Title
Approving a resolution with the caption reading: RESOLUTION APPROVING PRELIMINARY OFFICIAL STATEMENT AND AUTHORIZING DISTRIBUTION OF SUCH PRELIMINARY OFFICIAL STATEMENT RELATING TO THE CITY'S COMBINATION TAX AND LIMITED REVENUE CERTIFICATES OF OBLIGATION, SERIES 2015 AND LIMITED TAX AND REFUNDING BONDS, SERIES 2015.
Summary
This resolution is the next step in the process of issuing debt. The City will be issuing up to $26.5 million in certificates of obligation for street, park and utility projects (see list attached), up to $12.2 million in general obligation (limited tax) bonds for street and park projects authorized by citizens in the 2014 bond election, and up to $14.0 million limited tax refunding bonds. This is the first issuance related to the 2014 election, including $10.2 million for street projects (of the $28 million authorized) and $2.0 million for parks projects (of the $25 million authorized). Further, current market conditions appear favorable to pay off certain bonds by refinancing the outstanding principal and obtaining a lower interest rate on the new debt. The decision whether or not to issue refunding bonds will be made at the time of the bond sale and will depend on the net present value calculated on market rates on that day.
City staff, the City's financial advisor and the City's bond counsel have been revising the preliminary official statement which is the informational document that is sent to prospective investors. This resolution, prepared by bond counsel, will approve the preliminary official statement and authorize its distribution. A revised copy of the preliminary official statement was emailed to the City Council on Thursday, April 9, 2015. A copy of the final official statement will be given to each City Councilmember when it is complete.
Information contained in the preliminary official statement is often structured on market conditions and therefore subject to change. Any differences reflected between the issuing numbers provided above and that included in the preliminary official statement reflect anticipated market conditions, which at this time appear favorable.
Mr. Terrell Palmer, the City's financial advisor will be at the City Council meeting to answer any questions you may have.
Prior City Council Action
At the January 27, 2015 Council meeting, a resolution was approved to begin the process for issuing the Combination Tax and Limited Revenue Certificates of Obligation, Series 2015. At the March 10, 2015 City Council meeting a first draft of the Preliminary Official Statement and an action delaying the issuance of the Certificates of Obligation were approved by Council.
Deadline for City Council Action
To meet the deadlines established for closing the bonds and receiving funds on May 27, 2015, the preliminary official statement must be approved at this meeting.
Projected Future City Council Action
On April 28, 2015, a public hearing will be held and the sale of the bonds will be finalized.
A tentative financing schedule is attached to this agenda item.
Fiscal Impact
The bonds have been structured with no payments due until February 2016 which will allow for funding as part of the 2016 budget. Although decisions regarding the distribution of the ad valorem tax revenues will be made during the budget process, based on FY15 information, the annual debt service on the general obligation bonds would equate to approximately 2.3₵ on the ad valorem tax rate and the roadway and parks portion of the debt service on the certificates of obligation total up to 1.67₵ on the ad valorem tax rate. The utility portion of the certificate of obligation debt was considered during the 2014 utility rate study and funding of this debt service is available within the current utility rate structure. Any refunding debt issued would be paid from existing debt service allocations and would reduce future debt service payments.
Staff Recommendation
Approve the resolution.
Drafter
Lauri Gillam
Assistant City Manager