02-23-1998 Council Packet - Laserfiche WebLink

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r REQUEST FOR COUNCIL ACTION COUNCIL r/E'"Ti‘- DATE: February 19, 1998 FEB 2 3 1998ITEM NO: ^ Department Approval:Administratoirlkevi^il?P^^Agenda Section: Name Ron Moorse City Administrator's Title City Administrator Report Item Description: Advance Refunding of City Facilities' Bonds - Resolution Calling for Bond Sale The current City facilities were financed through a lease/purchase arrangement involving the sale of $4,000,000 of bonds by the City HRA. The call date of these bonds is February 1,2001. The interest rates on the bonds maturing after the call date are from 5.5% to 6.5%. Current interest rates on municipal bonds have been at about 4.5%. Due to the very favorable interest rates in the bond market, the City's bond consultant has suggested the City consider an advance reftmding of the bonds used to finance the City facilities. Because of the sig^icantly lower current interest rates, the City could realize substantial savings in interest costs through an advance refunding of the City facilities' bonds. Carolyn Drude, the City's bond consultant, will attend the February 23 Council meeting to explain the advance refunding process and the savings to be realized. The net savings, including all costs of the new bonds, is projected to be approximately SI 19,000 over the remaining life of the bonds. The net present value of the savings is approximately $87,000. Staff Recommendation Staff believes the level of savings to be realized is significant enough to warrant the advance refunding process. If the Council agrees, staff recommends moving ahead with the process expeditiously based on the current very favorable bond market. It is recommended Council authorize a bond sale to be held on March 23, 1998. A resolution calling for the bond sale is attached for Council adoption. COUNCIL ACTION REQUESTED: Motion to adopt a resolution calling for an advance refunding bond sale of the HRA City facilities' bonds on March 23, 1998. BONDREfU 1 t 1I ' L \