HomeMy WebLinkAbout12 2006 COP'senda Item #
CONSENT
To: Board of Directors
12
From: Jeremy Popov
Date. April 06, 2016
Subject: Consideration to Authorize Staff to Accept a Lenders Commitment
Letter for The 2006 COPs Remaining Balance Refunding
1. WHY THIS MATTER IS BEFORE THE BOARD
This consent item is to provide staff the authorization to accept a lenders commitment
letter, subject to Board approval of the financing documents thereafter, for the 2006
Revenue Certificates of Participation (COPs) remaining balance refunding.
2. HISTORY
On March 02, 2016 a workshop item was presented that informed the Board of an
opportunity to refund the remaining balance of the 2006 COPs.
As background, in 2006 Truckee Donner Public Utility District Financing Corporation
issued $26,570,000 of COPs to finance various water system improvements. In 2015
the COPs were partially refunded to achieve an improved interest rate and reduce
debt service. At the time of the August 2015 refunding, a remaining balance of
$4,315,000 was not eligible for refunding.
The March 02, 2016 workshop identified an opportunity for a private placement
refunding that provides the District compliance with advance refunding restrictions
using a "rate lock" program. The rate lock program allows the District to lock into low
rates now and close in the Fall of 2016 by utilizing a long closing process. A private
placement would equate to a NPV savings of 4.25%. During the workshop the Board
was also informed of an alternative in which the District could instead wait until fall of
2016 and at that time consider a public offering. A public offering could save up to an
additional $3,800 per year if rates remain stable to present. However, the District
would be exposed to rate risk between now and October 2016. Further, a public
offering is more complex and would require significant staff engagement. The Board
provided direction to continue to evaluate the private placement rate lock program.
3. NEW INFORMATION
With support from Brandis Tallman, a full service investment banking firm and broker/
dealer, the District issued an RFP to several potential lenders for the 2006 COPs
remaining balance refunding, requesting an extended rate lock quote. The District
received several responses, with interest rates ranging from 2.35% - 2.95%.
The prior workshop anticipated a rate of 2.929/o (all expenses included). Based on the
responses, the District is now able to move forward and select the most favorable
lender commitment letter for the 2006 COPs remaining balance refunding. Selecting
the commitment letter will allow staff to continue to progress with the refunding
evaluation and will allow staff to prepare and provide to the Board the financing
documents for approval.
If the Board elects to authorize the selection of a lenders commitment letter, a rate
lock would then occur on April 7th, 2016. The first draft of financing documents would
be delivered to the lender April 8th, 2016 and comments from the lender would be due
back on April 15th, 2016. On May 4th, 2016 the Board would review and consider
approval of the refunding. If approved, by May 18th, 2016 all documents would be
finalized and executed. In October 2016 the District would then send out a call notice
for the 2006 COPs and close the transaction. By November 15th, 2016 the District
would complete the call of 2006 COPs.
4. FISCAL IMPACT
The benefit to the District is a minimum of $38,420 per year, or $192,101 in total.
Savings are not yet included in the Financial Master Plan,
5. RECOMMENDATION
Authorize District staff, Treasurer or General Manager to select a lender's commitment
letter, subject to the Boards approval of financing documents.
fir
Jeremy Popov
Administrative Services Manager
Michael D. Holley
General Manager