HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 04/01/2003 - SECOND READING OF ORDINANCE NO. 042, 2003, AUTHORI AGENDA ITEM SUMMARY ITEM NUMBER: 8
FORT COLLINS CITY COUNCIL DATE: April 1, 2003FROM
FROM: Alan Krcmarik
SUBJECT:
Second Reading of Ordinance No.042,2003,Authorizing the Issuance of City of Fort Collins Sales
and Use Tax Revenue Refunding Bonds, Series 2003A, in the Aggregate Principal Amount of
$5,860,000.
RECOMMENDATION:
Staff recommends adoption of the Ordinance on Second Reading.
EXECUTIVE SUMMARY:
Ordinance No. 042, 2003, which was unanimously adopted on First Reading on March 25, 2003,
authorizes the issuance of the bonds. Bond Counsel will file a copy of the revised bond ordinance
in the office of the City Clerk,on or before March 28,2003. The bonds will be sold on April 1. The
Financial Officer will read the final numbers into the record at the regular meeting on April 1.
AGENDA ITEM SUMMARY ITEM NUMBER: 12
FORT COLLINS CITY COUNCIL DATE: March 18, 2003
STAFF: Alan Krcmarik
SUBJECT:
First Reading of Ordinance No. 042, 2003, Authorizing the Issuance of City of Fort Collins Sales
and Use Tax Revenue Refunding Bonds, Series 2003A, in the Aggregate Principal Amount of
$5,860,000.
RECOMMENDATION:
Staff recommends adoption o e Ordi ce o i t Reading
FINANCIAL IMPACT:
The remaining Sales and Use Tax bonds from the 1993 issue carry rates that range from 5.0% to
5.375%. Due to the recent drop;in igteresvxges, the-blended-rate on the refunding bonds, which
mature in 2009, is projected to be 2.9�! St yf p ojet s a ddction in future interest costs of
10 $600,000. This refinancing p1�'n will rece thamfffi of outfanding sales and use tax debt and
lower the annual debt service in cator b}� ( s is a percentage of operating expenditures.)
The bonds will be paid from fee revenues from the Sales and Use Tax fund.
EXECUTIVE SUMMARY:
This Ordinance authorizes the bond documents necessary to issue$5,860,000 of Sales and Use Tax
Revenue Refunding Bonds to refinance the remaining 1993 Bonds. Essentially, the City is
refinancing a portion of its ou nding t to d r aygtents. The refinancing will save
the City approximately$85,0 per ye a tot d ice ductions over the next 6-1/2 years
is estimated to be $600,000. Finn De m nt will duct the sale of the bonds through
a public competitive process on April 1. Base on t e current market rates,staff estimates the bonds
will have an interest rate of about 2.25%compared to rates of 5% to 5.375% on the current bonds.
BACKGROUND:
In the early 1980s, the City issued bonds and other types of indebtedness to finance street
improvements, acquisition of land, improvements near the Anheuser-Busch plant, golf course
improvements, and other public works. In 1986,the City refinanced all of these projects in one$30
million package of Sales and Use Tax Revenue Bonds. According to the terms of the 1986 bonds,
they could not be called (paid off early) until 1993. As interest rates had fallen dramatically by
1993,staff refinanced the bonds to save debt service payments for the City. In the 1993 refinancing,
the bond documents set the earliest call date for the new bonds for 2003. Interest rates have
continued to trend downward, and now,they are at their lowest levels in over 40 years. Under the
DATE: marcn IS, 2073 1 2
ITEM NUMBER: 12
Master Agreement with Anheuser-Busch, the City will reduce the amount of annual supplemental
user fee that Anheuser-Busch will pay on its share of the bonds.
1
The Bonds
Staff has set the debt payments on the$5.86 million into approximately level annual payments. The
debt service schedule calls for the final payments for the bonds to occur in 2009.
Sources
Bond Proceeds
Scheduled 6/1/ Pa qfA T724
Additional Ca Contrib ion
Total Sources ]P$
Uses
Refunded Principal $ 7,400,006
Underwriters Discount 29,300
Refunded Interest at 6/1/03 195,879
Premium 69,650
Bond Ratings 12,900
Bond Counsel P40,0qNO
Financial Advi rIrN
0
Printing &M ng
PayingAgent a o. sts 0
Contingency 1,595
Total Uses $ 7,772,424
The Finance Department has arranged to sell the bonds at a competitive sale on April 1,2003. Final
amounts,rates,and costs will be determined after the bids have been received. On Second Reading,
staff will read the necessary changes into the record at the Council meeting.
Recommendation 7-
Staff recommends the Counci 0dopt "rdine Ithond
ng. Staff will coordinate with the
financial advisor to proceed w , the�i s ce c plet sale. Final costs and interest
rates will be incorporated into the tdinanc Se ReStaff believes the historically low
market rates now available make this an optimal time to refund.