HomeMy WebLinkAbout04/16/1996, CIB 2 - APPROVAL OF 1996 LEASE BOND FINANCING PROGRAM illllylilp�lllllp�lpil�1pll MEETIN DATE
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city or san lugs oBIspo �
COUNCIL AGENDA REPORT � �-
FROM: Bill Statler, Director of Finance j
Prepared by: Linda Asprion, Revenue Manager/*,/
SUBJECT: APPROVAL OF 1996 LEASE BOND FINANCING PROGRAM
CAO RECOMMENDATION
Approve implementation of the 1996 bond financing program by adopting an ordinance
approving lease and acquisition agreements between the City and the San Luis Obispo Capital
Improvement Board (Board); these agreements will serve as collateral for the 1996 lease revenue
bonds that will be issued by the Board.
REPORT-IN-BRIEF
The purpose of the 1996 bond financing program is to implement the funding strategies
previously approved by the Council in accomplishing high-priority capital improvement projects.
It will provide financing totalling $6.4 million for the following six projects: headquarters fire
station, City Hall seismic safety and HVAC improvements, Mission Plaza expansion, Mathews
property, Bowden Adobe adjacent lot purchase, and street lighting system purchase. The net
annual debt service cost of the proposed issue is estimated at$490,000, which is consistent with
the amounts already programmed and approved by the Council in the 1995-97 Financial Plan
and the 1995-96 Mid-Year Budget Review. This will result in total annual debt service costs
of about 5% of annual General Fund revenues, which is well below generally accepted debt
capacity standards.
The lease revenue bonds will be issued by the San Luis Obispo Capital Improvement Board, who
will receive annual lease payments from the City equal to the annual debt service amounts of the
bonds. The term of the bonds is 30 years, similar to a single family mortgage. This bond issue
is not a "general" obligation of the City; however, the City will be pledging to annually budget
the lease payments necessary for the Board to meet its annual debt service requirements.
In summary, all of the projects proposed to be included in the 1996 bond financing program
have been previously approved by the Council for funding through debt financing. All of them
are high priority goals for the City, and each meets the City's conservative criteria for debt
financing as set forth in the 1995-97 Financial Plan. In short, approval of the 1996 bond
financing program simply represents the implementation of goals, plans and projects previously
approved by the Council.
DISCUSSION
Projects to be Included in the Debt Financing
Several projects are being combined for the proposed financing. Some of these projects have ,
been completed and the proposed financing will provide reimbursement of expenditures, with
other projects having received Council approval and in various stages of planning/completion.
Specific projects included in the proposed financing are:
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■ Headquarters fwe station. This project is very near completion with occupancy expected
within the next few months. The amount to be debt financed for this project was
approved by the Council in the 1993-95 Financial Plan and 1995-96 Mid-Year Budget
Review. Additionally, on July 25, 1995, the Council adopted Resolution No. 8445
preserving the City's ability to reimburse expenditures from this financing. Of the $4.8
million allocated for this project, only$2.625 million is recommended for debt financing.
■ City Hall seismic safety and HVAC improvements. Extensive planning has gone into
this project with construction anticipated to begin in May, 1996. The use of debt
financing to fund this project was approved in the 1995-97 Financial Plan and the 1995-
96 Mid-Year Budget Review. Additionally, Resolution No. 8466 was adopted by
Council on November 7, 1995, preserving the City's ability to reimburse expenditures
from this financing. All of the estimated $1.375 million in costs for this project are
proposed to be debt financed.
■ Mission plaza expansion. This project consists of expanding Mission Plaza between
Broad and Nipomo by acquiring property and installing pedestrian paths and landscaping.
The use of debt financing for this project was approved by the Council in the 1995-97
Financial Plan. Additionally, preserving the City's ability to reimburse expenditures
from this financing is also provided in Resolution No. 8466 which was adopted by the
Council on November 7, 1995. Of the $1.1 million that will be required to complete the
land acquisitions and planned improvements, $710,000 will be funded through debt
financing.
■ 314350 Higuera Street (Mathews property) acquisition. This property was purchased
in December, 1995. At that time, the Council approved the use of debt financing in
funding this project. Additionally, Resolution No. 8467 was. adopted by Council on
November 7, 1995 preserving the City's ability to reimburse expenditures from this
financing. Of the $885,000 budgeted for the project, $705,000 will be funded through
debt financing.
■ Bowden adobe adjacent lot purchase. This property is currently in escrow with an
anticipated closing date of late April, 1996. Purchase of the property was approved by
the Council on March 5, 1996, at which time the Council approved the use of debt
financing to fund its purchase. Resolution No. 8503 was adopted by the Council at that
time preserving the City's ability to reimburse this expenditure from this financing.
■ Street lighting system purchase. There are 1,864 street lights within the City. Currently
PG&E owns 1,813 of the lights with the City paying PG&E rent plus electricity and
maintenance on these lights. On April 2, 1996, Council approved appropriating funding
from the 1996 bond proceeds to pay for acquisition of these 1,813 street lights from
PG&E. As set forth in the April 2, 1996 Council agenda report, the annual debt service
cost is more than offset by the operational savings of owning the system rather than
renting it from PG&E. i
city of San A OBIspo
COUNCIL AGENDA REPORT
Capital Financing and Debt Management Policy Links
As discussed above, the use of debt financing in funding each of these projects has been
previously approved by the Council on a number of occasions. Accordingly, this financing is
consistent with adopted budget plans, goals and objectives. Additionally, the proposed financing
for these projects is consistent with the City's adopted capital financing and debt management
policies as provided in the 1995-97 Financial Plan (Exhibit A). Most notably, the proposed
financing meets the following key criteria outlined in this policy: i
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■ The projects useful lives are equal to or greater than the proposed term of the financing
(30 years).
■ The proposed financing will support an investment. grade rating and will be conducted
on a competitive basis.
■ Current market conditions present favorable interest rates and demand for municipal
financings.
■ Completion of these projects should not be deferred, and pay-as-you-go resources are not
sufficient to fully fund them.
■ Adequate resources are available to meet annual debt service requirements.
Impact of the Financing on the City's Debt Capacity
Provided in Exhibit B is a detailed assessment of factors that should be evaluated in considering
the City's debt capacity. Of the key three factors discussed - ability to pay, willingness to pay,
and management capabilities - the most objective and constraining of these factors is the ratio
of annual debt service requirements to operating revenues. As discussed in this exhibit, this
ratio should generally not exceed 10%, although a case could be made with the credit agencies
to go as high as 15% depending on the circumstances.
At this time, our ratio of debt service requirements to operating revenues is 3.4%; with this new
issue, it will be 5.6%, which is well within generally accepted debt capacity standards.
As noted in the exhibit, while the City has the ability to take on additional debt, it is important
to recognize that it is limited - and that.its use today in financing capital improvements impacts
our ability to fund capital improvements and operations in the future. Therefore, it is important
to ask ourselves: should we take on additional debt for these projects? As noted above, the
Council has previously approved each of these capital improvement projects and their funding
through bond financing. In short, all of these projects are high priority goals for the City, and
each meets the City's conservative criteria for debt financing. Accordingly, we believe that this
is a prudent use of our debt financing capacity.
Additionally, it should be noted that the proposed financing is less than the debt financing
originally envisioned when the headquarters fire station and the performing arts center projects
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AIIU COUNCIL AGENDA REPORT
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were originally approved. We originally planned to finance over $8.0 million in debt for these
two projects alone; the proposed financing only debt finances $2.625 million of this amount.
In this context, it is important to note that we have fully paid for our share of the performing
arts center($4.5 million) and a significant portion of the headquarters fire station ($2.2 million)
with pay-as-you-go resources.
Proposed Financing Structure
The 1996 lease revenue bonds will be issued by the San Luis Obispo Capital Improvement
Board. Proceeds from the bond sale will be used by the Board to acquire four properties from
the City: the headquarters fire station, Mathews property, Bowden adobe and adjacent lot, and
the corporation yard. The City will, in turn, use the proceeds received from the sale of these
properties to reimburse itself for past project expenditures and pay for future project
expenditures as described above. In order to secure the bonds, the Board will lease the four
acquired properties back to the City, with the City paying semiannual rental payments which will
be sufficient to enable the Board to pay principal and interest on the bonds.
As discussed in greater detail below, the net proceeds from the bond issue need to be $6.4
million in order to fund the projects at Council-approved levels. However, the costs associated
with selling the bonds (such as bond counsel, financial advisor, trustee, rating agency,
underwriting costs, and possible bond insurance if elected by the winning bidder) and the debt
service reserve (which is required to be set aside from the proceeds as a payment surety to bond
holders in an amount equal to at least one year's debt service payment) must also be funded from
the debt financing. Accordingly, the bond issue is sized at an amount not to exceed$7.5 million
to cover these costs. As outlined below in the "Fiscal Impact" section of this report, it is likely
that the bonds will be sold for about $7.1 million to cover these costs and to provide net
proceeds of$6.4 million. However, in order to assure adequate flexibility in covering issuance
contingencies where higher front end costs may result in lower overall interest costs, this 5%
cushion in the maximum bond sale amount is recommended by our financial advisor.
Professional Assistance
In accordance with service agreements previously approved by the Council with these firms in
November of 1995, bond counsel services will be provided by the law firm of Jones Hall Hill
& White and financial advisor services will be provided by Evensen Dodge. For trustee
services, proposals are currently being requested from several firms providing this service.
Proposals will be evaluated by a review team consisting of the City's financial advisor, Director
of Finance and Revenue Manager. The contract for trustee services will be awarded by the City
Administrative Officer to the most qualified proposer.
Description of Financing Documents
The attached resolution approves a variety of financing documents which are required in order
to proceed with the project financing. Prepared by the City's bond counsel (Jones Hall Hill & i
White) and financial advisor (Evensen Dodge), the following is a brief description off these
documents which are on file in the Council's offices:
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■ Indenture of trust. This document contains all of the terms and provisions relating to
the lease revenue bonds, including prepayment provisions, maturity schedules, rights, and
remedies of the bond owners and the trustee in the event of a default.
■ Official statement. Prepared by the financial advisor, the Official Statement (OS)
describes the financing for prospective purchasers of the lease revenue bonds, and
constitutes the primary marketing document for the financing.
■ Acquisition agreement. Prepared by bond counsel, the acquisition agreement provides
for the City to sell the four properties (headquarters fire. station, Mathews property,
Bowden adobe property, and corporation yard) to the Capital Improvement Board.
■ Assignment agreement. Prepared by bond counsel, the assignment agreement is between
the Capital Improvement Board and the trustee. The assignment consists of the Board
transferring certain rights to the trustee, such as collecting of the lease payments from
the City and protecting the interests of the bond owners.
■ Lease agreement. Prepared by bond counsel, the lease agreement is between the City
and the Capital Improvement Board. In order to secure the bonds, the Board will lease
the four properties back to the City under this agreement. Semiannual rental payments
from the City will be sufficient to pay principal and interest on the bonds.
As reflected in the attached ordinance approving these financing documents, the City
Administrative Officer is authorized to make minor amendments to these documents as
recommended by bond counsel and the financial advisor, and to execute the final documents.
Competitive Sale of Bonds
In accordance with our Financial Plan policies, the sale of these bonds will be a competitive
process, with the award made to the lowest proposer. The attached ordinance authorizes the
Director of Finance to make this award based on the recommendation of our financial advisor.
Project Financing Schedule
The following outlines key dates in completing the 1996 bond financing program:
■ Council approval of bond financing program 4/16/96
■ Rating agency (Moody's) presentation in San Luis Obispo 4/26/96
■ Bid opening 6/06/96
■ Bond closing; receipt of funds 6/20/96
FISCAL EMPACT
The net debt service payments to be made by the City will be approximately $490,000 annually
($520,000 for interest and principal less estimated interest earnings of$30,000 on the reserve),
and will be paid from the General Fund beginning in fiscal year 1996-97. The following
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WINCOUNCIL AGENDA REPORT
summarizes the planned uses of the proceeds from the sale of these bonds.
F
proceeds for acquisition and construction $6,400,000
st of issuance (bond counsel, financial advisor, trustee, etc.) 177,000
bt service reserve 523,000
Total $7,100,000
It should be noted that the debt service reserve will be invested in securities that will equal or
exceed the interest cost of the bonds, resulting in no net costs to the City.
The following summarizes the uses of the net proceeds from the bonds:
Project Project Budget Debt.Financed Amount
Headquarters fire station $4,770,600 $2,625,000
City Hall seismic and HVAC improvements 1,375,000 1,375,000
Mission Plaza expansion & improvements 1,108,000 710,000
Mathews property acquisition 885,000 705,000
Bowden adobe adjacent lot purchase 150,000 150,000
Street lighting system purchase 550,000 550,000
Total Projects $898389600 $6,115,000
Contingency @ 5% 285,000
TOTAL $8,838,600 $69,4009000
As reflected above, we are including a contingency of about 5% as part of this issue; while some
of these projects are complete (or very near completion), others have not yet been initiated, and
accordingly, it is prudent to plan for a reasonable level of contingencies in financing these
projects.
The detail regarding the financial terms of the proposed lease revenue bond issuance are
provided in Exhibit C:
■ Source and use of funds (Exhibit C-1)
■ Debt service schedule (Exhibit C-2)
■ Net debt service requirements (Exhibit C-3)
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COUNCIL AGENDA REPORT
ALTERNATIVES
The recommended financing is in accordance with adopted Council policies and objectives.
Many of these projects have already been completed or are substantially underway: of the $8.8
million in costs related to these projects, $6.6 million has already been expended or contractually
committed. Accordingly, given Council actions to date, there are no viable alternatives to the
proposed financing which will achieve the Council approved project objectives in a timely
manner that is consistent with the sound and prudent financial management policies current in
effect.
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ATTACHMENT
Ordinance approving acquisition and lease agreements between the City and the San Luis Obispo
Capital Improvement Board
EXHIBITS
A. Capital Financing and Debt Management Policy (excerpt from 1995-97 Financial Plan)
B. Overview of City's Debt Capacity
1. Latest credit report prepared by Moody's Investor Services
2. Debt service obligation excerpt from the 1995-97 Financial Plan
a. Overview - summary of current long-term debt obligations
b. Annual payments by function
C. Annual payments by source
3. Comments from City's financial advisor
C. Detailed Financing Schedules
1. Source and use of funds
2. Debt service schedule
3. Net debt service requirements
ON FILE IN COUNCIL OFFICE
■ Indenture of Trust
■ Preliminary Official Statement
■ Acquisition Agreement
■ Assignment Agreement
0 Lease Agreement
ORDINANCE NO.
ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO
APPROVING SALE AND LEASEBACK OF PROPERTY WITH THE CITY OF
SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD IN CONJUNCTION
WITH THE ISSUANCE OF LEASE REVENUE BONDS BY THE BOARD
AND APPROVING RELATED DOCUNIENTS AND OFFICIAL ACTIONS
WHEREAS, the City of San Luis Obispo (the "City") wishes at this time to finance the
acquisition and construction of various properties and improvements to be used for the municipal
purposes of the City, including but not limited to facilities to be used for the headquarters fire
station purposes, land acquisition, seismic and other improvements to the City Hall, and the
acquisition of street lighting facilities; and
WHEREAS, in order to provide funds for such purpose, the City has proposed to sell to
the City of San Luis Obispo Capital Improvement Board (the "Board")certain existing properties
owned by the City, consisting generally of a headquarters fire station, land for public park, open
space, transportation and flood protection purposes, land on which the existing Bowden Adobe
building is situated and adjacent properties, and the corporation yard of the City (collectively,the
"Properties"), pursuant to an Acquisition Agreement dated as of June 1, 1996 (the "Acquisition
Agreement"), by and between the City as seller and the Board as purchaser, and
WHEREAS, in order to raise the funds necessary to acquire the properties from the City
under the Acquisition Agreement, the Board has proposed to issue its 1996 Lease Revenue Bonds
in the maximum principal amount of$7,500,000(the"Bonds")under an Indenture of Trust dated
as of June 1, 1996, by and between the Board and a commercial bank to be designated by the
City Administrative Officer, as trustee; and
WHEREAS, for the purpose of providing a source of funds with which to pay debt service
on the Bonds, the City has proposed to lease the Properties back from the Board under a Lease
Agreement dated as of June 1, 1996 (the "Lease"), by and between the Board as lessor and the
City as lessee, under which the City will agree to pay semiannual rental payments which will be
sufficient to enable the Board to pay principal of and interest on the Bonds when due; and
WHEREAS, the firm of Evensen Dodge, Inc. as financial adviser to the City and the
Board(the "Financial Adviser"),has recommended that the Board sell the Bonds on a competitive
basis and has prepared a preliminary form of an Official Statement describing the Bonds; and
WHEREAS, the City is required by Article 9 of Chapter 5 of Part 1 of Division 2 of the
California Government Code (commencing with Section 54240 of said Code) to approve the
Lease Agreement by ordinance which is subject to referendum;
BE IT ORDAINED by the Council of the City of San Luis Obispo:
SECTION 1. Sale of Properties to Board. The City Council hereby approves the sale of
the Properties by the City to the Board under and pursuant to the Acquisition Agreement. The
proceeds received by the City from the sale of the Properties shall be applied to pay and
reimburse the City for payment of costs of various municipal improvements approved by the City
Council. The City Council hereby approves the Acquisition Agreement in substantially the form
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 the Acquisition Agreement.
SECTION 2. Lease of Properties from Board. The City Council further hereby approves
the lease of the Properties by the City back from the Board under and pursuant to the Lease
Agreement. The City Council hereby approves the Lease Agreement in substantially the form
on file with the City Clerk together with any changes therein or additions thereto deemed and
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 the Lease Agreement.
SECTION 3. Issuance and Sale of Bonds by Board. The City Council hereby approves
the issuance of the Bonds by the Board in the aggregate principal amount of not to exceed
$7,500,000 for the purpose of providing funds to acquire the Properties from the City under the
Acquisition Agreement, and thereby provide funds to enable the City to finance its various
municipal projects. The City Council hereby approves the competitive sale of the Bonds by the
Board 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 Financial Adviser to prospective bidders
is hereby approved. The City Council hereby authorizes the distribution of the final Official
Statement by the winning bidder.
SECTION 5. 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 leases, 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 Ordinance.
Whenever in this Ordinance 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
of such officer shall be absent or unavailable.
SECTION 6. Effective Date. This Ordinance shall become effective thirty(30) days from
and after the date of its final passage. This Ordinance shall be subject to referendum pursuant
to and as provided in Section 54241 of the Government Code of the State of California and the
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laws of the State of California. The City Clerk shall certify to the adoption of this Ordinance,
and shall cause this Ordinance to be published as required by Section 602 of the City Charter_
On motion of seconded by ,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing Ordinance was passed and adopted this day of May, 1996.
Mayor, Allen Settle
ATTEST:
City Clerk
APPROVED AS TO FORM:
(Q�Aw lf"'e'4w� —
i tto ey, Jorgensen
POLICIES AND OB.,cCTIVES Exhibitl�'
GENERAL BUDGET POLICIES (continued)
Debt service Installment payments of principal and interest for completed projects funded through debt ,
financings. Expenditures for this project phase are included in the Debt Service section of the Financial Plan.
Generally, " will become more difficult for a project to move from one phase to the next As such, more projects'
will be studi will be designed, and more projects will be designed than will be constructed or purchased during _
the term of the
F. The City's annual CI propriation for study, design, acquisition, and/or construction is based on the projects
designated by the Council ugh adoption of the Financial Plan. Adoption of the Financial Plan CIP appropriation
does not automatically autho funding for specific project phases. This authorization generally occurs only after
the preceding project phase has completed and approved by the Council and costs for the succeeding phases i
have been fully developed. Acco , project appropriations are generally made when contracts are awarded. If
project costs at the time of bid award less than the budgeted amount, the balance will be unappropriated and
returned to fund balance or allocated to an er project. If project costs at the time of bid award are greater than
budget amounts, five basic options are avail ab to the Council:
1. Eliminate the project
2. Defer the project for consideration to the next F' cial Plan period.
3. Rescope or change the phasing of the project to meet a existing budget
4. Transfer funding from another specified, lower priority 'ect.
5. Appropriate additional resources as necessary from fund b ce.
G. CIP appropriations lapse three years after budget adoption. Projects w 'ch lapse from lack of project account
appropriations may be resubmitted for inclusion in a subsequent CIP. Project. ounts which have been appropriated
will not lapse until completion of the project phase.
H. Project phases will be listed as objectives in the program narratives of the programs w " h manage the projects.
I. CIP projects will be evaluated during the budget process and prior to each phase for confo ce with the City's
Public Art Policy, which generally requires that 1%of eligible project construction costs be set ast for public art. ;
In those cases where public art would not be appropriate to incorporate directly into the project, "in-lieu"
contribution may be made. For 1995-97 only, the percentage contribution in these circumstances has been uced
from 1% to 1/2%. This reduction recognizes the City's fiscal situation while at the same time continuing
financial commitment to public art
CAPTTAL FINANCING AND DEBT MANAGEMENT
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Capital Financing
A. The City will consider the use of debt financing only for one-time capital improvement projects and only under the
following circumstances:
1. When the project's useful life will exceed the tens of the financing.
2. When project revenues or specific resources will be sufficient to service the long-term debt
B. Debt financing will not be considered appropriate for any recurring purpose such as current operating and
maintenance expenditures. The issuance of short-term iusCvments such as revenue, tax, or bond anticipation notes
is excluded from this limitation. (See Investment Policy)
C. Capital improvements will be financed primarily through user fees, service charges, assessments, special taxes, or
developer agreements when benefits can be specifically attributed to users of the facility. Accordingly, development
impact fees should be created and implemented at levels sufficient to ensure that new development pays its fair share
of the cost of constructing necessary community facilities.
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POLICIES AND OBJEC i IVES
GENERAL BUDGET POLICIES (continued)
D. The 1995-97 Financial Plan reflects the first use of transportation impact fees as a major funding source in financing
transportation system improvements. However, revenues from these fees are subject to significant fluctuation based
on the rate of new development Accordingly, the following guidelines will be followed in designing and building
Projects funded with transportation impact fees:
1. The availability of transportation impact fees in funding a specific project will be analyzed on a case-by-case
basis as plans and specification or contract awards are submitted for CAO or Council approval.
2. If adequate funds are not available at that time, the Council will make one of two determinations:
a. Defer the project until funds are available.
b. Based on the high-priority of the project, advance fimds from the General Fund, which will be
reimbursed as soon as funds become available. Repayment of General Fund advances will be the first
use of transportation impact fee funds when they become available.
E. The City will use the following criteria to evaluate pay-as-you-go versus long-term financing in funding capital
improvements:
Factors which favor pay-as-you-go
1. Current revenues and adequate fund balances are available or project phasing can be accomplished
2. Existing debt levels adversely affect the City's credit rating.
3. Market conditions are unstable or present difficulties in marketing.
Factors which favor long-term financing
4. Revenues available for debt service are deemed to be sufficient and reliable so that long-term financings can
be marketed with investment grade credit ratings.
5. The project securingthe financing is of the type which will support an investment grade credit rating.
6. Market conditions present favorable interest rates and.demand for City financings.
7. A project is mandated by state or federal requirements, and resources are insufficient or unavailable.
8. The project is immediately required to meet or relieve capacity needs and current resources are insufficient
or unavailable.
9. The life of the project or asset to be financed is 10 years or longer.
Debt Management
F. The City will not obligate the General Fund to secure long-term financings except when marketability can be
significantly enhanced
G. No more than 60% of capital improvement outlays will be funded from long term financing and direct debt will
not exceed 2% of assessed valuation.
H. An internal feasibility analysis will be prepared for each long-term financing which analyzes the impact on current
and future budgets for debt service and operations. This analysis will also address the reliability of.revenues to
support debt service.
T The City will generally conduct financings on a competitive basis. However, negotiated financings may be used due
to market volatility or the use of an unusual or complex financing or security structure.
J. The City will seek an investment grade rating (Baa/BBB or.greater) on any direct debt and will seek credit
enhancements such as letters of credit or insurance when necessary for marketing purposes, availability, and cost-
effectiveness.
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POLICIES AND OBJi..:TIVES
GENERAL BUDGET POLICIES (contmued)
K The City will monitor all forms of debt annually coincident with the City's Financial Plan preparation and review —
process and report concerns and remedies, if needed, to the Council.
L. The City will diligently monitor its compliance with bond covenants and ensure its adherence to federal arbitrage
regulations.
M. The City will maintain good communications with bond rating agencies about its financial condition. The City will
follow a policy of full disclosure on every financial report and bond prospectus (Official Statement).
RESOURCE MANAGEMENT
A. a budget will fully appropriate the resources needed for authorized regular staffing and will limit programs to the
g lar staffing authorized.
B. Staffing d contract service cost ceilings will limit total expenditures for regular employees, temporary employees,
and in dent contractors hired to provide operating and maintenance services.
C. Regular emplo will be the core work force and the preferred means of staffing ongoing, year-round program
activities that sho be performed by full-time City employees rather than independem contractors. The City will
strive to provide corn rive compensation and benefit schedules for its authorized regular work force. Each regular -
employee will:
1. Fill an authorized reg ar position.
2. Be assigned to an appro 'ate bargaining unit.
3. Receive salary and bene consistent with labor agreements or other compensation plans.
D. To manage the growth of the regular rk force and overall staffing costs, the City will follow these procedures:
1. The Council will authorize all regu ositions.
2. The Personnel Department will coordinate d approve the hiring of all regular and temporary employees.
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3. All requests for additional anular positions wil • clude evaluations of-
a.
fa. The necessity, term, and expected results of proposed activity. i
b. Staffing and materials costs including salary, efits, equipment, uniforms, clerical support, and
facilities.
C. The ability of private industry to provide the propos ervice.
d. Additional revenues or cost savings which may be real'
4. Periodically, and prior to any request for additional regular positions, ograms will be evaluated to determine
if they can be accomplished with fewer regular employees. (See Prod vity Review Policy)
E. The hiring of temporary employees will not be used as an incremental method for a anding the City's regular work
force.
1. Temporary employees include all employees other than regular employees, elected cials, and volunteers.
Temporary employees will generally augment regular City staffing as extra-help ployees, seasonal
employees, contract employees, interns, and work-study assistants. The City Admini .ve Officer and
Department Heads will encourage the use of temporary rather than regular employees tom workload
requirements, fill interim vacancies, and accomplish tasks where less than full-time, year-ro staffing is
required. Under this guideline, temporary employee hours will generally not exceed 50% of a ar, full- _
time position (1,000 hours annually). There may be limited circumstances where the use of t orary _
employees on an ongoing basis in excess of this target may be appropriate due to unique pro or
B-14
CSB-Z-/3
Exhibit
OVERVIEW OF THE CITY'S DEBT CAPACITY
Introduction
This overview of the City's debt capacity has been prepared as background information in
preparing for the 1996 bond financing program, which will provide about $6.4 million for the
following projects:
■ Headquarters fire station ($2.625 million)
■ City Hall seismic & HVAC improvements ($1,375 million)
■ Mission Plaza expansion and improvements ($710,000)
■ Mathews property purchase ($705,000)
■ Bowden adobe adjacent lot property purchase ($150,000)
■ Street lighting acquisition ($550,000)
Key Criteria in Evaluating Debt Capacity
In evaluating a city's capacity to take on additional General Fund supported debt, there are three
key factors that the major rating agencies consider(which are very similar to the kinds of factors
considered in making personal or business loans):
■ Ability to pay. What does the agency's financial condition look like? What are past
revenue and expenditure trends? What makes up its economic base? How has the local
economy performed over time and what are its prospects? How susceptible are revenues
to curtailment or reduction due to economic or political circumstances? What is the
relationship between revenues that are highly reliable and predictable versus expenditures
that would be difficult to reduce? What are the agency's annual debt service-to-revenue
and long term debt-to-assessed value ratios?
■ Willingness to pay. Does the agency have a demonstrated track record of meeting its debt
obligations?
■ Management and leadership. Does the agency have a tradition of stable elected
leadership?Is a strong management team in place? Does the agency have long-term fiscal
plans? Are comprehensive fiscal policies in place? Does the agency follow them? Is
there a practice of maintaining adequate reserves and fund balances? Does the agency
have a track record of making the tough revenue and expenditure necessary to ensure its
long-tens fiscal health? Does it have a positive labor relations environment?
As reflected in the attached summary from the City's latest credit report (Exhibit B.1) prepared
by Moodys Investor Services (the parent organization for Dun & Bradstreet), the City is rated
very highly in all of these areas.
gig-s2
Generally Accepted Debt Capacity Standards
While many of the factors listed above are very subjective, there are two generally accepted
standards for local government debt capacity:
■ Ratio of annual debt service requirements to operating revenues. This should generally
not exceed 10%, although a case could be made with the credit agencies to go as high
15% depending on the circumstances. With annual General Fund revenues projected at
$23.2 million for 1995-96 and current annual debt service requirements of about
$789,000, our current ratio is 3.4%. At the 10% level, this means we could take on
additional annual debt.service obligations of about $1.5 million, which would support
about $19 million in additional long-term debt. At the 15% level - which would require
compelling circumstances as noted above - we could take on additional annual debt
service obligations of about $2.7 million, which would support about $34 million in
additional long-term debt.
• Ratio of long-term debt to assessed value. This should generally not exceed 3.75% of
assessed value. As a point of interest, this standard for general obligation bonds is
incorporated into the City Charter. While the debt incurred by the City to-date is in fact
technically exempt from this limit since it is not supported by General Obligation Bonds,
it nonetheless provides us with a good standard for the*maximum amount of General Fund
supported debt we should consider. Based on an assessed value for 1995-96 of about$2.5
billion, our debt capacity by this standard is about.$94 million; outstanding General Fund
supported debt as of July 1, 1995 is $9.2 million. By this standard, the City could take
on an additional $85 million in long term General Fund supported debt.
However, the City's capital financing and debt management policy - in recognition that
property-based revenues are a smaller share of the City's revenue base than they are in
other cities as well as when this charter provision was enacted - sets forth a more
conservative standard of 2% of assessed valuation. Under this criteria, long term General
Fund supported debt should not exceed $50 million, leaving a remaining margin of about
$40 million under this even more conservative standard.
As reflected above, these two capacity standards reflect basic concerns that would be equally
applicable to a personal or business situation: ability to take on debt as percent of total net assets;
and ability of income to support debt service payments. In our case, by far the more limiting
factor is the ratio of annual debt service requirements to operating revenue.
The attached excerpt from the 1995-97 Financial Plan (Exhibit B.2) provides a good overall
summary of the City's existing long-term debt obligations.
Concurrence by the City's financial advisor on the City's Debt Capacity
We have asked the City's Financial Advisor (Evensen Dodge) to review and comment on this
matter, and have incorporated their specific suggestions into this overview. Additionally, they
have provided us with supplemental comments (Exhibit B.3) concurring with the staffs general
findings and conclusions.
Merits of the Proposed Debt Financing
While the City has the capacity to take on additional debt, it is important to recognize that it is
limited - and that its use today in meeting capital improvement needs absolutely impacts our
ability to fimd capital improvements and operations in the future.
So, while we have the ability to take on additional debt, it is important to ask ourselves should
we take on additional debt. The following addresses this issue in terms of general guidance under
the City's adopted fiscal policies and the specific benefits of the capital improvement projects that
would be funded under this financing:
■ General policy guidance. The 1995-97 Financial Plan clearly sets forth specific criteria
for the use of debt financing in funding our capital improvement needs. The projects
included in this debt financing meet all of these criteria.
■ Merits ojproposed projects All of the proposed projects to be included in the 1996 bond
financing program have been previously approved by the Council for funding through
debt financing. Each of them are high priority goals for the City, and each meets the
City's conservative criteria for debt financing as set forth in the 1995-97 Financial Plan.
In short, approval of the 1996 bond financing program simply represents the
implementation of goals, plans and projects previously approved by the Council.
Summary
Under generally accepted credit rating standards,the City possesses significant capacity to assume
additional debt (about $19 million under the most limiting standard of the ratio of annual debt
service payments to total operating revenues). Accordingly, the issue before the Council is
whether the proposed bond issue is an appropriate use of this capacity at this.time. Based on the
high priority assigned to these projects by the Council through the budget process and their
consistency with our conservative debt management policies,we believe that this is an appropriate
use of our debt capacity.
ATTACHMENTS
1. Moodys Investors Service credit report on the City
2. Debt service obligation excerpt from the 1995-97 Financial Plan
a. Overview - summary of current long-term debt obligations
b. Annual payments by function
C. Annual payments by source
3. Comments from the City's financial advisor
Exhibit.&l•
Moody's WUniCIPCII Credit Report
San Luis Obispo—San Luis Obispo Capital
Improvement Board, California September 27, 1994
New Issue Lease Rental
sale: $11,660,000 1994 Refunding Lease Revenue Bonds (Capital
Improvement Projects), Series 1994 dated September
1, 1994
date: Expected through negotiation September 28
Moody's rating: A
Refunding Lease Revenue Bonds dated September 1,1994
credit comment- The A rating has been assigned to the upcoming sale fornia Polytechnic Institute,a state prison,and other
of$11,660,000 lease revenue bonds.Proceeds will be state and local government offices. In addition,the
used to refund the city's outstanding Series 1986 retail sector is expanding,adding further diversity to
Lease Revenue bonds.Principal amortization will be the existing tax base.
extended by eight years,reducing annual debt service Modest Debt Position
by approximately 5300,000,which will enable the The city's debt Position remains modest reflecting
city to undertake additional capital projects on a pay-
, as-you-go basis. Although the stretching of debt policy to set rates so that enterprise debt is self-
service is an unfavorable debt practice,concerns are supporting and the preference for pay-as-you-go
mitigated by the ability of the city to finance future . fnancing. The peak obligation of the city's General
c�pi�al needs fro m-on2oine revenues and by the over- Fund supported lease debt represents a manageable
all strength of financial operations. The rating is 7%of fiscal 1993 General Fund revenues. Debt
levels are expected to remain modest given that no
based on the following factors:
additional borrowing is anticipated.
City's Financial Performance Remains Strong `
The city has maintained favorable financial opera- Standard Legal Provisions,
1LU5.as indicated by a consistent level of amplee, The lease payments are subject to abatement in the
operating reserves. Although the city anticipates an event that the city does not have use and occupancy
operating drawdown in fiscal 1994, these results of the pledged asses. However,legal documents
reflect a$5.2 million transfer from the General Fund Provide such protections as a Reserve Fund, equal o
to the Capital Projects Fund.These funds will finance maximum annual debt service,and the maintenance
a portion of the costs of a new fire station and a of rental interruption insurance equal to twelve
performing arts center. General Fund reserve levels months' lease payments.
remain above the 20%of operating expenditures At this time we are confirming the Al rating assigned
levels as is the city's financial policy. to the city's general obligation bonds and the A rating
Diverse and Growing Local Economy
The city serves as a service center for a broad area of
central California. Key employers here include Cali-
/7
ExhibitAL.2(a).-
DEBT SERVICE REQUIREMENTS
OVERVIEW
This section summarizes the debt service obligations of the City at the beginning of the 1995-97 Financial Plan
period(July 1, 1995). 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 1995-97 Financial Plan. The following is a description of each lease or bond obligation existing at July 1,
1995:
1959 Whale Rock Reservoir General Obligation Bonds -'Series A and B
■ Purpose: Constructing the City's share of the Whale Rock Reservoir.
IN Maturity Date: 1999
■ Original Principal Amount: $3,900,000; July 1, 1994 Principal Outstanding: $780,000
■ Interest Rate: 3.75% to 4.00%
■ Funding Source: Water Fund
1986 Lease Revenue Bonds - Refunded in 1994
■ Purpose: Constructing parking structures ($5,758,400) as well as road improvements and facility
acquisitions ($4,450,000).
■ Refunded Maturity Date: 2014
■ Original Principal Amount (1986): $I3,970,000
■ Original Principal Amount Refunded (1994): $11,780,000; July 1, 1995 Principal Outstanding:
$11,540,000
■ Refunded Interest Rate: 3.900% to 6.125%
■ Funding Source: Debt Service and Parking Funds
1988 Water Certificates of Participation
■ Purpose: Constructing various water system improvements.
■ Maturity Date:' 2008
■ Original Principal Amount: $5,000,000; July 1, 1995 Principal Outstanding: $3,965,000
■ Interest Rate: 6.70% to 7.25%
■ Funding Source: Water Fund
1990 Certificates of Participation
■ Purpose: Acquiring land for open space, rehabilitating the City's Recreation Center, and acquiring land
for parks & recreation administration offices/neighborhood park.
■ Maturity Date: 2010
■ Original Principal Amount: $4,360,000; July 1, 1995 Principal Outstanding: S4,180000
■ Interest Rate: 6.00% to 6.70% '
■ Funding Source: Debt Service Fund
1992 State Revolving Fund Loan
■ Purpose: Upgrading the City's water reclamation plant and collection system to meet discharge
standards.
■ Maturity Date: 2012
■ Original Principal Amount: 531,227,400; July 1, 1995 Principal Outstanding: S30,036,500
■ Interest Rate: 3.00% to 3.20%
■ Funding Source: Sewer Fund
1993 Water Revenue Bonds
■ Purpose: Upgrading the City's water treatment plant to meet water quality standards.
■ Maturity Date: 2023
■ Original Principal Amount: $10,890,000; July 1, 1995 Principal Outstanding: Sio,3&0,000
■ Interest Rate: 5.00% to 5.50%
■ Funding Source: Water Fund
F-1
DEBT SERVICE F MIREMENTS Exhibitld t
ANNUAL PAYAMNTS BY FUNCTION
1993-94 1994-95 1995-96 1996-97
PUBLIC SAFETY ACTUAL BUDGET APPROVED APPROVED
Fire&Environmental Safety 0
0 0 150,000
PUBLIC UTILITIES
Wastewater Service 2,122,000 2,120,600 2,135,900
Water Service 1,345,400 1,435,400 2135 900
Total Public Utilities 1,427,200 1,433,900
3,467,400 3,556,000 3,563,100 3,569,800
TRANSPORTATION
Streets and Flood Control 473,700 227,300
Parking 341,100 340,900
960,100 436,000 654,400 654,000
Total Transportation 1,433,800 663,300� 995,500 994,900
LEISURE,CULTURAL&SOCIAL SERVICES
Cultural Services 0
Parks and Recreation 0 0 40,000
,
Total Leisure, Cultural &Social Services 473,700 434,300 448 400 444300 473,700 434,300
448,400 484,300
GENERAL GOVERMENT
.
Buildings 0
0 0 80,000
TOTAL DEBT SERVICE REQUIREMENTS $5374,900 $4 653 600 $s
20072000 000 $5279 000
7the
anciag 1995-97,a project financing with net proceeds in the amount of$3,055,000 is planned for
rposes,which will result in additional annual debt sevice requirements of$270,000: I
• Prior to 1993-95,two key capital improvement plan projects were scheduled for funding through debt
financing:the headquarters fire station ($2.9 million)and the performing arts center($45 million).
However,as part of the 1993—95 Financial Plan budget balancing strategy,it was decided to fund these
projects on a"pay—as—you—go"basis to the maximum extent possible in order to use a very strong fund
balance in a "one—time"fashion that would reduce future ongoing debt service costs. Nonetheless,a
balance remained to be debt financed of about$1.7 million,which will result in annual debt service
requirements of$150,000 beginning in 1996-97. This cost in reflected under"public safety"above.
• Making seismic safety and HVAC improvements at City Hall will cost 5900,000. Debt financing this
improvement results in annual debt service requirements of$80,000 beginning in 1996-97. This cost is
reflected under"general government"above.
Acquiring property and designing and buildng improvements to expand Mission Plaza will cost$455,000.
Debt financing this project results in annual debt service requirements of 540,000 beginning in 1996-97.
This cost is reflected under"cultural services"above.
F-2
ci6 2-/F
Exhibit .9(c-
DEBT SERVICE REQUIREMENTS
ANNUAL PAYMENT'S BY SOURCE
1993-94 1994-95 1995-96 1996-97
DEBT SERVICE FUND ACTUAL BUDGET APPROVED APPROVED
1986 Lease Revenue Bonds(Refunded in 1994)
Principal 195,600 0 0 0
Interest 347,900 0 0 0
1990 Certificates of Participation
Principal 130,000 140,000 150,000 155,000
Interest 273,900 268,800 260,100 251,000
1994 Refunding Revenue Bonds
Principal 0 88,100 135,800 141,300
Interest 0 164,700 243,600 237,900
Projected 1996 Financing 0 ' 0 0 270,000
Total Debt Service Fund 947,400 661,600 789,500 1,055,200
WATER FUND
1959 Water Bonds- Series A
Principal 125,000 130,000 130,000 140,000
Interest. 30,000 27,000 21,800 16,600
1959 Water Bonds-Series B
Principal 35,000 35,000 40,000 40,000
Interest 10,100 10,000 7,800 6,300
1988 Certificates of Participation
Principal 165,000 180,000 190,000 205,000
Interest 307,300 297,200 284,900 272,000
1993 Water Revenue Bonds
Principal 25,000 170,000 175,000 185,000
Interest 648,000 586,200 577,700 569,000
Total Water Fund 1,345,400 1,435,400 1,427,200 1,433,900
WASTEWATER FUND
1992 State Revolving Fund(SRF)Loan
Principal 944,900 1,190,900 1,233,200 1,271,300
Interest 1,177,100 929,700 902,700 864,600
Total Wastewater Fund 2,122,000 2,120,600 2,135,900 2,135,900
PARKING FUND
1986 Lease Revenue Bonds(Refunded in 1994)
Principal 339,400 0 0 0
Interest 620,700 0 0 0
1994 Refunding Revenue Bonds
Principal 0 151,900 234,200 243,700
Interest 0 284,100 420,200 410,300
Total Parking Fund 960,100 436,000 654,400 654,000
TOTAL DEBT SERVICE REQUIREMENTS $5,3742900 $4,655-600 $5 007 000 S5,279,000
F-3
Exhibit &3
EVENSEN DODGE INC
MEMORANDUM
To: Bill Statler
City of San Luis.Obispo
From: Evensen Dodge, Inc.
Date: August 16, 1995
Re: Debt financing capacity and credit condition of the City
During the course of our meeting on July 28, 1995, you asked for a "snapshot"
evaluation of the general strengths and weaknesses of the City's present debt capacity.
This is in response to that request.
Background
The City presently enjoys excellent long term debt ratings from both major credit
rating agencies, Standard&Poor's Corporation and Moody's Investors Service, Inc.
Moody's maintains the more comprehensive rating of the City's credit, having rated both
general obligation bonds and all uninsured lease financings the City has outstanding, at the
"A-1" and "A" levels, respectively. S & P rates the City's 1986 lease bonds "A-". While
broad generalizations can be dangerous in the analysis of credit, it is generally the bias of
Moody's to rate the overall capacity and management ability of the issuer first, giving
secondary emphasis to structural features of each transaction such as strength of legal
pledges, covenants and default remedies. S &P tends to place primary emphasis on the
structural features and places secondary emphasis on management controls. Accordingly,
the comments which follow are more consistent with the Moody's analysis, and indeed rely
heavily on the reports generated by Moody's in connection with its analysis.
Discussion
The question of how much debt is too much is a function of numerous variables.
Key among these are: (1) the level of undesignated, unreserved fund balance; (2)the
rate at which debt is being paid down (or, prospectively, will be paid down); and (3)the
share of annual resources being devoted to debt retirement. With respect to (1) above, the
City has long maintained a policy of keeping reserves high. At the time of the last full
rating analysis by Moody's (just a little over one year ago) the general fund's reserves
stood above the 20% level imposed by City policy, and Moody's specifically cites this as a
rating strength. "The City has mair7tained favorable firrarrcing operations as indicated by
650 Town Center Drive,Suite 595
Costa 9261-6 -.2/
71315-15-!?!? 500/3??-0122.01 711 FAX 714/557-9126 e•n
August 16, 1995
Page 2
a consistent level of ample operating resenyes"according to Moody's. (from 9/23/94
rating report)
Debt paydown is rapid for debt supported by the general fund, with just under half
of the City's debt scheduled for retirement within 10 years. This excludes enterprise debt
which is defined as self supporting. Also, enterprise debt is typically tied more closely to
estimated useful life of facilities financed in order to maintain intergenerational equity.
Finally, the percentage of the City's annual operating expense devoted to debt
service is quite modest. As it is the City's practice to amortize debt on a level (or
mortgage) basis, the ratio of debt service expenditures to overall expenditures will tend to
decrease over time, after allowing for inflation- a positive trend. We observe that the
expenditure of more than 5%-7% of an issuer's general fund revenues on debt service will
tend to provoke rating questions. However, 5%-7% devoted to debt service is by no
means excessive and should always be judged against the backdrop of the two other
factors discussed above. Indeed, in the presence of significant reserves, these levels could
be increased by as much as 50%without major rating impairment. Similarly, issuers with
low or no reserves could buffer rating impairment at levels lower than the 5%-7% range.
Among areas of minor credit concern to Moody's in the past is the significant
portion of general revenues produced by sales and use taxes. Despite the City's well
diversified economy, sales and use taxes are notoriously volatile in economic recessions
and accordingly, the City should continue to monitor this revenue category carefully as it
has for the past 4 -5 years.
Conclusion
We believe the City is capable of incurring additional debt, in normal amounts, for
its ongoing capital needs. A key ingredient in this capacity is the continued maintenance
of prudent reserves. Assuming maintenance of the existing reserve levels, the City's basic
debt capacity will likely continue to far exceed its normal, cyclical needs.
We would be happy to discuss any of the material with you further. We are
pleased to be of continuing service.
Very truly yours,
EVENSEN DODGE, INC.
UI D
Timothy J. ha fer
Senior Vice President
CITY OF SAN LUIS OBISPO Exhibit.6s
/
1996 Lease Revenue Bonds
Scenario: New Money Issue (30 yrs; W-rated/De(phis 92)
S O U R C E S A N D U S E S O F F U N D S
DELIVERY DATE: 5/29/96
Sources of Funds
Par Amount of Bonds................... $7,025,000.00
+Premium /-Discount................... $90,723.40
Bond Proceeds........................................... 7,115,723.40
Accrued Interest........................................ 33,791.33
-------------------
S7,149,514.73
Uses of Funds
Bond Proceeds........................................... 6,400,000.00
Underwriters Discount (X or S)..........( 1.300000X)... 91,325.00
Variable Cost of Issuance...............( 0.500000X)... 35,125.00
Fixed Cost ofIssuance.................................. 65,000.00
Accrued Interest......................................... 33,791.33
Debt Service Reserve.................................... 522,780.00
Contingency............................................. 1,493.40
-------------------
S7,149,514.73
RUNDATE: 04-02-1996 2 14:56:23 FILENAME: SLO KEY: 96-NEN30
CITY OF SAN LUIS OBISPO Exhib!U
1996 Lease Revenue Bords
Scenario: New Money Issue (30 yrs; nA°-rated/Delphis 92)
DEBT SERVICE SCHEDULE
DATE PRINCIPAL COUPON INTEREST PERIOD TOTAL FISCAL TOTAL
-------- -------------- ---------- -------------- -----^_ ----- --------------
12/ 1/96 253,435.00 253,435.00
6/ 1/97 85,000.00 6.200000 217,230.00 302,230.00 555,665.00
12/ 1/97 214,595.00 214,595.00
6/ 1/98 90,000.00 6.200000 214,595.00 304,595.00 519,190.00
12/ 1/98 211,805.00 211,805.00
6/ 1/99 95,000.00 6.200000 211,805.00 306,805.00 518,610.00
12/ 1/99 208,860.00 208,860.00
6/ 1/ 0 105,000.00 6.200000 208,860.00 313,860.00 522,720.00
12/ 1/ 0 205,605.00 205,605.00
6/ 1/ 1 110,000.00 6.200000 205,605.00 315,605.00 521,210.00
12/ 1/ 1 202,195.00 202,195.00
6/ 1/ 2 115,000.00 6.200000 202,195.00 317,195.00 519,390.00
12/ 1/ 2 198,630.00 198,630.00
6/ 1/ 3 125,000.00 6.200000 198,630.00 323,630.00 522,260.00
12/ 1/ 3 194,755.00 194,755.00
6/ 1/ 4 130,000.00 6.200000 194,755.00 324,755.00 519,510.00
12/ 1/ 4 190,725.00 190,725.00
6/ 1/ 5 140,000.00 6.200000 190,725.00 330,725.00 521,450.00
12/ 1/ 5 186,385.00 186,385.00
6/ 1/ 6 150,000.00 6.200000 186,385.00 336,385.00 522,770.00
12/ 1/ 6 181,735.00 181,735.00
6/ 1/ 7 155,000.00 6.200000 181,735.00 336,735.00 518,470.00
12/ 1/ 7 176,930.00 176,930.00
6/ 1/ 8 165,000.00 6.200000 176,930.00 341,930.00 518,860.00
12/ 1/ 8 171,815.00 171,815.00
6/ 1/ 9 175,000.00 6.200000 171,815.00 346,815.00 518,630.00
12/ 1/ 9 166,390.00 166,390.00
6/ 1/10 190,000.00 6.200000 166,390.00 356,390.00 522,780.00
12/ 1/10 160,500.00 160,500.00
6/ 1/11 200,000.00 6.200000 160,500.00 360,500.00 521,000.00
12/ 1/11 154,300.00 154,300.00
6/ 1/12 210,000.00 6.200000 154,300.00 364,300.00 518,600.00
12/ 1/12 147,790.00 147,790.00
6/ 1/13 225,000.00 6.200000 147,790.00 372,790.00 520,580.00
12/ 1/13 140,815.00 140,815.00
6/ 1/14 240,000.00 6.200000 140,815.00 380,815.00 521,630.00
12/ 1/14 133,375.00 133,375.00
6/ 1/15 255,000.00 6.200000 133,375.00 388,375.00 521,750.00
12/ 1/15 125,470.00 125,470.00
6/ 1/16 270,000.00 6.200000 125,470.00 395,470.00 520,940.00
12/ 1/16 117,100.00 117,100.00
6/ 1/17 285,000.00 6.200000 117,100.00 402,100.00 519,200.00
12/ 1/17 108,265.00 108,265.00
6/ 1/18 305,000.00 6.200000 108,265.00 413,265.00 521,530.00
12/ 1/18 98,810.00 98,810.00
6/ 1/19 320,000.00 6.200000 98,810.00 418,810.00 517,620.00
12/ 1/19 88,890.00 88,890.00
6/ 1/20 340,000.00 6.200000 88,890.00 428,890.00 517,780.00
12/ 1/20 78,350.00 78,350.00
6/ 1/21 365,000.00 6.200000 78,350.00 443,350.00 521,700.00
12/ 1/21 67,035.00 67,035.00
6/ 1/22 385,000.00 6.150000 67,035.00 452,035.00 519,070.00
12/ 1/22 55,196.25 55,196.25
6/ 1/23 410,000.00 6.150000 55,196.25 465,196.25 520,392.50
12/ 1/23 42,588.75 42,588.75
6/ 1/24 435,000.00 6.150000 42,588.75 477,588.75 520,177.50
12/ 1/24 29,212.50 29,212.50
6/ 1125 460,000.00 6.150000 29,212.50 489,212.50 518,425.00
12/ 1/25 15,067.50 15,067.50
6/ 1/26 490,000.00 6.150000 15,067.50 505,067.50 520,135.00
RUNDATE: 04-02-1996 2 14:56:10 FILENAME: SLO KEY: 96-KEW30
CITY OF SAN LUIS OBISPO
1996 Lease Revenue Bonds
Scenario: New Money Issue (30 yrs; "A"-rated/Delphis 92)
DEBT SERVICE SCHEDULE
DATE PRINCIPAL COUPON INTEREST PERIOD TOTAL FISCAL TOTAL
-------- -------------- ---------- -------------- -------------- ------------
-------------- -------------- --------------
7,025,000.00 8,617,045.00 15,642,045.00
ACCRUED 33,791.33 33,791.33
7,025,000.00 8,583,253.67 15,608,253.67
Dated 5/ 1/96 with Delivery of 5/29/96
Bond Years 139,480.417
Average Coupon 6.177960
Average Life 19.854864
N I C % 6.112917 % Using 101.2914363
T I C % 6.180105 % From Delivery Date
RUNDATE: 04-02-1996 2 14:56:11 FILENAME: SLO KEY: 96-NEW30
e��-a as'
CITY OF SAN LUIS OBISPO Exhibiti:�----3
1996 Lease Revenue Bands
Scenario: New Money Issue (30 yrs; "A'-rated/Delphis 92)
NET DEBT SERVICE REQUIREMENTS
DELIVERY DATE: . 5/29/96
PERIOD TOTAL CONSTR. FUND DEBT SVC. RES. NET SURPLUS FUNDS
ENDING PRINCIPAL COUPON INTEREST DEBT SERVICE EARNINGS • CAP. TNT. DEBT SERVICE REMAINING
-------- -------------- ---------- -------------- -------------- -------------- --------'---'- -------------- --------------
12/ 1/96 253,435.00 253,435.00 49,913.28 203,521.72
6/ 1/97 85,000.00 6.200000 217,230.00 302,230.00 15,944.79 286,285.21
12/ 1/97 214,595.00 214,595.00 15,944.79 198,650.21
6/ 1/98 90,000.00 6.200000 214,595.00 304,595.00 15,944.79 288,650.21
12/ 1/98 211,805.00 211,805.00 15,944.79 195,860.21
6/ 1/99 95,000.00 6.200000 211,805.00 306,805.00 15,944.79 290,860.21
12/ 1/99 208,860.00 208,860.00 15,944.79 192,915.21
6/ 1/ 0 105,000.00 6.200000 208,860.00 313,860.00 15,944.79 297,915.21
12/ 1/ 0 205,605.00 205,605.00 15,944.79 189,660.21
6/ 1/ 1 110,000.00 6.200000 205,605.00 315,605.00 15,944.79 299,660.21
12/ 1/ 1 202,195.00 202,195.00 15,944.79 186,250.21
6/ 1/ 2 115,000.00 6.200000 202,195.00 317,195.00 15,944.79 301,250.21
12/ 1/ 2 198,630.00 198,630.00 15,944.79 182,685.21
6/ 1/ 3 125,000.00 6.200000 198,630.00 323,630.00 15,944.79 307,685.21
12/ 1/ 3 194,755.00 194,755.00 15,944.79 178,810.21
6/ 1/ 4 130,000.00 6.200000 194,755.00 324,755.00 15,944.79 308,810.21
12/ 1/ 4 190,725.00 190,725.00 15,944.79 174,780.21
6/ 1/ 5 140,000.00 6.200000 190,725.00 330,725.00 15,944.79 314,780.21
12/ 1/ 5 186,385.00 186,385.00 15,944.79 170,440.21
6/ 1/ 6 150,000.00 6.200000 186,385.00 336,385.00 15,944.79 320,440.21
12/ 1/ 6 181,735.00 181,735.00 15,944.79 165,790.21
6/ 1/ 7 155,000.00 6.200000 181,735.00 336,735.00 15,944.79 320,790.21
12/ 1/ 7 176,930.00 176,930.00 15,944.79 160,985.21
6/ 1/ 8 165,000.00 6.200000 176,930.00 341,930.00 15,944.79 38,985.21
12/ 1/ 8 171,815.00 171,815.00 15,944.79 155,870.21
6/ 1/ 9 175,000.00 6.200000 171,815.00 346,815.00 15,944.79 330,870.21
12/ 1/ 9 166,390.00 166,390.00 15,944.79 150,445.21
6/ 1/10 190,000.00 6.200000 166,390.00 356,390.00 15,944.79 340,445.21
1/10 160,500.00 160,500.00 15,944.79 144,555.21
1/11 200,000.00 6.200000 160,500.00 360,500.00 15,944.79 344,555.21
1/11 154,300.00 154,300.00 15,944.79 138,355.21
6/ 1/12 210,000.00 6.200000 154,300.00 364,300.00 15,944.79 348,355.21
12/ 1/12 147,790.00 147,790.00 15,944.79 131,845.21
6/ 1/13 28,000.00 6.200000 147,790.00 372,790.00 15,944.79 356,845.21
12/ 1/13 140,815.00 140,815.00 15,944.79 124,870.21
6/ 1/14 240,000.00 6.200000 140,815.00 380,815.00 15,944.79 364,870.21
12/ 1/14 133,375.00 133,375.00 15,944.79 117,430.21
6/ 1/15 85,000.00 6.200000 133,375.00 388,375.00 15,944.79 372,430.21
12/ 1/15 18,470.00 18,470.00 15,944.79 109,58.21
6/ 1/16 270,000.00 6.200000 18,470.00 395,470.00 15,944.79 379,58.21
12/ 1/16 117,100.00 117,100.00 15,944.79 101,155.21
6/ 1/17 285,000.00 6.200000 117,100.00 402,100.00 15,944.79 386,155.21
12/ 1/17 108,265.00 108,265.00 15,944.79 92,320.21
6/ 1/18 305,000.00 6.200000 108,265.00 413,265.00 15,944.79 397,320.21
12/ 1/18 98,810.00 98,810.00 15,944.79 82,865.21
6/ 1/19 320,000.00 6.200000 98,810.00 418,810.00 15,944.79 402,865.21
12/ 1/19 88,890.00 88,890.00 15,944.79 72,945.21
6/ 1/20 340,000.00 6.200000 88,890.00 428,890.00 15,944.79 412,945.21
12/ 1/20 78,350.00 78,350.00 15',944.79 62,405.21
6/ 1/21 365,000.00 6.200000 78,350.00 443,350.00 15,944.79 427,405.21
12/ 1/21 67,035.00 67,035.00 15,944.79 51,090.21
6/ 1/22 385,000.00 6.150000 67,035.00 452,035.00 15,944.79 436,090.21
12/ 1/22 55,196.8 55,196.8 15,944.79 39,81.46
6/ 1/23 410,00D.00 6.150000 55,196.8 465,196.8 15,944.79 449,81.46
12/ 1/23 42,588.75 42,588.75 15,944.79 26,643.96
6/ 1/24 435,000.00 6.150000 42,588.75 477,588.75 15,944.79 461,643.96
12/ 1/24 29,212.50 29,212.50 15,944.79 13,267.71
6/ 1/8 460,000.00 6.150000 29,212.50 489,212.50 15,944.79 473,267.71
12/ 1/8 15,067.50 15,067.50 15,944.79 877.29
6/ 1/26 490,000.00 6.150000 15,067.50 505,067.50 538,724.79 34,534.58
-------------- .............. .............. .............. .............. ..............
7,08,000.00 8,617,045.00 15,642,045.00 1,513,435.89 14,163,143.69
n.dDATE: 04-02-1996 8 14:56:15 FILENAME: SLO KEY: 96-NEOO
CITY OF SAN LUIS OBISPO
1996 Lease Revenue Bonds
Scenario: New Money Issue (30 yrs; "A"-rated/Delphis 92)
NET DEBT SERVICE REQUIREMENTS
DELIVERY DATE: 5/29/%
Dated 5/ 1/96 with Delivery of 5/29/96
Bond Years 139,480.417
Average Coupon 6.177960
Average Life 19.854864
N I C % 6.112917 X Using 101.2914363
T I C X 6.180105 X From Delivery Date
RUNDATE: 04-02-1996 8 14:56:20 FILENAME: SLO KEY: 96-NEW30
61 -o�