On April 8, 2013, the City Council approved a resolution of intent to refund SID 1385 bonds.  The $5,360,000 of original bonds were issued in 2008 to finance the improvements on King Avenue East between South Billings Blvd. and Orchard.  There is an outstanding balance of $4,945,000.  This refunding is an advance refunding, meaning that the original bonds are not mature and may not be called prior to 2015.  The refunding is being done at this time in order to take advantage of low interest rates.  Because the bonds are being refunded prior to maturity, the City must retain enough money to make the principal and interest payments until the original bonds may be called in 2014.  That requires that the City capitalize those amounts in the new issue and to pay the new bonds' issuance costs.  Therefore, the principal amount of the new bonds is greater than the original outstanding bonds.  Based on preliminary analysis, the City could achieve debt savings estimated to be at least 8%.    

A public hearing is required to establish the desirability of issuing the refunding bonds. Notice of the public hearing was published and mailed to the property owners in the district. 

After the public hearing, the Council may:

• Approve the resolution: or
• Not approve the resolution.

The refunding bonds are being issued to reduce future interest costs, which could be $400,000 -  $500,000.  These savings will be passed on  to the  property owners in the district.

Staff recommends that the City Council approve the resolution authorizing the issuance and negotiated sale of SID 1385 refunding bonds.