SA-3 - RESO TAX ALLOCATION BOND - Laserfiche WebLink

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A. Total debt service (principal and interest) on the refunding bonds is less than total debt service on the refunded bonds (sec. 34177.5(a)(1)(A)): Section 34177.5(a)(1)(A) requires that the total interest cost to maturity on the refunding bonds or other indebtedness plus the principal amount of the refunding bonds or other indebtedness shall not exceed the total remaining interest cost to maturity on the bonds or other indebtedness to be refunded plus the remaining principal of the bonds or other indebtedness to be refunded. Table 2 shows projected total nominal debt service savings from the refunding of the Prior Obligations of $19.92 million, calculated as (i) total debt service on the Prior Obligations, minus (ii) total debt service on the 2018 TABS. Net PV savings is projected to be $4.05 million or 5.05% of total refunded par, which is above the industry standard guideline of 3% of refunded par. B. Refunding bonds principal shall be used only for refunding purposes, not for new -money (sec. 34177.5(x) (1)(B)): Section 34177.5(a)(1)(B) requires that the principal amount of the refunding bonds or other indebtedness shall not exceed the amount required to defease the refunded bonds or other indebtedness, to establish customary debt service reserves, and to pay related costs of issuance. Table 1 is the projected sources and uses of funds for the 2018 TABS, showing that all proceeds are used only for purposes associated with refundingthe Prior Obligations and to pay related costs of issuance. No proceeds of the 2018 TABS will be used for any other purposes, including new -money purposes. C. Agency shall make diligent efforts to ensure lowest long-term cost financing is obtained, to structure refunding that does not provide for any bullets or spikes or variable rates, and shall hire an independent financial advisor (sec. 34177.5(h)): Section 34177.5(h) requires the Agency to make diligent efforts to ensure that the lowest long-term cost financing is obtained and that the financing not provide for any bullets or spikes or use variable rates. The Agency has retained Urban Futures, Inc., an independent financial advisor registered with the SEC and MSRB, to monitor the pricing of the 2018 TABS. In order to achieve the lowest long-term cost of financing, thefinancing team is anticipating releasing additional cash from the reserve account into the escrow for the Prior Obligations and replacing the cash with a surety policy to satisfy the Reserve Requirement. In accordance with Section 34177.5(h), the proposed refunding structure does not provide for any bullet principal maturities, debt service spikes or variable rate debt. SA -3-146