55A - RESO - GAS TAX BONDS - Laserfiche WebLink

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Resolution of the City of Santa Ana Authorizing the issuance and Sale of Gas Tax Revenue Refunding Bonds November 5, 2019 Page 2 The City's 2007 COP have a current outstanding obligations totaling $56 million (as June 30, 2019), and the refinancing is expected to generate interest rate savings for the City. DISCUSSION The municipal interest rate environment continues to be at favorable levels. By issuing the Bonds to refinance the outstanding principal of the 2007 COP, the City is expected to generate cash flow savings of approximately $18.4 million (approximately 20% net present value ("NPV") savings) over the life of the bond (average annual savings of approximately $916K), without extending the current maturity date. The City's Debt Management Policy requires at least 3% savings for a refinancing. To maximize the savings, the City will contribute cash from the existing reserve account (approx. $4.3M) from the 2007 COPS to the refunding escrow for the 2019 Bonds. These figures assume the use of the reserve fund, a surety policy, and bond insurance; and are subject to bond market conditions at the time of the sale. The principal amount of the refinanced Bonds will be approximately $44 million, approximately $12 million less than the current outstanding obligation. The 2007 COPS may be redeemed on any date. The City will deposit the refunding proceeds into a short-term escrow account in order to call the 2007 COP on the earliest date possible. Refunding Bond Structure The Bonds will be structured as refunding obligations issued by the City. The City is authorized pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 et seq. and Section 53580 et seq. of said Code (the "Bond Law"), to issue the Bonds for the purpose of refunding any outstanding indebtedness of the City which is payable from the revenues of the Gas Tax Fund. In addition, contingent on prevailing market conditions at the time of sale, the Bonds may be structured with bond insurance and a surety policy. The City financing team anticipates setting a date to price and sell the Bonds and determine the final interest rate structure in late November 2019. DOCUMENTS TO BE APPROVED Approval of the Resolution and related bond documents, which have been reviewed by Bond Counsel, will authorize the execution of the following documents: • Indenture of Trust - This document contains the terms of the Bonds, including payment and redemption provisions, definition and pledge of Revenues to pay the Bonds, Rights and Duties of the Trustee, remedies upon a default in the payment of the Bonds, and final discharge of the Bonds and other related matters. • Escrow Agreement - This document contains terms by which the Trustee will hold 2019 Refunding Bond proceeds on the behalf of the owners of the 2007 COPs to pay and discharge all the 2007 COPS on the call date. • Preliminary Official Statement - This is the City's document pursuant to which the Bonds will be offered for purchase by the public. This document must contain all facts material to 55A-2