HomeMy WebLinkAbout1999 01 11 Regular Item B
COMMISSION AGENDA
ITEM B
Consent
Informational
Public Hearing
Regular X
January 11, 1999
Meeting
iiI/it(
Mgr, 1 Dept.
Authorization
REQUEST: City Manager requesting the Commission to approve Bond Issue
Refunding and/or Restructuring to provide for the refunding of existing 1989
bond issues and/or the restructuring of 1989 into a 1999 bond issue for
certain City improvements.
PURPOSE: The purpose of this agenda item is to take advantage of current interest rates
to refund the existing 1989 bond issues and to issue new bonds for capital improvements.
CONSIDERATIONS:
In 1989 the City issued $9,000,000 in non-advalorem refunding and new revenue bonds for
capital improvements. Approximately $2,875,000 of these bonds remain outstanding and can be
refinanced at today's interest rates with a present value cash flow savings of$655,200.87 as
follows:
Reserve Fund
Annual Payment Savings
Total Net Bond Value Saving
$420,000.00
$235,200.87
$655,200.87
The new'present value saving from annual payments exclusive of the reserve fund ($235,200,87)
equals approximate 8 Y2% of the refunded principal an amount sufficient to warrant the refunding
of the 1989 issue.
Additionally, current low interest rates are ideal for this issuance of additional debt for needed
capital improvements. Combining the savings of refunding of the 1989 bonds with a new issue
January 11, 1999
AGENDA ITEM
Page 2
provides the City with ideal efficiency for structuring a new bond issue that would provide the
City with funds to construct needed improvements.
The options are shown in Attachments "A" schedule "B" and "C". Schedule "B" demonstrates
payments for $3 million dollars in proceeds. Schedule "C" demonstrates payments for $5
million dollar in proceeds. Both schedules would maintain payments at below current payments
for two years and a gradual increase in payments over the life of the bonds.
Table 1 below demonstrates the recommended uses ofthe proceeds:
Uses
$3 Million
Proceeds Option
$5 Million
Proceeds Option
434 Beautification Project
Town Center Trail Park Development
Park Improvements
Urban Rehabilitation Fund*
Town Center Planning & Design Reimbursement
Traffic Calming
600,000
125,000
2,275,000
625,000
700,000
2,275,000
800,000
300,000
300.000
$5,000,000
$3,000,000
*The Urban Rehabilitation Fund would initially be used to loan start-up funds for the
conversion of the quadraplex rental units in the rehab area of Winter Springs to Home
Ownership Units. The loans will be paid back to the fund as the units are sold. At this
time the funds can be used for any other improvement projects the City would deem
appropriate such as removal of the public works facility from the rehab area, additional
traffic calming and Town Center improvements.
ISSUE 1 - What financing alternative does the Commission desire?
a) Refund the existing 1989 bond issue
b) 3 million-dollar proceeds from 1999 bond issue
c) 5 million-dollar proceeds from 1999 bond issue
ISSUE 2 - When does the Commission desire to refund or issue new debt?
a) Refunding needs to be done this month in order to maximize the savings provided by
lower interest rates. The bonds are callable in April. It will take approximately 60 days to
complete the transaction and take advantage of the lower rate of interest at the earliest time.
b) Issuance of a 1999 bond issue needs to be done immediately to take advantage of low
interest rates. If the Commission decides to combine the 1999 bond issue with the refunding as
recommended, the transaction would need to be authorized now to maximize interest savings.
January 11, 1999
AGENDA ITEM
Page 3
ISSUE 3 - When should construction be authorized?
Currently construction costs are at a premium due to the unprecedented level of construction in
the area. Delaying construction for six to twelve months could result in a significant reduction in
cost.
The ideal scenario could be to issue bonds now taking maximum advantage of low interest rates,
completing construction documents, and delaying construction until the fall or first of next year
when the construction industry "cools off' and construction costs goes down as predicted.
The down side to this scenario is that construction costs may not go down as predicted and the
benefit of the project improvements would have been delayed.
RECOMMENDATION:
It is recommended that the Commission decide the following:
1. Financing
a) Refund 1989 issue
b) 3 million bond proceeds 1999 bond issue
c) 5 million bond proceeds 1999 bond issue
2. Timing of Financing
a) Now
b) At some future date
3. Timing of Construction
a) As quickly as possible
b) Delay to fall or January 2000
It is recommended that the Commission authorize a series 1999 non-advalorem bond issue
Utilizing the refunding of the 1989 bond issue and new debt to yield $5 million in construction
Proceeds due to the advantages of current low interest rates.
Management believes the relative benefits of the timing of construction is a decision the
Commission is better positioned to determine.
Attachments:
Jim Lentz Letter of December 7, 1998
COMMISSION ACTION:
---fiRST SOUTHWEST COMPANY
IF.' ~ .-::'"";1tJ1~
j!;., ~.~ - ~
DEe 0 8 199&1
December 7, 1998
elTY Of . '!INTER SPRINGS
Ci~Y Managef
Mr. Ron McLemore
City Manager
City of Winter Springs
1126 East State Road 434
Winter Springs, Florida 32708
RE: Proposed Refunding and or New Money for Capital
Improvements/Emergency Medical Care Vehicle
Dear Mr. McLemore:
You have suggested we present the various options the City has regarding combining a
new money issue with a current refunding ofthe 1989 Improvement Issue. The options
that will be presented are of comparisons with existing cost and how much each option
will cost.
I have included the three (3) options you requested as attachments A, B and C to this
letter.
. Option A - Compares Existing Debt with a Refunding.
. Option B - Provides $3 Million in New Money, Plus the Refunding.
. Option C - Provides $5 Million in New Money, Plus the Refunding.
Please note all scenarios include the $420,000 Debt Service Reserve surplus which has
been used as part of the refunding. The savings, excluding the reserve, has a net present
value benefit of $235,000 or approximately 8 1/2% of the refunded principal. Most local
governments use a 5% net present value (PY) benefit or greater as the benchmark PY rate
to determine if the savings are worth refunding or not.
It is my recommendation that should the City wish to proceed with the refunding and is
also contemplating new money, then the issues should be combined at the same time for
the purposes of reducing overall cost. I will review these options at the Commission
meeting on December 14th.
INVESTMENT BANKERS SINCE 1946
651 Bryn Mawr Strut. Orlando, Florida 32804-4427' 407-426-9611 . Fax 407-426-7835
Mr. Ron McLemore
December 7, 1998
Page 2
I have also requested an interest rate and annual cost from several providers regarding the
lease purchase not to exceed $134,568 Emergency Medical Care Vehicle approved at the
November 9,1998 meeting of the Commission. I will present the results of those offers
Monday at the Commission meeting.
Should you have any questions regarding these matters please advise.
Sincerely,
Attachments
Cc: Harry Martin
:F-
SCHEDULE A
City of Winter Springs
Improvement and Refunding Revenue Bonds
Series 1999
Refunding Only
Debt Service Comparison
Date Net New DIS Old Net DIS Savin~s
10/01/1999 $ 373,199,70 $ 467,150,00 $ 93,950.30
10/01/2000 $ 381,472,50 $ 463,790.00 $ 87,317.50
10/01/2001 $ 381,322,50 $ 468,852,50 $ 87,530,00
10/01/2002 $ 375,522,50 $ 467,022,50 $ 91,500,00
10/01/2003 $ 374,237.50 $ 463,712,50 $ 89,475.00
10/01/2004 $ 377,267,50 $ 468,922,50 $ 91,655,00
10/01/2005 $ 379,397,50 $ 466,912,50 $ 87,515,00
1 % 1 /2006 $ 380,597,50 $ 468,052,50 $ 87,455.00
10/01/2007 $ 151,017,50 $ 241,762.50 $ 90,745,00
$ 3,174,034.70 $ 3,981,177,50 $ 807,142.80
Net Present Value Cashflow Savings $ 655,200.87
Excluding Debt Service Reserve Surplus $ 235,200.87
SCHEDULE B
City of Winter Springs
Improvement and Refunding Revenue Bonds
Series 1999
$5,000,000 of Construction Funds Available
Net Debt Service Schedule
Date
Existina DIS
New DIS
Cost or Savinqs
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
$ 961,057,50
$ 960,627,50
$ 958,620,00
$ 959,720,00
$ 958,860.00
$ 961 ,265,00
$ 961,450.00
$ 959,440.00
$ 960,000,00
$ 958,012,50
$ 959,400,00
$ 959,212,50
$ 962,450,00
$ 958,850,00
$ 958,675,00
$ 959,900,00
$ 958,925,00
$ 960,750.00
$ 959,250,00
$ 960,750,00
$ 956,633.29
$ 959,307,50
$ 967,037,50
$ 983,447.50
$ 993,132,50
$ 1,006,457,50
$ 1,018,247.50
$ 1,028,297,50
$ 1,041,922,50
$1,051,115.00
$ 1,066,015,00
$ 1,078,702,50
$ 1,089,112,50
$1,102,175,00
$1,112,677,50
$1,123,787.50
$ 1,136,937,50
$1,146,875,00
$ 1,162,775,00
$1,175,487,50
$ 1,185,000,00
$ 1,200,000,00
$ 1,210,000,00
$ 1,220,000,00
$ 1,235,000,00
$ 1,245,000,00
$ 1,260,000,00
$ 1,270,000.00
$ 1,150,000,00
$ 1,115,000,00
($4,424,21)
($1,020,00)
$8,417.50
$23,727,50
$34,272,50
$45,192,50
$56,797,50
$68,857,50
$81,922.50
$93,102,50
$106,615,00
$119,490,00
$126,662,50
$143,325,00
$154,002,50
$163,887,50
$178,012,50
$186,125,00
$203,525.00
$214,737.50
$1,185,000,00
$ 1,200,000.00
$ 1,210,000,00
$ 1,220,000.00
$ 1,235,000,00
$ 1,245,000,00
$ 1,260,000,00
$ 1,270,000,00
$ 1,150,000.00
$ 1,115,000,00
SCHEDULE C
City of Winter Springs
Improvement and Refunding Revenue Bonds
Series 1999
Refunding Only
$3,000,000 of Construction Funds Available
Net Debt Service Schedule
Date
ExistinQ DIS New DIS Cost or (SavinQs)
$96-1',057 :50 - $- 958;633,29 $- -(1,424,21)
$ 960,627,50 $ 959,607.50 $ (1,020,00)
$ 958,620,00 $ 967,037,50 $ 8,417,50
$ 959,720.00 $ 983,447,50 $ 23,727,50
$ 958,860,00 $ 993,132,50 $ 34,272,50
$ 961,265.00 $ 1,006,457,50 $ 45,192,50
$ 961,450.00 $1,018,247,50 $ 56,797,50
$ 959,440,00 $ 1,028,297,50 $ 68,857,50
$ 960,000.00 $ 1,041,922,50 $ 81,922,50
$ 958,012,50 $1,051,115,00 $ 93,102,50
$ 959,400,00 $1,066,015,00 $ 106,615,00
$ 959,212.50 $ 1,078,702,50 $ 119,490,00
$ 962,450,00 $1,089,112.50 $ 126,662,50
$ 958,850,00 $1,102,175,00 $ 143,325,00
$ 958,675.00 $ 1,112,677,50 $ 154,002.50
$ 959,900.00 $1,123,787.50 $ 163,887,50
$ 958,925,00 $1,136,937,50 $ 178,012,50
$ 960,750,00 $ 1,146,875,00 $ 186,125,00
$ 959,250,00 $1,162,775.00 $ 203,525.00
$ 960,750,00 $ 1,175,487,50 $ 214,737.50
$1,185,000,00 $ 1,185,000,00
$ 1,200,000,00 $ 1,200,000,00
$1,210,000.00 $ 1,210,000,00
$ 130,000,00 $ 130,000.00
1999-
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