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Metropolitan Council

Metropolitan Council. Environmental Services. Info Item 3 : Capital Finance Update ($70M PFA & $65M BABs). Presented to the Environment Committee January 11, 2011. Jason Willett, MCES Finance Director. A Clean Water Agency. Build America Bonds (BAB) Summary. $65 million Council BAB

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Metropolitan Council

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  1. Metropolitan Council Environmental Services Info Item 3: Capital Finance Update ($70M PFA & $65M BABs) Presented to the Environment Committee January 11, 2011 Jason Willett, MCES Finance Director A Clean Water Agency

  2. Build America Bonds (BAB) Summary • $65 million Council BAB • Competitive bids • Closed on December 22 • 2.97% after federal 35% credit (3.9% before credit) • $65M projected to last about 14-18 months

  3. PFA Loan Summary • $70 million PFA loan • Closing January 13, 2011 • Interest rate locked on October 22, 2010 at all-time low of 1.77% • PFA loans to provide about 60% of wastewater capital project spending • $70M projected to last about 12-16 months

  4. PFA Compared to BAB $70 million loan Total Debt Present Service Value 2.62% Council BABs* $90.8 $70.0 1.77% PFA loan 83.7 64.5 Savings Interest Rate $ 7.1 $ 5.5 Underwriters Disc./Issuance Cost Saved $ 0.6 Interest Savings from Reimbursement Basis $ 0.5 Total Present Value Savings $ 6.6 * 2.62% is after 35% federal rebate (estimated rate on 10/22/10).

  5. PFA Loan Key Terms • Loan closing date is Jan. 13, 2011 (day after Council approval) • Funds received after expenses incurred • No interest accrual until fund disbursement • Council must complete projects even after funding is exhausted • Loan backed by Council’s general obligation

  6. Key Terms, cont. • Sale of assets and management contracts restricted • Blue Lake project has extra restriction and must have declaration recorded against title • Federal prevailing wage rates (Davis-Bacon) must be used • Refunding or prepayment savings is split with PFA

  7. Rates* * Chart of national average G.O. AAA 20-year bonds.

  8. MCES Outstanding Debt * Actual through 2009, projected thereafter based on CIP and level debt service on all new debt.

  9. MCES Debt Service * Actual through 2009, projected thereafter based on CIP and level debt service on all new debt.

  10. 2011 Planned Refunding • $9.6 million of 2002B bonds “callable” in June • “Current” refunding sale in March • 4.00% interest cost reduced to estimated 1.51% • About $570,000 savings estimated (net present value)

  11. Questions/Concerns

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