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Refunding Water Revenue Bonds <br />Series 1994 <br />January 20, 2004 <br /> <br />debt service on the bonds. On August 1, 1994, the City and the Authority <br />entered into the Master Installment Purchase Agreement and other <br />agreements in connection with the issuance of the bonds. The interest <br />rates on these bonds range from 5.25 to 6.125 percent. Periodically, due <br />to the interest rate fluctuations in the~ bond market, it becomes <br />advantages to refinance outstanding bonds to the benefit of the City. <br /> <br />At this time staff recommends refinancing the outstanding Water Revenue <br />Bonds, Series 1994 if interest rates are favorable at the time of sale. <br />This refinancing will allow the City to realize one-time advance savings <br />of $2.5 to $2.8 million with average interest rates not exceeding 4.15 <br />percent. The existing terms will remain the same. <br /> <br />Staff further recommends that Kinsell, Newcomb & DeDios, Inc. be retained <br />to underwrite the bond issue. Kinsell, Newcomb & DeDios, Inc. has <br />extensive experience in structuring complex bond issues and an excellent <br />ability to market the bonds. Staff also recommends that Northcross, Hill, <br />& Ach be retained as financial advisor and Orrick Herrington & Sutcliffe <br />LLP be retained as bond counsel. The financial advisor and bond counsel <br />both served on the original financing team for the Water Revenue Bond <br />issue in 1994. Underwriter fees will not exceed $115,000 and financial <br />advisor fees will not exceed $25,000. Bond counsel fees will not exceed <br />$80,000. The documents also appoint BNY Western Trust Company as Trustee. <br />These fees are contingent upon the sale of the bonds. <br /> <br />The closing will occur when interest rates reach the level needed to <br />achieve the projected savings mentioned above. If interest rates rise to <br />the detriment of the City prior to the bond sale date, the City will have <br />the option to terminate the proposed transaction. <br /> <br />FISCAL IMPACT <br /> <br />It is projected that the City will realize a minimum one-time <br />savings of $2.5 million as a result of reduced interest rates. <br /> <br />~.~o~6ma <br />ExecutlvefDirector <br />Finance & Management Services Agency <br /> <br />advance <br /> <br />75.D. Page 206 <br /> <br /> <br />