HomeMy WebLinkAbout14-Discussion of a Proposed Refinancing of the Special Tax Bonds for Community Facilities District NoMQ
TRUC EE D 11 NE
Public Utility District
WORKSHOP
To: Board of Directors
From: Robert Mescher
Date: April 03, 2013
Subject: Discussion of a Proposed Refinancing of the Special Tax Bonds for
Community Facilities District No. 03-1 (Old Greenwood CFD)
1. WHY THIS MATTER IS BEFORE THE BOARD
This item involves discussion of a proposed refinancing of the Special Tax Bonds
("2003 Bonds") for the Community Facilities District No. 03-1 (Old Greenwood)
("CFD").
2. HISTORY
In 2003, the District issued $12,445,000 of Special Tax Bonds, the proceeds of which
were used to construct and acquire various public improvements related to the
proposed development within the CFD. The 2003 Bonds are paid by property owners
in the CFD via a special tax levied on the property tax roll.
The 2003 Bonds have interest rates that range from 4.80% in 2013 to 6.10% in their
final maturity of 2033. The 2003 Bonds are callable on September 1, 2013 at par (no
premium). There is approximately $11,765,000 outstanding on the issue.
3. NEW INFORMATION
Brandis Tallman LLC, a full service investment banking firm and broker/dealer in San
Francisco, and the firm that assisted the District with its Side Fund refinancing in 2011,
contacted the District to propose the refunding of the 2003 Bonds. The decrease in
municipal bond interest rates, coupled with the build -out of the CFD and the recent
sale of land in the CFD, makes the refunding economically feasible at this time.
The District has discussed the timeline and financing plan with Brandis Tallman. The
method of sale would be a public offering, the same as the sale of the 2003 Bonds.
Current market interest rates are estimated to range from 1.60% in 2013 to 4.75% in
the final maturity of 2033, with the average interest rate being about 4.32%. This is
over 100 basis points of savings in interest rate when compared to the 2003 Bonds.
The summary of the refunding (Attachment 1) illustrates that the property owners in
the CFD will save approximately $129,000 per year.
If directed to proceed with the refunding, the next steps are:
04/05/2013 - Finance Team kick-off conference call
06/05/2013 - Present the Financing documents to the Board for approval
06/07/2013 - Publish the Public Offering Statement
06/20/2013 - Sell the 2012 Bonds
07/02/2013 - Close the transaction and deposit funds with the Trustee
08/01 /2013 - Send the call notices for the 2003 Bonds
09/03/2013 - Call the 2003 Bonds
4. FISCAL IMPACT
The summary of the refinancing (Attachment 1) illustrates that the property owners in
the CFD will save approximately $129,000 per year. Total savings are approximately
$2.4 million over the life of the issue, and net present value savings are estimated at
$1,652,000 or 14%.
5. RECOMMENDATION
Direct staff to pursue the proposed refinancing of the 2003 Bonds and to present
financing documents to the Board for their review and approval at the June 5, 2013
Board Meeting.
Robert Mescher
Administrative Services Manager
Michael D. Holley
General Manager