Title
Staff Report for Resolutions Approving San Leandro Public Financing Authority 2016 Refunding Lease Revenue Bonds
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SUMMARY AND RECOMMENDATION
Staff recommends that the City Council and the San Leandro Public Financing Authority approve the referenced resolutions and documents required to issue the San Leandro Public Financing Authority 2016 Refunding Lease Revenue Bonds (Refunding Bonds). The proposed Refunding Bonds will be issued to refund $15,825,000 of currently outstanding City of San Leandro 2007 Certificates of Participation (2007 COPs). The par, or face value, of the Refunding Bonds will not exceed $15.8 million and they will mature in 2029, which is the existing final maturity of the 2007 COPs. Annual debt service on the Refunding Bonds will not exceed the annual debt service currently payable on the outstanding 2007 COPs.
DISCUSSION
In May 2007 the City issued $23,425,000 of the 2007 COPs to refund 1999 COPs (Library and Fire Stations Financing). After the scheduled principal payment on 11/1/16, there will be $15,825,000 of the 2007 COPs outstanding. The City has an opportunity to refinance the 2007 COPs and realize substantial savings in annual debt service payments. Staff recommends that the City Council use the savings from the 2007 COPs to augment the City's General Fund reserve. The savings can also be leveraged in the future to issue bonds for new-money projects. Please refer to the table on Attachment 1 that shows how the current municipal bond market allows for projected savings.
Based on municipal bond market rates effective 9/13/16, staff estimates that the City will realize almost $2.5 million in total nominal savings over the life of the 2007 COPs. The present value (PV) of these future savings, discounting the nominal savings by the estimated arbitrage yield of 1.8%, is just over $2.2 million. This results in net present value (NPV) savings of about 14% when taken as a percentage of the par value of the 2007 COPs to be re...
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