 39,546.54 01/01/2025 4,736.90 4,736.90 07/01/2025 30,073 4,736.90 34,809.90 39,546.80 01/01/2026 4,034.69 4,034,69 07/01/2026 31,478 4,034.69 35,512.69 39,547.38 01/01/2027 3,299.68 3,299.68 07/01/2027 32,948 3,299.68 36,247.68 39,547.36 01/01/2028 2,530.35 2,530.35 07/01/2028 34,486 2,530.35 37,016.35 39,546.70 Mar IS, 2002 2:43 pm Prepared by DBC Finance (Finance 4.420 Winter Springs:CAP _IMPR-02_NOTE) Page I BOND DEBT SERVICE Capital Improvement Capital Improvement 30-year note Period Annual Ending Principal Interest Debt Service Debt Service 01/01/2029 1,725.10 1,725.10 07/01/2029 36,097 1,725.10 37,822.10 39,547.20 01/01/2030 882.23 882.23 07/01/2030 37,783 882.23 38,665.23 39,547.46 610,906 496,411.36 1,107,317.36 1,107,317.36 Mar 15, 2002 2:43 pm Prepared by DBC Finance (Finance 4.420 Winter Springs:CAP _IMPR-02_NOTE) Page 2 BOND DEBT SERVICE Capital Improvement 2002 Bonds to Replace 20008 Bank Note Period Annual Ending Principal Interest Debt Service Debt Service 07/01/2002 01/01/2003 16,704.75 16,704.75 07/01/2003 15,000 16,704.75 31,704.75 48,409.50 01/01/2004 16,551.00 16,551.00 07/01/2004 15,000 16,551.00 31,551.00 48,102.00 01/01/2005 16,341. 75 16,341.75 07/01/2005 15,000 16,341.7 5 31,341.75 47,683.50 01/01/2006 16,092.75 16,092.75 07/01/2006 15,000 16,092.75 31,092.75 47,185.50 01/01/2007 15,821.25 15,821.25 07/01/2007 15,000 15,821.25 30,821.25 46,642.50 01/01/2008 15,526.50 15,526.50 07/01/2008 15,000 15,526.50 30,526.50 46,053.00 01/01/2009 15,216.00 15,216.00 07/01/2009 15,000 15,216.00 30,216.00 45,432.00 01/01/2010 14,892.00 14,892.00 07/01/2010 15,000 14,892.00 29,892.00 44,784.00 01/01/2011 14,559.75 14,559.75 07/01/2011 15,000 14,559.75 29,559.75 44,119.50 01/01/2012 14,220.00 14,220.00 07/01/2012 20,000 14,220.00 34,220.00 48,440.00 01/01/2013 13,758.00 13,758.00 07/01/2013 20,000 13,758.00 33,758.00 47,516.00 01/01/2014 13,284.00 13,284.00 07/01/2014 20,000 13,284.00 33,284.00 46,568.00 01/01/2015 12,800.00 12,800.00 07/01/2015 20,000 12,800.00 32,800.00 45,600.00 01/01/2016 12,306.00 12,306.00 07/01/2016 20,000 12,306.00 32,306.00 44,612.00 01/01/2017 11,802.00 11,802.00 07/01/2017 20,000 11,802.00 31,802.00 43,604.00 01/01/2018 11,288.00 1 1,288.00 07/01/2018 25,000 11,288.00 36,288.00 47,576.00 01/01/2019 10,638.00 10,638.00 07/01/2019 25,000 10,638.00 35,638.00 46,276.00 01/01/2020 9,981.75 9,981.75 07/01/2020 25,000 9,981.75 34,981.75 44,963.50 01/01/2021 9,320.50 9,320.50 07/01/2021 25,000 9,320.50 34,320.50 43,641.00 01/01/2022 8,655.50 8,655.50 07/01/2022 30,000 8,655.50 38,655.50 47,311.00 01/01/2023 7,854.50 7,854.50 07/0 I /2023 30,000 7,854.50 37,854.50 45,709.00 01/01/2024 7,049.00 7,049.00 07/01/2024 30,000 7,049.00 37,049.00 44,098.00 01/01/2025 6,240.50 6,240.50 07/01/2025 35,000 6,240.50 41,240,50 47,481.00 01/01/2026 5,295.50 5,295.50 07/01/2026 35,000 5,295.50 40,295.50 45,591.00 01/0 1 /2027 4,348.75 4,348.75 07/01/2027 35,000 4,348.75 39,348.75 43,697.50 01/01/2028 3,400.25 3,400.25 07/01/2028 40,000 3,400,25 43,400.25 46,800.50 Mar 15,2002 2:42 pm Prepared by DBC Finance (Finance 4.420 Winter Springs:CAP _IMPR-2002) Page 1 BOND DEBT SERVICE Capital Improvement 2002 Bonds to Replace 2000B Bank Note Period Annual Ending Principal Interest Debt Service Debt Service 01/01/2029 2,314.25 2,314.25 07/01/2029 40,000 2,314.25 42,314.25 44,628.50 01/01/2030 1,226.25 1,226.25 07/01/2030 45,000 1,226.25 46,226.25 47,452.50 675,000 614,977.00 1,289,977.00 1,289,977.00 Mar 15,2002 2:42 pm Prepared by DBC Finance (Finance 4.420 Winter Springs:CAP _IMPR-2002) Page 2