Agenda - Council - 07/28/1981 - Laserfiche WebLink

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-16- Figure 8 illustrates the portion of the annual debt service payments which could be cancelled and • refinanced by exercising the early call option. - b. Proposals for Refunding of Existing Callable Bonds The existing debt payment schedules have required. generally increasing amounts of funding from 1971 ($14.6 million) to 1982 ($19.4 million). In 1985 and 1986 still higher debt service revenues are required ($22.5 million and $21.6 million respectively). The debt service funding needs of the 1981 to 1986 Development Program, designed to overlay the existing debt, will raise the total annual revenue needs. For purposes of this' study, the Council staff has reviewed some refinancing options which are available to the Council and the MWCC by reason of the early call features which are designed into the existing bond issues. An interest rate of nine percent was used in the calculations. The first option requires that $34.8 million of the issue dated October 1, 1975 ($50.9 million) be called on January 1, 1985. A new bond issue in the amount of $34 million would have a longer retirement schedule, thus reducing the high amounts of revenues needed in the years 1986 and following. From 1986 to 1989 the average annual reduction would be 24.7 percent. This would provide a lower base of revenue needs fo_l_. existing debt before the new development program borrowing is superimposed. The second option would involve calling all of the out- standing Council /MWCC bonds, $62.43 million. A refunding issue of $62 million would require lesser revenues for five years beginning in 1984. The average annual reduction would be 23.2 percent. The third option requires calling the remaining Council /MWCC bonds and those issues of the assumed debt which exceed an interest rate of six percent. A total of $71.07 million in debt would be refinanced by $70.6 million in new borrowing, providing an average annual reduction of 24.1 percent for the years 1984 to 1988. The issue dates and amounts and the call dates and amounts of the bond issues concerned are shown in Table 5. The difference between the three options is the amount of bonds called, therefore, the amount of reduction in the annual revenues required for the years 1984 to 1988. Table 6 shows the existing revenue needs for existing debt service and the needs as they are estimated to be for each of the options discussed above.