14-Presentation on certificates of obligation & refunding bond issues

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CITY COUNCIL AGENDA ITEM BRIEFING SHEET Submittal Date: Originating Department: Presented By: Agenda Item No.: 10/22/09 Council Date: Finance Gene Anderson, Dan Almon 14. 10/26/09 RECOMMENDED MOTION: Direct staff to begin the refunding process for current debt issues and the proposed issuance of certificates of obligation. POLICY ISSUE(S): Fiscal management. Mr. Dan Almon, the City's financial advisor from Southwest Securities, will discuss the possibilities and timing of refunding current debt issues for savings. The presentation will include the sensitivity of potential savings to interest rate fluctuations. He will also discuss the proposed issuance of certificates of obligation (CO) for the expansion of Collegiate Drive and the timing of that issue. Council may wish to consider adding funds for the widening of Stillhouse Road to the proposed Collegiate Drive CO issue in order to avoid further depletion of the General Fund Reserve which has been used extensively for the demolition of Casa Bonita and the funding of various large capital projects. The General Fund cash balance 9-30-2009 was $11,154,377. Of this $7,232,657 is the minimum 4 month reserve amount, $845,000 is budgeted to be transferred to the Water & Sewer Fund, $2,403,705 is budgeted for transfer to the Capital Projects Fund, and another $350,000 is needed to fully fund the Capital Projects Fund for the 2009-10 budget. I had estimated an ending balance in the Capital Projects Fund of $450,000. The actual balance turned out to be $99,863 due to over spending on the Casa Bonita demolition and unbudgeted expenditures on One Oak Apartments demolition and the CAD Mobile Data Project. The additional money will have to be transferred or budgeted projects for 2009-10 will have to be reduced accordingly. Taking the above items into consideration, there would only be $323,000 General Fund reserves available to finish the One Oak demolition. Additionally, based on the current estimated average coupon rate for the proposed 20 year certificates of obligation and the current estimated investment rate for 20 year Treasury Bonds, the City would have a net gain of about $7,000 over 20 years if Stillhouse Road is funded with CO money as opposed to funding it with reserves. BOARD/COMMISSION RECOMMENDATION: None EXHIBITS: None ACTION: BUDGET INFO: ❑ Financial Report ❑ Minute Order Expense $NA ❑ Department Report ❑ Resolution Budgeted Amt. $NA Z Presentation ❑ Ordinance y'I'D Actual $NA ❑ P bli H i u c ear ng ❑ Other Acct. Name NA Acct. Number NA FISCAL NOTES: Refunding $21,618,630 in current debt at current interest rates would yield net present value interest savings of $1,439,922 over the term of the current debt issues. REVIEWED AND APPROVED BY: Z Administration 0 City Clerk ❑ Community Development ❑ EMS/IT Z Finance ❑ Fire ❑ Municipal Court ❑ Legal ❑ Library ❑ Police ❑ Eng./Public Works ❑ Utilities City of Paris o~ Revised 2/04/08 ~ ~ V V ~ 4