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ITEM 18
City Council Memorandum Management Services Memo No.
22-004
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. 5457, Authorizing the Issuance and Sale of Not to Exceed $75,000,000 in General Obligation (GO) Refunding Bonds, Taxable Series 2021
Proposed Motion:
Move City Council pass and adopt Resolution No. 5457, prepared by City’s bond counsel firm of Gust Rosenfeld, P.L.C., authorizing the issuance and sale of not to exceed $75,000,000 in GO Refunding Bonds, 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 GO debt by refunding bonds previously issued and outstanding, specifically GO Bonds, Series 2014 and 2016, allowing the City to realize debt service savings. If completed, the refunding will reduce the amount of debt service expenses paid from the secondary property tax-supported Debt Service Fund, as well as debt service expenses paid from water and wastewater user fee-supported Water and Wastewater Operating Funds (for the portion of the GO's supported by user fees). These savings will allow for some additional debt capacity for new projects in the City's Capital Improvement Plan.
The final interest rates, which will be determined at the time of the bond sale, will also determine the final principal amount that can or 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 resolution authorizes the refunding of a portion of the City’s outstanding GO Bonds. Opportunities are identified if the savings are at least 3% of the principal amount of the bonds being refunded and results in present value savings of at least $1,000,000. Depending upon the final issue size, this refunding is expected to generate debt service savings to the City of approximately $1,500,000-$2,500,000 in net present value dollars. These bonds 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.
Attachments
Chandler GO Refunding Bonds-Series-Resolution No. 5457
Chandler GO Refunding Bonds-Series 2021- Registrar Contract-draft
Chandler GO Refunding Bonds-Series 2021- Depository Trust Agreement-draft
Chandler GO Refunding Bonds-Series 2021-Continuing Disclosure Cert-draft
Chandler GO Refunding Bonds-Series 2021-Preliminary Official Statement-draft
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