Town Council Regular Session


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  Item # D.       
Meeting Date: 03/07/2012  
Requested by: Stacey Lemos Submitted By: Stacey Lemos, Finance
Department: Finance  

Information
SUBJECT:
Resolution No. (R)12-13, Authorizing the execution and delivery of a Purchase Agreement, a Trust Agreement, an Obligation Purchase Agreement and a Continuing Disclosure Certificate; Approving an Official Statement; Approving the Sale, Execution and Delivery of Excise Tax Revenue Obligations, Series 2012, Evidencing a Proportionate Interest of the Owners thereof in a Purchase Agreement between the Town of Oro Valley, Arizona, and a Trustee, and the Sale Thereof to the Purchaser thereof; Authorizing the taking of all other actions necessary to the consummation of the transactions contemplated by this resolution; and Declaring an Emergency
RECOMMENDATION:
Staff recommends approval of Resolution No. (R)12-13.
EXECUTIVE SUMMARY:

At the December 7, 2011 regular Council Meeting, the Town Council directed staff to establish funding for and implement phases 1 and 3 of the Oro Valley Municipal Pool Feasibility Study.  The total estimated construction budget for this project is $3.45 million consisting of the following funding sources:
 

  • Parks and Recreation Impact Fees cash reserve balance of $400,000
  • Bed Tax fund cash reserves of $500,000 (current total balance is approximately $840,000)
  • New excise tax revenue obligations of $2.55 million
This item requests Council approval of the resolution to authorize the issuance of the excise tax revenue obligations outlined above.  Also on file with the Town Clerk are the following standard documents supporting the issuance of the obligations: 
  • Draft Preliminary Official Statement (also attached hereto)
  • Purchase Agreement
  • Trust Agreement
  • Obligation Purchase Agreement
  • Continuing Disclosure Certificate
  • Issuance Financing Calendar (also attached hereto)
Once approved, these documents will be finalized by the financing team in preparation for bond rating discussions with Standard & Poor's and distribution to prospective investors.  The expected closing date on the bonds is targeted for the end of March or first week of April.

The Town's financing team consists of Town Finance Department staff; Gust Rosenfeld, PLC as special counsel; Stone & Youngberg, a Division of Stifel Nicolaus as underwriter; and Greenberg Traurig, LLP as underwriter's counsel.  Mr. Mark Reader, Managing Director of Stone & Youngberg, and Mr. Scott Ruby, Esq., of Gust Rosenfeld, PLC, will be present at the meeting to answer any specific questions regarding the bond issuance.
BACKGROUND OR DETAILED INFORMATION:
The new excise tax revenue obligation proceeds of $2.55 million, in addition to the other local funding sources outlined above, will be used to fund improvements and expand the existing Oro Valley Municipal Pool facility to allow the Town to host large scale swim meets and other special events resulting in increased economic benefits to the Town. 

Phases 1 and 3 of the Oro Valley Municipal Pool Feasibility Study, completed in March 2011, include requisite Americans with Disabilities Act (ADA) improvements, as well as enhancements such as a splash pad, raised deck, improved and expanded locker rooms, additional shaded deck space, a new gutter system, timing system with scoreboard, along with a new 6-lane lap pool.

The Town is currently in negotiations with Swaim Associates for project design services, and proposals for Construction Manager at Risk are due to the Town on February 27, 2012.  It is anticipated that the Town will close on the bond sale by the end of March or early April, so that all funding sources are available with sufficient time prior to the groundbreaking of the project.  To facilitate this, the attached resolution includes an emergency clause which makes the resolution immediately effective to allow the financing team the flexibility to go to market with these obligations at the appropriate time to secure the most favorable interest rates.
FISCAL IMPACT:
The debt service on these bonds has been estimated at approximately $235,000 per year for 15 years based on an estimated interest rate of 4.25% used for planning purposes.  This interest rate is not locked in until bonds are sold, and current interest rates are at historically low levels.  Therefore, the actual debt service may be lower depending upon market conditions on the day of sale.  The annual debt service payments on these obligations will be paid with the Town's bed tax revenues and have no impact on the Town's General Fund. 
SUGGESTED MOTION:
I move to approve Resolution No. (R)12-13.
Attachments
Reso 12-13
Prelim Official Stmt
Financing Calendar


    

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