Title
Financing for Construction and Refunding of Certain Outstanding Bonds; Approval of Interest Mode Changes for Outstanding Variable Rate Bonds (B)
Explanation
2014 Series A and B Bonds: In September of 2014, the City Commission, approved GRU’s Fiscal Year 2015 (FY15) operating and capital budgets. The approved capital budget included approximately $98 million in capital projects for the electric, water, wastewater, and gas systems for FY15. Accordingly, GRU proposes to issue approximately $46 million of new tax-exempt debt to partially fund approved capital projects. Additionally, there are opportunities to advance refund 2005 Series A Bonds and to current refund a portion of the taxable 2008 Series A Bonds with tax-exempt debt. While refunding the 2005 Series A Bonds and 2008 Series A Bonds currently is projected to result in net present value savings of more than $1 million, those savings are sensitive to market interest rates, are subject to change, and may not be realized if market interest rates change to make the refundings uneconomical.
With respect to the new money portion of the financing, GRU staff and our Financial Advisor have determined that the bonds to be issued to finance capital projects for GRUCom are eligible to be financed on a tax-exempt basis.
With respect to the refunding portion of the financing, GRU staff and our Financial Advisor have determined that it is advantageous that $13.130 million of the 2005 Series A Bonds be refunded through the issuance of the tax-exempt 2014 Series B Bonds. As a result of certain federal income tax considerations, however, it may be necessary to reduce the amount of the 2005 Series A Bonds of each maturity that may be refunded, so we are recommending that the General Manager be delegated the authority to determine the actual amount of the 2005 Series A Bonds of each maturity to be refunded. In addition, GRU staff and our Financial Advisor have determined that, under current market conditions, ...
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