CITY COMMISSION AGENDA ITEM

Department:

Finance

Commission Meeting Date:  October 17, 2017

Staff Contact:

Bryan Kidney, Director

Recommendations/Options/Action Requested:

Adopt Resolution No. 7227, authorizing the offering for sale of water and sewage system improvement and refunding revenue bonds, Series 2017-A

Executive Summary:

Project Funding

Staff proposes revenue bond financing for water and wastewater projects included in the capital improvement master plans included in the adopted 2018-2022 CIP and 2018 operational budgets.

Staff estimates the following 2018 water and wastewater projects will cost $16,000,000.

1. General improvements to Clinton and Kaw water treatment facilities and to raw water systems

2. General improvements to water storage, pumping stations and automated metering infrastructure

3. Watermain assessment, relocation, rehabilitation, replacement and extension

4. Capital project and utility billing management

5. General improvements to Kansas River and Wakarusa River wastewater treatment facilities

6. General improvements to wastewater containment and pumping stations

7. Rapid inflow/infiltration reduction program

8. Sanitary sewer/manhole assessment, cured in place piping (CIPP), relocation, rehabilitation, replacement and extension

In addition to funding the project costs, we estimate that there will be the additional financing costs and reoffering premium for a total estimated bond issue size of $16,125,000 calculated as follows:

Project Costs	$16,000,000
Plus: est. Issue Cost and rounding	291,237
Less: est. Premium	(166,237)
New Project Issue Size	$16,125,000

Refunding of 2008 Revenue Bonds

The City of Lawrence revenue bond series 2008 has outstanding balance of $2,740,000. The original bond was issued to finance a variety of water and wastewater projects in 2008 for a total issue size of $4,270,000 with a final maturity date of 11/01/2028.

The 2008 bonds included a provision to call outstanding maturities after 2017. The average interest rate the City is paying for the outstanding maturities for years 2018 through 2028 is 4.255%. The market rates for the same years of maturities are estimated to average 2.75%. If the City issues new revenue bonds and uses the proceeds from the new sale to pay-off the 2008 bonds, the latest estimated savings (net of issue costs) is a present value of $268,374.

The estimated size of refunding:

Funded Escrow	$2,827,614
Plus: est. Issue Cost and rounding	55,470
Less: Prior Issue Reserve Funds	(324,260)
Less: est. Premium	(53,824)
Refunding Issue Size	$2,505,000

Total Estimated Issue Size

New Project Funding	$16,125,000
Refunding 2008 Bonds	2,505,000
Total Issue Size	$18,630,000

Strategic Plan Critical Success Factor

Effective Governance and Professional Administration

Sound Fiscal Stewardship

Commitment to Core Services

Fiscal Impact (Amount/Source):

Repayment of bonds are included in the 2018-2022 Capital Improvement Program and 2018 Budget. The repayments are included within the balanced rate model.

Attachments:

Resolution No. 7227

Reviewed By: (for CMO use only)

☐TM ☐DS ☒CT ☐BM