City Council Minutes 1989 10 03 - Laserfiche WebLink

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program. The total issue is rated AAA and the bonds are insured. Other goals of the water system, along with lower interest rates, include building adequate fund balances, creating some equity among rate payers, and over time, hope that the municipal market will allow the City to finance this debt close to the useful life of the facility. The issues that are not included in this refinancing are two Farmers Home Loans that go for forty years and a Colorado Water Conservation Board loan that goes forty years. The length of the debt, the City's credit quality, how rate-payer equity is achieved, are among the things to be considered in re-structuring the City's water debt structure. Mr. Caldwell detailed the basics of this refinancing including the extra $500,000 balance that will occur in this fund over the next 5-years. "This improves your credit quality in the event that you have a need for those fund -- they will available to you." Caldwell stated that in stretching the debt out closer to the useful life, there is an increased interest cost over the life, but re-financing creates rate payer equity. "There is a slight present value cost, when you look at the present value stream, of about $114,000." Tom Davidson, 611 W. Chestnut, addressed Council stating that he looked into the re-financing of the water debt and found that principle and interest payoff for this proposed debt if held to maturity would amount to $12.6 million after re-financing the $4.8 million, plus adding in the $813,000 in new bonds would then amount to $15.4 million or a $2,776,454 increase. "That doesn't sound like a savings -- that sounds like an expense," Davidson stated. He then asked about the refinancing costs which appears to be about $213,000. Mr. Davidson stated that these figures don't include attorney costs. "In the long run, it increases the City's water costs for the bonds by over 22$." Mr. Caldwell stated that the legal fees have been addressed in a separate line item called "issuance costs" that are paid to Lamm Edstrom as bond counsel and amounts to approximately $20,000. Mohr reasoned that to issue these bonds to is create the availability of funds to acquire large blocks of water rights and the other reason to issue these bonds is to create equity to all rate payers. The cost of issue is to be spread over both existing and