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Home My WebLink About2.d. Bond Refundings1XrC.)FSEM0L1NT EXECUTIVE SUMMARY CITY COUNCIL City Council Work Session: October 13, 2010 AGENDA ITEM: Bond Refundings AGENDA SECTION: Discussion PREPARED BY: Jeff May, Finance Director AGENDA NO. ATTACHMENTS: Refunding "Preliminary Feasibility Summaries" and "Debt Service APPROVED BY: Comparisons" RECOMMENDED ACTION: Discussion only. ISSUE The issue before the City Council is the discussion of possible bond tefundings. BACKGROUND Based on discussions with our financial advisors from Springsted we have prepared information for the possibility of 4 refundings (3 City Water /Storm Water issues and 1 Port Authority issue). The three City F issues are for the following: 1) G.O. Storm Water Revenue Bonds, 2001B (Original issue amount - $1,140,000 for the Marcotte Pond Lift Station and Forcemain and the Hawkins Pond Lift Station and Forcemain); 2) G.O. Water /Storm Water Revenue Bonds, 2002B (Original issue amount - $1,195,000 -for Well #12 and the Brockway Draw Storm Water Improvements); and 3) G.O. Water Revenue Bonds, -2003B (Original issue amount - $1,170,000 for the East Side Watermain Phase 2 Improvements). The Port Authority issue is the Port Authority G.O. Public Facility Bonds, 2001C (Original issue amount - $2,045,000 for the City Hall expansion /remodel project). I am including the information on the Port Authority issue because the City Council would be involved to the extent that they would have to pass an ordinance pledging their full faith and credit of the City to-get the "G.O." (General Obligation) classification on the Port Authority bonds. Bonds issued by a City that are issued as "G.O." bonds typically receive more favorable rates because the City has pledged their ability to levy taxes if necessary as "collateral' on the bonds. The main reason for doing these refundings is because of the market today and the lower interest rates that should be available to us. These'lower interest rates will result in present value savings and actual interest savings on the payments that we will make over the life of the bonds. All of the refundings will keep the remaining life of the current bonds in place — we will not be extending any of our debt to do these refundings. The net present value benefit for the 3 City issues is estimated to be $114,502.95 and for the Port Authority issue the estimated benefit is $82,014.34. The estimated actual interest savings that will be realized over the life of the 3 City issues is $222,843.39 (approximately $31,834.77 per year over 7 years). 0 The savings will be realized from both the Water Core Fund and the Storm Water Core Fund (exact amounts for the two funds not know at this time until all of the bond documents are drawn up). The estimated actual interest savings that will be- realized over the,hfe of the Port Authority issue is $95,577.50 (approximately $9,557.75 per year over 10 years). This is also the approximate amount that we will be able to reduce our annual levy for the repayment of these bonds. After discussing this matter with City Administrator Johnson, staff is recommending that we set sales for the refundings at the Port Authority and'City Council meetings on Tuesday, October 19`b. The actual sales would then occur on Tuesday, November 16t`', and be brought back that evening for consideration by the Port Authority and the City Council. } SUMMARY After discussion this evening, with, Council direction, staff will be bringing an agenda item for the City Council to approve at the October 19t' meeting. r. x S e � � n 2 $1,550,000 City of Rosemount, Minnesota General Obligation RefundingBonds,,Series 2010 Current Refunding of Series 2001 B, 20026, 20038 Preliminary Feasibility Summary Dated 12/01/2010 1 Delivered 12/01/2010 Series 2010 Series 2010 Series 2010 Issue Ref 2001 B Ref 20028 Ref 20038 Summary Sources Of Funds Pa(Amount of Bonds ............................... ............................... $470,000.00 Transfers from Prior Issue Debt Service Funds ........................ 100,000.00 Total Sources ........................................... ............................... $570,000.00 Uses Of Funds $51,305.67 Deposit to Current Refunding Fund ........... ............................... 555,000.00 Costsof Issuance ...................................... ............................... 8,187.10 Total Underwriter's Discount (0. 625%) ..... ............................... 2,937.50 Rounding Amount .................................:... ............................... 3,875.40 TotalUses ................................................ ............................... $570,000.00 Flow of Funds Detail 3.709 Years State and Local Government Series (SLGS) rates for .............. 1.4753587% Date of OMP Candidates ........................r... ............................... 1.6438577% Primary Purpose Fund Solution Method .... ............................... Gross Funded Total Cost of Investments .......................... ............................... $555,000.00 Total Draws ............................................... ............................... q $555,000.00 PV Analysis Summary (Net to Net) Net PV Cashflow Savings @ 1.482 %(Bond Yield) ................... 147,430.27 Transfers from Prior Issue Debt Service Fund.. ........................ (100,000.00) Contingency or Rounding Amount ............. ............................... 3,875.40 Net Present Value Benefit ......................... ............................... 's $51,305.67 $1,650,000.00 665,000.00 Net PV Benefit/ $1,610;000 Refunded Principal ..................... 9.244% Net PV Benefit / $1,550,000 Refunding Principal .................... 10.916% 27,000.00 4,250.00 Bond Statistics 9,687.50 AverageLife ............:................................. ............................... 3.709 Years Average Coupon ....................................... ............................... 1.4753587% Net Interest Cost ( NIC). e ............................ ............................... 1.6438577% Bond Yield for Arbitrage Purposes.. ......................................... 1.4819946% True Interest Cost ( TIC) ............................ ............................... 1.6456478% All Inclusive Cost ( AIC) .............................. ............................... 2.1412013% Series 2010 Ref2001B, 20 / %sSue Summary / 101 912010 / 8:26 AiN Springsted $680,000.00 $400,000.00 $1,550,000.00 - - 100,000.00 $680,000.00 $400,060.00 $1,650,000.00 665,000.00 390,000.00 1,610,000.00 11,845.16 6,967.74 27,000.00 4,250.00 2,500.00 9,687.50 (1,095.16) 532.26 3,312.50 $680,000.00 $400,000.00 $1,650,000.00 Gross Funded 'Gross Funded Gross Funded $665,000.00 $390,000.00 $1,610,000.00 $665;000.00 $390,000.00 $1,610,000.00 56,540.74 (1,095.16) $55,445.58 8.338% 8.154% 4.225 Years 1.6612528% 1.8091646% 1.4819946% 1.8091300% 2.2480626% 7,219.44 211,190.45 - (100,000.00) 532.26 f 331250 $7,751.70 $114,502.95 1.988% 7.112% 1.938% 7.387% 2.179 Years 0.9465109% 1.2333178% 1.4819946% 1.2376214% 2.0646285% d 3.541 Years 1.4886882% 1.6651990% 1.4819946% 1.6651349% 2.1844155% $1,550,000 City of Rosemount, Minnesota General Obligation Refunding Bonds, Series 2010 Current Refunding of Series 2001 B, 2002B, 2003B Debt Service Comparison Date Total P +I Existing D/S Net New D/S Old Net D/S Savings 02/01/2011 - 318,529.38 318,529.38 318,529.38 02/01/2012 317,359.17 - 317,359.17 352,038.76 34,679.59 02101/2013 327,100.00 - 327,100.00 361,568.76 34,468.76 02/01/2014 324,465.00 - 324,465.00 359,893.76 35,428.76 02/01/2015 186,055.00 - -186,055.00 222,428.76 36,373.76 02/01/2016 188,692.50 - 188,692.50 223,878.76 35,186.26 02/01/2017 180,722.50 - 180,722.50 219,678.76 38,956.26 02/0112018 107,310.00 - 107,310.00 115,060.00 7 750.00 Total $1,631,704.17 $318,529.38 $1,950,233.55 $2,173,076.94 $222,843.39 PV Analysis Summary (Net to Net) NetFV Cashflow Savings ....................................................................................................... ............................... 222,843.39 GrossPV Debt`Service Savings ............................................................................................. ............................... 211,190.45 a Net PV Cashflow Savings @ 1.482 %(Bond Yield) ................................................................. ............................... 211,190.45 Transfers from Prior Issue Debt Service Fund ........................................................................ ............................... (100,000.00) Contingency or Rounding Amount .......................................................................................... ............................... 3,312.50 NetFuture Value Benefit ........................................................................................................ ............................... $126,155.89 NetPresent Value Benefit ...................................................'.................................................... ............................... $114,502.95,. Net PV Benefit / $234,963.67 PV Refunded Interest ............................................................... .,............................. 48.732% Net PV Benefit / $1,761,190.45 PV Refunded Debt Service ............................... ...................... .............. I ....... ....... 6.501% Net PV Benefit/ $1,610,000 Refunded Principal ................................................... ............................... *............... 7.112% Net PV Benefit / $1,550;000 Refunding Principal ................................................................... ............................... 7.387% Refunding Bond Information ' � c RefundingDated Date ............................................................................................................ ............................... 12/01/2010 RefundingDelivery Date ......................................................................................................... ............................... 12/01/2010 SOUCS 2010 Rel2001B, 20 / Issue Summary / 10/ 412010 / 8.26 AM ' Springsted t F $1,350,000 t Port Authority of.the City of Rosemount, Minnesota General Obligation Public Facility Refunding Bonds, Series 2010 f Crossover Refunding of Series 2001C Preliminary Feasibility Summary Dated 12101/2010 1 Delivered 12/01/2010 Sources Of Funds ParAmount of Bonds ....................................................................................................................... ............................... $1,350,000.00 TotalSources ..........:..................................................................................................................... ............................:.. $1,350,000.00 Uses Of Funds Deposit to Crossover Escrow Fund .................................................................................................. ............................... . 1,305,764.41 Costsof Issuance ....................................................................................................:....................... ............................... 33,000.00 Total Underwriter's Discount (0.825%): ........ ......... .................................................................................................. 11,137.50 RoundingAmount...... i ..................................................................................................................... ............................... 98.09 TotalUses ....................................................................................................................................... ............................... $1,350,000.00 ISSUES REFUNDED AND CALL INFORMATION PriorIssue Call Price ....................................................................................................................... ............................... 100.000% PriorIssue Call Date ...............................:....................................................................................... ............................... 12/01/2012 SAVINGS INFORMATION NetFuture Value Benefit .................... ................:5............. ..... ............................... 7.......................... ............................... $95,675.59 NetPresent Value Benefit ................................................................................................................ ............................... $82,014.3 Net PV Benefit / $1,398,261.92 PV Refunded Debt Service.` ........................................................... .:............................. 5. 5% e i BOND STATISTICS AverageLife ..................................................................................................................................... ............................... 6.867 Years AverageCoupon .............................................................................................................................. ......:........................ 2.5251529% NetInterest Cost ( NIC) ..................................................................................................................... :.............................. 2.6452985% TrueInterest Cost ( TIC) ..................................................................:.................................................. ............................... 2.6354708% k � Ni r x 4 w a 11 Series 2010 9cl2001C PA / SerieS 2006 RCI2000A / 10/ 5/20!0 / 11.77AM- Springsted $1,350,000 Port- Authority of the City of Rosemount; 'Min'nesota General Obligation Public Facility Refunding Bonds, Series 2010 Crossover Refunding of Series 2001 C Debt Service Comparison PV Analysis Summary (Net to Net) ...............I......I........ 25.093% NetFV Cashflow Savings .................................................................................................................. ............................... 95,577.50 GrossPV bebt Service Savings ........................................................................................................ r Net PV Cashflow Savings @ 2.503 %(Bond Yield) ............................................................................ Date Total P +I Escrow Existing D/S Net New DIS Old Net D/S Savings ........................'...... $82,014.34 02/01/2011 - - 130,072.50 130,072.50 130,072.50 02/01/2012 34,399.17 (1,309,399.17) 1,435,870.00 160,870.00 160,870.00 - 02/0112013 154,485.00 - 154,485.00 161,595.00 7,110.00 02/01/2014 153,360.00 - - 153,360.00 162,095.00 8,735.00 02/01/2015 151,985.00 - - 151,985.00 162,160.00 10,175.00 02/01/2016 150,235.00 - - 150,235.00 161,990.00 11,755.00 0210112017 158,110.00 - - 158,110.00 166,470.00 8,360.00 02/01/2018 155,410.00 - - 155,410.00 165,470.00 10,060.00 02101/2019 152, 372.50 - 152,372.50 164,230.00 11,857.50 02/0112020 158,997.50 - - - 158,997.50 167,750.00 8,752.50 02/01/2021 155,155.00 155,155.00 165,500.00 10,345.00 02/01/2022 159,572.50 159,572.50 168,000.00 8,427.50 Total $1,584,081.67 '(1,309,399.17) $1,565,942.50 $1,840,625.00 $1,936,202.50 $95,577.50 PV Analysis Summary (Net to Net) ...............I......I........ 25.093% NetFV Cashflow Savings .................................................................................................................. ............................... 95,577.50 GrossPV bebt Service Savings ........................................................................................................ ............................... 81,916.25 Net PV Cashflow Savings @ 2.503 %(Bond Yield) ............................................................................ ............................... 81,916.25 Contingency or Rounding Amount .................................................................................................... ............................... 98.09 NetFuture Value Benefit ..................#................................................................................................ ............................... $95,675.59 NetPresent Value Benefit ........................... x................................................................................... ........................'...... $82,014.34 Net PV Benefit / $326,835.64 PV Refunded Interest .......................................................................... ...............I......I........ 25.093% Net PV Benefit / $1,398,261.92 PV Refunded Debt Service .............................................................. ............................... 5.865% Net PV Benefit / $1,275,000 Refunded Principal ............................................................................... ............................... 6.432% Net PV Benefit / $1,350,000 Refunding Principal .............................................................................. ............................... 6.075% Refunding Bond Information RefundingDated Date ....................................................................................................................... ............................... 12/01/2010 RefundingDelivery Date .................................................................................................................... ............................... 12/0112010 n I Series 2010 Ref 2001C P 1 / Series 2006 Ref2000A • / 101912010 / 11:17AU Sprin'gsted I