Title
Refunding of Utilities System Revenue Bonds, 1996 Series A; Financing for Construction; and Amendment of Certain Interest Rate Swap Transactions (B)
Staff recommends the adoption the attached resolution (Authorizing Resolution).
Explanation
In July 2005, the City Commission authorized, among other things (1) the refunding of the 1996 Series A Bonds through the issuance of either fixed-rate bonds or variable-rate bonds that are converted synthetically to a fixed rate through the use of a "floating-to-fixed" interest rate swap; and (2) the negotiation of one or more "floating-to-fixed" interest rate swaps with Goldman, Sachs and/or Bear, Stearns if the financing team determined that it was most beneficial to the Utility to issue variable-rate bonds that are converted synthetically to a fixed rate.
Upon the advice of the Utility's Financial Advisor and the Co-Senior Managers, Utilities staff entered into two interest rate swap transactions on September 21, 2005. The first was a swap with BSFP that permitted us to achieve a favorable fixed rate of interest for a synthetic advance refunding of a portion of the 1996 Series A Bonds which, in conjunction with the issuance of the 2005 Series C Bonds, is expected to provide net present value savings of $6.861 million. The second was a swap with GSMMDP that permitted us to achieve a favorable fixed rate of interest for a synthetic current refunding of a portion of the 1996 Series A Bonds which, in conjunction with the issuance of the 2006 Series A Bonds, is expected to provide net present value savings of $6.376 million.
On November 16, 2005, the 2005 Series C Bonds were issued to complete the advance refunding of a portion of the 1996 Series A Bonds.
The issuance of the 2006 Series A Bonds is scheduled to occur on July 6, 2006 in order to complete the current refunding of a portion of the 1996 Series A Bonds and to provide funds for capital projects. We recommend that the City Commission adopt the ...
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