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<br />REQUEST FOR COUNCIL ACTION <br /> Date: 02/11/13 <br /> Item No.: 7.i <br />Department Approval City Manager Approval <br /> <br />Item Description: Establish a Date of Sale for the Issuance of the City’s 2013 Refunding Bonds <br /> <br />Page 1 of 2 <br />B ACKGROUND 1 <br />Back in 2003 the City issued bonds to finance the construction of the expansion and renovation of City Hall 2 <br />and the Public Works facility. The bonds are scheduled to be retired in 2019, but feature a provision that 3 <br />allow them to be paid off or refinanced in 2013 or later. Given current mark et conditions the City can 4 <br />financially benefit by refinancing the bonds at today’s lower interest rates. 5 <br /> 6 <br />The mechanism to achieve this involves the issuance of ‘refunding’ bonds whereby the City’s issues new 7 <br />bonds to pay off the remaining principle on the old bonds . Tax levies earmarked for the old bonds are then 8 <br />redirected to pay the new bonds. 9 <br /> 10 <br />Based on current projections, the refinancing is expected to generate present value savings in the amount of 11 <br />$296,000 over the next 6 years. This will allow the City to lower its debt service levy by approximately 12 <br />$60,000 annually beginning in 2015. Alternatively, this levy could be repurposed to address the funding 13 <br />gap in the City’s capital improvement programs such as street improvements. 14 <br />P OLICY O BJECTIVE 15 <br />The City’s Council-adopted Debt Service Policy enc ourages the City to refinance outstanding debt 16 <br />whenever it is financially beneficial. 17 <br />F INANCIAL I MPACTS 18 <br />As noted above, the City can expect to realize present value savings in the amount of $296,000 over the 19 <br />next 6 years. 20 <br />S TAFF R ECOMMENDATION 21 <br />Staff recommends the Council approve the attached resolu tion setting the date of sale for the issuance of the 22 <br />City’s 2013 Refunding Bonds. 23 <br />24