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City of Missoula, Montana Item to be Referred to City Council Committee Committee: Administration & Finance Item: Recommended Refunding of the 2001 General Obligation Bond Issues in order to save future interest costs Date: March 24, 2010 Prepared by: Brentt Ramharter Initiated by: City Administration based on recommendation from City's Financial Advisor Action Required: None. Recommended Motion: Informational item. Timeline: Referral to committee: March 24, 2010 Committee discussion: Tentatively March 31, 2010 Background and Alternatives Explored: The City continues to monitor its outstanding debt to see if opportunities exist to refinance and realize interest cost savings. As part of this ongoing review the City's General Fund Bonds of 2001 are a candidate for refinancing. The City staff is moving forward with its consultants to refinance this issue to achieve cost savings. The amounts of debt is relatively small at approximately $1,000,000, but in the current interest rate market our future total debt service, net of all costs, would decrease by approximately $75,000. In today's dollars, present value net of all costs, this savings as a percent of outstanding debt service would decrease by over Given the relatively small issue size and the need to take advantage of the current market level, our financial advisor, Springsted Incorporated, is recommending a negotiated sale process rather than a competitive sale process. They are also recommending the City work with the investment banking firm of D.A. Davidson, as they have been active in bidding other City bond issues. If the City is successful in realizing savings at acceptable levels, we would proceed with this sale process and be back to the Council with a resolution to finalize this refinancing in the next few weeks. Financial Implications: See discussion above. Attachments: Hyperlink to attachments here