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REQUEST FOR COUNCIL ACTION Date:12j09/91 Item No.: l;!. t/ Department Approval: Manager Reviewed Agenda section £¡~ ~ Cons en t l'~genda It_ Description: Resol.ution Providing for the Puhl.ic Sal.. of General. Obl.iqation!flB][ Increaent Refmuling Bonds and General. Obl.iqation n.proveaent Bonds Series 18 Background The City, as part of its paving management program and debt management plan, has been issuing approxi- mately $2,000,000 of general obligation public improvement bonds annually. The proceeds are used to fi- nance the paving construction program. Staff is recommending the issue amount for 1992 be $2,200,000. The tax increment bonds issued in 1985, have a net interest cost in excess of 8%. It is appropriate to do a refunding to reduce the long term interest cost and save substantial dollars. The bonds being recommended for issuance, along with current dollars in the debt service fund, will provide for a full refunding of all current outstanding bonds due after February 1, 1994. Refunding cannot be com- pleted earlier because the call date is not until February 1, 1994. During the years of 1992 and 1993, the proceeds of this issue will be kept in an escrow account with the earnings paying the issue's interest until 1994. At that time the escrow will be released to call all of the remaining original 1985 bonds. Financial Analysis The issuance of the public improvement issue is necessary to cover the costs of projects completed and to provide for a continuation of the paving management program. The debt service has been included in the 1992 levy and is part of the 1992 budget. The refunding will result in savings of debt service from 1995 through 2006 in excess of $400,000 annually. These savings directly result in achieving an lower rate of interest over what is currently being paid on the outstanding debt. Staff Recommendation On the basis of continuation of the paving management program and to save substantial funds on the out- standing tax increment debt issues, staff is recommending the approval of the Public Improvements bond issue and the tax increment refunding bonds. COUNCIL ACTION REQUESTED Motion to accept the attached Resolutions providing for the issuance of $20,035,000 of General Obligation Tax Increment Refunding Bonds Series 1992 and $2,200,000 of General Obligation Public Improvement Bonds Series 18.