HomeMy WebLinkAbout1997 03_OPWA_Distribution of Offering Document Refunding Serier 1988 Bonds_1997.12.16
97-03
A RESOLUTION PRELIMINARILY APPROVING THE ISSUANCE OF THE
AUTHORITY'S REVENUE REFUNDING BONDS, SERIES 1997 (THE
Ii BONDS " ) FOR THE PURPOSE OF REFUNDING THE AUTHORITY'S
PUBLIC IMPROVEMENT REVENUE BONDS, SERIES 1988; APPROVING
THE PRELIMINARY OFFICIAL STATEMENT PERTAINING TO THE
ISSUANCE OF THE BONDS AND DEEMING SAID PRELIMINARY
OFFICIAL STATEMENT "NEAR FINAL" AND AUTHORIZING
DISTRIBUTION OF THE SAME; DESIGNATING AN UNDERWRITER WITH
RESPECT TO THE SALE OF THE BONDS; AND CONTAINING OTHER
PROVISIONS RELATING THERETO.
RESOLUTION NO.
WHEREAS, The Owasso Public Works Authority (the "Authority")
has determined to advance refund the Authority's Public Improvement
Revenue Bonds, Series 1988 (the "Refunding"); and
WHEREAS, the Authority has determined to finance a portion of
the cost of the Refunding through the issuance of the Authority's
Revenue Refunding Bonds, Series 1997, in the approximate principal
amount of $4,445,000 (the "Bonds")
IT RESOLVED BY THE TRUSTEES OF THE OWASSO
NOW, THEREFORE, BE
PUBLIC WORKS AUTHORITY:
t
SECTION 1. PRELIMINARY AUTHORIZATION REGARDING ISSUANCE OF
BONDS. The Authority preliminarily authorizes the issuance of the
Bonds in the approximate principal amount and for the purposes set
forth above
SECTION 2. PRELIMINARY OFFICIAL STATEMENT. The Preliminary
Official Statement dated December 16, 1997 (the "preliminary
Official Statementll) outlining the terms, conditions and security
for the Bonds, is hereby adopted and approved and the Chairperson
or Vice Chairperson of the Authority is authorized to approve any
corrections, additions or deletions thereto for and on behalf of
the Authority and is further authorized and directed to execute and
deliver same for and on behalf of the Authority; provided further,
that the information contained in said Preliminary Official
Statement with respect to the Authority is correct in all material
respects and such information does not contain any untrue
statements of a material fact and does not omit to state a material
fact necessary to make the statements made in such Preliminary
Official Statement, in light of the circumstances under which they
were made, not misleading. The Authority hereby deems the
Preliminary Official Statement "near final" in accordance with the
requirements of Rule 15c2-12 of the Securities and Exchange
Commission promulgated pursuant to the Securities Exchange Act of
1934. The Authority designates Rauscher Pierce Refsnes, Inc., to
act as the underwriter of the referenced Bonds (the "Underwriter") .
The Authority authorizes the Underwriter to distribute the
Preliminary Official Statement in connection with the sale of the
Bonds
'"
APPROVED AND ADOPTED this 16th day of December, 1997, by The
Owasso Public Works Authority.
THE OWASSO PUBLIC WORKS AUTHORITY
~
..J. -
M
(SEAL)
ATTEST
V~. ~dJt
ell, ec ary
TO FORM:
Attorney t
2
CERTIFICATE
OF
AUTHORITY ACTION
I, the -undersigned, hereby certify that I am the duly
qualified and acting Secretary of The Owasso Public Works
Authority.
I further certify that the Trustees of The Owasso Public Works
Authority held a Regular Meeting at 7:00 o'clock p.m. on December
16, 1997, after due notice was given in full compliance with the
Oklahoma Open Meeting Act.
I further certify that attached hereto is a full and complete
copy of a Resolution that was passed and approved by said Trustees
at said meeting as the same appears in the official records of my
office and that said Resolution is currently in effect and has not
been repealed or amended as of this date.
I further certify that below is listed those Trustees present
and absent at said meeting; those making and seconding the motion
that said Resolution be passed and approved, and those voting for
and against such motion: t
PRESENT: Mary Lou Barnhouse, Chairperson;
Tracy Standridge, Vice Chairperson;
Michael Helm, Trustee; Denise Bode,
Trustee; Mark Wilken, Trustee
ABSENT: None
MOTION MADE BY: Wilken
MOTION SECONDED BY: Bode
AYE: Wilken, Bode, Helm, Standridge,
Barnhouse
NAY: None
WITNESS MY HAND THIS 16TH DAY OF DECEMBER, 1997.
THE OWASSO PUBLIC WORKS AUTHORITY
l
),
r
3
MEMORANDUM
THE HONORABLE CHAm & TRUSTEES
OW ASSO PUBLIC WORKS AUTHORITY
TO
RODNEY J RAY
CITY MANAGER
FROM:
REFUNDING OF SERIES 1988 OUTSTANDING BONDS
OPW A RESOLUTION #97-3
SUBJECT
1997
12
December
DATE:
BACKGROUND
A review of the 1988 Bond Issue and the existing debt service on those bonds, has indicated that
it is the best interest of the city to refinance the outstanding debt created by that series of
bonds. That decision was reached after an extensive review of the debt by Keith McDonald and
Allan Brooks (the city's financial advisor and bond counsel) and Ms Bishop/ and) two City
Council work sessions that included discussion of this matter.
The result of such a refinancing, using an option that is agreeable to all parties is an approximate
savings of $391,000. That is a substantial savings to the taxpayer and will result in additional
capital projects.
the
the
Resolution #97-3 (attached) is a resolution that allows the city's representatives to initiate
refunding by declaring the official statement "near final", thus giving the underwriter
authority to begin preliminary placement of the bonds
RECOMMENDA TION
#97-3
There are two "blanks" in the attached resolution. Those pieces of information will
be available prior to the City Council meeting, but until negotiations with the
underwriter are complete, the information cannot be added. If you have questions
please call Ms Bishop or me
of OPW A Resolution
Trustee approval
staff recommends
NOTE
The
1997
11
ATTACHMENTS
Resolution #97-3
Memorandum dated December
1
2
MEMORANDUM
THE HONORABLE MAYOR AND CITY COUNCIL
CITY OF OW ASSO
TO
RODNEY J RAY, CITY MANAGER
SHERRY BISHOP, FINANCE DIRECTOR
FROM:
REFUNDING BOND
1997
INFORMATION RELATING TO
SUBJECT:
1997
11
December
DA TE:
BACKGROUND
Pursuant to your request, the City's Financial Advisor (Keith McDonald of Leo Oppenheim &
Co) and Bond Counsel (Allan Brooks of the Fagin Brown Law Firm) have supplied information
relating the proposed refunding bond issue. The information has been updated with the most
current estimates for interest rates and costs. One result of these changes is to reduce the total
amount of bonds to be issued by $75,000. These documents anticipate a total of $4,445.000 in
bonds. with an average interest rate of 4.65 %
financing options discussed during last week s
would be taken by the City and what
Advisor and his staff have created an
on the cost of money to compare the
includes models for the three
session Those options focused on how a savings
the comparative savings of each option is. The Financial
additional document on each option that uses a 10% cap'
savings for all options in three methods
The information
work
Cash
four years
first
the
for
the payments
option reduces
three financing options are
Front Loaded Savings. This
savings is realized up front
The
1
savmgs
Cash
term of the debt
the
payments over
Level Savings. This option reduces all
is realized evenly over the ten years.
2
Back Loaded Savings. This option maintains the payments at the current level and pays off
the debt as soon as possible. Cash savings is realized in years eight through ten
3
term of the debt
the
are
over
payments
the value of the savings
cash
total
the
This method uses
methods for comparing
Flow
three
Cash
The
1997 REFUNDING BOND
DECEMBER 11 1997
PAGE 2
interest rate of the debt
Arbitrage Rate of Present Value This method uses the average
as the rate to calculate the present value of the savings
to calculate
of money
the cost
10 % as
method uses
Rate of Present Value This
the present value of the savings
10%
and each
financing option
each
the city for
to
net savings
Listed below are the estimated
of the cost of money
10% Rate
Present Value
Arbitrage Rate
Present Value
assumption
Cash Flow
Savings
Savings
Savings
tion:
o
Financin
$262.892
$387.226
$520,990
Loaded
Front
1
765
131
293
391
889
721
Level
2
-33.935
The back loaded option provides the greatest cash flow savings but, when analyzed with a
potential 1 0 % cost of money, could actually be a loss in value. The front loaded option provides
the greatest savings potential should the cost of money be at the 10 % level, but the least cash
flow savings. The level financing option provides a savings under all three valuation methods
and is nearly equal to option #1 using the arbitrage rate of present value. The
financing option provides a good savings on the refunding and offers the least risk
term
savmgs
the long
level
over
425.348
047.639
1
Back Loaded
3
FEES
I have discussed/negotiated with the three firms (Oppenheim Fagin Cates) relative to the fees
they would propose for the two projects. Based on those discussions, it is my opinion that the
firms are willing to accept the discounted rates shown in the right column below
Discounted Rate/Both
Issue
1998
Issue
1997
$45.000
$30,000
$25.000
Cates
$145.000
$112.000
$56,000
Leo Oppenheim
110.000
65.000
50.000
Fagin Brown
$300,000
'"
207.000
$338,000
000
$131
TOTAL
1997 REFUNDING BOND
DECEMBER 11 1997
PAGE 3
the following fees
$45,000
$150,000
$90,000
$285,000
was to acquire
Cates
Oppenheim
Fagin
My goal
NOTE
Target
Total
negotiations resulted in the following fees
$45,000
$145,000
$110.000
$300,000
Cates
Oppenheim
Fagin
NOTE: The
Negotiated
Total
of
savmgs
estimates, the negotiations have resulted in a net
financial advisor fees and bond counsel fees.
cost
counsel fees
the original
local
COMMENTS
Based on
$38,000 in
*
has
was
net
(above)
with five underwriters and
cost/discount He also
of a
fee
the underwriters
three fees
Keith McDonald has completed preliminary negotiations
initially selected Rauscher, etal as the firm with the lowest
successful in including the underwriters counsel cost as a part
savings of $5000
those
$53.000 for
at
was set
savmgs
target
The
*
*
Mr McDonald has renegotiated the underwriters fees/discounts down from
1 the bond. with their fee including the underwriters counseL a
% of
Additionally,
1.25 % of total to
savings of $12.050
*
Fagin-Brown firm (bond counsel) lowered their fee only $5000, but strongly commented that
their initial quote of $50,000 + $65,000 was already discounted from a normal combined
fee of $140,000 (based on one percent of the bond). Allan Brooks felt that he had quoted
a fair fee for the work involved and believed the $5000 discount represented a good faith
effort
*
less
are approximately $55,000
'"
and discussions
savings due to negotiations
estimate of fees
amount
the original
Total
than
*
1997 REFUNDING BOND
DECEMBER 11 1997
PAGE 4
of the Three Options
Each
Value Reports for
Present
& Net
ATTACHMENTS
Sources & Uses of Funds
Cost of Issuance Information
Debt Service Savings Reports
C:\WPDA T A \PROJECTS\BOND1997 .REF
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