HomeMy WebLinkAbout12 - COP RefinancingAgenda Item # 12
ACTION
To: Board of Directors
From: Robert Mescher
Date: June 08, 2015
Subject: Consideration of Documents Associated with the Refinancing of the
Water 2006 Refunding Revenue Certificates of Participation (2006
COPS)
1. WHY THIS MATTER IS BEFORE THE BOARD
This item involves the consideration of adopting a resolution to authorize the sale and
issuance of the District's Water 2015 Revenue Refunding Bonds, approve documents
thereto, and authorize certain related actions.
2. HISTORY
On October 12, 2006, Truckee Donner Public Utility District Financing Corporation
issued $26,570,000 of Water 2006 Refunding Revenue Certificates of Participation
(2006 COPs), which mature in 2036. The 2006 COPs were issued to refund 100% of
the outstanding balance of the 1996 COPs, complete the funding of the Donner Lake
Assessment District water system, and fund water system capital improvements. The
refunding portion of the 2006 COP's, totaling $8,465,000, has an average interest rate
of 4.10%. The terms of the Certificates call for payments to be made only from the
net revenues of the Water Utility and the debt is secured by this revenue. These
revenues are required to be at least equal to 125% of the debt service for each year.
The principal balance as of today is $20,080,000.
Since a portion of the 2006 COPs was used for advance refunding of previous COPs,
that portion cannot be advance refunded again. Therefore, the refunding analysis is
only for the new money portion of the 2006 COPs.
Brandis Tallman LLC is a full service investment banking firm and broker/dealer in
San Francisco. The firm assisted the District with its CaIPERS Side Fund refinancing
in 2011 and the Old Greenwood bond refunding in 2014. The District has been
discussing with the firm the feasibility of refunding (refinancing) the 2006 COPs.
At the May 20, 2015, the Board directed staff to pursue the refunding.
3. NEW INFORMATION
Current market interest rates are estimated to range from 2.00% in 2015 to 5.00% in
the final maturity of 2035, with the average interest rate being about 2.96%. This is
over 100 basis points of savings in interest rate when compared to the 2006 COPs. A
summary of the refunding (Attachment 1) illustrates that the Water Utility could save
approximately $100,000 per year through the term of the bonds.
Brandis Tallman and the District have been working with its bond counsel, Stradling
Yocca Carlson & Rauth, to prepare the necessary documents which include the Term
Sheet (Attachment 2), the Board Resolution (Attachment 3), the Trust Indenture
(Attachment 4); and the Preliminary Official Statement (Attachment 5).
The steps for refunding are:
Present the financing documents to the Board for approval -June 8,
Meet with rating agencies - June 2015,
Publish the Public Offering Statement - July 2015,
Sell the 2015 Refunding Bonds - July 2015,
Close the transaction and deposit funds with the Trustee - July 2015,
Send the call notices for the 2006 COPs - October 2015, and
,all the 2006 COPs -November 2015.
4. FISCAL IMPACT
2015 (tonight),
The summary of the refinancing (Attachment 1) illustrates that the Water Utility could
save approximately $100,000 per year. Total savings are approximately $2.1 mon
over the life of the issue, and net present value savings are estimated at $1.6 million
or 10%.
5. RECOMMENDATION
Adopt the Resolution 2015-14 authorizing the sale and issuance of the District's Water
2015 Revenue Refunding Bonds, approving documents relating thereto, and
authorizing and directing certain related actions.
Robert Mescher Michael D. Holley
Administrative Services Manager General Manager