2014 2:00:00 PM

Monday, May 12, 2014 2:00 PM
Sparks City Hall, Legislative Bldg, Council Chambers, 745 4th St., Sparks

General Business: 6.12

Title: Consideration and possible approval of Bill No. 2672, creating a 2014 Consolidated Tax Revenue Refunding Bond Ordinance of the City Council of Sparks, Nevada, authorizing the reissuance by the City of its Consolidated Tax Revenue Refunding Bonds, Series 2007; reducing the interest rate of the refunding bond previously issued in 2007; and providing for its adoption as if an emergency exists.

Petitioner/Presenter: Jeff Cronk, CPA, Financial Services Director/Jeff Cronk, CPA, Financial Services Director

Recommendation: That the City Council approve the 2014 Consolidated Tax Revenue Refunding Bond Ordinance

Financial Impact: Total estimated savings equal to $583,997 until maturity in 2026, generating an estimated net present value savings of $487,741.

Business Impact (Per NRS 237):
A Business Impact Statement is not required because this is not a rule.

Agenda Item Brief: The proposed Consolidated Tax Refunding Bonds will lower the interest rate from 4.09% to 3.09% and generate debt service savings estimated to equal $583,997 over the life of the bonds until maturity in 2026 for an average annual savings of approximately $48,666.

Background: On February 15, 2007, the City issued its Consolidated Tax (CTAX) Revenue Refunding bonds, and subsequently refunded a portion of those bonds on May 12, 2011. There is an opportunity to decrease the City’s debt service costs by refunding these CTAX bonds which were originally issued in 2007 by refinancing to a lower interest rate with the existing holder of the outstanding debt. The attached ordinance would authorize the acceptance of a new interest rate and the reissuance and reamortization of the outstanding 2007 debt. As this is a reissuance of the 2007 bonds, the terms of the 2007 debt would apply to the 2014 reissuance.

Analysis: The interest rate would drop from 4.09% to 3.09% and produce estimated total savings of $583,997 over the remaining life of the bonds until maturity in 2026, representing a net present value savings estimated at $487,741. The new par value of the 2014 reissuance is estimated to be $7,354,000, an increase of $79,000 over the current debt outstanding (final par amount will be determined at closing). The $79,000 increase is attributable to estimated cost of reissuance and is included in the overall expected estimated savings. These CTAX revenue bonds were originally issued to help fund four primary projects: 1) the Golden Eagle Regional Park; 2) Improvements in Victorian Square (Redevelopment Agency Area #1); 3) a new City Hall; and 4) the Larry Johnson Community Center. As a portion of these bonds are attributable to the Victorian Square area and benefit the Redevelopment Agency Area #1, approximately 29% of the debt issuance costs have been and will continue to be paid by the Redevelopment Agency. As such, approximately 29% of the savings generated will also apply to the benefit of the Redevelopment Agency. In order to meet a reissue delivery date by the end of May, the attached ordinance authorizing the reissuance of the 2007 debt is considered to be passed as if an emergency exists, requiring four-fifths approval rather than a simple majority. Attached to this agenda are the authorizing Ordinance under consideration, a Debt Service Savings and Summary Schedule, and a Tentative Issuance Schedule.

Alternatives: The City Council may choose not to adopt the 2014 Consolidated Tax Revenue Refunding Bond ordinance.

Recommended Motion:

“I move to approve Bill No. 2672, creating a 2014 Consolidated Tax Revenue Refunding Bond Ordinance authorizing the reissuance by the City of its 2007 Consolidated Tax Revenue Refunding Bonds”.

Attached Files:

2014 CTAX Refunding Bonds Estimated Issuance & Savings_May 12, 2014.pdf

2014 CTAX Bond Tentative Issuance Schedule_May 12, 2014.pdf

Sparks Ordinance Revised.pdf

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