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Lake City News

Lake City Report - Aug. 13, 2010
City Utility Bonds up-up and away
$600,000 airport terminal grant on the way

From City Manager Wendell Johnson

City Utilities Bond and Waste Water Treatment Plant Project

The City’s Kicklighter WWTP and Utility System upgrades project funding reached a major milestone this week with the Sale of the Utility Bonds. The bonds provide for $18,000,000 in Utility Construction funds over the next two years.

Links for the Policy Wonks:
Financial Advisor Jim Gollahon's:
 • August 8th presentation to the City Council.
 • How much does it cost to sell twenty eight million dollars worth of bonds?

Funding Highlights

•      The City’s Series 2010 A&B utility bonds were marketed and sold on Tuesday and Wednesday August 10th and 11th.

•      CM Johnson and Financial Consultant Gollahon attended the Bond pricing process in St Petersburg, while Administrative Service Director Cason and Finance Director Tyre participated by phone.

•      The City’s underwriting team was led by Raymond James & Associates as senior manager and RBC Capital Markets, Southwest Securities and Stephens & Co. as co-managers.

•      The team was able to take full advantage of the City’s high credit ratings and a strong rally in the bond market.

•      The combination of the excellent marketing efforts of the underwriters, a strong demand for the bonds and very favorable market conditions allowed our underwriters to lower the interest rates twice from the preliminary to final pricing.

•      The refunding of the Series 1998A and Series 2000 bonds realized $727,151 of present value savings or 7.6% of the par amount of the refunded bonds.  This is $102,000 more than we estimated on August 2nd.

•      The true interest cost on the Series 2010A refunding bonds, including all issuance expenses, is 4.10% which is .10% less than our August 2nd estimate.

•      The demand for the Series 2010B Build America Bonds (BABs) was much greater than we expected.

•      The true interest cost on the BABs, including all issuance expenses and net of subsidies, is 4.21%, which is .34% less than our August 2nd estimate.

•      The BABs will save a total of approximately $3.7 million or about $123,000 per year more than if the City had issued conventional tax-exempt bonds for the wastewater projects.  This is substantially higher than our August 2nd BABs vs. tax-exempt savings estimate of $1.5 million or $50,000 per year.

•      The final BABs interest rate, net of the subsidy, is about .77% less than the rate would have been for a tax-exempt issue, again much better than our earlier estimate.

•      A pre-closing and closing is scheduled for August 25-26 in Lake City.

•      Congratulations on a very successful team effort and financing!

Florida Airports Council Annual Conference

Mayor Witt, Councilman Ward, Airport Director Sawyer and I attended the 41st Annual Conference & Exposition of the Florida Airports Council in Tampa, Florida, held from last Saturday through Wednesday of this week.

Hosted by the Tampa International Airport, the Sarasota-Bradenton International Airport and the St. Petersburg-Clearwater International Airport, the event provided an outstanding program on a variety of topics and challenges that currently face the aviation industry, commercial and general aviation alike. A variety of innovative programs were introduced to assist Florida airports get through tough times.

City Awarded $600,000 Airport Terminal Grant

The agreement from the Federal Aviation Administration (FAA) for the $600,000 grant Lake City has been waiting for is in. The City Council is being requested to approve the FAA agreement at the August 16th regular meeting.

The Council will also consider a contract award to Mandese-White, Inc. for construction of the City’s new Air Terminal.  Work on the terminal will begin in September. 

The City Staff Report is available in pdf format here.

New Meeting Calendar New

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Read the City Manager's 2010 Budget and Administrative Report • here.


City Staff Report
 • Week ending August 13, 2010