Travis County Commissioners Court
October 17, 2006
Item 22
22 is to consider and take appropriate action on the following request. (a), receive briefing from first southwest and other consultants regarding opportunity to realize significant savings by refinancing. 22 (b) is to authorize county staff, financial advisor and bond council to proceed with preparation of negotiation documents to refinance various county debit okaygations and 22 (c) is to designate first southwest as underwriter.
>> good morning. Your financial advisor, sworn in as gary kim ball with first southwest company. Gary brought to me a couple of weeks ago an opportunity to pick up some of the maturities that were not refunded last fall, as you get closer to the call date, maturities and old bonds that were not good candidates for refinancing at a good level get better as we get closer to their redemption date. I would like to let gary explain to you the handout he had given and we're just here to ask your permission just to initiate this, but not -- this is of course not an approval to sell bonds. That always happens when we have a deal and bring it back to you.
>> okay, gary.
>> thank you, les. Judge, members of the court, I would like to highlight a couple of items on the booklet that I've just handed out under tab (a), we've got a ten year look back of tax exempt interest rates and what I would highlight here is that we have come off of a recently realized bottom in interest rates about two weeks ago, so we're up slightly from where this process began, and it has affected the savings somewhat, but I think the transactions still make sense. What I would highlight here is if you follow the red line back, the point at which it crosses the blue line again is when we did the last set of refundings so we've had basically an intervening year with rates spiking up and then a rally that started in mid August that we're proposing to take advantage of here and refinance. As pointed out, some of the bonds that were left on the table the last time we went through this process. Under tab b, the table of contents is a source of uses that would propose a $23.785 million transaction which would refund a like amount of bonds. On the next page is really the construction of the deal. In essence, at current market rates and this analysis was updated yesterday, we would reduce the county's debt service by just over $900,000 realized over a 15 year period at about $60,000 a year. That equates to $618,000 net present value savings and in essence we would be taking a series 2002 (a) and the series 2002 unlimited tax road bonds that have an average coupon on them of about 5.1% and lowering that interest rate to about 4 and a half percent, so the difference between the 5.1 and the 4 and a half is what generates the savings you see on this page. The remaind railroad just the supporting documents for transaction. Be happy to answer any questions you might have, as lab pointed out we're not asking for approval at this stage, simply to get the documents to the point that we can pull the trigger when it makes financial sense.
>> so what you hope to do is to get authorization to get the paperwork ready, monitor the market and then at the appropriate time come back for authorization and move?
>> it's just sort of like, you know, loading the shotgun and standing in the corner and so it's there if we see a bear. But we need to get it ready and we need your authorization to move forward with that, and we would like to get that this morning and then we'll carefully move forward and take care of all of the various issues that we have to take care of, the preliminary disclosure, all of those sort of things beforehand, and then the ratings and then we'll monitor the market, the market has come down as you saw there, meaning the interest rates went up a tad since we spoke to you last week, judge, and but with the way things are going, you never know which way it goes, it could be better than this in a couple of weeks. I would think it's going to be at least two to three weeks at the earliest before we could get this in the market.
>> because it's being written as we speak and closing out of book and other kinds of things, do we need to do appropriate notices because of this now or is that really at whatever point we get diligent.
>> everything has got to be freshened up, I've already discussed that with diana and with the auditor's office and bond counsel and disclosure clown, we will continue to move forward with all of those and do it correctly.
>> including whatever we need to do on --
>> right.
>> okay. Move that we authorize that the proceeding be ready and at the appropriate time if we think that we ought to move court would have an opportunity to address it at that point, look at all the specifics and decide yea or nay, that's the motion. Discussion?
>> judge, include (c) in terms of designated -- right.
>> want to make sure that was part of it.
>> all in favor? That passes by unanimous vote, consistent with our policy that if they -- if they bring us an opportunity typically the ones that we get to do the work.
>> yeah, I would say that generally over the last two to three years they've been a month or two ahead of anyone else that has ever proposed, we've got some proposals after we already finished deals.
>> and all this, you could do the work and the deal may hatch.
>> it may hatch or may not.
>> if that line continues to go up, then it's something we may not do or we may do a few months from now.
>> right.
>> we keep an eye on it, but we want to be able to take advantage of the opportunity.
>> okay, thank you.
>> makes since to me. Thank you.
>> thanks, gary.
The Closed Caption log for this Commissioners Court agenda item is provided by Travis County Internet Services. Since this file is derived from the Closed Captions created during live cablecasts, there are occasional spelling and grammatical errors. This Closed Caption log is not an official record the Commissioners Court Meeting and cannot be relied on for official purposes. For official records please contact the County Clerk at (512) 854-4722.
Last Modified:
Tuesday, October 17, 2006 4:29 PM