Title
A RESOLUTION AUTHORIZING AND DIRECTING THE ISSUANCE, SALE AND DELIVERY OF GENERAL OBLIGATION BONDS, SERIES A, 2011, AND GENERAL OBLIGATION REFUNDING BONDS, SERIES B, 2011, 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, CFO.
RECOMMENDED ACTION: Award the sale of each series of the Bonds to the best bidder and adopt the resolution.
Body
Pursuant to Resolution No. 170-2011, the Board of County Commissioners authorized the Chief Financial Officer to solicit bids for the Series A, 2011 and Series B, 2011 Bonds (collectively, the "Bonds"). Bids will be received at 10:00 a.m. on September 21, 2011. The Bonds will be dated October 1, 2011 and are scheduled to close on October 13, 2011. The principal amounts of the Bonds are subject to change based on bids received, currently estimated to be: Series A, 2011 - $8,025,000 and Series B, 2011 - $6,505,000.
The Series A, 2011 Bonds are scheduled to mature August 1, 2012 through August 1, 2031 and will provide funds to permanently finance a portion of the costs of the following special assessment improvements:
Project Description Res. No. Authority Amount
Street Improvements - 62-2010 K.S.A. 68-728 et seq./ $198,515.24
Cedar Hills Estates Ch. Res. No. 61
and the following capital projects (plus costs of issuance):
Project Description Res. No. Authority Amount
Road Improvements - 28-2011 K.S.A. 68-5, 103 $4,000,000
98.75 miles of reconstruction
Courthouse Improvements 118-2011 K.S.A. 19-1500/
Ch. Res. 56 $3,718,732
Total $7,718,732
1 Net of available Issuer Sales Tax Funds ($4,000,000)
2 Net of reallocated amounts to Series A, 2009 Bonds ($1,211,419)
The Series B, 2011 Bonds will be issued to refinance the following County bonds, in order to achieve a present value interest cost savings:
Description Series Dated Date Years Amount
General Obligation Bonds A, 2003 August 15, 2003 2014 to 2018 $6,290,000
The Series B, 2011 Bonds are scheduled to mature August 1, 2014 through August 1, 2018 (same maturities as the Refunded Bonds).
Alternatives:
Financial Considerations:
This financing will add $8,025,000 of new debt (Series A) to the Countys balance of outstanding general obligation debt, bringing the total to approximately $79.3-million.
The new debt is expected to carry a true interest cost of approximately 2.91%.
The annual repayment obligation for the Series A new debt is expected to be approximately $740,000 in each of the first seven years after the bond sale; then it will decrease to approximately $380,000 in each of the following 13 years years. Annual repayment is expected to be funded with a combination of special assessments, general County revenues and property taxes; the precise amounts of each 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 0.12 mills.
The Series B refunding bonds are expected to achieve an approximate $374,000 present value savings in interest costs, which will be achieved in the years 2014 - 2018. Proceeds from the issuance of the refunding bonds will be used to redeem $6.290-million of debt originally issued in 2003 and pay costs of issuance. The portion of proceeds to be used for bond redemption will be placed in escrow until the call date of the original bonds, August 1, 2013. The refunding bonds are expected to be sold at a true interest cost of approximately 1.32%. The bonds being refinanced carry an average interest coupon of 4.43%. The financial benefit of the refunding is estimated to be 5.55% of the refunded debt service, well above the targeted savings of 3% specified in the County's Debt Policy. The final maturity of the refunding bonds will be in 2018, the same as that of the bonds being refinanced.
Legal Considerations:
The Board has heretofore authorized the aforementioned improvements, which are 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.
Policy Considerations:
County debt policy provides five ratios that measure the impact of debt on the community. These ratios are benchmarks that serve to limit the amount of debt Sedgwick County will have outstanding at any point in time. The policy prohibits the issuance of new debt if it would cause more than two of these ratios to exceed the specified maximum levels. After including the new debt, four of the five debt ratios will be below the maximums allowed by the debt policy.
Policy Current Current Debt
Benchmark Limit Debt As % Of Limit
Per capita direct debt $500.00 $345 69%
Per capita direct,
overlapping and
underlying debt $3,000.00 $3,543 118%
Direct debt as
of estimated full
% market value 1.50% 0.51% 34%
Direct, overlapping
and underlying debt
as % of full market value 6.00% 5.28% 88%
Annual debt service 20% 10.84% 54%
as % of budgeted expenditures
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 approaches the adopted policy maximums.
Outside Attendees: Joe Norton, Gilmore & Bell PC, Bond Counsel
David MacGillivray, Springsted Inc, Financial Advisor
Multimedia Presentation: PowerPoint presentation