Staff along with Gilmore Bell as our Bond Counsel and PFM serving as our Municipal Advisor has created a refunding option for the outstanding Series 2012B and 2013C Sewer bonds. In April of 2021, the City engaged Morgan Stanley as the Underwriter for the debt refunding to further refine the plan and to assist with selling the debt. 

The Ordinance authorizes the City to borrow up to $76 million for the purpose of refunding outstanding Series 2012B and 2013C Bonds. The Ordinance further authorizes the officers of the City to execute all documents and take actions to complete the transaction.  The officers of the City are only able to complete the transaction if the results of the sale are within the following parameters:

With respect to the Series 2021A Bonds to refund Series 2012B Bonds:

• The maximum principal amount of the Series 2021 Bonds shall not exceed $31,000,000. 
• The True Interest Cost of the Series 2021A Bonds shall not exceed 2.75%.
• The weighted average maturity of the Series 2021A Bonds shall be between 7 years and 13 years.
• The final maturity date of the Series 2021A Bonds shall be not later than the year 2041.
• The Underwriter’s discount shall not exceed 1.0% of the principal amount of the Series 2021A Bonds.
• The Series 2021A Bonds shall be subject to optional redemption prior to maturity beginning not later than 2031.

With respect to the Series 2021B Bonds to refund Series 2013C Bonds:

• The maximum principal amount of the Series 2021B Bonds shall not exceed $45,000,000. 
• The True Interest Cost of the Series 2021B Bonds shall not exceed 3.50%.
• The weighted average maturity of the Series 2021B Bonds shall be between 8 years and 15 years.
• The final maturity date of the Series 2021B Bonds shall be not later than the year 2042.
• The Underwriter’s discount shall not exceed 1.0% of the principal amount of the Series 2021B Bonds.
• The Series 2021B Bonds shall be subject to optional redemption prior to maturity beginning not later than 2031.

The refunding debt will be a long-term obligations of the City and considered a debt security. The financing team has developed the Preliminary Official Statement (POS). The POS is the document used by the issuer to give information about the price of the bond, the maturity date, interest rate, and all other important information to potential buyers. 

The City is responsible for including information within the POS that reasonable investors would consider to be important in making an investment decision. This information includes relevant financial and operating information as well as legal and tax considerations. The POS includes how the City plans to repay the debt. 

As part of the transaction, the City will be making disclosers in compliance with the antifraud provisions of the Securities Act of 1933 and Rule 10b-5 of the Securities Act of 1934.  Primary market disclosure practices for municipal securities have developed as a result of these antifraud provisions, federal regulation of broker-dealers through the Securities and Exchange Commission (SEC) Rule 15(c)2-12, and other regulations of market participants by the Municipal Securities Rulemaking Board (MSRB).

The governing body is urged to review the POS and be aware that Federal antifraud laws prohibit making material misstatements or omissions of material facts if those facts are necessary to avoid a misleading statement. If the City fails to comply with these disclosure requirements the City may be subject to regulatory actions and/or monetary fines.

Pledged revenues generated from sewer operations are sufficient to pay related debt service.

The latest estimates show that the refundings will generate $25 million in cashflow savings for the WPC system. On a discounted, net present value basis, this is $17.6 million. The refunding bonds are structured to place the cashflow savings towards the end of the life of bonds between 2037 and 2042.