Memorandum
City of Lawrence
Finance Department
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TO: |
Dave Corliss, City Manager
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FROM: |
Ed Mullins, Finance Director
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Date: |
July 28, 2010
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RE: |
Resolution 6899 - General Obligation Note and Bond Sale |
Background
The City of Lawrence has a note maturing on October 1, 2010 in the amount of $14,120,000. The projects funded by the note must be refinanced with either a bond or another note. In order to reduce interest expense in the Water and Sewer Fund, a general obligation bond issue in the amount of $8,500,000 to refinance the two outstanding water and sewer state revolving loan (SRF) is planned. In addition, initial or additional funding is required for several projects. The table below provides a breakdown of the projects by proposed funding source. The Finance Department typically finances a project with a one year note and then refinances the project with a general obligation bond when the project is complete. The City Commission is requested to approve Resolution 6899 authorizing the sale of general obligation notes and bonds on August 24, 2010.
Projects
The table below lists the projects that are proposed to be financed with notes and bonds. All of the projects have previously been authorized by resolution. The amount financed includes issuance costs. The at-large project cost of the bond issue is $2.9 million with the rest being paid by benefit districts. The at-large cost of the note issue is $4.6 million.
Notes
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Project Description |
Amount |
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Fairfield East sanitary sewer (BD) |
454,511 |
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Fairfield East streets (BD) |
1,684,662 |
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Airport sewer line |
1,261,775 |
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Oregon Trail stormwater (BD) |
745,123 |
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W. 6th Street widening/ mill & overlay |
904,500 |
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Iowa – Yale to 15th design |
402,000 |
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Bob Billings repair |
1,306,789 |
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2010 KLINK |
452,250 |
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6th Street ITS |
253,390 |
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Total |
$7,465,000 |
Bonds
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Project Description |
Amount |
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2009 KLINK |
$228,386 |
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Stoneridge Drive South (BD) |
612,481 |
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Stoneridge Drive North (BD) |
1,339,848 |
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Overland Drive (BD) |
1,144,118 |
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Carnegie rehabilitation |
615,447 |
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Traffic Signals |
152,447 |
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6th & Congressional traffic signals (BD) |
103,219 |
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23rd Street access |
16,895 |
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Fire Truck |
757,900 |
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Bauer Farm (BD) |
505,308 |
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Airport water line |
762,950 |
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George Williams Way N of 6th (BD) |
1,901,841 |
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George Williams Way N of Overland (BD) |
892,000 |
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Stoneridge Dr/Kelly turn lane (BD) |
37,160 |
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Total |
$9,070,000 |
BD _indicates Benefit District financing, with partial or complete assessments on benefitting property.
SRF Refinancing
In addition to the financing provided by the bonds and notes above, the city plans to refinance $8,329,197 in SRF loans payable from water and sewer funds. The loan will be refinanced with a $8,500,000 general obligation bond issue. The City Commission has previously approved the hiring of George K. Baum to act as financial advisor and the City Manager to send KDHE a notice of intent to redeem the SRF loan.
It is projected that the refinancing will save the water and sewer fund over $50,000 annually in future interest payments and result in a net present value savings of nearly $650,000 or 8.0% of refunded principal.
Action Requested
The City Commission is requested to approve Resolution 6899 authorizing the sale of general obligation notes and bonds to finance the projects listed above and the refinancing of the SRF loan.