CITY COMMISSION AGENDA ITEM

Department:

Finance

Commission Meeting Date: May 2, 2017

Staff Contact:

Bryan Kidney, Director

Recommendations/Options/Action Requested:

1. Review bids received and approve sale to the lowest responsible bidder $3,030,000 General Obligation Improvement Bonds, Series 2017-A. Consider declaring an emergency and adopt on first and second reading Ordinance No. 9350 providing for the issuance of general obligation improvement bonds, Series 2017-A. Consider adopting Resolution No. 7198 prescribing the forms and details of and authorizing and directing the sale and delivery of general obligation improvement bonds, Series 2017-A.

2. Review bids received and approve sale to the lowest responsible bidder $11,375,000 General Obligation Improvement Bonds, Series 2017-B. Consider declaring an emergency and adopt on first and second reading Ordinance No. 9351 providing for the issuance of general obligation improvement bonds, Series 2017-B. Consider adopting Resolution No. 7199 prescribing the forms and details of and authorizing and directing the sale and delivery of general obligation improvement bonds, Series 2017-B.

3. Review bids received and approve sale the lowest responsible bidder $6,000,000 General Obligation Temporary Notes, Series 2017-I. Consider adopting Resolution No. 7200 authorizing and directing the issuance, sale and delivery of general obligation temporary notes, Series 2017-I

4. Consider adopting Resolution No. 7201 authorizing the Mayor or Vice-Mayor to execute a bond purchase agreement for the sale of General Obligation Improvement Bonds, Series 2017-C

Executive Summary:

At 11:00 this morning, the City opened bids for the above named Bonds and Temporary Notes. All four of the issues are described in the memo provided with tonight’s agenda.

Prior to taking bids on the Bonds, Moody’s affirmed its Aa1 rating on the City’s outstanding general obligation bonds. The Moody’s report is attached.

Obligation Bond, Series 2017-A

The City received six bids from interested investment banks, with true interest costs ranging from 2.04% to 2.25%. The bids are summarized below.

Bidder Name	Interest
Robert W. Baird & Co., Inc		2.04%
Stifel, Nicolaus & Co., Inc		2.06%
Commerce Bank		2.07%
Hutchinson, Shockey, Erley & Co.		2.09%
J.P. Morgan Securities		2.19%
Jefferies LLC		2.25%
Estimate		2.49%

The lowest bid, submitted by Robert W. Baird & Col, Inc, conforms to all of the bidding requirements established by the City. The bids are attached for your reference. This bid was approximately 45 basis points less than the most recent interest rate projections provided by the City’s Municipal Advisor, Springsted, Incorporated.

Staff and Springsted recommend awarding the bonds to Robert W. Baird & Co., Inc.

As a result of the lower than anticipated interest rates the total principal amount of the Bonds was reduced from an estimated $3,160,000 to $3,030,000. The average debt service was estimated at $357,000. The lower interest rate results in an average debt service of $343,000 These savings will be passed along to the properties in the benefit districts.

Obligation Bond, Series 2017-B (Green Bonds)

The City received six bids from interested investment banks, with true interest costs ranging from 3.14% to 3.24%. The bids are summarized below.

Bidder Name	Interest
Robert W. Baird & Co., Inc		3.14%
Citigroup Global Markets, Inc.		3.16%
J.P. Morgan Securities, LLC		3.17%
Jefferies LLC		3.19%
Bank of America Merill Lynch		2.19%
Commerce Bank		3.24%
Estimate		3.61%

The lowest bid, submitted by Robert W. Baird & Col, Inc, conforms to all of the bidding requirements established by the City. The bids are attached for your reference. This bid was approximately 47 basis points less than the most recent interest rate projections provided by the City’s Municipal Advisor, Springsted, Incorporated.

Staff and Springsted recommend awarding the bonds to Robert W. Baird & Co., Inc. The average debt service was estimated at $724,000. The lower interest rate results in an average debt service of $704,000.

Temporary Note, Series 2017-I

The City received five bids from interested investment banks, with true interest costs ranging from 1.71% to 3.17%. The bids are summarized below.

Bidder Name	Interest
Citigroup Global Markets, Inc.		1.71%
Oppenheimer & Col, Inc.		1.78%
D.A. Davidson & Co.		1.85%
Hutchinson, Shockey, Erley & Co		1.97%
Jefferies LLC		3.17%
Estimate		1.77%

The lowest bid, submitted by Robert W. Baird & Col, Inc, conforms to all of the bidding requirements established by the City. The bids are attached for your reference. This bid was approximately 6 basis points less than the most recent interest rate projections provided by the City’s Municipal Advisor, Springsted, Incorporated.

Staff and Springsted recommend awarding the bonds to Robert W. Baird & Co., Inc. The total payoff was estimated at $6,352,333. The lower interest rate results in a total payoff of $6,308,291.

Obligation Bond, Series 2017-C (Neighborly)

Staff and Springsted, Incorporated will use the interest rates for the first 10 years of Series 2017-B bonds to structure the estimated interest rate for the negotiation with Neighborly tomorrow morning. After the negotiation with Neighborly, neighborly will be able to announce the interest rates available for purchasing the Series 2017-C bonds.

We will provide a resolution for consideration at tonight’s meeting that will allow the Mayor or Vice-Mayor to approve bond purchase agreement with Neighborly. The interest rate in the resolution will be a maximum amount.

Strategic Goal Area:

Effective Governance and Professional Administration; Innovative Infrastructure and Asset Management; Commitment to Core Services, Sound Fiscal Stewardship; Collaborative Solutions

Fiscal Impact (Amount/Source):

All projects to be financed were included in the 2017-2021 Capital Improvement Program.  The debt service for the cost of improvements will be included in the debt service fund beginning with the 2018 operating budget. The estimated debt service will be included in the 2018 City Manager’s recommended budget.

Attachments:

Bid tabulation Series 2017-A

Bid tabulation Series 2017-B

Bid tabulation Series 2017-I

Moody’s Bond Rating Report

Reviewed By: (for CMO use only)

☐TM ☐DS ☒CT ☐BM