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November 28, 2017 <br /> <br />At a Regular Meeting of the City Council on Tuesday, November 28, 2017, there <br />were present: <br /> <br />Mayor John L. Rowe, Jr., Vice Mayor Paige D. Cherry, William E. Moody, Jr., Elizabeth <br />M. Psimas, Dr. Mark M. Whitaker, Nathan J. Clark, Lisa Lucas-Burke, City Manager Dr. <br />L. Pettis Patton, City Attorney Solomon H. Ashby, Jr. <br /> <br />Pastor Michael Porter opened the meeting with prayer, which was followed by <br />the Pledge of Allegiance to the Flag. <br /> <br /> Mayor Rowe called the meeting to order and welcomed all in attendance. <br /> <br /> Motion by Mr. Moody, and seconded by Ms. Psimas, to approve the minutes of a <br />Called Meeting of November 13, 2017, of a Called Meeting of November 14, 2017, and <br />of a Regular Meeting of November 14, 2017, and was adopted by the following vote: <br /> <br />Ayes: Cherry, Clark, Lucas-Burke, Moody, Psimas, Whitaker, Rowe <br />Nays: None <br /> <br />- City Manager’s Report - <br /> <br />17 - 510 - Adoption of an ordinance authorizing the issuance and sale of City of <br />Portsmouth, Virginia general obligation refunding bonds. <br /> <br />Background: <br /> <br /> Interest rates for tax-exempt borrowing remain at historically favorable levels which <br />presents a favorable environment to refund existing debt. <br /> <br /> The city’s debt management principles state that the city shall aggressively initiate <br />refinancing of debt when economically feasible and advantageous. <br /> <br /> The city’s policy for proceeding with refunding is to generate an overall net present <br />value savings equal to at least 3% of the refunded par amount on any given transaction. <br /> <br /> As of 6/30/17, the city had total debt outstanding net of premiums of $553,276,854 <br />of which $426,143,554 is paid for by governmental activities and $127,133,300 is paid for <br />by business type activities. <br /> <br /> According to the Public Finance Act for the Commonwealth of Virginia, a public <br />hearing is not required for a bond refunding. <br /> <br />Discussion: <br /> <br /> As of November 13, 2017, up to $115 million of outstanding debt qualifies for <br />refinancing for interest savings purposes under the city’s guidelines. Based on current <br />market interest rates, the savings is well above the city’s 3% net present value policy. <br /> <br /> Refinancing given current market conditions would allow the city to reduce the <br />existing interest rate(s) on select outstanding bond issues thus saving money over time <br />via reduced interest costs. <br /> <br /> The reduced interest cost will provide additional financial flexibility to the city in <br />future years. <br /> <br /> The refinancing does not extend the life of the bond issues involved. <br /> <br />Financial Impact: <br /> <br /> Depending on market conditions, the city may realize $12 million or more of <br />interest savings over the remaining life of the bonds. Approximately 60% of the savings <br />is for tax supported bonds and 40% for self-supported bonds. <br /> <br />Staff Recommends: <br /> <br /> <br /> Adoption of the ordinance. <br /> <br />Next Steps Following Council Action: <br /> <br /> Prepare the necessary documents for rating agency review and bond sale. <br /> <br /> November - Obtain credit rating. <br /> <br /> December - Refinance bonds if market conditions still favorable. <br /> <br /> <br /> <br /> <br /> <br />