HomeMy WebLinkAboutPre Sale Report_Oshkosh Series 2021F (GORBs)_2021-8-19
Pre-Sale Report for
City of Oshkosh, Wisconsin
$6,990,000 General Obligation Refunding Bonds,
Series 2021F
Prepared by:
Ehlers
N21W23350 Ridgeview Parkway West,
Suite 100
Waukesha, WI 53188
Advisors:
Todd Taves, Senior Municipal Advisor
Jon Cameron, Senior Municipal Advisor
BUILDING COMMUNITIES. IT’S WHAT WE DO.
Presale Report
City of Oshkosh, Wisconsin
Page 1
Proposed Issue:
$6,990,000 General Obligation Refunding Bonds, Series 2021F (“Bonds”)
Purpose:
The proposed issue will refund (refinance) the City’s Series 2012B GO Bonds for debt service
savings. Interest rates on the 2012B Bonds to be refunded range from 2.00% to 3.00%. The
refunding is expected to reduce debt service expense by approximately $612,000 over the
next ten years. The Net Present Value benefit of the refunding is estimated to be $568,000,
equal to 8.2% of the refunded principal. Debt service savings will reduce the tax levy as well as
payments from Tax Incremental Districts No. 17 and 20 which are allocated portions of the
debt service. This refunding is considered “current” under IRS rules as the obligations being
refunded will be callable within 90 days of the date of issue of the new Bonds.
Authority:
The Bonds are being issued pursuant to Wisconsin Statute 67.04 and will be general
obligations of the City for which its full faith, credit and taxing powers are pledged. The Bonds
count against the City’s General Obligation Debt Capacity Limit of 5% of total City Equalized
Valuation. Following issuance of the Bonds, the City’s total General Obligation debt principal
outstanding will be approximately $134.4 million, which is 54.3% of its limit. After December 1
principal payments are made on other existing City debt total General Obligation debt
principal outstanding will be approximately $121.3 million, which is 49% of its limit with
remaining General Obligation borrowing capacity of approximately $126.3 million.
Term/Call Feature:
The Bonds are being issued for a term of 10 years. Principal on the Bonds will be due on
December 1 in the years 2022 through 2031. Interest is payable every six months beginning
June 1, 2022. The Bonds will be subject to prepayment at the discretion of the City on
December 1, 2028 or any date thereafter.
Bank Qualification:
Because the City has issued more than $10,000,000 in tax-exempt obligations during the
calendar year, the City will be not able to designate the Bonds as “bank qualified” obligations.
EXECUTIVE SUMMARY OF PROPOSED DEBT
Presale Report
City of Oshkosh, Wisconsin
Page 2
Rating:
The City’s most recent bond issues were rated by Moody’s Investors Service. The current
ratings on those bonds are “Aa3”. The City will request a new rating for the Bonds. If the
winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue may
be higher than the City's bond rating if the bond rating of the insurer is higher than that of the
City.
Basis for Recommendation:
Based on our knowledge of your situation, your objectives communicated to us, our advisory
relationship as well as characteristics of various municipal financing options, we are
recommending the issuance of General Obligation Refunding Bonds as a suitable option based
on:
The expectation this form of financing will provide the overall lowest cost of funds
while also meeting the City’s objectives for term, structure, and optional redemption.
The City having adequate General Obligation debt capacity to undertake this financing.
The existing General Obligation pledge securing the obligations to be refunded.
Method of Sale/Placement:
We will solicit competitive bids for the purchase of the Bonds from underwriters and banks
and will include an allowance for discount bidding in the terms of the issue. The discount is
treated as an interest item and provides the underwriter with all or a portion of their
compensation in the transaction. If the Bonds are purchased at a price greater than the
minimum bid amount (maximum discount), the unused allowance will be used to reduce your
borrowing amount.
Premium Pricing:
In some cases, investors in municipal bonds prefer “premium” pricing structures. A premium
is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds
the yield to the investor, resulting in a price paid that is greater than the face value of the
bonds. The sum of the amounts paid above face value is considered “reoffering premium.” The
underwriter of the bonds will retain a portion of this reoffering premium as their compensation
(or “discount”) but will pay the remainder of the premium to the City.
For this issue of Bonds, any premium amount received will be used to reduce the issue size.
These adjustments may slightly change the true interest cost of the original bid, either up or
down. We anticipate using any premium amounts received to reduce the issue size.
The amount of premium allowed can be restricted in the bid specifications. Restrictions on
premium may result in fewer bids but may also eliminate large adjustments on the day of sale
and unintended results with respect to debt service payment impacts. Ehlers will identify
appropriate premium restrictions for the Bonds intended to achieve the City’s objectives for
this financing.
Presale Report
City of Oshkosh, Wisconsin
Page 3
Parameters:
The City Council will be asked to adopt a “Parameters Resolution” on September 28th which
delegates authority to the City Manager or Finance Director to accept bids and sign an
Approving Certificate for sale of the Bonds provided certain parameters are met. These
parameters are:
The par amount of Bonds issued may not exceed $6,990,000.
Principal on the Bonds to be due on December 1 in the years 2022 through 2031 with
interest payable every six months beginning June 1, 2022.
That no maturity be increased or decreased by an amount more than $100,000 from the
maturity schedule included in the Parameters Resolution.
The maximum annual debt service levy may not exceed $835,000
The True Interest Cost (TIC) may not exceed 2.10%. (The savings estimate included
within this Presale Report assumes a TIC of 1.15%).
Minimum purchase price may be no less than 99% of the par amount of Bonds issued.
Other Considerations:
The Bonds will be offered with the option of the successful bidder utilizing a term bond
structure. By offering underwriters the option to “term up” some of the maturities at the time
of the sale, it gives them more flexibility in finding a market for your Bonds. This makes your
issue more marketable, which can result in lower borrowing costs. If the successful bidder
utilizes a term bond structure, we recommend the City retain a paying agent to handle
responsibility for processing mandatory redemption/call notices associated with term bonds.
Review of Existing Debt:
We have reviewed all outstanding indebtedness for the City and find that other than the
obligations proposed to be refunded by the Bonds, there are no other refunding opportunities
at this time. We will continue to monitor the market and the call dates for the City’s outstanding
debt and will alert you to any future refunding opportunities.
Continuing Disclosure:
Because the City has more than $10,000,000 in outstanding debt (including this issue) and
this issue is over $1,000,000, the City will be agreeing to provide certain updated Annual
Financial Information and its Audited Financial Statement annually, as well as providing notices
of the occurrence of certain reportable events to the Municipal Securities Rulemaking Board
(the “MSRB”), as required by rules of the Securities and Exchange Commission (SEC). The City
is already obligated to provide such reports for its existing bonds and has contracted with
Ehlers to prepare and file the reports.
Presale Report
City of Oshkosh, Wisconsin
Page 4
Arbitrage Monitoring:
The City must ensure compliance with certain sections of the Internal Revenue Code and
Treasury Regulations (“Arbitrage Rules”) throughout the life of the issue to maintain the tax-
exempt status of the Bonds. These Arbitrage Rules apply to amounts held in construction,
escrow, reserve, debt service account(s), etc., along with related investment income on each
fund/account.
IRS audits will verify compliance with rebate, yield restriction and records retention
requirements within the Arbitrage Rules. The City’s specific arbitrage responsibilities will be
detailed in the Tax Exemption Certificate and Agreement (the “Tax Compliance Document”)
prepared by your Bond Attorney and provided at closing. The Bonds may qualify for one or
more exception(s) to the Arbitrage Rules by meeting 1) small issuer exception, 2) spend down
requirements, 3) bona fide debt service fund limits, 4) reasonable reserve requirements, 5)
expenditure within an available period limitation, 6) investments yield restrictions, 7) de
minimis rules, or 8) borrower limited requirements. We recommend that the City review its
specific responsibilities related to the Bonds with an arbitrage expert to utilize one or more of
the exceptions listed above. We also recommend that you establish written procedures
regarding compliance with IRS rules and/or contract with Ehlers to assist you.
Risk Factors:
Planned Abatement: The City expects to abate a portion of the City debt service with tax
incremental revenues from TIDs 17 and 20. In the event these revenues are not available, the
City is obligated to levy property taxes in an amount sufficient to make all debt payments.
Current Refunding: The Bonds are being issued to finance a current refunding of prior City
debt obligations. Those prior debt obligations are callable on or after December 1, 2021.The
new Bonds will not be pre-payable until December 1, 2028. This refunding is being undertaken
based in part on an assumption that the City does not expect to pre-pay off this debt prior to
the new call date and that market conditions warrant the refunding at this time.
Other Service Providers:
This debt issuance will require the engagement of other public finance service providers. This
section identifies those other service providers, so Ehlers can coordinate their engagement on
your behalf. Where you have previously used a particular firm to provide a service, we have
assumed that you will continue that relationship. For services you have not previously required,
we have identified a service provider. Fees charged by these service providers will be paid
from proceeds of the obligation, unless you notify us that you wish to pay them from other
sources. Our pre-sale bond sizing includes a good faith estimate of these fees, but the final
fees may vary. If you have any questions pertaining to the identified service providers or their
role, or if you would like to use a different service provider for any of the listed services please
contact us.
Bond Counsel: Chapman and Cutler LLP
Paying Agent: Issuer, unless term bonds offered, then US Bank
Rating Agency: Moody's Investors Service, Inc.
Presale Report
City of Oshkosh, Wisconsin
Page 5
City Council Adopts Parameters Resolution: September 28, 2021
Due Diligence Call to review Official Statement: Week of October 11, 2021
Conference with Rating Agency: Week of October 11, 2021
Distribute Official Statement: October 19, 2021
Estimated Parameters Sale Date: October 27, 2021
Estimated Closing Date: November 18, 2021
Redemption Date for the Obligations Being Refunded: December 1, 2021
Attachments
Estimated Sources and Uses of Funds
Estimated Debt Service Comparison
Bond Buyer Index
ELERS’ CONTACTS
Todd Taves, Senior Municipal Advisor (262) 796-6173
Jon Cameron, Senior Municipal Advisor (262) 796-6179
Sue Porter, Senior Public Finance Analyst/Marketing Coordinator (262) 796-6167
Kathy Myers, Senior Financial Analyst (262) 796-6177
The Preliminary Official Statement for this financing will be sent to the City Council at their
home or email address for review prior to the sale date.
PROPOSED DEBT ISSUANCE SCHEDULE
EHLERS’ CONTACTS
Presale EstimateEst. Sale 10-27-2021Est. Dated 11-18-2021LevyTID 17TID 20G.O. Refunding BondsSeries 2021FTax-ExemptDeposit to Current Refunding FundSeries 2012B G.O. Bonds 4,492,800$ 1,399,075$ 1,708,875$ 7,600,750$ Less Prior Issue Debt Service Funds (412,800)$ (174,075)$ (158,875)$ (745,750)$ Net Deposit to Current Refunding Fund4,080,000$ 1,225,000$ 1,550,000$ 6,855,000$ Estimated Issuance ExpensesEhlers (Municipal Advisor)15,712$ 4,721$ 5,967$ 26,400$ Chapman & Cutler (Bond Counsel)8,927$ 2,682$ 3,391$15,000$ Maximum Discount (Bid Item) 41,600$ 12,500$ 15,800$ 69,900$ Moody's Investors Service (Rating Fee)10,712$3,219$ 4,069$ 18,000$ U.S. Bank (Paying Agent)506$152$192$850$TOTAL TO BE FINANCED4,157,457$ 1,248,274$ 1,579,419$ 6,985,150$ Rounding2,543$ 1,726$ 581$4,850$NET BOND SIZE4,160,000$ 1,250,000$ 1,580,000$ 6,990,000$ 2021 Refunding Bond Sizing Worksheet8/18/2021File: Oshkosh Debt Base Case_2021‐8‐12/Sizing CRFGPage 6
Prior Issue DS FundsLevy SavingsTID 17 SavingsTID 20 SavingsTotal SavingsAmountAmountDatedDatedCall DateCall DateCall AmtCall AmtRate/Term2.000‐3.000%2021‐2031Rate/Term0.150‐1.400%2022‐2031Year Prin (12/1) Rate Interest TotalYear Prin (12/1) Est. Rate1Interest Total2021640,0003.000%211,500 851,5002021(851,500)2022 660,0002.000%192,300 852,300 2022 735,0000.150%53,800 788,80036,351 11,247 15,90163,5002023 675,0002.000%179,100 854,100 2023 740,0000.250%50,823 790,82335,935 13,563 13,78063,2782024 695,0003.000%165,600 860,600 2024 745,0000.400%48,973 793,97339,560 10,700 16,36866,6282025 715,0003.000%144,750 859,750 2025 750,0000.550%45,993 795,99339,800 11,320 12,63863,7582026 725,0003.000%123,300 848,300 2026 740,0000.700%41,868 781,86840,355 12,060 14,01866,4332027 755,0003.000%101,550 856,550 2027 755,0000.850%36,688 791,68836,340 12,920 15,60364,8632028775,0003.000%78,900 853,9002028760,0001.000%30,270 790,27037,460 13,900 12,27063,6302029 600,0003.000%55,650 655,650 2029 580,0001.150%22,670 602,67038,910 0 14,07052,9802030 620,0003.000%37,650 657,650 2030 590,0001.300%16,000 606,00035,690 0 15,96051,6502031635,0003.000%19,050 654,0502031595,0001.400%8,330 603,33037,780 0 12,94050,720Total 7,495,000 1,309,350 8,804,350 Total 6,990,000 355,413 7,345,413 Total 378,181 85,710 143,546607,437 Maturities Subject to Optional Redemption Plus Rounding 2,543 1,726 581 4,850ESTIMATED FUTURE VALUE SAVINGS NET OF COSTS 380,724 87,435 144,128612,287NOTES:1Estimated rates are City of Oshkosh June 8, 2021 sale results (reoffering yields).Existing Debt Service To Be RefundedDebt Service After RefundingIssueGeneral Obligation Corporate Purpose Bonds, Series 2012BIssueGeneral Obligation Refunding Bonds, Series 2021FEstimated Refunding Savings - Series 2012B G.O. BondsPresale Estimate$6,855,000$1,765,000$12,480,000$6,990,00001‐Nov‐1218‐Nov‐2101‐Dec‐211‐Dec‐288/18/2021File: Oshkosh Debt Base Case_2021‐8‐12/2012B GO Savings Page 7
YearPrin (6/1) Est. Rate3Interest TotalYear20224,562,703,300 18,793,202(7,036,014)11,757,1882.58735,000 0.150% 53,800 788,800(182,253) (167,799)12,195,9372.6712,232,288(36,351)202220234,685,520,562 16,957,661(5,414,872)11,542,7892.46740,000 0.250% 50,823 790,823(181,738) (167,120)11,984,7542.5612,020,689(35,935)202320244,811,643,776 15,121,417(4,227,248)10,894,1692.26745,000 0.400% 48,973 793,973(186,300) (166,733)11,335,1092.3611,374,669(39,560)202420254,941,161,931 13,595,156(3,675,872)9,919,2842.01750,000 0.550% 45,993 795,993(185,580) (171,113)10,358,5842.1010,398,384(39,800)202520265,074,166,411 12,041,948(3,133,266)8,908,6821.76740,000 0.700% 41,868 781,868(184,590) (165,233)9,340,7271.849,381,082(40,355)202620275,210,751,059 10,569,266(2,565,538)8,003,7281.54755,000 0.850% 36,688 791,688(183,330) (164,148)8,447,9381.628,484,278(36,340)202720285,351,012,245 9,073,754(2,081,526)6,992,2281.31760,000 1.000% 30,270 790,270(181,800) (167,830)7,432,8681.397,470,328(37,460)202820295,495,048,933 6,903,298(1,081,273)5,822,0251.06580,000 1.150% 22,670 602,670(166,230)6,258,4651.146,297,375(38,910)202920305,642,962,750 6,835,345(1,078,379)5,756,9661.02590,000 1.300% 16,000 606,000(164,390)6,198,5761.106,234,266(35,690)203020315,794,858,0615,311,329(822,329)4,489,0000.77595,000 1.400% 8,330 603,330(167,310)4,925,0200.854,962,800(37,780)203120325,950,842,036 4,430,423(625,404)3,805,0190.6403,805,0190.643,805,0190203220336,111,024,734 4,439,350(616,438)3,822,9130.6303,822,9130.633,822,9130203320346,275,519,174 3,339,944(521,250)2,818,6940.4502,818,6940.452,818,6940203420356,444,441,418 1,914,438(305,713)1,608,7250.2501,608,7250.251,608,7250203520366,617,910,653 1,508,678(200,125)1,308,5530.2001,308,5530.201,308,5530203620376,796,049,272 1,127,766(56,925)1,070,8410.1601,070,8410.161,070,8410203720386,978,982,964 819,8130 819,8130.120819,8130.12819,8130203820397,166,840,802 631,7310 631,7310.090631,7310.09631,7310203920407,359,755,333 623,9940 623,9940.080623,9940.08623,9940204020417,557,862,6690000.00000.0000204120427,761,302,5900000.00000.00002042TOTALS134,038,511(33,442,171)100,596,3396,990,000355,413 7,345,413(1,285,590) (1,667,904)104,988,258TOTALSNOTES:1Value shown for 2022 is 1-1-2021 actual TID OUT EV. Assumes an 2.69% increase each year thereafter which is 50% of the actual past five year average increase.2Includes General Obligation debt, room-tax secured State Trust Fund Loan, and TID 31 SBA Loan.3Estimated rates are City of Oshkosh June 8, 2021 sale results (reoffering yields). Maturities Subject to Optional RedemptionProposed 2021 Refunding BondNet Tax Levy Pre-RefundingEstimated SavingsEstimated Levy Savings$6,990,000Dated 11-18-2021Less TID 17 AllocationLess TID 20 AllocationNet Tax Levy for DebtNet Tax Rate for Debt 2021 G.O. Refunding Bond Structure WorksheetPresale EstimateExisting Debt Only (Less Bonds to be Refunded)Projected Equalized Value1Debt P&I2Total Abatement SourcesNet Tax Levy for DebtNet Tax Rate for DebtG.O. Refunding Bonds, Series 2021F8/18/2021File: Oshkosh Debt Base Case_2021‐8‐12/G.O. Structure CRFGPage 8
5 YEAR TREND IN MUNICIPAL BOND INDICES
Source: The Bond Buyer
The Bond Buyer “20 Bond Index” (BBI) shows average yields on a group of municipal bonds that
mature in 20 years and have an average rating equivalent to Moody’s Aa2 and S&P’s AA.
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