HomeMy WebLinkAbout04/17/2013 6F AGENDA BILL
CITY OF BREMERTON (O F
CITY COUNCIL
SUBJECT: Ordinance No 5214 providing Study Session Date April 10, 2013
for the issuance and sale of two bonds COUNCIL MEETING Date April 17, 2013
(Parking System and Golf Course), and Department Financial Services
delegating authority to the Mayor or Director Presenter Becky Hasart
of Financial Services to approve final terms Phone 360- 473 -5722
of the bonds
SUMMARY: The City currently has outstanding a bond note (short term line of credit with Bank of
America) in the amount of $8,910,000 for the purpose of refunding a revenue bond that was originally
issued to finance the cost of constructing and equipping the Harborside parking garage This line of
credit was renewed in July 2011 for a two year term and is due July 29, 2013 The City can request
an extension of the line of credit, but this would be temporary in nature and any related interest rates
would be variable Tax exempt fixed rate limited tax general obligation (LTGO) bonding is currently
at historic lows It is recommended that the City convert the line of credit to a fixed rate tax exempt
LTGO bond Because the amount of this bond is below $10 million, this bond would be eligible to be
"Bank - Qualified "
The City currently also has outstanding a tax bearing, non -Bank Qualified, bond associated with our
golf course in the amount of $5,058,000 Again, the non -Bank Qualified market interest rates are
also at historic lows Although the golf bonds do not mature until December 31, 2028, it is
recommended that the City refund these bonds to take advantage of the favorable interest rate
market By doing so, it is estimated that the City can save over $562,000 during the life of this bond,
dependent upon the actual interest rate that is set on the date of sale Because the golf bond is not
eligible to be Bank Qualified, this amount does not affect the eligibility of the parking bonds
The attached ordinance delegates to the Director of Financial Services the ability to set the date and
rates for the final sale of both the parking bonds and the golf bonds The ordinance sets the
parameters under which this can occur By doing this, the City can watch the market for any signs
that the interest rates are starting to climb If that were to happen, we can move quickly without
being tied to a date certain based on Council meeting schedules In addition, by timing both bonds
for issuance at the same time, the City can realize some savings in its issuance costs (underwriting
costs, legal costs, etc ) versus issuing these bonds on separate sale dates
ATTACHMENTS Proposed Ordinance No 5214 providing for the issuance and sale of two series of
LTGO bonds in the aggregate principal amount of not to exceed $14,500,000 and delegating
authority to the Mayor or Director of Financial Services to approve final terms of the bonds
Page 3 and 6 from the March 26, 2013 DA Davidson report to the Finance Committee
FISCAL IMPACTS (Include Budgeted Amount) The following numbers are estimates Final
amounts will be determined based on the interest rates set at time of sale and based on the bond
rating issued by Moody's (rating call is scheduled for April 11 or 12)
Estimates anticipate a total debt savings of over $562,000 over the life of the refunded golf bonds
The present value of these savings in today's dollars would be approximately $421,087 (PV factor of
3 052 %) The refinanced bonds would not extend the life of the existing debt service, so debt service
payments are within current budget authority
For the parking bonds, there is no estimated "savings" as this issue does not replace an existing
bond If the City did not refinance these bonds, we would have to either extend the line of credit
(subject to a variable interest rate on the principal outstanding), or pay off the line of credit in full
Anticipated annual payments are similar in size to what was budgeted for the 2013 payment
STUDY SESSION AGENDA ❑ No Discussion 0 Full Presentation
STUDY SESSION ACTION: 0 Consent Agenda ❑ General Business ❑ Public Hearing
RECOMMENDED MOTION:
Move to approve Ordinance No 5214 of the City of Bremerton, Washington, providing for the
issuance and sale of two series of limited tax general obligation bonds in the aggregate principal
amount of not to exceed $14,500,000 for the purpose of currently refunding certain outstanding debt,
and delegating authority to the Mayor or Director of Financial Services to approve the final terms of
the bonds
COUNCIL ACTION: [Approve ❑ Deny ❑ Table ❑ Continue ❑ No Action
Form Updated 11/02/12