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INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10222
January 15, 2019
To the Mayor and Members of the City Council
Page 1 of 2
SUBJECT: PROPOSED SERIES 2019 DRAINAGE REFUNDING BONDS
This Informal Report is provided to the Mayor and City Council to explain the analysis indicating
2009 Series Drainage Utility System Revenue Bonds can be refinanced
resulting in debt service savings.
Background
The 2009 Series Drainage Utility System Revenue Bonds were structured with an Optional Call
Provision, which allows the City to refund/refinance the existing bonds by purchasing the
outstanding bonds at a pre-determined price, using dollars obtained from the issue of new bonds.
The Optional Call Date for the Series 2009 bonds is February 15, 2019.
Refunding Proposal Series 2019 Drainage Refunding Bonds
City -financial advisors, Hilltop Securities and Estrada Hinojosa, regularly
outstanding bonds for opportunities to refinance at lower interest rates. Based
on current market conditions for bonds that are eligible to be refinanced under current tax law, we
are recommending that the Mayor and Council consider refunding the following bonds:
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The fiscal savings of the proposed refunding would be within the guidelines outlined in the City's
Financial Management Policy Statements with a target of 3.5 percent present value savings or
greater. Under current market conditions, the drainage system refunding generates
approximately $2.18 million in total debt service savings, after transaction costs, or 4.1% present
value savings. See attached Exhibit A.
In recent years, the City has included refinancing opportunities with its annual bonds sale in late
spring/early summer. This practice was effective for favorable financing for the City given (i) the
relative stability of interest rates at the time and (ii) the existing tax laws that permitted refinancing
tax-exempt bonds at any time prior to the call date. The Tax Cuts and Jobs Act of 2017 now
mandates that a tax-exempt refinancing can close no sooner than 90 days prior to the Call Date
of the bonds. The possibility of increasing interest rates may also reduce or eliminate any
savings the City may realize if this action is delayed until May or June. Therefore, staff
recommends the City Council approve the refunding the 2009 Series Drainage Utility System
Revenue Bonds as soon as practical.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10222
January 15, 2019
To the Mayor and Members of the City Council
Page 2 of 2
SUBJECT: PROPOSED SERIES 2019 DRAINAGE REFUNDING BONDS
Next Steps:
Staff will submit a Mayor and Council Communications item on the January 29, 2019 regular
Council Meeting with a parameters resolution and an ordinance authorizing the issuance of
Series 2019 Drainage Utility System Refunding Bonds.
If you have any questions, please call Kevin Gunn, Interim Chief Financial Officer, at 817-392-
2015.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
HilltopSecurities
A Hilltop Holdings Company.
PRIOR BOND DEBT SERVICE
City of Fort Worth, Texas
Drainage Utility System Revenue Refunding Bonds, Series 2019
(CR: Dr Util Sys Rev Bds, Series 2009)
Tax -Exempt Rates as of 12/04/2018 (+25 bps) (AA+/ AA+)
Period
Ending
Principal
Coupon
Interest
Debt Service
09/30/2019
692,736.88
692,736.88
09/30/2020
1,460,000
4.250%
1,354,448.76
2,814,448.76
09/30/2021
1,525,000
4.000%
1,292,923.76
2,817,923.76
09/30/2022
1,590,000
4.000%
1,230,623.76
2,820,623.76
09/30/2023
1,665,000
4.000%
1,165,523.76
2,830,523.76
09/30/2024
1,740,000
4.000%
1,097,423.76
2,837,423.76
09/30/2025
1,820,000
4.000%
1,026,223.76
2,846,223.76
09/30/2026
1,905,000
4.000%
951,723.76
2,856,723.76
09/30/2027
2,000,000
4.000%
873,623.76
2,873,623.76
09/30/2028
2,095,000
4.000%
791,723.76
2,886,723.76
09/30/2029
2,200,000
4.000%
705,823.76
2,905,823.76
09/30/2030
2,310,000
4.000%
615,623.76
2,925,623.76
09/30/2031
2,435,000
4.125%
519,201.88
2,954,201.88
09/30/2032
2,560,000
4.125%
416,180.00
2,976,180.00
09/30/2033
2,695,000
4.250%
306,111.25
3,001,111.25
09/30/2034
2,835,000
4.250%
188,598.75
3,023,598.75
09/30/2035
2,985,000
4.300%
64,177.50
3,049,177.50
33,820,000
13,292,692.62
47,112,692.62
Note: Preliminary, for illustrative purposes only.
Dec 28, 2018 1:50 pm Prepared by HilltopSecurities (aml) (Finance 8.000 FORT WORTH:2019_DR-REF_19DR,REF_19DR) Page 15