7.3.
CC Regular Session
- Meeting Date:
- 08/13/2013
- By:
- Diana Lund, Finance
Information
Title:
Adopt Resolution #13-08-131 Authorizing the Issuance and Awarding the Sale of $635,000 General General Obligation Equipment Certificates of Indebtedness, Series 2013A
Background:
On December 11, 2012, City Council adopted the 2013 General Fund Budget and Levy. Included in the budget was $463,000 for capital equipment which included the second year funding for a fire tanker truck that council gave official authorization for purchasing at the June 25, 2013 City Council meeting. The first half of the fire tanker truck was included in the 2012 General Fund budget.
Overall, the amount of capital that needs to be funded for 2013 is $594,000 (See capital listing that includes full funding of fire tranker truck). The funding source for the purchase of these capital items was proposed to be the issuance of capital equipment certificates. The issuance of certificates not only allows the city to take advantage of lower interest rates, but it will allow the Equipment Revolving Fund time to rebuild and preserve fund for future needs.
The amount of certificates to be issued to fund the capital items is proposed to be $635,000 which covers the principal costs of the capital items and underwriting costs. The certificates would be for a ten-year time frame and be levied to the property tax starting in year 2014. The annual levy from the debt issuance would be approximately $75,000 based on today's interest rates.
At its regular meeting of July 9, 2013, City Council passed Resolution #13-07-117 authorizing the sale of $635,000 General Obligation Equipment Certificates.
The Final terms and conditions of the Capital Equipment Certificates of Indebtedness are attached. The all-inclusive interest rate (includes principal and underwriting costs) came in slightly lower than what was prposed on July 9, when the City Council authorized the issuance of capital equipment certificates. The all-inclusive interest rate is 3.31% vs 3.65% on July 9. The 3.31% interest rate takes into considertation the extra quarter percent that the city had to pay due to the conduit debt issuance for the Pact Charter School which made this issue non-bank qualified. Pact will be reimbursing the city this additional expense in the amount of approximately $9,000.
A resolution needs to be adopted by the City Council confirming the sale.
Overall, the amount of capital that needs to be funded for 2013 is $594,000 (See capital listing that includes full funding of fire tranker truck). The funding source for the purchase of these capital items was proposed to be the issuance of capital equipment certificates. The issuance of certificates not only allows the city to take advantage of lower interest rates, but it will allow the Equipment Revolving Fund time to rebuild and preserve fund for future needs.
The amount of certificates to be issued to fund the capital items is proposed to be $635,000 which covers the principal costs of the capital items and underwriting costs. The certificates would be for a ten-year time frame and be levied to the property tax starting in year 2014. The annual levy from the debt issuance would be approximately $75,000 based on today's interest rates.
At its regular meeting of July 9, 2013, City Council passed Resolution #13-07-117 authorizing the sale of $635,000 General Obligation Equipment Certificates.
The Final terms and conditions of the Capital Equipment Certificates of Indebtedness are attached. The all-inclusive interest rate (includes principal and underwriting costs) came in slightly lower than what was prposed on July 9, when the City Council authorized the issuance of capital equipment certificates. The all-inclusive interest rate is 3.31% vs 3.65% on July 9. The 3.31% interest rate takes into considertation the extra quarter percent that the city had to pay due to the conduit debt issuance for the Pact Charter School which made this issue non-bank qualified. Pact will be reimbursing the city this additional expense in the amount of approximately $9,000.
A resolution needs to be adopted by the City Council confirming the sale.
Notification:
Staff had a bond rating call for the certificates with Standards and Poors (S&P) on July 23, 2013. S&P confirmed the city's AA+ bond rating.
Observations/Alternatives:
Option 1: Authorize Sale of Capital Equipment Certificates as outlined at the worksession of July 23, 2013 to take advantage of low interest rates and to preserve the Capital Equipment Fund for future needs.
Option 2: Not Authorize Sale Of Capital Equipment Certificates and utilize the city's Equipment Revolving Fund. Current balance of fund is $1.8M. and is designated to be the funding source of 2014 proposed General Fund Capital Equipment requests in the amount of $482,000. The bond rating call would be an additional expense as it has already been incurred. The ratings call fee is included in the $635,000 Equipment Certificate total.
Recommendation:
Staff recommends that Council adopt Resolution #13-08-131 authorizing the issuance and awarding the sale of $635,000 General Obligation Equipment Certificate of Indebtedness, Series 2013A as outlined in the Final Debt Service Schedule.
Funding Source:
Equipment Certificate debt will fund the city's budgeted General Fund capital expenditures.
Council Action:
Adopt Resolution #13-08-131 authorizing the issuance and awarding the sale of $635,000 General Obligation Equipment Certificate of Indebtedness, Series 2013A
Attachments
- Final Debt Schedule $635,000 Capital Equipment Certificates
- Capital Equipment Listing
- Resolution Awarding Sale of Capital Equipment Certificates
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Jo Thieling | 08/08/2013 10:52 AM |
- Form Started By:
- Diana Lund
- Started On:
- 07/25/2013 02:26 PM
- Final Approval Date:
- 08/08/2013