| | | | | | | | 
Staff REPORT
Action ITEM
|
| | | | | | | | SUBJECT:
| Refinancing of Existing Debt for Interest Rate Savings (information forthcoming in supplemental agenda)
| DATE OF MEETING:
| March 24, 2020
| | Staff CONTACT(S): | Liz Krens, Director of Finance |
|
| | | | | | | |
SUMMARY and RECOMMENDATIONS:
The Town’s Financial Advisor, Davenport & Company LLC (“Davenport”), is finalizing the competitive bidding process for a refinancing of existing General Obligation debt of the Town. The two resolutions prepared by the Hunton & Andrews Kurth, the Town’s Bond Counsel, will authorize these refinancings. At the February 25th Town Council meeting Davenport presented an estimate of the savings that could results from these refinancings that was in the range of $680,000. It is estimated the final savings will be well in excess of these initial estimates. Staff recommends approval of the resolutions prepared by the Town’s Bond Counsel.
|
| | | | | | | |
BACKGROUND:
While financial markets have been volatile, interest rates are at historically low levels. As a result, Davenport identified the potential opportunity to refinance existing debt for interest rate savings. The goals of the refinancing are:1. Reduce the interest rate on the refinanced debt which totals roughly $14.8 mm; 2. Maintain the existing final maturity of the refinanced debt (i.e. extension of final maturity); 3. Maintain prepayment flexibility on the refinanced debt. The debt will be refinanced via two separate bond transactions. The structure of these two refinancing bonds is dictated by federal tax law. The refinancing bonds (2013A and 2013B) will both carry a fixed interest rate through final maturity. Davenport competitively bid the refinancing to local, regional, and national banking institutions and received 10 bids in response. Davenport is finalizing the negotiations and terms and conditions of the refinancing bonds and will have final information for the Town Council at its meeting on March 24. The estimated savings previously presented to the Town was in the range of $680,000. The actual savings is expected will be well in excess of this amount and will also retain substantial prepayment flexibility for the Town in the future.
|
| | | | | | | |
ISSUES:
None Town Staff is aware of
|
| | | | | | | |
CORRELATION TO STRATEGIC INITIATIVES:
The refinancings contemplated herein will reduce the Town’s interest cost and save in debt service payments beginning immediately in FY2021.
|
| | | | | | | |
BUDGET IMPACT:
The refinancings will reduce interest costs by at least $680,000 over the life of the loans. Davenport will provide final savings amounts at the March 24 Town Council meeting.
|
| | | | | | | |
MOTION(S):
“I move that the Town Council adopt Resolution #20-03-03 and Resolution #20-03-04 in order to authorize and direct execution of the refinancing of the 2013A/2013B bonds and 2012A bond for interest rate savings.”
|
|