Memorandum

City of Lawrence

Finance Department

TO:	Diane Stoddard, Interim City Manager
FROM:	Bryan Kidney, Finance Director
Date:	August 25, 2015
RE:	General Obligation Bond, Series 2015-A and General Obligation Temporary Note, Series 2015-I– Bond Sale Results.

At 11:00 this morning, the City opened bids for General Obligation Bonds, Series 2015-A and General Obligation Temporary Notes, Series 2015-I. The General Obligation Bonds are being issued to repay outstanding temporary notes, Series 2014-II and Series 2014-III used to finance multiple projects that are now substantially completed. The General Obligation Temporary Notes are being issued to “roll over” temporary financing of special assessment districts, which have not completed the assessment process as well as projects ready for construction financing. Both Series are 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 general obligation bonds.

At this morning’s sale of the General Obligation Bonds, Series 2015-A, the City received seven bids from interested investment banks, with true interest costs ranging from 2.508% to 2.717%. The bids are summarized below.

Bidder Name	Interest
Commerce Bank		2.508%
Robert W. Baird & Co., Inc.		2.549%
Hutchinson, Shockey, Erley & Co		2.582%
BMO Capital Markets		2.595%
Morgan Stanley & Co, LLC		2.599%
Piper Jaffray		2.624%
D.A. Davidson & Co		2.717%
Estimate as of July 24, 2015		2.98%

The lowest bid, submitted by Commerce Bank, 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 Commerce Bank.

As a result of the lower than anticipated interest rates and a premium bid by Commerce Bank, the total principal amount of the Bonds was reduced from an estimated $9,610,000 to $9,450,000. The Bonds will be payable over the next 15 years with level annual debt service. The annual cash flow savings will be used for previously unfunded capital improvement costs

At this morning’s sale of the General Obligation Temporary Notes, Series 2015-I the City received two bids from interested investment banks, with true interest costs ranging from 1.103% to 1.187%. The bids are summarized below.

Bidder Name	Interest
Oppenheimer & Co. Inc		1.103%
Hutchinson, Shockey, Erley & Co.		1.187%
Estimate as of July, 24 2015		1.5%

The lowest bid, submitted by Oppenheimer & Co. Inc, conforms to all of the bidding requirements established by the City. The bids are attached for your reference. This bid was approximately 40 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 temporary notes to Oppenheimer & Co. Inc.

The City’s Bond Counsel, Gilmore & Bell, P.C. has updated the draft Ordinance No. 9148 and Resolution No. 7136 to incorporate all of the final terms of Commerce Bank bid and Resolution No. 7137 to incorporate all of the final terms of the Oppenheimer bid.

Action Requested: The City Commission is requested to review bids received and approve the sale of $9,450,000 General Obligation Bonds, Series 2015-A to Commerce Bank and $10,795,000 General Obligation Temporary Notes, Series 2015-I to Oppenheimer & Co. Inc. Consider declaring an emergency and adopting Ordinance No. 9148 authorizing and providing for the issuance of General Obligation Bonds, Series 2015-A and General Obligation Temporary Notes, Series 2015-I. Consider adopting Resolution No. 7136 and No. 7137 prescribing the forms and details of and authorizing and directing the sale and delivery of General Obligation Bonds, Series 2015-A and General Obligation Temporary Notes, Series 2015-I, respectively.