DEPARTMENT: Finance
DEPARTMENT HEAD: Troy Elliott
COUNCIL DISTRICTS IMPACTED: City-Wide
SUBJECT:
Issuance, Sale, and Delivery of 2014 Refunding Bonds
SUMMARY:
This Ordinance by the City Council of the City of San Antonio, Texas authorizes the issuance of up to $65,500,000 "City of San Antonio, Texas General Improvement Refunding Bonds, Series 2014"; levies an annual ad valorem tax, within the limitations prescribed by law, for the payment of the bonds; prescribes the form, terms, and conditions of, and resolves other matters incident and related to, the issuance, sale, and delivery of the bonds, including the approval and distribution of an official statement pertaining thereto; authorizes the execution of an Escrow Agreement, a Paying Agent/Registrar Agreement, and a Purchase Contract; complies with the provisions of the Depository Trust Company's Letter of Representations; delegates the authority to certain City officials and staff to establish terms of sale of the bonds and to execute certain documents relating to the sale thereof; and provides for an effective date.
BACKGROUND INFORMATION:
The 2014 General Improvement Refunding Bonds (the "2014 Refunding Bonds") in the approximate amount of $53,690,000 are being issued to refund approximately $56,290,000 of various outstanding general obligation issuances of the City. This refunding transaction is projected to produce total savings of $7,168,632 with annual savings estimated at $550,000 in FY 2015 and an average of $661,000 per year from FY 2016 though FY 2025. Net present value savings on the transaction is estimated to be $6,540,258 or 11.62% of the refunded obligations.
This Ordinance authorizes the issuance of the 2014 Refunding Bonds in an amount not to exceed $65,500,000. The differential is attributable to the potential refunding of additional obligations for savings and will be dependent upon market conditions and determined at the time of the sale. Parameter sale authorization for the sale of the 2014 Refunding Bonds will give the City Manager and Chief Financial Officer the flexibility to establish the pricing terms on the obligations and the authority to sign the applicable Purchase Contract upon completion of the sale of such obligations.
It is anticipated that the 2014 Refunding Bonds will be sold the week of November 17, 2014 by an underwriting syndicate led by Siebert Brandford Shank & Co., LLC as Senior Book Running Manager; Frost National Bank as Co Senior Manager; and RBC Capital Markets, LLC and Southwestern Capital Markets, Inc. as Co-Managers. Closing and delivery of the 2014 Refunding Bonds is anticipated to occur on December 16, 2014. Bracewell & Giuliani LLP and LM Tatum, PLLC are serving as Co-Bond Counsel.
On November 20, 2014, a memo will be provided to the Mayor, City Council, and City Manager for the purpose of providing an update on the outcome of the sale of the 2014 Refunding Bonds.
ISSUE:
The aforementioned transaction is consistent with the City's objective to routinely review the possibility of refunding certain of its outstanding debt to effectuate interest cost savings.
ALTERNATIVES:
The City could choose not to refund the proposed outstanding general obligation issuances and forego the interest cost savings of refunding the obligations at a lower rate.
FISCAL IMPACT:
Any costs pertaining to the proposed transaction will be paid for from the proceeds derived from the issuance and sale of such obligations. Therefore, there is no impact on the City's Operating Budget.
RECOMMENDATION:
Staff recommends approval of this Ordinance that authorizes the issuance, sale, and delivery of the 2014 Refunding Bonds.