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 2020; 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 outstanding 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 to save money. The savings will amount to $324,386 or an average annual savings of $27,032.
The Old Bonds outstanding in the amount of $4,610,000, Series 2009, and Series 2011, will be paid off with new bonds in the amount of $4,475,000
Interest rates in the Municipal Bond Market have been lower and because of lower 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 $279,360. See the attached schedules for more detail regarding savings estimates.
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.
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 Phillis, Deputy City Manager
817-276-4261