HomeMy WebLinkAboutPR 13029:REFUND 1997 BONDSTo.'
From:
Date:
Re:
City of Port Arthur
Finance Department
Memorandum
Steve Fitzgibbons, City Mand~er 0~tfl'¢
Rebecca Underhill, CPA, Dir~f~_o¥ Finance
February 7, 2005 w-
PR 13029
Recommendation
Presented for City Council consideration and approval is PR 13029 which authorizes the City Manager
and the Finance Director to prepare the documents necessary to refund the 1997 General Obligation
Bonds.
Background
In 1997, the City issued $15,000,000, Series 1997 General Obligation Bonds. This was the second
phase of the $32,000,000 water plant bond issue that was approved by voters in 1994. At that time,
the City issued the bonds at a competitive sale at an average interest rate of 5.34%. Due to declines in
the bond market, the interest rate available to refund these bonds is approximately 3.8%. This
difference could produce a savings to the City, after the cost of issuance, of $950,000 over the 17
years remaining on the bonds, with a net present value savings of $690,000.
As you may recall, in 2003, the City refunded the first phase of the water plant project, the $17 million
issue, 1995 General Obligation Bond, at a savings of $950,000.
Budgetary Effect
With the adoption of this resolution, the City will incur issuance costs estimated to be $285,400, which
will be funded through the bond issue. The bond issue will save the City $60,000 in debt service in
fiscal year 2006. and an estimated $950,000 over the next 17 years.
P. R. NO. 13029
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE FINANCE
DIRECTOR AND THE CITY MANAGER TO PROCEED
WITH PREPARING DOCUMENTS TO REFUND THE
CITY OF PORT ARTHUR. GENERAL OBLIGATION
BONDS, SERIES 1997
WHEREAS, on April 8, 1997, the City of Port Arthur issued $15 million in General Obligation
Bonds, Series 1997 to complete the water treatment plant project, and
WHEREAS, the average interest rate cost on these bonds was 5.34%, and
WHEREAS, the current market is favorable to refund these bonds at a lower interest rate as
described in the proposal attached hereto as "Exhibit A", and
WHEREAS, the City Council deems it is in the best interest of the City to refund the bonds as
soon as possible in order to capture the savings; now therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR:
Section 1. That the facts and opinions in the preamble are true and correct.
Section 2. That the City Council hereby authorizes the City Manager and the Director of
Finance, working with the Financial Advisors of the City, First Southwest Company, to prepare the
necessary documents, and solicit the required bond ratings to facilitate a sale of the City of Port
Arthur, Texas General Obligation Refunding Bonds, Series 2005.
Section 3. That these documents will be presented to the Council for approval at the March 1,
2005 meeting.
Section 4. That a copy of the caption of this Resolution shall be spread upon the Minutes of
the City Council.
READ, ADOPTED, AND APPROVED, this 15th day of February, 2005, AD, at a Regular
Meeting of the City Council of the City of Port Arthur, Texas by the following vote:
AYES: Mayor:
Councilmembers:
NOES:
ATTEST:
Evangeline Green, City Secretary
APPROVED AS TO FORM:
Mark Sokolow, City Attorney
APPROVED FOR ADMINISTRATION:
Fitzgibbons. City Manager
Rebecca Underhill. CPA. Finance Director
Mayor
EXHIBIT A
SOURCES AND USES OF FUNDS
Cit) of Port Arthur. Tcxm
General Obligation Refunding Bonds. Series 2005
*Preliminary - For Discussion Purposes Only*
*Current Market Rates as of 2/7/2005
Dated Date 03/07/2005
Delivery Date 03/07/2005
Sources:
Bond Proceeds:
Par Amount 11.930.000.00
O~her Sources of Funds:
Cash Contribution 112,000.00
12.042.000.00
Uses
Refunding Escrow Deposits:
Cash Deposn 0.8l
SLG Purchases 11.752.918.00
11.752.918.81
Delivery Date Expenses:
Cost o f Issuance 120.000.00
Underwriter's Discount 83.5 I0.00
Bond Insurance (50 bps) 81.917.21
285.42721
Other Uses of Funds:
Additional Proceeds 3.653.98
12.042.000.00
Feb 7. 2005 1:45 pm Prepared by First Southwest Company (NF) ,Finance 5.012 Port Arthur PA-2005.2005'* Page 1
SUMMARY OF REFUNDING RESULTS
City of Port Arth~. Texas
General Obligation Refunding Bonds, Series 2005
*Preliminat3 - For Discussion Purposes Only*
*Current Market Rates as of 2/7/2005
Dated Date
Delivery. Date
Arbitrage yield
Escrow ymld
Bond Par Amount
True interest Cost
Net Interest Cost
Average Coupon
Average Lil~
Par amount of refimded bonds
Average coupon of refunded bonds
Average life of refunded bonds
PV of prior debt to 03/07/2005 ~ 3.862807%
Net PV Savings
Percentage savings of refunded bonds
Percentage savings of re£unding bonds
03~7/2005
03/07/2005
3.862807%
3.155864%
11.930.000.00
3,951961%
3.863342%
3.792231%
9.844
11.225.000.00
5.340010%
10.318
12.64&631.07
690.202.26
6.148795%
5.785434%
Feb 7. 2005 1:45 pm Prepared by First Southwest Company (NF) (Finance 5 012 Port Arthur:PA-2005.2005; Page 2
Date
SAVINGS
City of Port Arthur. Texas
General Obligation Refunding Bonds. Series 2005
*PreliminaD' - For Discussion Purposes Only*
*Current Market Rates as of 2/7/2005
Present Value
Prior Prior Prior Refunding to 03/07/2005
Debt Service Recmpts Net Cash Flow Debt Service Savings (3 3.8628067%
09/30/2005 308.509.38 [12~000.00 196.509.38 193.929.42 2.579.96 672.02
09/30/2006 617.018.76 61T01g.76 555.513.25 61.505.51 57.709.77
09/30/2007 617.018.76 617.018.76 557.662.00 59.356.76 5~.522.00
09/30/2008 1.145.018.76 L145.018.76 1.087.402.00 57.616.76 50.012.86
09/30/2009 1.132~565.63 1.132 565.63 1.074.291.75 58.273.88 48.800.17
09/30/2010 1.150.237.50 1.150.237.50 1.089.465.50 60.772.00 49.136.72
09/30/2011 [.140.487.50 1.140.487.50 1.082.597.00 57.890.50 45./94.31
09/30:2012 1.128.712.50 1.128.712.50 1.069.023.75 59.688.75 44.878.20
09/30~2013 1.139.512.50 1.139.512.50 1.078.544.00 60.968.50 44.236.03
09/30/2014 1.123.118.75 1.123.118.75 1.066.292.75 56.826.00 39.729.04
09/30,'2015 1.129.225.00 1.129.225.00 1.072.234.50 56.990.50 38.449.86
09/30/2016 [131.987.50 1,131,987.50 1.070.917.50 61.070.00 39.793.53
09/30/2017 1.131.900.00 1.131.900.00 1.072.477.75 59.422.25 37.357.30
09/30/2018 ] 132 500.00 1.132.500.00 1.072.021.00 60.479.00 36.662.93
09/30/2019 1A 33.750.00 1.133.750.00 1.074.441.50 59.308.50 34.662.81
09130/2020 1.132.500.00 1.132.500.00 [.074 587.00 57.913.00 32.635.19
09/30/2021 1.153.125.00 1.153.125.00 1.092.042.00 61.083.00 33.[95.53
17.447.187.54 112.000.00 17.335.187.54 16.383.442.67 951.744.87 686.548.28
Savings Summary
Dated Date 03/07/2005
DeliveD Date 03/07/2005
PV of savings from cash flow 686 q48.28
Plus: Refunding funds on hand 3.653.98
Net PV Savings 690 202.26
Feb 7. 2005 1:45 pm Prepared by First Southwest Company (NF) (Finance 5.012 Port Artbur:PA-2005~200q, Page 3
Period
Ending
09/30/2005
09/30/2006
09/30:2007
09/30/2008
09/30/2009
09/30/2010
09/3 )/2011
09/30/2012
09/30/2013
09/30/2014
09/30/2015
09/30/2016
09/30/2017
09/30/2018
09/30/2019
09/30/2020
09/3 )/2021
BOND DEBT SERVICE
Cit3 of Port Arthur Texas
General Obligation Relhnding Bonds. Series 2005
*Preliminary - For Discussion Purposes Only*
*Current Market Rates as of 2/7/2005
Dated Date 03/07/2005
Delivery Date 03/07/2005
Principal Coupon Interesl Debt Service
193.929.42 193.929.42
115.000 2.350% 440.513.25 555.513.25
120.000 2.500% 437.662.00 557.662.00
670.000 5600% 417.402.00 1.087.402,00
685.000 2.730% 389.291.75 1.074.291.75
720.000 2.910% 369.465.50 1.089.465.50
735.000 3.100% 347.597.00 1.082.597.00
745.000 3.270% 324.023.75 1.069, 123.75
780.000 3.410% 298.544.00 1.078.544.00
795.000 3.510% 271.292.75 1.066.292.75
830.000 3.640% 242.234.50 1.072.234.50
860.000 3,770% 210.917.50 1.070.917.50
895.000 3.850% [77.477,75 1.072.477,75
930,000 3.920% 142.021.00 1.072.021.00
970.000 3.990% 104.44E50 1.074.441.50
[.010.000 4.060% 64.587.00 1.074.587.00
1.070.000 4.120% 22.042.00 1.092.042.00
11.930.000 4.453.442.67 16.383.442.67
Feb 7, 2005 1:45 pm Prepared by First Southwest Company (NF) (Finance 5 012 Port Arthur:PA-2005.2005 Page 4
SUMMARY OF BONDS REFUNDED
Cii~ of Port Arthur Texas
General Obligation Refunding Bonds. Series 2005
*Preliminary - For Discussion Purooses Only*
*Current Market Rates as ot 2/7/2005
Maturity Interest Par Call
Bond Date Rate Amount Date
General Obligation Bonds. Series 1997, 1997:
SERIAL 02/15/2008 8.000% 550.000.00
)2/15/2009 5.375% 575.000.00
02/15/2010 5 400% 625.000.00
02/15/2011 5.500% 650.000.00
02/15 2012 5.600% 675.000.00
02/15/2013 5.600% 725.000.00
02:15/2014 5.625% 750.000.00
02/15/2015 5.700% 800.000.00
02/15/2016 5.750% 850.000.00
02/15/2017 5.700% 900.000.00
02/15/2018 5.000% 950.000.00
TERM21 02/15/2021 5.000% 3.175.000.00
Call
Price
11.22q.000.00
02/15/2007 I00.000
02/15t2007 100.000
02/15/2007 100.000
02/15/2007 100.000
02/15/2007 100.000
02/15/2007 100.000
02/15/2007 100.000
02/15 2007 100.000
02/15 2007 100.000
02/15/2007 100.000
02/15 2007 100.000
02/15/2007 100.000
Feb 7. 2005 1:45 pm Prepared by First Southwest Company fNF) gFinance 5.012 Port Arthur:PA-2005.2005't Page 5
ESCROW DESCRIPTIONS
CiD of Port Arthur. Tex~s
General Obligation Refimding Bonds. Series 2005
*Pretiminary - For Discussion Purposes Onl?
*Current Market Rates as >f 2/7/2005
Type of Type of Mamri~ First Int Par
Security SLGS Date Pmt Date Amount Rate Rate
Mar 7 2005:
SLG Certificate 08/15/2005 )8/15/2005 [46.045 2.640% 2.640~
SLG Certificate 02/15,'2006 ~2/15/2006 124.424 2.850% 2.850%
SLG Note 08 15/2006 08/15 2005 127.776 2.970% 2.970%
SLG Note 02~q5,'2007 08/15 2005 11.354.673 3.150% 3.150%
11,752.918
SLGS Summary
SLGS Rates File
Total Certificates of Indebtedness
Total Notes
Total original SLGS
07FEB05
270.469.00
11.482.449.00
11.752.918.00
Feb 7 2005 1:45 pm Prepared by First Southwest Company (NF) (Finance 5.012 Port Arthur:PA-2005.2005/ Page 6
ESCROW CASH FLOW
City of Port Arthur. Texas
General Obligation Refunding Bonds Series 2005
*Preliminary - Fc~r Discussion Purposes Only*
*Current Market Rates as of 2/7/2005
Present Value
Net Escrow to 03/07/2005
Date Principal Interest Receip*s ~ 3.1558641%
08/15/2005 146.045,00 162.463.69 308.508,69 304.297.98
02/15/2006 124~424.00 184.085.35 308.509.35 299.571.59
08/15/2006 127.776.00 180.733.57 308.509.57 294.918.20
02/15/2007 11.354.673.00 178.836.10 11.533.509.10 10.854.130.23
11.752.918.00 706.118.71 12.459.036.71 11.752.918.00
Escrow Cost Summary
Purchase date
Purchase cost of securities
Target for yield calculation
03/07/2005
11.752.918.00
I 1.752.918.00
Feb 7. 2005 1:45 pm Prepared by First Southwest Company (NF) (Finance 5.012 Port Arthur:PA-2005.2005) Page 7
ESCROW STATISTICS
Cit3 of Port Arthur Texas
General Obligation Refunding Bonds, Series 2005
*Prel[minar3 - For Discussion Purposes Only'
*Current Market Rates as of 2/7/2005
Modified Yield to Yield to Perfect Value of
Total Duration Receipl Disbursement Escrow Negative Cost of
Escro,~ Cost /years) Date Date Cost Arbitrage Dead Time
Global Proceeds Escrow:
11.752.918.81 1.833 3,155864% 3.155864% I 1.601.881.06 151.037.73 0.02
11.752.918.81 11.601.881.06 151.037.73 0.02
Delivery. date 03/07/2005
Arbitrage yield 3.862807%
Feb 7 2005 1:45 pm Prepared by First Southwest Company (NF) iFinance 5.012 Port Arthur:PA-2005.2005 Page 8