TITLE
Consider an ordinance designating the City Manager as the pricing officer and authorizing the issuance and sale of City of Killeen, Texas, Waterworks and Sewer System Revenue Refunding Bonds in one or more series.
SUMMARY
DATE: September 17, 2019
TO: Ronald L. Olson, City Manager
FROM: Jonathan Locke, Executive Director of Finance
SUBJECT: Bond Refunding Opportunity
BACKGROUND AND FINDINGS:
Staff works with the City’s Financial Advisor, Dan Wegmiller of Specialized Public Finance, Inc., to identify bond refunding opportunities that will generate interest savings on outstanding debt. Market conditions are such that $6,990,000 in outstanding bonds can be refunded, saving the City an estimated $369,818, net present value, over the life of the bonds. The estimated savings are contingent on market conditions remaining favorable and will come from issuing new bonds with more favorable terms to pay off existing bonds creating a cost savings. There will be no change to the term of the bonds. The refunded bonds will be repaid on the same schedule as the original bonds.
Texas law provides two options for the issuance of refunding bonds. The City may either:
1) Adopt an ordinance with all the final pricing terms of the refunding bonds in the ordinance; or
2) Adopt an ordinance that delegates the ability to set the final pricing terms of the refunding bonds to any officer or employee of the City. The final pricing terms must fall within certain parameters set out in the approved delegation ordinance.
The City has utilized both options in the past. Option 1 is not recommended due to the short timeframe involved (City Council must approve within 1-2 days after bond pricing), and the lack of flexibility in entering the market in optimum conditions.
Option 2 provides the flexibility to choose the bond pricing date when market conditions are favorable. Staff and the City’s Financial Advisor recommend option 2 to access the market when ready...
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