Title
A RESOLUTION AUTHORIZING AND DIRECTING THE ISSUANCE, SALE AND DELIVERY OF GENERAL OBLIGATION BONDS, SERIES A, 2012, OF SEDGWICK COUNTY, KANSAS; PROVIDING FOR THE LEVY AND COLLECTION OF AN ANNUAL TAX FOR THE PURPOSE OF PAYING THE PRINCIPAL OF AND INTEREST ON SAID BONDS AS THEY BECOME DUE; MAKING CERTAIN COVENANTS AND AGREEMENTS TO PROVIDE FOR THE PAYMENT AND SECURITY THEREOF; AND AUTHORIZING CERTAIN OTHER DOCUMENTS AND ACTIONS CONNECTED THEREWITH.
Presented By: Chris Chronis, Chief Financial Officer.
RECOMMENDED ACTION: Award the sale of each series of the bonds to the best bidder and adopt the resolution.
Body
Pursuant to Resolution No. 106-2012, the Board of County Commissioners (the "Board") authorized the Chief Financial Officer to solicit bids for the Series A, 2012 Bonds. Bids will be received at 10:00 a.m. on July 25, 2012. The Bonds will be dated August 15, 2012, and are scheduled to close on the same date. The principal amounts of the Bonds are subject to change based on bids received, currently estimated to be$10,175,000.
The Bonds will provide funds to: (a) permanently finance the costs of the following internal improvements previously authorized by the Board (the Project), plus costs of issuance:
|
Project Description |
Res No. |
Authority (K.S.A.) |
Amount |
|
Reconstruct 71st St S from 135th St W to K-42 and |
35-2012 |
68-5,103 / 68-1103 |
$4,000,000 |
183rd St W from 71st St S to K-42
; and (b) refinance the following County bonds (the Refunded Bonds), in order to achieve a present value interest cost savings:
|
Description |
Series |
Dated Date |
Years |
Amount |
|
General Obligation Bonds |
A, 2005 |
June 1, 2005 |
2016 to 2025 |
$5,785,000 |
The portion of the Bonds issued to finance the Project are scheduled to mature August 1, 2013 through August 1, 2032. The portion of the Bonds issued to refinance the Refunded Bonds will mature over the same period of the Refunded Bonds (2016-2025).
Alternatives:
The Board could decline to award the sale of the bonds. Doing so could jeopardize the County's excellent reputation in the municipal bond marketplace, and could cause underwriters to decline to participate in future County bond sales, or could cause them to increase their interest cost bids in an attempt to cover the perceived greater uncertainty about County debt issuance plans.
Financial Considerations:
This financing will add $4,060,000 of new debt to the Countys balance of outstanding long term debt, bringing the total to approximately $162-million at the end of this year.
The new debt is expected to carry a true interest cost of approximately 2.7%.
The annual repayment obligation is expected to be approximately $316-thousand in the first year after the bond sale and to decrease in subsequent years. Annual repayment is expected to be funded with general revenues including property taxes; the precise amounts of each funding source will be determined each year in the budget adoption process. The effective property tax rate needed to repay this debt is expected to be less than 0.08 mills.
The refunding debt will be $6,15,000 (subject to change based on market conditions) and is expected to carry a true interest cost of approximately 2.1%.
The Refunding Bonds are expected to achieve an approximate $205,000 present value savings in interest costs, which will be achieved in the years 2016 - 2025. The present value of savings is estimated to be approximately 3.4% of the refunded debt service.
Legal Considerations:
The Board has heretofore authorized the Project which is to be permanently financed by the Bonds. The Bond Resolution authorizes the issuance of the Bonds, sets for the terms, details and conditions of the Bonds and authorizes the Chairman and County Clerk to execute all documents necessary to complete the issuance of the Bonds. K.S.A. 10-427 et seq. authorizes the issuance of the bonds to refund the Refunded Bonds.
Policy Considerations:
County debt policy provides five ratios that measure the impact of debt on the community. These ratios constitute limits on the total County debt that may be outstanding at any point. The policy restricts the county from issuing additional debt if it will cause more than two of the ratios to exceed the stated maximum levels. The issuance of these Bonds will not cause more than two of those ceilings to be exceeded. As is shown in the following table, all current and planned 2012 debt including this issue falls within the debt limits of four of the five ratios established by County policy.
|
Benchmark |
Policy Limit |
Current Debt |
Per capita direct debt$500.00$322Per capita direct, overlapping and underlying debt$3,000.00$3,401Direct debt as % of estimated full market value1.50%0.48%Direct, overlapping and underlying debt as % of full market value6.00%5.09%Annual debt service as % of budgeted expenditures20%10.16%
As indicated in the ratios listed above, the Countys direct debt is relatively low, but when added to the outstanding debt issued by cities and schools districts within the county, the impact on taxpayers exceeds our benchmark.
The debt policy also establishes minimum targeted savings for refinancing at 3% of refunded debt service, a target that is exceeded by the refunding component of the Bonds.
Outside Attendees:
Joe L. Norton, Gilmore & Bell, P.C., Bond Counsel
Tom Kaleko, Springsted, Inc., Financial Advisor
Multimedia Presentation: