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AGENDA ITEM #: 17.
DATE: 06/21/2021
AI #:317

COMMUNITY FACILITIES DISTRICT REPORT

SUBJECT:

PREPAYMENT OF DEBT WITHIN THE WILDFLOWER RANCH CFD #2

STAFF PRESENTER(S):

Jared Askelson, Deputy Finance Director

SUMMARY

Resolution WFRCFD#2 RES 2021-076 authorizes the defeasance of a portion of the Wildflower Ranch CFD #2 Series 2001 General Obligation debt.

Recommendation

ADOPT RESOLUTION WFRCFD#2 RES 2021-076 AUTHORIZING AND PROVIDING FOR THE TRANSFER OF AVAILABLE DISTRICT FUNDS TO DEFEASE AND REDEEM A PORTION OF ITS OUTSTANDING DISTRICT GENERAL OBLIGATION BONDS, SERIES 2001, THE DIRECT PAYMENT, OR THE EXECUTION OF A DEPOSITORY TRUST AGREEMENT FOR THE SAFEKEEPING AND HANDLING, OF MONEYS TO BE USED TO PAY THE BONDS BEING DEFEASED; APPROVING THE FORM OF CERTAIN DOCUMENTS AND AUTHORIZING COMPLETION, EXECUTION AND DELIVERY THEREOF; AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION; AND RATIFYING THE ACTIONS OF ALL OFFICERS AND AGENTS OF THE DISTRICT AND OTHERS WITH RESPECT TO THE TRANSFER, PREPAYMENT, DEFEASANCE AND REDEMPTION. (Jared Askelson, Deputy Finance Director)

FISCAL IMPACT

This action will result in the prepayment of approximately $12,900 using available fund balance within the district’s debt service fund. The current value savings is estimated to be $300. The prepayment of debt will decrease the debt service fund balance in line with recent state statute revisions.

BACKGROUND AND PREVIOUS ACTIONS

In March of this year, House Bill 2317 was approved by the State Legislature and signed into law by the Governor. As an emergency measure, it immediately went into effect. The bill changed various CFD related statutes including 48-719 pertaining to tax levies. The bill added language to effectively limit the debt service fund balance of each CFD to 10% of its debt service payments. Previous statute revisions had placed a similar fund balance threshold on municipal debt service funds, but included a two-year transition period to allow for a smoother implementation of the change. HB 2317 has no such provision, requiring immediate action to bring the CFDs in compliance with the law.

The Wildflower Ranch CFD #2 currently has debt eligible to be called for prepayment allowing for direct payment without the need of a depository trust agreement.

STAFF ANALYSIS

This action will allow the district to reach compliance with new debt service fund balance requirements enacted by the State this year.

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