14-Presentation on certificates of obligation & refunding bond issuesCITY 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
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