Transcript Auburn Union School District

Refinancing
the District’s Outstanding
Special Tax Bonds
October 2, 2014
The District has 2 outstanding Special Tax Bonds
2005 Bonds
2007 Bonds
• Original par amount of
$4,900,000
• Balance of approx.
$4,015,000
• Final Maturity August 1,
2035
• Current interest rate 4.81%
• Original par amount of
$1,750,000
• Balance of approx.
$1,130,000
• Final Maturity August 1,
2037
• Current interest rate 5.625%
 With the current interest rate environment, the District can
achieve savings from a refinance of these bonds through a
direct placement.
Slide 2
Refinance
Summary
Slide 3
Key Refinance Components
Could refinance both Series 2005 and 2007 bonds for
savings through two direct placement financings
• No prepayment penalty on 2005 bonds
• 2% prepayment penalty on 2007 bonds
Would remain special tax bonds
• Not a General Fund obligation
No leased asset required
Maintain same term as 2005 bonds, shorten term for
2007 bond
Slide 4
Special Tax Direct Placement Sizing
Refi of 2005
CFD Bonds
Deposit to Escrow Funds
Refi of 2007
CFD Bonds
Combined
Refinance
Sizing
$4,079,265
$1,174,141
$5,253,406
Costs of Issuance and Additional Proceeds
$120,645
$70,565
$191,211
Debt Service Reserve Fund
$120,270
$35,670
$155,940
($311,180)
($91,376)
($402,556)
Less: Prior Debt Service Reserve Funds
Par Amount of Bonds
$4,009,000
$1,189,000
$5,198,000
Costs of Issuance
Description
Quint & Thimmig LLP (Bond Counsel)
CFD #1
$35,000
CFD #2
$25,000
Total
$60,000
Capitol Public Finance Group (Financial Advisor)
$50,000
$25,000
$75,000
Southwest Securities (Placement Agent)
$25,000
$12,500
$37,500
$3,000
$2,000
$5,000
Acceptance Fee
$1,500
$1,500
$3,000
First Annual Fiscal Agent Fee
$1,500
$1,500
$3,000
$1,000
$1,000
$2,000
$650
$200
$850
$2,995
$1,865
$4,861
$120,645
$70,565
$191,211
Other Expenses
Lozano Smith - General Counsel
Fiscal Agent
Escrow Agent
CDIAC
Contingency and Additional Proceeds
Total Costs of Issuance
Slide 5
Slide 6
Why Refinance?
A refinance of the Special Tax bonds would
directly reduce the annual General Fund
obligation on the COP debt repayment by
approximately $40,000 per year
• Special tax revenue in excess of current Special Tax
Bond debt service is used to pay the outstanding COPs
– Developer fee revenue is applied to the extent
available, with the remaining amount paid from the
General Fund
Slide 7
$1,000,000
After Funding Debt Service on Outstanding CFD Bonds, Excess Special Tax
Revenue Can be Applied to COP Debt Repayment. The Annual Shortfall for COP
Payments Can be Funded from Developer Fee Collections or Other Available
Revenues
$900,000
$800,000
$700,000
Current Capital
Cash Balance of
Approximately
$713,000 Can Be
Used to Make
Debt Payments
Shortfall of
Approximately
$320,000 per Year
After the Refinance
(was Previously
$360,000 Per Year)
Fund Balance Used for Debt Service
Excess Special Tax Revenue
Combined COP Debt Service
Future Shortfall
Excludes Tax
Revenue from
Future
Development
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
Fiscal Year Ending
Slide 8
Refinance Terms
3:1 Value to Lien Ratio
• Currently 5:1
Special tax collections of at least 110% of the total
annual debt service
Optional Redemption: On any date on or after August
1, 2019 at 101%
Annual disclosure including: audit, special tax levies and
delinquencies, and amount deposited in reserve fund
Slide 9
Documents for
Consideration
Slide 10
2 Resolutions for Board Consideration:
Approve Documents Related to the
Restructuring of Each CFD Bond
Bond Purchase and Rate Lock Agreements
with City National Bank
• CFD #1 financing not to exceed $4.2 million
• CFD #2 financing not to exceed $1.275 million
• Interest rate lock at 3.75%
Fiscal Agent Agreements with US Bank
Escrow Agreements with Wells Fargo Bank
Slide 11
Next Steps
Oct.
3
Dec.
2
Dec.
3
Execute Bond Purchase and Rate Lock
Agreements
Deposit funds in escrow
Complete refinance of 2005 and 2007
CFD Bonds
Slide 12
Questions?