HomeMy WebLinkAboutMINUTES - 02231988 - 2.2 G1 a a
iro: BOARD OF SUPERVISORS
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FROM; VVl tra
Phil Batchelor, County Administrator
Costa
DATE: February 23, 1988 COJ' "-'
SUBJECT:
Refunding Outstanding Bond and Certificate Issues
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS RESOLUTION NO. 88/100
In order to reflect current market conditions and to take steps to help
alleviate the financial concerns regarding the 1988-89 budget, it is
recommended that the Board approve the following:
1. Approve .the staff recommendation to not exercise the second part
( $70 million taxable issue) of the County' s short-term borrowing
program for 1987-88 .
2 . Authorize staff to explore the feasibility of refunding existing
County bond and certificate of participation obligations (Capital
.Projects 1 through 6, Telecommunications Project and Series A
Bonds) . If these projects can be insured and then refunded, the size
of the projects could be decreased and the cash savings to the
County could total as much as $600 ,000 a year if all projects could
be refunded.
3 . Authorize County staff and consultants to prepare and distribute
necessary documents and take other actions, necessary to issue
certificates of participation for the refunding of any of the
above-mentioned obligations which can be financially cost justified.
4 . Authorize staff and consultants to travel to New York to meet with
the bond insurance companies to ascertain which of these projects
can be refunded to obtain a AAA rating and ensure a more favorable
pricing on .refunding these issues.,
FINANCIAL IMPACT
it is not desirable at this time to consider issuing a $70 million
taxable issue and assuming the corresponding risk with the likelihood of
a return on investment of less than $133 ,000. The risk is not justified
considering the possible return and the uncertainty of current market
conditions.
If the County is able to refund all of the six capital projects that were
issued over the last four years and obtain a AAA rating by insuring these
CONTINUED ON ATTACHMENT: _ YES ' SIGNATURE:
�
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE S : _
ACTION OF BOARD ON (:'PROVED AS RECOMMENDED IV OTHER _
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A TRUE
UNANIMOUS (ABSENT AND CORRECT COPY OF AN ACTION TAKEN
AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN.
cc: County Counsel ATTESTED 'FEB 2 3 1988
Auditor-Controller PHIL BATCHELOR, CLERK OF THE BOARD OF
Treasurer-Tax Collector SUPERVISORS AND COUNTY ADMINISTRATOR
RESOLUTION 88/100L,
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M382/7-83 BY ,DEPUTY
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issues, it will be able to realize up to a $600,000 savings per year
after consideration of reissuance and insurance costs. The alternative
of insuring issues to get a AAA rating has only become available recently
due to the much improved financial standing of Contra Costa County.
BACKGROUND
Staff efforts to cope with increasing costs and limited revenues require
that extraordinary efforts be made to maintain County services. As part
of this effort staff contacted the County Financial Advisors concerning
the short-term borrowing program and the management of the current
outstanding issues of long-term securities. The current refunding
proposal was developed from these meetings. The concept proposed is to
replace the outstanding debt with a new certificate issue insured by a
bond insurance company. The insurance will allow the reserve fund
required in the old issues to be released and applied to the new debt.
The resulting debt service, because of the high rating given to insured
issues, application of reserves to lower the total of the new issue and
the favorable market conditions provide substantial annual savings over
the current debt service requirements.
CONSEQUENCES OF NEGATIVE ACTION
The County will not be able to realize savings estimated to be up to
$600,000 per year.