HomeMy WebLinkAboutReg 2014-11-17 Item 6 - Powerpoint Presentation Shown at Meeting - Tukwila International Boulevard Redevelopment Financing UpdateCity of Tukwila
Public Financial Management, Inc.
1200 5th Avenue, Suite 1220
Seattle, WA 98101
(360) 445 -0238
Susan Musselman, Director
November 17, 2014
Table of Contents
1. Background and Update
2. Line of Credit Financing Proposals
3. 20 -Year Bonds Financing Proposals
4. 20 -Year Bonds Financing Structure Overview
5. Estimated Debt Service
6. Recommendation and Timeline
Background and Update
At the September 2nd Council meeting the Tukwila International Boulevard Redevelopment Project Financing
Plan was approved:
• Variable rate 3 -year line of credit for approximately $2.25 million, the projected proceeds from future sale of
the purchased properties on Tukwila International Boulevard
• Fixed rate 20 -year bond offering for approximately $3.85 million, the estimated net cost to the City for the
project
• The plan anticipated annual debt service of approximately $28,000 for the line of credit and approximately
$285,000 for the 20 -year bond
AAA GO Municipal Market Data Index
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
5 -Year Market High (January 2011)
■■Current Market Rates (November 12, 2014)
5 -Year Market Low (November 2012)
Finance Plan Approved by Council (September 2014)
1
Line of Credit Financing Proposals
Five banks proposed terms for the $2.25 million line of credit component of the financing
• Cashmere Valley Bank
• Columbia Bank
• Capital One Public Funding
• Zions Bank
• Bank of the West
• Variable rate proposals ranged from 1.23% to 2.15%
• Fixed rate proposals ranged from 1.70% to over 3.00%
The recommended proposal was provided by Bank of the West at LIBOR plus 1.00% for a term of 3
years
The variable rate is currently 1.23 %, based on the current 3 month LIBOR
Historical LIBOR Rates
Rates from 11/10/14
1M
3M
6M
Current
0.16%
0.23%
0.33%
2 -yr Avg.
0.18%
0.26%
0.38%
Max (20 yrs.)
6.82%
6.87%
7.11%
Min (20 yrs.)
0.15%
0.22%
0.32%
5 Years Prior
0.24%
0.27%
0.54%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0Vo
°,o
Historical LIBOR Rates
November 2009 - Present
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N"\CJ
\-\OJ
\-\O,
1 Month LIBOR 3 Month LIBOR
6 Month LIBOR
2
20 -Year Bonds Financing Proposals
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• Four banks proposed terms for the $3.85 million 20 -year component of the financing
• Cashmere Valley Bank
• Columbia Bank
• Capital One Public Funding
• Zions Bank
• Proposals containing variable rate terms ranged from approximately 3.00% to 4.28%
• One 20 -year fixed rate proposal was submitted with a rate of 6.34%
• The recommended proposal was provided by Zions Bank with an initial average rate of 3.00%
• First 10 maturities are fixed for the term of the loan
• Last 10 maturities are fixed for the first 5 years, then reset based on the 5 -year Federal Home Loan rate
8.0%
6.0%
4.0%
2.0%
5 -Year Indices Comparison
October 2000 — Present
5 -Year Federal Reserve Swap
5 -Year Treasury Note
5 -Year Federal Home Loan Bank (Seattle)
0.0%
Oct -00 Oct -01 Oct -02 Oct -03 Oct -04 Oct -05 Oct -06 Oct -07 Oct -08 Oct -09 Oct -10 Oct -11 Oct -12 Oct -13 Oct -14
3
20 -Year Bonds Financing Structure Overview
Maturity
Date
Series A:
Amount
Rate
12/01/2015 142,000
12/01/2016 148,000
12/01/2017 150,000
12/01/2018 153,000
12/01/2019 156,000
12/01/2020 160,000
12/01/2021 165,000
12/01/2022 172,000
12/01/2023 179,000
12/01/2024 187,000
1,612,000
0.85%
1.17%
1.60%
2.17%
2.67%
3.26%
3.93%
4.32%
4.63%
4.86%
• Interest for "Series A" is fixed at the above rates for
the life of the loan
• Interest for "Series B" is fixed at 2.85% for the first
five years, then reset at 5 year intervals thereafter at
the 5 -year Federal Home Loan rate divided by 0.65
Maturity
Date
Series B:
Amount
Rate
12/1/2015
12/1/2016
12/1/2017
12/1/2018
12/1/2019
12/1/2020
12/1/2021
12/1/2022
12/1/2023
12/1/2024
12/1/2025
12/1/2026
12/1/2027
12/1/2028
12/1/2029
12/1/2030
12/1/2031
12/1/2032
12/1/2033
12/1/2034
Total
197,000
202,000
208,000
214,000
220,000
226,000
233,000
239,000
246,000
253,000
$2,238,000
2.85%
2.85%
2.85%
2.85%
2.85%
** Interest rate is reset every 5 years at the 5 -year Seattle Federal Home Loan Bank rate. The first reset is in 2019.
4
Estimated Debt Service
Period Ending
12/1/2015
12/1/2016
12/1/2017
12/1/2018
12/1/2019
12/1/2020
12/1/2021
12/1/2022
12/1/2023
12/1/2024
12/1/2025
12/1/2026
12/1/2027
12/1/2028
12/1/2029
12/1/2030
12/1/2031
12/1/2032
12/1/2033
12/1/2034
Estimated Total Debt Service
Initial Financing Proposal
$ 314,000
314,000
314,000
285,000
285,000
285,000
285,000
285,000
285,000
285,000
285,000
285,000
285,000
285,000
285,000
285,000
285,000
285,000
285,000
285,000
Current Estimate Difference
$ 288,000 $ (26,000)
288,000 (26,000)
288,000 (26,000)
260,000 (25,000)
260,000 (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
260,000* (25,000)
Total $5,787,000 $5,284,000 $503,000
* Based on indicative proposal rates, contains variable rate terms and is subject to change.
5
Recommendation and Timeline
PFM recommends that the City:
• Move forward with the proposal from Bank of the West for the line of credit
• Move forward with Zions Bank for the 20 -year bond
Key Dates
November 17th City Council meeting - Present Financing Recommendation
November 24th City Council Meeting - First Reading of Ordinances
December 1St City Council Meeting - Adoption of Ordinances
December 11th * Note Closing - $2.25 million Funds Delivered
Wk. of December 15th* Bond Closing - $3.85 million Funds Delivered
* Subject to change
6
Contact Information
3
Susan Musselman, Director
Public Financial Management, Inc.
1200 Fifth Avenue 1 Suite 1220 1 Seattle, WA 98101
Phone 360.445.0238 1 musselmans @pfm.com 1 www.pfm.com
Duncan Brown, Senior Managing Consultant
Public Financial Management, Inc.
1200 Fifth Avenue 1 Suite 1220 1 Seattle, WA 98101
Phone 206.858.5367 1 brownd @pfm.com 1 www.pfm.com
Marc Ragan, Analyst
Public Financial Management, Inc.
1200 Fifth Avenue 1 Suite 1220 1 Seattle, WA 98101
Phone 206.858.53621 raganm @pfm.com 1 www.pfm.com