1998 AGN OCT 06 I20 - Laserfiche WebLink

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ALTERNATIVES: 1. Refund the existing COP's as a non-rated issue. The interest rate will be substantially reduced and savings realized without lengthening the final maturity. Current bondholder's would have their bonds called on November l, 1998 at 1.02%. This method is probably the most cost effective way of reducing the interest cost without pledging revenue from any of the enterprise funds. The General Fund would continue to have below investment grade debt outstanding. 2. Refund the existin� COP's as a private placement lease with a sophisticated investor s . Staff has reviewed and analyzed proposals to restructure the existing COP issue as a municipal lease. One or more sophisticated investors could buy the lease. Restructuring the COP this way would avoid the ongoing expense of a Corporate Trustee and ongoing disclosure which is a new requirement since these COP's were issued. Preliminary discussions with a potential investor revealed that they would require an interest rate reset in the future. Additional requirements of the investor were a full and complete MAI summary appraisal, a Phase I environmental audit and a legal and binding intergovernmental rental agreement formally committing the Electric, Water & Wastewater enterprise funds to service this debt.. Additionally, the proposal was to have the interest rate reset at the fifth year at 102% of the five year Treasury Note but not lower than 5.50%. This would have exposed the City to higher debt service payment in the future. FINANCIAL IMPACT: Under current market conditions, we anticipate the savings, including all costs of the refunding to be about $191,000 over the 15 year remaining life of the issue. This equates to $13,000 per year of which 25% is the general fund portion. The final results will be determined by conditions in the market on the day the Certificates are priced. RECOMMENDATION: Approval of the Resolution, the financing plan, the site lease, the lease agreement, the trust agreement, the escrow deposit and trust agreement, the public sale of securities, the Preliminary Official Statement, the Bond Purchase Agreement, the employment of financing professionals and authorize offcial actions to be taken by staff