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Minutes of the Special Meeting of Council <br />Monday, June 23, 2014 <br />Page 2 <br />Motion to authorize the Finance Director to pursue refunding of the 2006 LTGO <br />bonds. <br />Mr. Marquardt, seconded by Dr. Parker, made a motion to authorize the Finance Director to <br />pursue refunding of the 2006 LTGO bonds. <br />Council President Buckholtz asked, quick explanation? <br />Mr. Wynne reported, our 2006 bonds after our payment this year will have a balance of <br />$4,270,000. What we are looking to do is a refunding or refinancing for the same amount of <br />money so our debt won't go up. Our current bonds are callable on December 1" so what we <br />would do is we would do the refmancing now. Once it is completed, that money will go, in to <br />escrow. On December 1 St, it will come out of escrow, recall the old bonds, pay them off with <br />debt money and we would take on the new bonds for the same period of time as the current <br />bonds so they would expire in 12 years in 2026. <br />We've got two choices, one is going through a public offering which is on the sheet I handed out <br />today. Referencing the first line, if we did a public offeri.ng, based upon the interest rate as it <br />stands on Friday, the rate and market would be 2.21 % and our net savings over the remaining 12 <br />years would be $370,274. The public offering would take anywhere from 8-10 weeks and is <br />subject to any changes in the interest rate that happens between now and the expiration. It's a <br />little bit of risk going that route. <br />The private placement with Huntington Bank is confirmed at 2.5%. The savings on that one <br />would be $330,331 net of a11 costs, so the difference between the two options is about $40,000 in <br />savings we would potentially leave on the ta.ble if we decide to go the private route. <br />Myself, I tend to be more conservative and go for the sure thing, so I would lean towards the <br />private placement at 2.5% and take the risk out of it. This would be wrapped up by the end of <br />July. In either option, whether it's a public or private placement, the new ofFering. would be <br />callable in 8 years so after 8 years we could pay it off 4 years early and call whatever balance it <br />is at that period of time. <br />Council President Buckholtz asked, you said 12 years and then you said it's callable at 8. So, the <br />term is 12, but at 8 we can? <br />Mr. Wynne replied, at 8 we can tell Huntington we are calling it, pay off whatever is left and <br />then we walk away, if we chose the pay off early. <br />Mr. Jerome asked, what about with the public one, do you have to stick for 12 years? <br />Mr. Wynne replied, no that's callable also. They are both callable. <br />Dr. Parker asked, so the time duration in either case is the same? <br />Mr. Wynne replied; yes, both exactly the same. Both 12 years. Both callable after 8.