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ITEM 17
City Council Memorandum Management Services Memo No.
22-003
Date:
August 26, 2021
To:
Mayor and Council
Thru:
Joshua H. Wright, City Manager
From:
Dawn Lang, Deputy City Manager - Chief Financial Officer
Subject:
Resolution No. 5456, Authorizing the Issuance and Sale of Not To Exceed $150,000,000 in Excise Tax Revenue Refunding Obligations, Taxable Series 2021
Proposed Motion:
Move City Council pass and adopt Resolution No. 5456, prepared by the City’s bond counsel firm of Gust Rosenfeld, P.L.C, authorizing the issuance and sale of not to exceed $150,000,000 in Excise Tax Revenue Refunding Obligations, Taxable Series 2021.
Background:
The City’s Financial Advisor, Piper Sandler, & Co., works with City staff to identify refunding opportunities based on current market conditions and potential present value savings. Current low-interest rates offer an opportunity to refinance a portion of the City’s Excise Tax Revenue Obligations (ETROs) debt by refunding bonds previously issued and outstanding, specifically ETRO's Series 2011, 2013, and 2016, allowing the City to realize debt service savings. When completed, the refunding will reduce the amount of debt service expenses paid by the Water and Wastewater Operating Funds, helping control future rate increases.
The final interest rates, which will be determined at the time of the sale, will also determine the final principal amount that can/should be refunded. Therefore, to provide flexibility under varying market conditions, the resolution authorizes a maximum principal amount that may be sold.
Financial Implications:
The ETRO's will be backed by the City’s excise taxes which include local sales tax, state shared revenues, franchise fees, licenses and permits and fines, and forfeitures. Although the ETRO's first pledge is excise taxes, the debt service on the ETRO's will be paid from water and wastewater operating funds generated from user fees. The City’s Excise Taxes are pledged to ensure payment of the debt in the unlikely situation that the water and wastewater revenues are insufficient to make those payments. These obligations will be refunded as taxable under the 2017 Tax Reform Act, since they are classified as advanced refunded as the call date is longer than 90 days from the refunding date. Depending upon the final issue size, this refunding is expected to generate debt service savings to the City of approximately $9,000,000-$10,000,000 in net present value dollars.
Attachments
Chandler ETRO Refunding-Series 2021-Res No. 5456
Chandler ETRO Refunding-Series 2021-Agreement-draft
Chandler ETRO Refunding-Series 2021-Depository Trust Agreement-draft
Chandler ETRO Refunding-Series 2021-Continuing Disclosure Cert-draft
Chandler ETRO Refunding-Series 2021-Preliminary Official Statement-draft
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