Discussion:
The City issued General Obligation Improvement Refunding Bonds, Series 2012A to refund General Obligation Improvement Bonds Series, 2004A and General Obligation Improvement Bonds Series, 2004D. The original bond issues funded improvement projects including West Dean Lake Project, Vierling/CR 15 East, Valley View/Greenfield and construction of the Public Works Building.
The city has the option to pay off the 2012A G.O. Refunding Bonds anytime after February 1, 2021. If approved, the total payment on February 1, 2021 would be $2,410,900 (current payment due of $489,150 + $1,920,000 of principal outstanding + $1,750 redemption fees). This would refund the February 1, 2022/2023/2024/2025 maturities. We currently have a cash balance outstanding of approximately $1,575,390 in this debt service fund as a result of accumulated special assessments received that was related to these projects.
The resolution authorizes a transfer of $835,510 from the city's General Fund to the debt service fund to provide the additional required sources of funds for the pay-off. Preliminary financial projections show that after this transfer, the General Fund unassigned fund balance will remain above 50% of the 2021 budgeted expenses.
Additionally, the resolution closes the 2012A GO Refunding Bonds following the pay-off and transfers any residual balances, including $790,595 in special assessments receivable to the city's Capital Improvements Fund.
The interest savings would be $98,400 and the total fees would be $1,750 leaving a net savings of $96,650. Which will far exceed what an anticipated investment return would achieve on the same balances. The interest rate on the 2022-2025 bond maturities range from 2.000% to 2.125%.