Title
Refunding of Utilities System Revenue Bonds, 2003 Series A and 2005 Series A (B)
Staff is recommending the adoption of an Authorizing Resolution.
Explanation
In December 2006, the City Commission, among other things, (1) authorized the refunding of all or a portion of the 2003 and 2005 Series A Bonds through the issuance of variable-rate bonds (Refunding Bonds) that are converted synthetically to a fixed interest rate through the use of one or more "floating-to-fixed" interest rate swaps; and (2) approved the selection of Bear Stearns as the sole Underwriter/Remarketing Agent for the Refunding Bonds.
Upon the advice of the Utility's Financial Advisor, Utilities staff entered into an interest rate swap transaction on December 7, 2006. The swap was competitively bid, with Goldman Sachs Mitsui Marine Derivative Products, L.P. (GSMMDP) as the winning bidder. This swap with GSMMDP permitted us to achieve a favorable fixed rate of interest for a synthetic advance refunding of a portion of the 2003 and 2005 Series A Bonds and is expected to provide net present value savings of approximately $8.5 million.
The issuance of the 2007 Series A Bonds is scheduled to occur on March 1, 2007 in order to complete the advance refunding of a portion of the 2003 and 2005 Series A Bonds. We recommend that the City Commission adopt the attached Authorizing Resolution which approves the sale of the 2007 Series A Bonds.
The Clerk of the Commission, the General Manager or other Authorized Officers of the City may be required to take certain other actions and hire certain other professionals to proceed with the issuance of the 2007 Series A Bonds as described above. Therefore, we recommend that these officials be authorized to take such other actions that may be necessary or desirable to proceed with the issuance and closing of the bond issue in accordance with this City Commission authorization.
Recommendations
The City Commission: 1. Adopt the attached resolution (Authorizing Resolution), which: (a)incorporates by reference and adopts, and authorizes the execution and delivery of, an Eighteenth Supplemental Utilities System Revenue Bond Resolution which authorizes the issuance, sale, execution and delivery of $139,505,000 in aggregate principal amount of the City's tax-exempt Variable Rate Utilities System Revenue Bonds, 2007 Series A (2007 Series A Bonds) in order to advance refund a portion of the City's Utilities System Revenue Bonds, 2003 Series A and 2005 Series A (2003 and 2005 Series A Bonds); (b) approves the form, and authorizes the execution and delivery, of a contract of purchase between the City and Bear, Stearns & Co. Inc., as sole underwriter; (c)approves the form, and authorizes the execution and delivery, of a remarketing agreement between the City and Bear, Stearns & Co. Inc., pursuant to which Bear, Stearns & Co. will serve as the initial remarketing agent for the 2007 Series A Bonds; (d)approves the form, and authorizes the execution and delivery, of a tender agency agreement between the City and U.S. Bank Trust National Association (who currently serves as Trustee for our Utilities System Revenue Bonds), pursuant to which U.S. Bank Trust will serve as the initial tender agent for the 2007 Series A Bonds; (e) approves the form, and authorizes the execution and delivery, of a standby bond purchase agreement between the City and State Street Bank and Trust Company, pursuant to which State Street Bank and Trust Company initially will provide liquidity support for any 2007 Series A Bonds that are tendered for purchase and not remarketed; (f)approves the form, and authorizes the execution and delivery, of an escrow deposit agreement relating to the advance refunding of a portion of the 2003 and 2005 Series A Bonds, authorizes the deposit of bond proceeds and certain other amounts into the escrow account to be established pursuant to said escrow deposit agreement, authorizes the investment of such monies in United States Treasury Securities - State and Local Government Series and ratifies the subscription for such United States Treasury Securities; (g)authorizes the authentication and delivery of the 2007 Series A Bonds; (h) approves the form and use of the official statement relating to the 2007 Series A Bonds; (i) authorizes the registration or qualification of the 2007 Series A Bonds under the blue sky laws of various states; (j) in the event that the 2007 Series A Bonds are converted to the auction mode, the term mode or the fixed mode, approves the form, and authorizes the execution and delivery, of a continuing disclosure certificate; (k) authorizes certain City officials to take other actions in connection with the issuance, sale and delivery of the 2007 Series A Bonds; (l)delegates the authority to extend the term of any facility providing liquidity support for the 2007 Series A Bonds or to procure another facility in substitution therefor; and (m) delegates the authority to remove the remarketing agent and/or the tender agent for the 2007 Series A Bonds and to appoint successor(s) therefor. 2. Authorize the Clerk of the Commission, the General Manager and other Authorized Officers of the City (as defined in the City's Amended and Restated Utilities System Revenue Bond Resolution) to execute such documents as may be necessary to proceed with the transaction authorized above, subject to the approval of the City Attorney as to form and legality, and to take such other actions as may be necessary or advisable to proceed with such transaction in accordance with this City Commission authorization.
Fiscal Note
There will be substantial present value savings that will accrue to our ratepayers from the refunding in the years through 2036.
Drafter
Prepared by Jennifer L. Hunt, Utilities Chief Financial Officer
Reviewed by Raymond O. Manasco, Jr., Utilities Attorney
Submitted by Karen S. Johnson, Interim General Manager