Title
Ordinance - An Ordinance of the City of Mansfield, Texas, Authorizing the Issuance and Sale of City of Mansfield, Texas, General Obligation Refunding Bonds, Series 2015; Levying a Tax in Payment Thereof; Prescribing the Form of Said Bonds; Approving Execution and Delivery of an Escrow Agreement and a Bond Purchase Agreement; Approving the Official Statement and an Engagement Letter; and Enacting Other Provisions Relating to the Subject
Requested Action
Vote on the Sale of Bonds to Refund existing Bonds for the purpose of saving money.
Recommendation
Approve the Sale of Bonds (new bonds) to Refund existing Bonds (old bonds) for the sole purpose of saving money.
Description/History
The City has determined that it is economically feasible to issue new bonds to pay off old bonds with new bonds to save money.
The Old Bonds: Four issuances: 2005 General Obligation Refunding Bonds, Series - $3,040,000; 2006 General Obligation Bonds, Series - $4,235,000; 2007 General Obligation Bonds, Series - $3,465,000; and 2007 Combination Tax and Certificates of Obligation, Series - $2,200,000.
Interest rates in the Municipal Bond Market have been fairly low over the past several years and because of these low rates the City is able to issue new bonds to pay off old bonds that have higher interest rates. In this Refunding, the expected net present values savings is $953,617.51. See the attached schedules for more detail on the savings estimates.
· Total Expected Savings - $953,617.51
· Expected Average Annual Savings - $89,587.34
Note - amounts are expected and subject to change based on the actual results of the sale.
Summarizing: The City is taking advantage of market conditions to create interest savings by refunding old bonds with new bonds.
Contact staff for a copy of the Preliminary Official Statement.
Justification
The City of Mansfield, Texas is creating opportunities for savings by refunding old debt with new debt.
Funding Source
The City of Mansfield, Texas as defined by statute or Ordinance - General Fund.
Prepared By
Peter K. Phillis, CPA, Director of Business Services
817-276-4261