RES-2011-083 Resolution Authorizing Application to the Local Government Commission to Issue Up to $17.04 Million in General Obligation Refunding Bonds

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ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 20, 2011 Action Agenda Item No. $ -G SUBJECT: Resolution Authorizing Application to the Local Government Commission to Issue Up to $17.04 Million- in General Obligation Refunding Bonds DEPARTMENT: Financial Services PUBLIC IifARING: (Y/N) No ATTACHMENT(S): 1. Resolution 2. Bond Refunding Analysis INFORMATION CONTACT: Clarence Grier, 919-245-2453 Bob Jessup, 919-933-9891 PURPOSE: To consider approving a resolution authorizing application to the Local Government Commission (LGC) to issue up to $17.04 million in General Obligation Refunding Bonds to refund the 2004A&B General Obligation Bonds. BACKGROUND: Staff continues to maintain contact with financial advisors who provide analysis on the County`s bonds against market conditions to identify opportunities to achieve debt service savings through refunding outstanding debt of the County. As a result of the recent market conditions, financial advisors Davenport and Company, Bond Counsel Bob Jessup of Sanford Holshouser, LLP, and staff have identified an additional refunding opportunity for debt service savings and have provided an analysis of the potential savings under current market conditions. The additional proposal is to refund $17.04 million of the 2004A&B General Obligation Bonds of the County. The analysis shows a potential savings of $846,000 over the remaining lift of the debt, with a net present value of $733,000. The analysis shows the reduction in debt service would. average slightly over $70,000 a year for fiscal years 2012 through 2023. The Local Government Commission requires the percentage savings of debt service to be approximately 3.0%, or more, of the amount of the refunded bonds. The proposal realizes a 4.333% savings. Market conditions could change- between now and the time of issuance, potentially increasing or decreasing savings. Additionally, as an update.on the County's recent refunding of $42.8 million, due to the credit quality of bond offering- and market conditions, the debt service savings on the refunding totaled $2 million, which was $245,000 more than the preliminary estimated savings analysis provided at the September 8, 2011 Board Meeting.