In 2008, the City created Local Improvement District (LID) No. 3 for the purpose of providing a funding mechanism necessary to help finance the infrastructure needed for the Legends at Sparks Marina project.  After creation of the LID, the City issued Limited Obligation Improvement Bonds in the amount of $26,120,000 that were supported by special assessments on the parcels located within the LID.  The LID was created and the Improvement Bonds were issued in accordance with the Disposition, Development, and Financing Agreement (DDFA) relating to the Legends at Sparks Marina Project.

The Improvement Bonds which were issued in 2008 were done so utilizing interest rates that ranged from 6.5% - 6.75%.  The ordinance being considered today will authorize the issuance of new refunding bonds which will take advantage of lower interest rates, reducing the amount of debt service paid by parcel owners whose assessments are still outstanding.  All the material provisions of the Improvement Bonds that were issued in 2008 will remain with the new 2016 refunding bonds including the original maturity date of 9/1/2027.  Additionally, the 2016 refunding bonds will not alter the provisions of the DDFA.

The new 2016 LID refunding bonds will be issued at a par value not to exceed $13,870,000 which will provide for an advance refunding of the 2008 LID improvement bonds that are currently outstanding plus issuance costs.  At the time of publishing this staff report, the interest rate was not yet finalized; however, the new interest rate is expected to be less than 3.90%, and is expected to provide net present value savings in excess of $700,000 over the remaining life of the debt (9/1/2017 final maturity).  Bond reserves of approximately 5% of par amount will also be maintained in accordance with the bond indenture, and the close of escrow is expected to be on or around December 22, 2016.

Attached to this staff report is a file showing the financial analysis and estimated debt service savings assuming an interest rate of 3.88% (again, the actual interest rate is yet to be finalized as of the writing of this staff report, but significant change is not expected).

Council may choose to approve Bill No. 2714, and authorize the issuance of 2016 Local Improvement District Refunding Bonds; or

Council may choose not to approve Bill No. 2714, not allowing the refunding bonds to be issued.

I move to approve Bill No. 2714, creating an ordinance authorizing the issuance by the City of Sparks, Nevada of its Local Improvement District No. 3 (Legends at Sparks Marina) Limited Obligation Refunding Bonds in the maximum principal amount of $13,870,000.