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Meeting Date:
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5/23/2017 - 5:30 PM
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Category:
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ITEMS OF BUSINESS
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Type:
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Action
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Subject:
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6. Action on a Request from Bond Counsel for Adoption of a Resolution Relative to the Issuance of RACM Refunding Revenue Bonds, Series 2017 (MPS, Neighborhood Schools Initiative Project)
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Strategic Plan Compatibility Statement:
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Goal 3 Effective and Efficient Operations
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Attachments
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Resolution Relative to the Issuance of RACM Refunding Revenue Bonds, Series 2017_NSI
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File Attachment:
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Background:
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On August 24, 2000, the Board approved the Neighborhood Schools Plan (NSP). The NSP called for capital expenditures to be funded by borrowing authority approved in the Neighborhood Schools Initiative (NSI) legislation.
On November 21, 2001, the Board authorized the issuance of up to $100,000,000 in bonds to finance school facilities, plus an additional amount of bonds for a capitalized interest fund, for the costs of credit assurance, and to pay issuance costs. Bonds totaling $112,040,000 to fund the NSI were subsequently issued by the Redevelopment Authority of the City of Milwaukee (RACM) on the district’s behalf in February 2002 and November 2003.
On March 30, 2006, the Board approved language modifications to the NSI, enabling legislation to allow debt refunding.
On February 1, 2007, RACM, on behalf of the district, issued $31,865,000 refunding bonds to advance refund $29,260,000 of November 2003 bonds to lower the costs of interest and to provide the district with net present-value savings of approximately $1.25 million. The district was also able to retire $5.1 million of bonds from that same series.
On March 30, 2017, the Board authorized the refunding of $31,865,000 of NSI bonds issued February 1, 2007.
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Fiscal Impact Statement:
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This item authorizes expenditures. As approved on March 30, 2017, the Administration continues to work with the City and the Financing Team to refund $31,865,000 NSI Series 2007A bonds, which will be refunded and issued with lower debt-service cost; resulting in a net present-value savings (net of all issuance costs and cash contribution to the refunding), as a percentage of the refunding bonds, of at least 3%. The specific reduction in debt-service cost will be determined by the level of interest rates at the time of sale.
In the process, the district will incur costs for the issuance of the new debt. These costs will be funded from bond proceeds. Payment of the issuance cost will be charged to account NSI-0-0-DBT-DW-EACL. Estimated annual administrative cost of $1,500 over the term of the debt, which replaces the current administrative costs of the 2007 bonds being refunded, will be charged to account ODB-0-0-DBT-DW-EACL.
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Implementation and Assessment Plan
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Current financial market conditions could result in lowering the cost of debt service on the $31,865,000 of NSI Refunding Bonds issued February 1, 2007, which are callable on August 1, 2017. The Governmental Finance Officers Association (GFOA) best-practice threshold for refunding is when net present-value savings (net of all issuance costs and cash contribution to the refunding), as a percentage of the refunding bonds, is at least 3%.
On March 30, 2017, the Board authorized the refunding of $31,865,000 of NSI bonds issued February 1, 2007.
Bond Counsel has requested the Board approve a resolution detailing the refunding of $31,865,000 of 2007 NSI Bonds.
Refunding bonds are expected to be issued on or after June 15, 2017.
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Recommendation:
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The Administration recommends that the Board adopt the resolution relative to the issuance of Redevelopment Authority of the City of Milwaukee (RACM) refunding bonds, Series 2017 – MPS Neighborhood Schools Initiative (NSI) project.
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Approvals:
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Recommended By:
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Signed By:
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LaWanda Baldwin - Comptroller
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Signed By:
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Shannon Gordon - Senior Director
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Signed By:
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Dr. Darienne Driver - Superintendent
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