lease revenue refunding bonds - City of Norwalk

More documents

Recommendations

Info

City Council February 19, 2013 Resolution No. 13-13 - Issuance of Lease Revenue Refunding Page No. 2 Bonds Series 2013A & 2013B On October 31, 2001, the City approved the Financing Authority’s issuance of the Refunding Lease Revenue Bonds, 2001 Series A (“2001 Bonds”) in the original amount of $12,795,000. The 2001 Bonds were originally issued to refinance existing 1995 Bonds and pay for construction of the civic center parking garage. The 2001 Bonds are currently outstanding in the amount of $7,945,000 with interest rates ranging from 4.125% - 5.25%. The final term of the 2001 Bonds is April 1, 2025. The 2001 Bonds can now be prepaid on October 1, 2013 without any penalty. Below is a summary of the key components of the 1999 Bonds and the 2001 Bonds: Series 1999 Bonds 2001 Bonds Amount Outstanding $7,295,000 $7,945,000 Final Year of Payment 2029 2025 Interest Rates 5.10% – 5.375% 4.125% – 5.25% Reserve Fund Cash Funded Bond Surety Policy Lease Asset City Hall Civic Center Parking Garage Earliest Prepayment August 1, 2013 October 1, 2013 Date To Be Refinanced by Series 2013A Bonds Series 2013B Bonds Financing Structure The Financing Authority will issue about $15.7 million of refunding bonds to refinance the 1999 and 2001 Bonds (“2013 Refunding Bonds”). The 2013 Refunding Bonds will be issued with the same final year of payment of 2025 and 2029 as the 1999 and 2001 Bonds, respectively. The Financing Authority will need to issue the 2013 Refunding Bonds in two separate bond series (“2013A Bonds” and “2013B Bonds”, collectively the 2013 Refunding Bonds) because each existing bond issue has a different prepayment date as set forth in the original financing documents. Like the 1999 and 2001 Bonds, the 2013 Refunding Bonds will be structured as a leaseleaseback financing between the City and the Financing Authority. The Financing Authority is a City-controlled joint powers authority consisting of the City and the Parking Authority and was originally formed to facilitate bond financing. The Financing Authority has used the same financing structure for its prior lease revenue bond financings. Currently, the Financing Authority leases the following assets from (and then back to) the City: - City Hall (lease asset for the 1999 Bonds); and - Civic Center Parking Garage (lease asset for the 2001 Bonds).
City Council February 19, 2013 Resolution No. 13-13 - Issuance of Lease Revenue Refunding Page No. 3 Bonds Series 2013A & 2013B The 2013 Refunding Bonds will be structured with only City Hall as the lease asset. The Civic Center Parking Garage will be released from the bonds since City Hall has sufficient rental value to stand alone. The 2013 Refunding Bonds will use City Hall as the lease asset in order to garner the highest credit rating possible leading to lower interest rates. The 2013 Refunding Bonds will be designed with a “master lease” bond structure. Under this structure, the Financing Authority will be allowed to issue additional lease bonds secured by the single pool of lease assets so long as the rental value of the pool is sufficient to cover the existing and new bonds. The primary benefit of the master lease structure is that it enables the City to pledge fewer assets over time to effectuate future lease financings. The City will have the flexibility to substitute, remove or add other assets over time under this new structure. The financing structure terms will be the same as the Financing Authority’s previous lease financings in all other respects. The 2013 Refunding Bonds will also be structured with a smaller bond reserve requirement equal to 50% of the maximum annual bond payment. Lease revenue bonds are typically sold with a larger bond reserve equal 100% of maximum annual bond payment. However, based on the City’s strong financial profile, the 2013 Refunding Bonds will be structured with the lower amount to save on financing costs. Depending the credit rating outcome and market conditions, the 2013 Refunding Bonds may need to be structured with a standard reserve requirement equal to 100% of the maximum annual bond payment. Finance Team Fulbright & Jaworski LLP will serve as Bond Counsel. Harrell & Company Advisors, LLC will serve as financial advisor for the proposed bond refinancing. E. J. De La Rosa & Company will serve as underwriter for the bonds which will be sold on a negotiated basis. Stradling Yocca Carlson & Rauth will serve as Underwriter’s Counsel. Bank of New York Mellon Trust Company will serve as the bond trustee and escrow agent. Fiscal Impact: Based on current rates, the City will issue about $15.7 million of 2013 Refunding Bonds. The bond authorizing resolution has a combined not-to-exceed issuance amount of $20 million for both series of proposed bonds which provides additional cushion to accommodate a larger bond reserve sizing and structuring flexibility to achieve the lowest interest rates. The 2013 Refunding Bonds are currently projected to be rated “A+” by the Standard & Poor’s rating agency. Based on current market conditions, the interest rates are expected to range from 1.20% - 4.10%. The average bond payment is estimated to be $615,000 and $846,000 for the 2013A and 2013B Bonds, respectively. The total bond payment for
Page 1: CITY COUNCIL AGENDA REPORT TO: FROM
Page 5 and 6: City Council February 19, 2013 Reso
Page 7 and 8: RESOLUTION NO. 13-13 A RESOLUTION O
Page 9 and 10: WHEREAS, there have been presented
Page 11 and 12: Bonds. The total principal amount o

lease revenue refunding bonds - City of Norwalk

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?