TITLE
Consider an ordinance authorizing the issuance and sale of General Obligation Refunding Bonds.
SUMMARY
DATE: November 7, 2017
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 $30,295,000 in outstanding bonds can be refunded, saving the City an estimated $2.2 million over the life of the bonds. The estimated savings are contingent on market conditions remaining favorable and will come from issuing new bonds with lower interest rates to pay off existing debt at a higher interest rate.
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 2, provides the flexibility to choose the bond pricing date when market conditions are favorable. 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 optim...
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