1998 AGN OCT 06 I20 - Laserfiche WebLink

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CITY OF COLTON AGENDA REPORT Til17? f`l1TTN(`TT . MFFTTN(' (lF (lf T(1RF.R (. 199R TO: HONORABLE MAYOR & CITY CO CIL APPROVAL: HENRY GARCIA CITY MANAGE FROM: MICHAEL WILLIAMS, CITY TREASURER �U� SUBJECT: Consideration and Approval of Refunding of 1988 City of Colton Certificates of Participation (Corporation Yard Project) Series 1988 � DATE; September 26, 1998 BACKGROUND: In 1988 The City of Colton Issued Certificates of Participation (COP's) to construct the City's Corporation Yard. This transaction is lease of the Corporation Yard from the Colton Public Improvement Corporation to the City. Because of the requirement of voter approval by 2/3 for long-term debt, this transaction was structured as a lease with the stream of lease payments sold to investors. This differs from other leases the City has done for equipment such as the phone system, fire truck and street sweepers. In those issues the lease was sold to an individual investor or a bank. The Corporation Yard Project was successfully completed and carried an initial investment grade rating. Interest rates for the various maturities ranged as high as 7.70%. DISCUSSION/ANALYSIS: Interest rates have dropped substantially since the Certificates were originally issued. In addition, the rating on the Certificates has dropped below investment grade because of past financial dif�iculties of the City's General Fund. Although the Electric, Water & Waste Water Departments of the City do occupy and contribute to debt service payments, the General Fund is looked to for the ultimate repayment. Team Colton has been asked to come up with ways to increase revenue or reduce expenses. Over the past year staff has reviewed many different options for restructuring this debt. This financing plan includes a negotiated sale of the bonds which will be marketed to sophisticated investors due to the below investment grade rating. Item No. 20