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HomeMy WebLinkAboutPresentation- Tax Allocation Refunding BondPresentation Previously, in 2003 and 2005 the Petaluma Community Development Commission issued Tax Allocation Bonds to finance economic development activities within the Project Area. Tax allocation bonds are a common type of long-term debt issued by redevelopment agencies. Tax allocation bonds are secured by and payable from a portion of the property taxes that are levied on property located within the Project Area. 2003 Bonds 2005 Bonds Issue Date Oct 28, 2003 Oct 6, 2005 Original Par Amount 23,630,000 18,355,000 Outstanding Par Amount 19,870,000 16,565,000 Final Maturity May 1, 2033 May 1, 2030 Interest rates have declined sharply since the 2003 and 2005 Bonds were issued, creating an opportunity for the Petaluma Community Development Successor Agency to achieve significant debt service savings by refinancing the 2003 and 2005 Bonds at lower interest rates. 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2003 10 -Year U.S. Treasury Note Yield 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2 In March 2015 the Petaluma Community Development Successor Agency issued Refunding Bonds to refinance the 2003 and 2005 Bonds at lower interest rates. The interest rate on the 2015A Refunding Bonds is 3.74% and the interest rate on the 2015B Refunding Bonds is 3.25%. ,A 95°b0.8yN°de�jf`g5°h���D�S� d,A1A3A 2003 Bonds 3.50% 3;IA°H3�A°a��A`�"��d`N3�d`H�.�d°�°•i�d°b��A°b��A'i�3�d°b��A°i+��A°H3�Ab3�d°a3,A°�^3�0.°b��A°�3�A ��A°f� 3.50% 3,00% _ 2015A Refunding Bonds 2.50% 2.00% - - - — - - - 1p13 1016 bp11 1013109 1010 1p1110111013 10111 2p1y 1016 41 1013 01 500 10 10, 10, 10+ A,`p°b A15ye d15.Je A•''0°�° A�O.�. Aa'0 2005 Bonds + d1� 61* 315.x. i• 3.00% 313M' 3151* 110 3110 115 + 31111* 1:0*'fo+ g1`'^h 31g^M 31`'�b 315 315>b 31�'� 313E 315°F zs0% 2015B Refunding Bonds 2.00% _ -. , --. -- „ : WO 0 1011 10 3 10 9 0 101% 1011 1013 1011, 1015 1016 1011 1018 1019 1030 3 Refinancing the 2003 and 2005 Bonds at lower interest rates will reduce future debt service payments by $220,000 to $245,000 per year from 2016 to 2033, for total debt service savings of approximately $4.26 million. 12 -Mo. Ending Nov. 1, 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2003 Bonds and 2005 Bonds Principal Interest Total 2015A and 2015B Refunding Bonds Principal Interest Total Debt Service Savings - 823,531 823,531 55,000 743,637 798,637 24,894 1,310,000 1,621,564 2,931,564 1,450,000 1,236,501 2,686,501 245,063 1,365,000 1,568,210 2,933,210 1,505,000 1,186,029 2,691,029 242,181 1,415,000 1,511,193 2,926,193 1,550,000 1,133,651 2,683,651 242,542 1,475,000 1,450,776 2,925,776 1,605,000 1,079,785 2,684,785 240,991 1,540,000 1,386,238 2,926,238 1,660,000 1,024,039 2,684,039 242,198 1,605,000 1,318,021 2,923,021 1,715,000 966,443 2,681,443 241,578 1,675,000 1,246,203 2,921,203 1,775,000 906,966 2,681,966 239,237 1,755,000 1,169,770 2,924,770 1,840,000 845,443 2,685,443 239,327 1,830,000 1,088,980 2,918,980 1,900,000 781,580 2,681,580 237,401 1,915,000 1,003,980 2,918,980 1,970,000 715,508 2,685,508 233,473 2,005,000 910,726 2,915,726 2,035,000 647,239 2,682,239 233,487 2,105,000 809,263 2,914,263 2,105,000 576,645 2,681,645 232,618 2,205,000 702,403 2,907,403 2,170,000 503,773 2,673,773 233,630 2,320,000 589,750 2,909,750 2,250,000 428,506 2,678,506 231,244 2,435,000 471,371 2,906,371 2,335,000 343,941 2,678,941 227,431 2,605,000 345,625 2,950,625 2,460,000 263,711 2,723,711 226,914 2,735,000 212,125 2,947,125 2,550,000 171,114 2,721,114 226,011 2,875,000 71,875 2,946,875 2,675,000 49,889 2,724,889 221,986 35,170,000 18,301,603 53,471,603 35,605,000 13,604,397 49,209,397 4,262,205 4 Under State Law, the savings from the refinancing are shared among all of the local taxing agencies in the Project Area. The refinancing does not result in lower property taxes for homeowners or businesses. 12 -Mo. Ending Nov. 1, City of Petaluma Sonoma County Special Districts Schools & CCD's Other Total 2015 3,813 1,173 1,288 18,378 242 24,894 2016 37,539 11,544 12,681 180,920 2,380 245,063 2017 37,097 11,408 12,532 178,792 2,352 242,181 2018 37,153 11,425 12,551 179,058 2,355 242,542 2019 36,915 11,352 12,470 177,913 2,340 240,991 2020 37,100 11,409 12,533 178,805 2,352 242,198 2021 37,005 11,380 12,501 178,347 2,346 241,578 2022 36,646 11,269 12,380 176,618 2,323 239,237 2023 36,660 11,273 12,384 176,685 2,324 239,327 2024 36,365 11,183 12,285 175,263 2,305 237,401 2025 35,764 10,998 12,081 172,363 2,267 233,473 2026 35,766 10,998 12,082 172,374 2,267 233,487 2027 35,633 10,957 12,037 171,732 2,259 232,618 2028 35,788 11,005 12,089 172,479 2,269 233,630 2029 35,422 10,893 11,966 170,718 2,246 231,244 2030 34,838 10,713 11,769 167,902 2,209 227,431 2031 34,759 10,689 11,742 167,521 2,204 226,914 2032 34,621 10,646 11,695 166,854 2,195 226,011 2033 34,004 10,457 11,487 163,883 2,156 221,986 652,889 200,771 220,552 3,146,603 41,390 4,262,205 5 Another common method of measuring debt service savings from a refinancing is "Net Present Value" savings. Net Present Value savings adjusts total savings for the time value of money. By this measure, total savings of $4.26 million has a "Present Value" of $3.27 million, which represents 9.31% of the par amount of the bonds that were refinanced. Net Present Value (NPV) Savings 3,272,782 NPV Savings / Par Amount of Refunded Bonds 9.31%