Memorandum
City of Lawrence
Finance Department
|
TO: |
Diane Stoddard, Interim City Manager |
|
FROM: |
Bryan Kidney, Finance Director |
|
DATE: |
July 14, 2015 |
|
RE: |
Water and Sewage System Refunding Revenue Bonds, Series 2015B – Bond Sale Results. |
At 11:00 this morning, the City opened bids for Water and Sewage System Refunding Revenue Bonds, Series 2015B. The Revenue Bonds are being issued to refinance the outstanding Water and Sewage Revenue Bonds, Series 2005, as described in the memo provided with tonight’s agenda.
Prior to taking bids on the Bonds, Moody’s affirmed its Aa2 rating on the City’s outstanding water and sewer revenue bonds.
At this morning’s sale, the City received seven bids (see attached) from interested investment banks, with true interest costs ranging from 2.033568% to 2.143518%. The bids are summarized below.
|
Bidder Name |
Interest |
|
|
Piper Jaffray |
2.034% |
|
|
J.P. Morgan Securities LLC |
2.039% |
|
|
FTN Financial Capital Markets |
2.064% |
|
|
FirstSouthwest |
2.067% |
|
|
Hutchinson, Shockey, Erley & Co |
2.075% |
|
|
Robert W. Baird & Co., Inc. |
2.098% |
|
|
BMO Capital Markets |
2.148% |
|
|
|
|
|
|
Estimate as of June 9, 2015 |
2.516% |
|
The lowest bid, submitted by Piper Jaffray, Minneapolis, Minnesota, conforms to all of the bidding requirements established by the City. The bids are attached for your reference. This bid was approximately 50 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 Piper Jaffray.
As a result of the lower than anticipated interest rates and a large premium bid by Piper Jaffray, the total principal amount of the Bonds was reduced from an estimated $9,730,000 to $8,960,000. The resulting net present value savings to the City is $1,362,196. This amount is $378,874 more than the estimate from June 9, 2015.
The Bonds will be payable over the next 10 years with level annual debt service. The annual cash flow savings will be used for previously unfunded capital improvement costs
The City’s Bond Counsel, Gilmore & Bell, P.C. has updated the draft Ordinance No. 9131 and Resolution No. 7128 to incorporate all of the final terms of Piper Jaffray bid.
Mr. David MacGillivray, Chairman of Springsted, Incorporated will be at the meeting to make a short presentation about the sale results and Moody’s rating report.
Action Requested:
The City Commission is requested to review bids received and approve the sale of $8,960,000 Water and Sewage System Refunding Revenue Bonds, Series 2015B to Piper Jaffray. Consider declaring an emergency and adopting Ordinance No. 9131 authorizing and providing for the issuance of Water and Sewage System Refunding Revenue Bonds, Series 2015B. Consider adopting Resolution No. 7128 prescribing the forms and details of and authorizing and directing the sale and delivery of Water and Sewage System Refunding Revenue Bonds, Series 2015B.