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Transcript of Agenda Cover Ordinance2.pdf · PDF file Ultimately, the private sale option will only be...

  • Agenda Cover Memorandum

    Rev 03/01/2013

    Meeting Date: October 3, 2016

    Meeting Type: COW (Committee of the Whole) City Council Budget Workshop

    Item Title: Approve the final reading of an Ordinance Authorizing the Issuance of General Obligation Refunding Bonds, Series 2016, for the City of Park Ridge, refinancing Series 2006A.

    Action Requested: Approval For Discussion Feedback Requested For Your Information

    Staff Contact: Joe Gilmore, Acting City Manager

    Phone Number: (847) 318-5216

    Email Address: [email protected] Background: The Council has previously been presented with this item and discussed the opportunity to refund the outstanding 2006A Bonds for savings. The options presented to Council on 9/12/2016 and 9/26/2016 included two scenarios (“level payments” and “optimal savings”) using either a public or private sale. At the 9/26/2016 Committee of the Whole meeting, and the 10/3/2016 City Council meeting the item was passed unanimously.

    The “level payments” scenario creates relatively level total debt payments (approx. $3M annually) for all outstanding debt that is levied for, through levy year 2023. This scenario provides for an estimated $1,102,636 in present value savings over the term of the refunded bond.

    The “optimal savings” scenario structures the refunding to provide the maximum savings available over the term of the original bond, through levy year 2020. This scenario provides for an estimated $1,219,457 in present value savings over the term of the refunded bond. The payment stream fluctuates significantly leading to annual total debt payments for all outstanding debt that is levied for from $1.1M to $4.4M.

    The public sale option would involve going through the traditional steps of issuing bonds in the public market, including preparing an offering document, obtaining a credit rating, and holding a public sale of the bonds. The private placement targets bank investors and is attractive to them given the size ($10M), the fact they are bank qualified and the short maturity schedule. The private placement has overall lower costs of issuance versus a public sale which will result in higher savings assuming the interest rates are comparable.

    At the 9/12 meeting, Council consensus favored the “level payments” scenario using private sale option first. Ultimately, the private sale option will only be pursued if the net savings exceed the public sale option.

    As was the case with previous refundings, the interest rates and principal amounts will not be known until the time of the bond sale. Action today will authorize placing of a Parameters refunding Ordinance on the 10/3/2016 City Council agenda for first reading. A proposed timeline is also attached. Staff has communicated with our bond advisor that the City is interested in accelerating this refunding as quickly as possible, although some of the deliverables are outside of the control of the City (example Ratings Call with Moody’s).

    Recommendation: Approve the final reading of an Ordinance Authorizing the Issuance of General Obligation Refunding Bonds, Series 2016, for the City of Park Ridge, refinancing Series 2006A.

    Budget Implications:

    Does Action Require an Expenditure of Funds: Yes No

    Attachment(s), if any:  Final Ordinance  Timeline  Bond Refunding Projection dated 9/8/2016

  • ORDINANCE NO. _______________

    ORDINANCE AUTHORIZING THE ISSUANCE OF GENERAL OBLIGATION REFUNDING BONDS, SERIES 2016, OF THE CITY OF PARK RIDGE, ILLINOIS

    BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARK RIDGE,

    ILLINOIS, AS FOLLOWS:

    Section 1. Authority and Purpose. This ordinance is adopted pursuant to

    Section 6 of Article VII of the Illinois Constitution of 1970 for the purpose of financing the

    refunding of all or a portion of the outstanding General Obligation Bonds, Series 2006A

    (the “Series 2006A Bonds”), of the City of Park Ridge, Illinois (the “City”) by the

    issuance of the General Obligation Refunding Bonds, Series 2016 (the “2016 Bonds”) of

    the City authorized by this ordinance.

    Section 2. Refunding Plan. The City may determine to refund all or a portion

    of the Series 2006A Bonds. The particular Series 2006A Bonds to be refunded (the

    “Prior Bonds”), the particular Prior Bonds to be redeemed prior to maturity and the date

    of redemption of any Prior Bonds that are to be redeemed prior to maturity, shall be

    specified in one or more bond orders (each a “Bond Order”) to be executed by the

    Mayor and the Acting City Manager (each an “Authorized Officer”). The refunding of the

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    Prior Bonds is subject to the condition that the present value debt service savings

    derived by the City from the refunding of the Prior Bonds must be not less than 5.0% of

    the principal amount of the Prior Bonds to be refunded. Each series of 2016 Bonds may

    be issued as obligations the interest on which is exempt from federal income taxation

    (“Tax-Exempt Bonds”) or as obligations the interest on which is includable in gross

    income for federal income tax purposes (“Taxable Bonds”) as determined in the Bond

    Order. The Mayor, the Acting City Manager and the other officers and officials of the

    City are authorized and directed to do, or cause to be done, all things necessary to

    accomplish the refunding and redemption of the Prior Bonds.

    Section 3. Authorization and Terms of Bonds. To meet part of the

    estimated costs of refunding the Prior Bonds and to fund the costs of issuance of the

    2016 Bonds herein authorized, there is hereby appropriated the sum of $10,500,000.

    Pursuant to the home rule powers of the City to incur debt payable from ad valorem

    property tax receipts and for the purpose of financing said appropriation, unlimited tax

    general obligation bonds of the City are authorized to be issued and sold in one or more

    series and in an aggregate principal amount of not to exceed $10,500,000.

    The bonds of each series shall be designated as “General Obligation Bonds”,

    and shall include additional designations to distinguish each series of the bonds. The

    bonds authorized and issued pursuant to this ordinance are herein collectively called

    the “2016 Bonds”.

    Bonds shall be issuable in the denominations of not less than $5,000 or any

    integral multiple thereof (“Authorized Denominations”) and may bear such identifying

    numbers or letters as shall be useful to facilitate the registration, transfer and exchange

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    of 2016 Bonds. Each 2016 Bond delivered upon the original issuance of the 2016

    Bonds shall be dated as of the date specified in the Bond Order. Each 2016 Bond

    thereafter issued upon any transfer, exchange or replacement of 2016 Bonds shall be

    dated so that no gain or loss of interest shall result from such transfer, exchange or

    replacement.

    The 2016 Bonds shall mature on December 1 in such years and in such principal

    amounts as shall be specified in the Bond Order, provided that no 2016 Bond shall

    mature later than December 1, 2024.

    Each 2016 Bond shall bear interest from its date, computed on the basis of a

    360 day year consisting of twelve 30 day months and payable in lawful money of the

    United States of America on an initial interest payment date of June 1, 2017 and

    semiannually thereafter on each June 1 and December 1, at the rates per annum as

    shall be specified in the Bond Order, provided that no 2016 Bond shall bear interest at a

    rate exceeding five percent (5.00%) per annum.

    No 2016 Bonds shall be sold pursuant to this ordinance unless the sum of the

    taxes levied pursuant to Section 9 of this ordinance and the moneys to be deposited

    into the 2016 Debt Service Account (established by this ordinance) concurrently with the

    issuance of the 2016 Bonds is sufficient to provide for the punctual payment of the

    principal of and interest on the 2016 Bonds.

    The principal of and premium, if any, on the 2016 Bonds shall be payable in

    lawful money of the United States of America upon presentation and surrender thereof

    at the corporate trust office of Amalgamated Bank of Chicago, in the City of Chicago,

    Illinois, which is hereby appointed as the bond registrar and paying agent for the 2016

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    Bonds. Interest on the 2016 Bonds shall be payable on each interest payment date to

    the registered owners of record thereof appearing on the registration books maintained

    by the City for such purpose at the corporate trust office of the bond registrar, as of the

    close of business on the 15th day of the calendar month next preceding the applicable

    interest payment date. Interest on the 2016 Bonds shall be paid by check or draft

    mailed to such registered owners at their addresses appearing on the registration books

    or by wire transfer pursuant to an agreement by and between the City and the

    registered owner.

    The 2016 Bonds of any series shall be subject to redemption prior to maturity as

    determined in the Bond Order, at the option of the City and upon notice as herein

    provided, in such principal amounts and from such maturities as the