This Resolution authorizes the issuance of not to exceed $8,300,000 Capital Improvement Refunding Special Revenue Bond, Series 2017A (the “Series 2017A Bond”). The proceeds of the Series 2017A Bond, together with other legally available funds of the City, will be issued for the purpose of refunding $9,000,000 principal amount of Capital Improvement Special Revenue Bonds, Series 2011A (the “Series 2011A Bonds”) maturing on April 1, 2017, and paying costs of issuance of the Series 2017A Bond.
The City’s Medium Term Note Program was originally designed to take advantage of the interest rates for one to fifteen year maturities on the yield curve as part of the City's Covenant Debt portfolio. Upon maturity of certain designated maturities of the City's Capital Improvement Special Revenue Bonds, the City would issue new series of refunding bonds over successive periods ranging from one to fifteen years up until the last ten years of the overall thirty-year term of the Bonds, at which time the principal would begin to amortize.
The City, through its financial advisor, issued a Solicitation of Offers for Bank Term Loan and received eleven proposals. PNC Bank, National Association ("PNC") submitted the proposal with the most favorable terms, including an indicative fixed interest rate of 2.36%. This indicative rate is based on interest rates at the time the proposal was submitted. The rate is subject to change until the final fixed rate is locked pursuant to a rate lock agreement that may be executed prior to closing.
Due to the characteristics of the Series 2017A Bond, the anticipated market conditions, and the need for an expeditious sale to meet the timing for refunding of the Refunded Designated Maturities, it is being recommended that the method of sale be through a negotiated sale to PNC.
Along with the Resolution, the action will approve the form of and authorize the execution of a Direct Purchase Agreement with PNC and an interest rate lock agreement with PNC, as well as authorize the Mayor to approve changes thereto and take other action necessary to complete the transaction.