This ordinance would authorize the issuance of up to $7.5 million in bonds to refund (refinance) the 2010B general obligation school/pool bonds. The original $7.58 million in bonds were sold June 1, 2010 through the Alaska Municipal Bond Bank to fund a portion of the Dimond Park Aquatic Center. The bonds were issued as Recovery Zone Economic Development Bonds (RZEDB) and receive a federal interest subsidy.
The amount to be refunded is $7.58 million of existing debt plus costs of issuance. At the time the bonds are issued in July 2020, the refunding will result in an estimated total savings of $100,000-$200,000 over the remaining life of the bonds. As part of the refunding, these bonds would no longer receive the federal interest subsidy, but the overall savings would outweigh the lost subsidy.
As a result of the COVID-19 pandemic crisis, market volatility has reduced potential savings to the lower end of the range. However, the financing team is optimistic that the market will recover and return higher savings as the pricing date in June approaches. The term of the new issue will be the same as the original (final payment December 2024).
These bonds qualify for 60% reimbursement under the State’s School Construction Bond Debt Reimbursement Program. The reimbursement under the State’s Debt Reimbursement Program is subject to annual appropriation by the Legislature. The debt service component of the property tax mill rate funds the remaining portion of the payments.
Additional detail will be forthcoming prior to public hearing.