HomeMy WebLinkAbout06/07/1994, C-16 - REFUNDING OF 1986 LEASE REVENUE BONDS MEETING DATE:
111111IIIIII 1001n it city of San WIS OBISpo
Nii% COUNCIL AGENDA REPORT ITEM NUMBER:
FROM: William C. Statler, Director of Finance
Prepared by: Linda Asprion, Revenue Managerwlel;v
SUBJECT: REFUNDING OF 1986 LEASE REVENUE BONDS
CAO RECOMMENDATION
■ Approve refunding the 1986 Lease Revenue Bonds and extending the remaining term
of the bonds by eight years in order-to create long-term capacity in the Parking Fund
to construct new facilities over the next three to seven years without requiring a
commensurate increase in parking revenues.
■ Approve a negotiated sale process for issuing the refunded bonds, and authorize the
City Administrative Officer, upon the advice of the City's Financial Advisor (Evensen
Dodge) and Bond Counsel (Jones, Hall, Hill and White), to select the underwriter.
■ Adopt a resolution approving the issuance of refunding bonds by the City of San Luis
Obispo Capital Improvement Board for the purpose of refinancing the 1986 Lease
Revenue Bonds and authorizing the amendment and restatement of the 1986 lease and
approving related documents and official actions.
DISCUSSION
Overview
There are three issues before the Council in considering a refunding of the 1986 Lease
Revenue Bonds:
■ Are there sufficient savings to offset the one-time costs we will incur in conducting a
refunding?
If there are, should we:
■ Extend the remaining term of the bonds?
■ Use a competitive or negotiated sales process?
The proposed refunding of the 1986 Lease Revenue Bonds is in conformance with the policies
and objectives outlined in the 1993-95 Financial Plan. An extensive analysis of the refinancing
has been prepared by our Financial Advisor and is on file in the Council office. The following
analysis concludes that:
■ Refinancing these bonds for the remaining term (12 years) results in annual net savings
of about $78,000 annually ($28,000 in the General Fund and $50,000 in the Parking
Fund). These estimated savings are more than sufficient to justify the refinancing.
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■ Extending the term by 8 years (resulting in a total refinancing term of 28 years, which
is significantly shorter than the useful life of the financed facilities) results in an initial
reduction in net debt service costs of about $420,000 ($155,000 General Fund and
$265,000 in Parking Fund). Although total costs (principal and interest) will be greater
because the term is extended by eight years, this will create additional capacity in the
Parking Fund to construct new facilities in the next three to five years without.requiring
a commensurate increase in parking revenues. Because we believe that new facilities
will need to go forward in this timeframe in accordance with the Parking Management
Plan and Downtown Physical Plan, we recommend extending the term for this purpose.
■ Using a negotiated rather than competitive process is the approach recommended in our
Financial Plan policies in times of market volatility. Under these circumstances, a
competitive sale can establish an arbitrary closing date that works to the City's
disadvantage when market rates are not stable. A negotiated sale allows for greater
flexibility in bringing the issue to market at the right time. This is especially important
in the case of a refunding since our timing is not related to a construction schedule, but
market factors. Accordingly, a negotiated sale process.is recommended.
Background
The 1986 Lease Revenue Bonds were issued in the amount of$13.97 million in order to fund
the construction of parking structures, acquisition of necessary land, purchase of the 860 Pacific
building, and construction of street improvements along Madonna Road and South Higuera to
High Street. Annual debt service payments on this issue are about $1.47 million, of which
$545,000 is paid by the General Fund (for street improvements and the 860 Pacific building)
and $929,000 is paid by the Parking Fund (for land acquisition and parking structures). The
principal amount currently outstanding is $11.56 million.
During the past three years, the City's financial advisor has periodically performed
comprehensive analyses of the potential savings if we refinanced some or any of the City's
outstanding bond issues. In the past, the resulting conclusion has been that not enough savings
would ensue to justify the costs associated with refinancing any of the currently outstanding
bond issues. However, their analysis performed in February/March of 1994 indicated that
refinancing the 1986 Lease Revenue Bonds would result in interest savings sufficient to offset
the other costs that will be incurred if we refinance this issue. At the Council Meeting on
April 5, 1994, Council directed staff to continue evaluating the cost effectiveness of refinancing
the 1986 Lease Revenue Bonds and to return with necessary bond documents for Council
approval if the analyses continue to confirm that the City would experience sufficient savings
to justify the refinancing. A copy of this agenda report is provided in Exhibit A.
Term of the 1994 Refunding
Provided in Exhibit B is a summary of the net debt service savings available to the City if the
bonds are refunded for the remaining term (12 years) or for the extended period of 20 years.
While this analysis in demonstrates that we should go forward with the refinancing of the 1986
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Lease Revenue Bonds due to net annual savings of$78,000, the question remaining is: should
we extend the term of the bonds as part of the refinancing?
This depends on the City's future capital plans.
Unless we plan to make significant improvements in our parking facilities over the next three
to seven years, we do not recommend extending the term. However, if we do plan on making
some level of improvements as set forth in the Parking Management Plan and Downtown
Physical Concept Plan within the next three to seven years, then we should extend the term of
the bonds. Reducing the annual payment requirements now allows two things to occur:
■ Begin accumulating savings for future improvements.
■ Create the ability to debt finance future improvements without having to
correspondingly increase parking revenues.
For example, if the City wanted to make a $5 million parking improvement four years from
now, we would be able to do so without raising parking revenues by refinancing for 20 years
as summarized below:
Existing fund balance available $ 1.0
Four years of accumulated debt service savings 1.0
Balance that could be finance with $265,000
in projected debt service savings 3.0
$ 5.0 million
Candidate projects (not to exclude others), include land acquisition and construction of an L-
shaped extension of the Marsh/Chorro structure, Wells Fargo site, and Nipomo site.
Competitive Sale vs Negotiated Sale
It is the City's policy to generally.conduct financings on a competitive basis unless there are
circumstances which justify using a negotiated process. This is one of those occasions. Under
a negotiated process, the timing of the sale can occur when market conditions are best, subject
to appropriate terms and conditions which are agreed upon in advance of the sale with the
underwriter.
Under the proposed negotiated sale process, the City's Financial Advisor will prepare a
Request for Proposal (RFP) and assist the City in selecting the underwriter that will provide
the best price and benefit to the City during the refinancing process. The chosen underwriter
will work closely with our Financial Advisor and City staff to safeguard the refinancing so that
it will only occur when the financial qualifications for the sale are met in the market (i.e. best
possible savings for the City). Because the administration process occurs at the front end of
a negotiated sale, the actual refunding of the 1986 Lease Bonds can occur when the market
conditions provide the highest level of savings available to the City.
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1 COUNCIL AGENDA REPORT
The specific scope of services to be provided by the underwriter include, but are not limited,
to the following:
■ Review and comment upon those sections in the following documents relevant to the
proposed refunding: drafts of the City's Preliminary Official Statement, the Amended
and Restated Lease Agreement, the Assignment of the Lease, and any other relevant
reports or studies.
■ Formulate a marketing plan for the sale of the bonds, including a presentation of
alternative structuring strategies, taking into consideration: implementation of the
refinancing in light of the City's overall goals and objectives; the City's policies and
procedures; and the current climate of the capital markets, particularly for rated, lease
revenue bonds.
■ Prepare bond amortization schedules, provisions for redemption prior to maturity, call
premiums, and other matters which may assist in obtaining the lowest practical interest
cost and the widest distribution for purchase of the bonds.
■ Distribute Preliminary Official Statements and final Official Statements and other
documents and materials required to facilitate bond sales.
■ Assist in finalizing legal and financing documents in coordination with bond counsel,
City staff, financial advisors and others consistent with the scope of services.
■ Make available qualified personnel for consultations and conferences with officials,
legal counsel, consultants and staff members of the City on an "as-needed" basis.
With the current volatility of the financial markets, the time it takes to establish a competitive
sale could mean losing the window of opportunity to complete the refinancing transaction at
the lowest possible cost Accordingly, staff is recommending, on the advice of the City's
Financial Advisor and Bond Counsel, that the City proceed with a negotiated sale for the
refinancing of the 1986 Lease Revenue Bonds. The authorizing resolution provides a three
month timeframe for completing the refunding. Once the RFP process is complete, the City
Administrative Officer is authorized by adoption of the resolutions to execute the contract with
the underwriter. As recommended by the City's Financial Advisor, a listing of firms that will
be requested to submit proposals is provided in Exhibit C. These firms were primarily selected
based on their past experience in underwriting City financings.
Proposed Strueture
This refinancing is to be achieved through the San Luis Obispo Capital Improvement Board,
which was established on April 15, 1986, at the time of the original issue of the 1986 Lease
Revenue Bonds, as a public financing authority for the express purpose of providing financing
for improvements. The City Council serves as the Board of Directors for this agency.
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jl� COUNCIL AGENDA REPORT
Under the proposed structure of this refinancing, which is the same as used for the original
1986 Lease Revenue Bonds, the City will make annual lease payments to the Board equal to
the debt service payments on the Bonds, which will be issued through the Board. Due to the
lease-purchase nature of the financing between the Board and the City, adoption of resolutions
approving the sale and related documents is required by both agencies.
Description of Financing Documents
The attached resolution approves a variety of financing documents which are required in order
to proceed with the bond refunding. Prepared by the City's .Bond Counsel and Financial
Advisor, the following is a brief description of these documents which are on file in the City
Clerk's office:
Refunding Transaction Analysis. Provides sources and uses information plus savings
summaries based on refunding the 1986 Lease Revenue Bonds for their remaining life of
twelve years and for extending the term of the refunded bonds an additional eight years.
First Amended and Restated Lease Agreement Amends and restates in full the original Lease
Agreement dated June 15, 1986, by and between the City of San Luis Obispo Capital
Improvement Board as lessor, and the City of San Luis Obispo as lessee, a memorandum of
which was recorded on July 15, 1986.
Escrow Deposit and Trust Agreement Provides the terms and conditions relating to the
deposit and application of moneys and federal securities to provide for the payment and
redemption of the 1986 Bonds, and thereby defease and discharge the 1986 Bonds pursuant to
and in accordance with the provisions of the 1986 Bond Indenture.
Trust Agreement Contains all of the terms and provisions relating to the Bonds, including
prepayment provisions, maturity schedules, rights, and remedies of the Bond owners and the
Trustee in the event of a default under the Lease Agreement.
Assignment Agreement Assigns lease payments to the trustee (Bank of America) on behalf
of the bond holders.
Official Statement Describes the financing for prospective purchasers of the bonds, and
constitutes the primary marketing document for the financing.
CONCURRENCES
Since the refunding and term extension of the 1986 Lease Revenue Bonds specifically affects
the downtown area, staff presented an analysis of the refunding and term extension to the
Business Improvement Association's (BIA) Board of Directors on May 10, 1994. The BIA's
Board unanimously concurred with extending the term of the refinance bonds to 20 years.
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COUNCIL AGENDA REPORT
Additionally, on May 19, 1994, staff also made a presentation to the Chamber of Commerce
Board of Directors, again presenting the analysis of the refunding and tern extension. The .
Chamber of Commerce also concurred with extending the term of refinance bonds to 20 years.
It should be noted that the concurrence with extending the term of the refinanced bonds by
both the BIA and the Chamber of Commerce is predicated on these savings in the Parking
Fund being used exclusively for parking improvements so that concurrent increases in parking
revenues will not be required to pay for these projects.
FISCAL EMPACT
The net lease payments (debt service) to be made by the City will be.approximately $903,000
annually with $332,000 paid by the General Fund and $571,000 paid by the Parking Fund
beginning in fiscal year 1994-95. The following detail schedules regarding the financial terms
of the refunded bonds are provided in Exhibit D:
■ Sources and Uses of Funds
■ Debt Service Schedules
ATTACHMENT
■ Resolution approving the issuance of refunding 1986 lease revenue bonds
EXHIBITS
A. Council Agenda Report from April 5, 1994 on refinancing of 1986 lease revenue bonds
B. Summary of net debt service savings
C. Proposed RFP distribution list for underwriter services
D. Refunding Summary
.1. Sources and uses of funds
2. Debt service schedules - current and proposed
a. General fund
b. Parking fund
ON FILE IN THE COUNCIL OFFICE:
■ Refunding transaction analysis, dated May 24, 1994, by Evensen Dodge
■ First amended and restated lease agreement
■ Escrow deposit and trust agreement
■ Indenture of trust
■ Assignment agreement
■ Preliminary official statement
■ Request for proposals for underwriter services
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO
APPROVING THE ISSUANCE OF REFUNDING BONDS BY THE CITY OF
SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD FOR THE PURPOSE
OF REFINANCING 1986 LEASE REVENUE BONDS, AUTHORIZING THE
AMENDMENT AND RESTATEMENT OF 1986 LEASE AND APPROVING
RELATED DOCUMENTS AND OFFICIAL ACTIONS
WHEREAS, the City of San Luis Obispo (the "City") has previously financed the
acquisition and construction of various public improvements consisting generally of city
hall improvements, a police station and public parking facilities (collectively, the "Projects")
with the assistance of the City of San Luis Obispo Capital Improvement Board (the 'Board")
pursuant to a Lease Agreement dated as of June 15, 1986 (the "1986 Lease Agreement")
under which the Board has leased the Projects to the City; and
WHEREAS, funds for the acquisition and construction of the Projects have been
provided by the Board through the issuance of its $13,970,000 aggregate principal amount of
Lease Revenue Bonds (Capital Improvement Projects), Series 1986 (the "1986 Bonds"); and
WHEREAS, in order to take advantage of current prevailing interest rates and
thereby realize substantial savings, the City has requested the Board at this time to
undertake and complete proceedings for the refinancing of the 1986 Lease Agreement and
the 1986 Bonds, and to that end the City and the Board have proposed to amend and restate
the 1986 Lease Agreement and the Board has proposed to issue its 1994 Refunding Lease
Revenue Bonds in the principal amount of not to exceed $12,750,000 (the "Bonds") which
are secured by rental payments made by the City under the amended and restated 1986 Lease
Agreement; and
WHEREAS, the firm of Evensen Dodge, Inc., as financial adviser to the City and the
Authority (the "Financial Adviser"), has recommended that the Authority sell the Bonds
on a negotiated basis; and
WHEREAS, the City Council wishes at this time to approve such financing
transactions and all documents relating thereto;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San Luis
Obispo as follows:
SECTION 1. AEproval of Bonds. The City Council hereby approves the issuance of
the Bonds by the Board in the aggregate principal amount of not to exceed $12,750,000, for
the purpose of providing funds to advance refund the 1986 Bonds, and thereby advance
refund the obligations of the City under the 1986 Lease.
SECTION 2. Approval of Related Financing Agreements. The City Council hereby
approves each of the following agreements required to implement the financing plan to be
accomplished by the Bonds, in substantially the respective forms on file with the City Clerk
together with any changes therein or additions thereto deemed advisable by the City
Administrative Officer, whose execution thereof shall be conclusive evidence of the
approval of any such changes or additions. The City Administrative Officer is hereby
authorized and directed for and in the name and on behalf of the City to execute, and the
City Clerk is hereby authorized and directed to attest and affix the seal of the City to, the
final form of each such agreement:
(a) First Amended and Restated Lease Agreement by and between the
Board as lessor and the City as lessee, relating to the amendment and
restatement of the 1986 Lease Agreement; and
(b) Escrow Deposit and Trust Agreement by and among the Board, the
City and Bank of America National Trust and Savings Association, as trustee
for the 1986 Bonds, relating to the establishment of an irrevocable escrow for
the advance refunding of the 1986 Bonds and the 1986 Lease Agreement.
SECTION 3. Sale of Bonds. The City Council hereby approves the negotiated sale of
the Bonds by the Board to an underwriting or investment banking firm to be selected by the
Executive Director of the Board upon the advice of the Financial Adviser (the
"Underwriter"). The Bonds shall be sold in accordance with the resolution of the
governing body of the Board relating thereto.
SECTION 4. Official Statement. The City Council hereby approves, and hereby
authorizes the Director of Finance to deem nearly final within the meaning of Rule 15c2-12
of the Securities Exchange Act of 1934, the preliminary Official Statement describing the
Bonds in substantially the form submitted by the Financial Adviser and on file with the
City Clerk Distribution of the preliminary Official Statement by the Underwriter to
prospective purchasers of the Bonds is hereby approved. The City Council hereby
authorizes the distribution of the final Official Statement by the Underwriter.
SECTION S. Official Actions. The City Administrative Officer, the Director of
Finance, the City Clerk and all other officers of the City are each authorized and directed in
the name and on behalf of the City to make any and all site ].eases, assignments, certificates,
requisitions, agreements, notices, consents, instruments of conveyance, warrants and other
documents, which they or any of them might deem necessary or appropriate in order to
consummate any of the transactions contemplated by the agreements and documents
approved pursuant to this Resolution. Whenever in this resolution any officer of the City
is authorized to execute or countersign any document or take any action, such execution,
countersigning or action may be taken on behalf of such officer by any person designated by
such officer to act on his or her behalf in the case such officer shall be absent or unavailable.
SECTION 6. Effective Date. This resolution shall take effect from and after the date
of approval and adoption thereof.
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On .motion of, _ _ —_ seconded -b
_
and on:the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted.this 7th day of June, 1994.
Mayor - ----- = - --
ATTEST:
City Clerk --- --- -
IOPPROVE AS TO FORW
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ii�h�I �WIIVII�I"��iuU�ll city of sari lues OBISPO MEETING DATE:
w` COUNCIL AGENDA REPORT ITEM NUMBER:
FROM: William C. Statler, Director of Finance
SUBJECT: REFINANCING OF 1986 LEASE REVENUE BONDS
CAO RECOMMENDATION .
Direct staff to continue evaluating the cost effectiveness of refinancing the 1986 Lease Revenue
Bonds and to return with necessary bond documents for Council approval if this analysis
confirms that the City will experience sufficient savings to justify the refinancing.
DISCUSSION
During the past three years the City's financial advisor, Evensen Dodge, has periodically
performed comprehensive analyses of the potential savings if we refmanced some or any of
our outstanding bond issues. This would be similar to refinancing an existing home mortgage
in light of today's lower interest rate market. In the past, the resulting conclusion has been that
not enough savings would ensue to justify the costs associated with refinancing any of our
currently outstanding bond issues. However, .their most recent analysis indicates that
refinancing the 1986 Lease Revenue Bonds (originally issued in the amount of$13.9 million
in order to fund parking and street improvements) at this time will result in interest savings that
are sufficient to offset the other costs that will be incurred if we refinance this issue.
Factors to Consider in Addition to Interest Rates
Even though interest rates have come down significantly over the past several years (we expect
the net interest cost on the refunding to be 5.75% compared with the current rate of 8.04%),
there are at least four factors that partially offset projected interest savings:
■ Interest costs during escrow. Issued in 1986, these bonds cannot be "called"
for 10 ten years - or until 1996 under the terms of the bond indenture. This
means that if we want to refinance this issue at today's interest rates, we must
issue what is called an "advance refunding". Under this approach, we issue
bonds now to refinance the 1986 lease-revenue bonds, but hold onto the
proceeds for two years before paying off the existing bonds. For this interim
two year period, we will in essence have two issues outstanding: the original
issue and the refunding. Although we will pay interest on the refunding issue
during this period, we will also earn interest on these funds, which will be
placed in an escrow account and administered by a third party trustee on behalf
of the bond holders. However, it is highly likely that interest earnings on the
escrow funds will be less than the interest costs on the bonds. (Long term rates -
which we will pay on the bonds - are almost always higher than short term
rates - which we will earn on the escrow funds.)
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Mmiia COUNCIL AGENDA REPORT
This "negative arbitrage" is one of the costs of the refinancing that reduces the
benefit of lower interest rates. As we get closer to the call date, this cost is
reduced. This argues for waiting longer to refinance this issue until the call
date, which has been part of our strategy, along with periodic review of changes
in interest rates. However, if we wait an additional two years, there is no
guarantee that the favorable interest rates present today will be available at that
time. This is a judgement call. Based on current market factors, and the results
of our financial advisor's analysis of savings under existing and projected
conditions, we believe that we should go forward with the refinancing at this
time.
■ Issuance costs. There will be one-time costs associated with this refinancing
(like "points" on a mortgage loan) for bond counsel, financial advisor, printing,
trustee, and underwriter fees. . These will be paid from the proceeds of the
refunding issue.
■ Early call penalty. There is a 2% penalty for an early call which is paid to the
current bond holders. These will also be paid from the proceeds of the
refunding issue.
■ Interest earnings on the reserve fund. The "reserve fund" on this issue (about
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$990,000) is invested in a long term treasury bond at 8.5%, which is a higher
yield the underlying interest rate on the bonds. Since these bonds were issued
before new arbitrage rebate rules were put in place in 1987, we are able to keep
the positive interest earnings. With the refunded issue, we will not be able to do
so. This lost "net earnings" on the reserve also becomes a cost factor in
considering the benefits of refinancing this issue. This will be partially offset,
however, by the capital gain we should earn when we sell this investment as
part of the refunding.
After considering all of these factors, we believe that it will be cost effective to refinance this
issue at this time. The City's bond counsel (Jones Hall Hill & White) and Evensen Dodge are
proceeding with the necessary paperwork to initiate the refinancing process. It should be noted
that Evensen Dodge continues to perform extensive analyses to ensure the amount of savings
to the City is sufficient before finally committing to the refunding.
Term Considerations in Addition to Financing Costs
Although.not directly related to the basic refinancing analysis, another factor to be considered
is the term of the refunding. Assets pledged as security for the Parking Fund portion of this
issue are the parking structures themselves, the assets pledged for the General Fund portion are
City Hall and the Police Station. In considering the economics of the refunding itself, we
assume that the term of the refinancing will be the balance of the original period remaining -
in this case, fourteen years. However, we may also want to consider extending the refinancing
term beyond this period, especially since the facilities being financed - such as the parking
structures - have useful remaining lives significantly in excess of fourteen years. This is a
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city of San Luis OBIspo
am% COUNCIL AGENDA REPORT
separate analysis we will also be performing as part of this refinancing, and is again very
similar to a personal mortgage refinance, where it is common to refinance for a new 30 year
term.
We anticipate bringing the results of this analysis and our recommendations regarding
refinancing the 1986 Lease Revenue Bonds to the Council at the April 19, 1994 meeting. If
the outcome of this analysis results in a recommendation to refinance this issue, we will also
be requesting Council approval of the bond documents necessary to completethe refinancing
at that time..
Background on the 1986 Lease Revenue Bonds
These bonds were issued in 1986 in the amount of $13.97 million in order to fund the
construction of parking structures, acquisition of necessary land, purchase of the 860 Pacific
building, and construction of street improvements along Madonna Road and South Higuera to
High Street. The principal amount currently outstanding is $11.56 million. Annual debt
service payments on this issue are about $1.47 million, of which $545,000 is paid by the
General Fund (for street improvements and the 860 Pacific building) and $929,000 is paid by
the Parking Fund (for land acquisition and parking structures).
Attached is an excerpt from the 1993-95 Financial Plan which summarizes all of the
outstanding debt service obligations of the City. As discussed above, the benefits of
refinancing each of these issues has recently been comprehensively evaluated by our financial
advisor. Based on their analysis, which they reviewed in-depth at a recent briefing with the
CAO, Assistant CAO, and Finance Staff, only the refinancing of the 1986 Lease Revenue
Bonds is recommended for serious consideration at this time.
ATTACHMENTS
Excerpt from the 1993-95 Financial Plan summarizing the City's outstanding debt service
obligations
ON FILE IN THE COUNCIL OFFICE
Analysis by Evensen Dodge, Inc. of the potential benefits of refinancing the City's outstanding
debt service obligations.
DEBT SERVICE REQL.. EMENTS '
OVERVIEW
This section summarizes the debt service obligations of the City as of the beginning of the 1993-95 Financial Plan period
(July 4 1993). These obligations represent the City's annual installment payments of principal and interest for previous
capital improvement plan projects or acquisitions funded through debt financings. The City's debt management policies
are comprehensively discussed in Section B (Capital Financing and Debt Management) of the Financial Plan. The
following is a description of each lease or bond obligation existing at July 1, 1993:
1959 Whale Rock Reservoir General Obligation Bonds -Series A and B
• Purpose: Constructing the City's share of the Whale Rock Reservoir.
• Maturity Date: 1999 Interest Rate: 3.75% to 4.00%
■ Original Principal Amount: $3,900,000 Funding Source: Water Fund
• July 1, 1993 Principal Outstanding: $1,140,000
1986 Lease Revenue Bonds
• Purpose: Constructing parking structures (55,758,400) as well as road improvements and facility acquisitions
(S4+450+0•
• Maturity Date: 2006 Interest Rate: 4.25% to 8.25%
• Original Principal Amount: 513,970,000 Funding Source: Debt Service and Parking Funds
• July 1, 1993 Principal Outstanding: $11,555,000
1988 Water Certificates of Participation
• Purpose: Constructing various water system improvements.
• Maturity Date: 2008 Interest Rate: 6.70% to 7.25%
• Original Principal Amount 55,000,000 Funding Source: Water Fund
• July 1, 1993 Principal Outstanding: 54,310,000
1990 Certificates of Participation
• Purpose: Acquiring land for open space, rehabilitating the City's Recreation Center, and acquiring land for a
fire station site.
• Maturity Date: 2010 Interest Rate: 6.00% to 6.70%
• Original Principal Amount: 54,500,000 Funding Source: Debt Service Fund
• July 1, 1993 Principal Outstanding: 54,310,000
1992 State Revolving Fund Loan
• Purpose: Upgrading the City's water reclamation plant and collection system to meet discharge standards.
• Maturity Date: 2012 Interest Rate: 3.00% to 3?0%
• Original Principal Amount: 531,227,400 Funding Source: Sewer Fund
• July 1, 1993 Principal Outstanding: 531,084,100
1993 Water Revenue Bonds
• Purpose: Upgrading the City's water treatment plant to meet water quality standards.
• Maturity Date: 2023 Interest Rate: 5.00% to 5.50%
• Original Principal Amount: 510,890,000 Funding Source: Water Fund
• July 1, 1993 Principal Outstanding:' $10,890,000
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Proposed Distribution List
City of San Luis Obispo
1994 Refunding Issue
Smith Barney Shearson Prudential Securities
Douglas K Auslmuler John Burhoe
Vice President Manager
333 So. Grand Avenue 300 Esplanade Drive
Suite 5200 Suite 104
Los Angeles, CA 90071 Oxnard, CA 93030
Lehman Brothers Stone & Youngberg
Catherine Pfeiffenberger Scott C. Sollars
Managing Director Partner
601 S. Figueroa Street 1 California Street
Suite 4400 Suite 2800
Los Angeles, CA 90017 San Francisco, CA 94111
Merrill Lynch & Co. Dean Witter Reynolds, Inc.
H. Cody Press Richard Harris
Managing Director Managing Director
350 S. Grand Avenue 101 California Street
28th Floor San Francisco, CA 94111
Los Angeles, CA 90071
Kemper Securities,Inc. Rauscher Pierce Refines, Inc.
Mike Engelbrecht ,john Geesman
Vice President Senior Vice President
555 California Street One Market Street
Sutie 2300 Suite 1100 (Steuart Tower)
San Francisco, CA 94104 San Francisco, CA 94105
i EAR&L
CITY OF SAN LUIS OBISPO
LEASE REVENUE BONDS, SERIES 1994
SOURCES AND USES OF FUNDS AND SAVINGS SUMMARY
SCENARIO: PARKING FUND AND GENERAL FUND (LAST MATURITY 6/1/14)
SOURCES AND USES OF FUNDS
TOTAL
PARKING AND
PARKING FUND GENERAL FUND GENERAL FUND
Sources of Funds
Bond Proceeds 7,235,000.00 4,210,000.00 11,445,000.00
Reserve Security Proceeds 1.004.298.16 582.270.81 1.586.568.97
Total Sources 8.239.298.16 4.792 270.81 13.031.568.97
Uses of Funds
Cost of Escrow 7,377,208.52 4,278,249.13 11,655,457.65
Underwriters Discount ($12.50/$1,000) 90,437.50 52,625.00 143,062.50
Cost of Issuance 49,205.00 40,130.00 89,335.00
Bond Insurance 93,755.18 54,584.40 148,339.58
Debt Service Reserve 627,057.50 366,562.50 993,620.00
Rounding 1.634.46 119.78 1.754.24
Total Uses $ 8 15 4.792270.81 13.031.568 97
SAVINGS SUMMARY
Gross Savings (2,048,557.60) (1,209,698.91) (3,258,256.51)
Present Value Savings 209,768.14 111,102.25 320,870.39
Current NIC = 8.05%
Refunding Scenario NIC = 6.04%
Prepared by Evensen Dodge, Inc. 05/24/94 8
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1. _JIN�G� ���� AGENDA _
DATE -1--=�ITEM #
MEMORANDUM
June 6, 1994
TO: City Council
FROM: John Dunn, City Administrative=VENUE
SUBJECT: REFUNDING OF THE 1986 LBONDS
The Refunding of the 1986 Lease Revenue Bonds is on the consent calendar of the June 7,
1994 City Council Meeting. Timothy Schaeffer from Evensen Dodge, the City's financial
Advisor and Charles Adams from Jones Hall Hill and White, the City's band counsel will both
be in attendance at the Council Meeting. Accordingly, if for any reason this item should be
pulled from the consent calendar, it is most important that the item be heard prior to the
Council Meeting being adjourned.
Thank you for your consideration. If you have any questions on this item please do not
hesitate to contact Bill Statler or Linda Asprion.
i Iff CNCIL ❑ CD IR
N DIR
ZATTC
0 13 FIRE CHIEF
J E ❑ PW DIR
RKAORIG ❑ POLICE
C
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G TEM ❑ REC DIR
❑ unL DIR
❑ PERS DIR
DECEIVE®.
AN 6 1994
CITY COUNCIL
SAN LUIS OBISP_0a CA
M�`�YNG AGENDA C
DATE (��7� ITEM #
MEMORANDUM
June 3, 1994
TO: City Council
VIA: John Dunn, City Administrative Offi�
FROM: Ken Hampian, Assistant City Administrative Officer.
SUBJECT: June 7, 1994 Agenda, Item #!2: Bonds for Industry Program
Attached is a correspondence from San Luis Sourdough indicating its intentions to withdraw
from the Bonds for Industry Program. The company is withdrawing because they were able to
secure competitive financing from a local bank. This will void recommendation #t2 in the Staff
Report.
However, staff continues to recommend that the City join the California Statewide Communities
Development Authority. By doing so, the City can respond quickly to future local companies
wishing to participate in the Bonds for Industries Program. During the afternoon of June 7th,
staff has scheduled meetings for Steve Hamill, the State's Program Representative with the
Spice Hunter, Blake Printery, and the Executive Director of the Manufacturing and Processing
Association so that they can learn more about the program. Therefore, there is some local
interest and City support could be requested in the future.
Mr. Hamill will be at the Council meeting to answer questions, if any. _
1
Attachment
,QOUNCIL ❑]DIR
IV9A0
�Y ❑ F
CrMORNEY ❑
B CLERKIORIG ❑ F
❑ GMT TEAM ❑❑�C READ F LE ❑❑
WEST SRN LUIS SOURDOUGH 30052392260 P. 02
- f.;A.
:1 3580 Sueldo .Sircef ,San l.uis Obispo, CA )3401 t e +
-r. CITY OF SAN LUIS OBISPO JUNE 61 1994
KEN HAMPIAN
r. i ASSISTANTiCITY ADMINISTRATIVE OFFICER
990 PALM ST I
SAN LUIS OBISPO, CA 93401
DEAR KEN f ''
I AM WRITING TO WITHDRAW OUR APPLICATION FOR FUNDING FROM
THE CALIFORNIA COMMUNITIES BONDS FOR INDUSTRY PROGRAM, } `
DURING FINAL REVIEW WE WERE APPROACHED WITH A COMPAIIA13LI: LOAN
PACKAGE. BY FIRST BANK OF SAN LUIS OBISPO, WHO CURRENTLY
HANDLES OUR BANKING NEEDS. AFTER CONSIDERING THL" PROS AND
' '•a'' CONS OF BOTH LOANS WE DECIDED THAT THE PACKAGE THAT (FIRST
".. BANK WAS OFFERING WAS BETTER SUITED TO OUR EXPANSION PROJECT.:
IT APPEARS THAT THE BONDS PROGRAM IS BEST SUITED TO IA
BUILDING ADDITION OR NEW CONSTRUCTION PiiOJECT AND IN THAT
INSTANCE MAY HAVE BEEN MORE APPLICABLE. : WE APPRECIATE YOUR y
EFFORTS IN HELPING TO MAKE THIS PROGRAM AVAILABLE A D HOPE
THAI IF THE NEED ARISES , THAT WE MAY BE ABLE TO TAK -
rl
ADVANTAGE OF IT IN THE FUTURE. I "
THANKS AGAIN
I•
5 " KEN FONTES _ CONTROLLER
rr. SAN LUIS SOURDOUGH I
r j is
805543.6142 1.800266.SOUR fax $05543.1279 S;