Item 15.3
City of Stockton / Stockton Public Financing Authority
Water Revenue Refunding Bonds
Series 2019
(Federally Taxable)
Tender and Purchase Program
August 22, 2023
Resolution for Consideration
2 Adopt a resolution authorizing the City Manager and Chief Financial Officer, acting alone, to:
• P
urchase bonds in the open market issued by the Stockton Public
Financing Authority, Water Revenue Refunding Bonds,
Series 2019A
(Federally Taxable),
•
Take all steps necessary to document the purchase and to cancel the purchased bonds, and
•
Approve a budget amendment in the amount of up to $14.0 million to complete the purchase in the event other owners wish to
participate.
Bonds Considered for Tender
Outstanding
Bonds
Original
Principal
Remaining
Principal
Range of
Interest Rates
Final
Maturity
2019A* $54,785,000 $53,140,000 2.274% - 3.610% 10/1/2040 *
Original amount of $55,000,000 issued in 2010, converted to fixed rate in 2013 in
the amount of $54,135,000 and refunded as a taxable advance refunding in
2019 in the amount of $54,785,000
3 Current Market Considerations
4 • There continues to be significant ou tflows of money from mutual funds often requiring the funds to
sell their bonds to generate the cash to
redeem shares
•
Due to Federal Reserve interest rate actions and inflation concerns, yields have risen in
the U.S. Treasury market significantly since the
summer of 2020,
by as much as 2.70% (270bp) to 3.20% (320bp)
•
This means 2019A Bonds that were originally issued with coupons and yields
ranging from 2.274% to 3.610% are now yielding significantly higher meaning their dollar
prices are trading at a significant discount
• Originally considered issuing re funding bonds to pay for the bonds tendered
to generate significant savings to the Water Utility Fund • Amount potentially tendered not signifi cant enough to merit the costs of issuing new
bonds
• Underwriter and Tender Agent identified $9.6 million in owners willing to tender
•
Consider a direct purchase of the $9.6 million potential tender and budget up to $14 million in
case other owners wish to participate
Estimated Cash Flow Savings
5 Total Fiscal Year
Date Principal Coupon Interest Debt Service Savings
10/1/2023 173,280.00 173,280.00
4/1/2024 173,280.00 173,280.00 346,560.00
10/1/2024 173,280.00 173,280.00
4/1/2025 173,280.00 173,280.00 346,560.00
10/1/2025 173,280.00 173,280.00
4/1/2026 173,280.00 173,280.00 346,560.00
10/1/2026 173,280.00 173,280.00
4/1/2027 173,280.00 173,280.00 346,560.00
10/1/2027 173,280.00 173,280.00
4/1/2028 173,280.00 173,280.00 346,560.00
10/1/2028 173,280.00 173,280.00
4/1/2029 173,280.00 173,280.00 346,560.00
10/1/2029 173,280.00 173,280.00
4/1/2030 173,280.00 173,280.00 346,560.00
10/1/2030 173,280.00 173,280.00
4/1/2031 173,280.00 173,280.00 346,560.00
10/1/2031 173,280.00 173,280.00
4/1/2032 173,280.00 173,280.00 346,560.00
10/1/2032 173,280.00 173,280.00
4/1/2033 173,280.00 173 ,280.00 346,560.00
10/1/2033 173,280.00 173,280.00
4/1/2034 173,280.00 173,280.00 346,560.00
10/1/2034 173,280.00 173,280.00
4/1/2035 173,280.00 173,280.00 346,560.00
10/1/2035 645,000.00 3.610% 173,280.00 818,280.00
4/1/2036 161,637.75 161,637.75 979,917.75
10/1/2036 195,000.00 3.610% 161,637.75 356,637.75
4/1/2037 158,118.00 158,118.00 514,755.75
10/1/2037 200,000.00 3.610% 158,118.00 358,118.00
4/1/2038 154,508.00 154,508.00 512,626.00
10/1/2038 3,145,000.00 3.610% 154,508.00 3,299,508.00 4/1/2039 97,740.75 97,740.75 3,397,248.75
10/1/2039 3,265,000.00 3.610% 97,740.75 3,362,740.75 4/1/2040 38,807.50 38,807.50 3,401,548.25
10/1/2040 2,150,000.00 3.610% 38,807.50 2,188,807.50 4/1/2041 2,188,807.50
9,600,000.00$ 5,553,624.00$ 15,153,624.00$ 15,153,624.00$ Estimated Tender Results
6 Notes:
(1) Includes adjustment for estimated purchase price of $8,463,234.67 and $100,000.00 estimated costs to complete the purchase
(2)
Net Present Value divided by the estimated $9.6 million of 2019A
Bonds Purchased
Discount
Rate
Net Present Value
Benefit (1)
Net Present
Value Savings
Percentage (2)
2.00% $3,267,153.98 34.03%
2.50% $2,582,442.68 26.90%
3.00% $1,947,001.40 20.28%
Staff Recommendation
•Authorize the City Manager and Chief Financial
Of
ficer, acting alone, to purchase bonds in the open
market issued by the Stockton Public Financing
Authority
, Water Revenue Refunding Bonds, Series
2019A
(Federally Taxable)
•Take all steps necessary to document the purchase
and to cancel the purchased bonds
•Approve a budget amendment in the amount of up to
$14.0 million to complete the purchase in the event
other owners wish to participate from the W
ater Utility
Fund balance
7