TITLE
HOLD a public hearing and consider an ordinance amending the FY 2018 Annual Budget and Plan of Municipal Services of the City of Killeen by increasing revenue and expenditure accounts for the issuance of General Obligation Refunding Bonds.
SUMMARY
DATE: November 7, 2017
TO: Ronald L. Olson, City Manager
FROM: Jonathan Locke, Executive Director of Finance
SUBJECT: Budget Amendment
BACKGROUND AND FINDINGS:
Current 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. The delegation ordinance approved by City Council authorizes a principal amount up to $40,115,000 instead of $30,295,000 to allow room for bonds that currently fall just outside the parameters established in the ordinance.
Bond Refunding Revenues
Bond Proceeds $40,115,000
TOTAL $40,115,000
Bond Refunding Expenditures
Payment to Escrow Refunding Agent $39,640,000
Refunding Agent Costs $475,000
TOTAL $40,115,000
THE ALTERNATIVES CONSIDERED:
(1) Approve the bond refunding to save an estimated $2.2 million over the life of the refunded bonds.
(2) Do not issue refunding bonds and forego the savings.
Which alternative is recommended? Why?
Staff recommends option 1 because of the significant savings achieved over the life of the refunded bonds.
CONFORMITY TO CITY POLICY:
City Charter, Article VII., Section 71
FINANCIAL IMPACT:
The maximum principal amount is being set at $40,115,000 instead of $30,295,000 to allow room for bonds that currently fall just outside the parameters. If market conditions improve such that the additional bonds fall within the parameters, the City will be ...
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