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/ate <br />Departmental Matters <br />Indian River County <br />Inter -Office Memorandum <br />Office of Management and Budget <br />TO: Members of the Board <br />of County Commissioners <br />DATE: July 2, 2019 <br />SUBJECT: Water & Sewer Revenue Refunding Bonds, Series 2009 <br />Approval of Resolution for Early Payoff <br />FROM: Kristin Daniels <br />Director, Management & Budget <br />Vincent Burke, P.E. <br />Director of Utility Services <br />Background <br />The Water & Sewer Revenue Refunding Bonds, Series 2009 were issued to refinance the Water & <br />Sewer Revenue Bonds, Series 1993A and 1993B which were then outstanding in the aggregate <br />principal amount of $32,695,000. The Series 2009 Bonds were issued in the principal amount of <br />$26,370,000, with the remaining Series 1993 Bonds not being refunded. The Series 2009 refinancing <br />of the Series 1993A and 1993B Bonds reduced the debt service payments for the Utility by about <br />$125,000 per year and provided a net present value savings of $1.4 million in 2009. <br />The Series 2009 bonds are callable on September 1, 2019. Once the September 1, 2019 debt service <br />payment is made, the remaining principal outstanding will be $11,315,000. On July 2, 2019 the Board <br />approved paying off the outstanding balance on or after September 1, 2019. <br />Analysis <br />Current annual debt service for the Series 2009 Bonds is approximately $2.9 million, with interest <br />expense of approximately $1.6 million over the remaining life of the bonds after the September 1, 2019 <br />payment. The remaining Series 2009 Bonds carry an interest rate of 5.0%. Currently, the County's <br />investments are earning about 2.1% interest per year. The estimated net savings over the remaining <br />life of the bonds will be $935,105, with a net present value savings of approximately $893,000 or 7.9%. <br />The reduction in debt service will provide flexibility for the Utility to fund increased renewal and <br />replacement expenses to ensure that the current infrastructure remains well maintained. Depending <br />upon the cost and timing of upcoming projects, additional borrowing may become necessary in the <br />future. <br />148 <br />