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Departmental Matters <br /> Indian River County <br /> (W Inter-Office Memorandum <br /> Office of Management and Budget <br /> TO: Members of the Board of County Commissioners <br /> DATE: July 9, 2013 <br /> SUBJECT: Recreational Revenue Refun ig Bonds, Series 2003 <br /> Consideration of Early Pa ff 'th Interfund Loan from General Fund <br /> FROM: Jason E. Brown <br /> Director, Management & Bud t <br /> Background <br /> The Recreational Revenue Refunding Bonds were issued for the purpose of refunding the- existing <br /> Recreational Revenue refunding Bonds in 2003. These bonds were issued in 1993 to refund two <br /> previous issues. The Series 1993 bonds were issued in the original principal amount of $9,875,000, <br /> and at the time of the refunding, $6,735,000 in bonds were still outstanding. The Series 1985 and <br /> Series 1991 bonds were issued for the construction of the County golf course (Sandridge Golf). <br /> twPayment of the principal and interest on the Series 2003 Recreational Revenue Refunding Bonds is <br /> payable and secured by a first lien upon net revenues of the golf club and the "Racetrack and Jai Alai <br /> Fronton Funds" (Fronton Funds). The Fronton Funds were subsequently replaced by an equal share of <br /> State Sales Tax (Racetrack and Fronton Replacement Revenues) during the 2000 legislative session of <br /> the State of Florida. The Series 2003 Bonds are additionally secured by a first lien upon 7% of the <br /> Half-Cent Sales Tax revenue received by Indian River County. <br /> Analysis <br /> Staff has prepared an analysis regarding the payoff of the remaining bonds outstanding during this <br /> fiscal year. The bonds are callable on or after September 1, 2013 at par value. Of the $2,120,000 still <br /> outstanding, $555,000 reaches maturity on September 1, 2013. This payment is already included in <br /> the current year budget. After the September 1St payment, a balance of$1,565,000 will remain. <br /> The General Fund currently has sufficient surplus funds to pay off these bonds. The Golf Course will <br /> then repay this interfund loan just as if this was a typical bond refinancing. It is important to note that <br /> this will be a loan from the General Fund and not a subsidy of the Golf Course. Sandridge has <br /> historically been fully supported by user fees. This will continue into the future. This "refinancing" will <br /> provide an interest savings for the golf course. In addition, the General Fund will receive higher interest <br /> earnings on this loan than available in current short term investments. Staff proposes an interest rate <br /> of 2.50%, which is slightly lower than the 10-year municipal bond rate of 2.73% according to <br /> Bloomberg. The remaining bonds outstanding carry interest rates ranging from 3.875% to 4.125%. <br /> Therefore, the lower interest rate charged by the General Fund will provide savings of about $44,944 <br /> over the remaining three years (please see attached worksheet). The County's short-term investment <br /> portfolio is earning approximately 0.50%. Therefore, this loan would provide interest earnings to the <br /> (W General Fund substantially higher than alternate investments. The table below illustrates the additional <br /> interest earnings for the General Fund based upon an assumed interest rate of 1.0% for the next three <br /> years, which are projected to total approximately $43,875. <br /> 173 <br />