2019-158 Bond SalesDate: August 9, 2019 Report No. 2019-158
INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: City’s most recent competitive bond sale of Series 2019 General Obligation Refunding & Improvement Bonds and Certificates of Obligation. BACKGROUND: The purpose of this report is to provide the City Council with details regarding the sale of Series 2019 General Obligation Refunding & Improvement Bonds and Certificates of Obligation
authorized on July 16, 2019.
DISCUSSION: On July 17, 2019, the City along with its financial advisor, Hilltop Securities, conducted a
competitive sale of $44,340,000 in General Obligation (GO) Refunding and Improvement Bonds and $28,755,000 in Certificates of Obligation (CO). The delivery date of the funds to the City will be on August 20, 2019. The participating underwriting firms for the GO bond sale were: Robert W. Baird & Co., Inc.;
UBS Financial Services Inc.; Wells Fargo Bank, N.A.; Citigroup Global Markets Inc.; and BOK Financial Securities, Inc. The participating underwriting firms for the CO sale were: Robert W. Baird & Co., Inc.; Wells Fargo Bank, N.A.; UBS Financial Services Inc.; Citigroup Global Markets Inc.; and BOK Financial Securities, Inc. The GO bonds and the COs were both awarded to Robert W. Baird & CO, Inc. the lowest true interest cost bidder on both bids.
The GO bonds included the issuance of $19.37 million to fund the fifth year of projects approved by voters in the November 2014 bond election. The bonds also refunded the remaining principal amount of the TMPA Scrubber debt (Combination Tax and Revenue Refunding Bonds, Series 2010). As approved by the City Council on July 16, 2019, the bond sale met all of the following
required parameters listed below: 1) The maximum principal amount of bonds shall not exceed $47,990,000; 2) Final stated maturity of February 15, 2039; 3) Refunding must produce savings of at least 3.5%;
4) The sale must occur prior to January 16, 2020. The present value savings for the GO refunding was $2,213,646.92 or 7.73% of the refunded bond amount, which was well in excess of the established criteria. The annual savings averages approximately $368,900 over six (6) years. The all-in true interest cost for the GO bonds, which
includes the cost of issuance, is 1.57%. Concurrently the City also completed the competitive CO sale for general government, technology service, electric, water, and wastewater projects. As approved by the City Council on July 16, 2019, the CO sale met all of the following required parameters listed below:
Date: August 9, 2019 Report No. 2019-158
1) The maximum principal amount of the certificates of obligation shall not exceed $30,720,000;
2) The final stated maturity shall not exceed February 15, 2049; 3) The maximum net effective interest rate shall not exceed 3.75%; 4) The sale must occur prior to January 16, 2020. The all-in true interest cost for the COs is 2.67%, which factors in the cost of issuance. City staff
was pleased with the results of both sales. Please do not hesitate to contact me if you have any further questions on the results of the City’s most recent debt issuance.
STAFF CONTACT: David Gaines, Director of Finance (940)-349-8260
David.Gaines@cityofdenton.com
REQUESTOR: Staff generated
PARTICIPATING DEPARTMENTS: Finance
STAFF TIME TO COMPLETE REPORT: 3 hours