8.2 WS Bond Sale POS
,
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE
07/22/02
2
BY: Rodney Franz
BY:
AGENDA SECTION:
NO.
8
ORIGINATING DEPARTMENT:
FINANCE
ITEM
NO.
i"
ITEM:
Resolution No. 02-5853 authorizing the offering for sale of water and sewage system revenue
refunding bonds of the City of Salina Kansas and approving the Preliminary Official Statemen
BACKGROUND:
The City has initiated the process of refunding our outstanding 1994 Revenue Refunding Bon s.
This action is a combined call and refunding, that is, we are applying approximately $2,750,0 0 in
cash to reduce the amount of outstanding indebtedness in addition to refinancing the remaini g
indebtedness at more favorable rates. The cash contribution comes from off budget resource,
including a residual in the Sewer Construction Accounts, and available reserve funds from ea ier
refinancing activity.
We anticipate an annual cash flow savings of about $450,000 per year through 2012. About 3%
of this savings is attributable to the refunding and 57% is attributable to the reduction in debt. The
present value savings on the refunding portion, expressed as a percent of refunded par, is 4. %.
The industry rule of thumb is that savings in excess of 3% justify the refunding.
The Resolution authorizes George K. Baum to do a non-binding pre-offering on the bonds. T is
enables them to find a purchaser for the bonds, and establish the rates that will be offered for the
bonds. They will return to us on August 12 with the results of the offering, and an updated sa ings
analysis. The City Commission will, at that time, review the savings analysis and authorize th sale
of the bonds if the actual savings justify proceeding. If the markets have changed to such an xtent
as to reduce the savings to an unacceptable level, the City has the option of not proceeding th
the sale at that time. The action on August 12 will substantially complete the transaction.
Second, the Resolution authorizes and approves the Official Statement, which provides the
description of the bonds and the City to prospective purchasers, and provides for compliance ith
Securities and Exchange Commission and Municipal Securities Rulemaking Board requireme ts.
REQUESTED ACTION:
Consider Resolution No. 02-5853, authorizing proceeding and offering the bonds for sale, and
approving the Official Statement for the refunding bonds.