Title:
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Approve and authorize the Chairman to sign a Supplemental Resolution authorizing the issuance of Water and Sewer Revenue Refunding Bonds, Series 2025A (the “2025A Bonds”) in an amount not to exceed $120,000,000 to defease and refund all outstanding Water and Sewer Revenue Bonds, Series 2010A (the “2010A Bonds”) and Water and Sewer Revenue Refunding Bonds, Series 2015A (the “2015A Bonds” and together with the 2010A Bonds, the “Refunded Bonds”) and approve all forms, related documents and their execution. Countywide (Lorie Bailey Brown, CFO/Resource Management Director) Requesting Department - Utilities
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Division:
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Resource Management
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Authorized By:
Johnny Edwards, Utilities Director
Contact/Phone Number:
Carrie Grein/407-665-2148
Background:
The 2010A Bonds are currently callable with $820,000 of par amount outstanding. They were issued to finance capital improvements of the Water and Sewer System at an original amount of $5,255,000. The 2015A Bonds have an initial call date of October 1, 2025, and $126,850,000 of outstanding par amount. The 2015A Bonds are eligible for a current refunding no more than 90 days prior to the initial call date (July 3, 2025). They were issued to advance refund outstanding Water and Sewer Revenue Bonds, Series 2006.
The current interest rate environment allows debt service savings by issuing the 2025A Bonds and depositing the proceeds into an escrow account to defease, pay at maturity and redeem the Refunded Bonds on the redemption date of October 1, 2025. Assuming today’s interest rate levels, the refunding can generate over $4 million of net present value debt service savings or 3.2% of the Refunded Bonds par amount. That is just above the minimum 3% net present value savings threshold for issuance per the resolution, which is consistent with GFOA recommendation for debt service savings threshold for refunding. There is also an existing $14 million debt service reserve fund currently securing the Refunded Bonds. Refunding both series of the Refunded Bonds will release the cash in the reserve fund as a source of funds into the transaction, lowering the overall borrowing for the County.
The combination of the debt service savings and debt service reserve fund release will result in approximately $1,800,000 of reduced debt service annually through 2036 (final maturity of refunded bonds). There will be no extension of the final maturity.
Requested Action:
Staff requests the Board approve and authorize the Chairman to sign the Supplemental Resolution authorizing the issuance of Water and Sewer Revenue Refunding Bonds Series 2025A in a not to exceed par amount of $120,000,000 to defease and refund all outstanding Series 2010A and Series 2015A Bonds and approve all forms, related documents and their execution.