O-1998-2234 - Laserfiche WebLink

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e e Savings At End - a method where the savings are recognized in the later years of the debt. For example, you have annual payments of $825,000 for 18 years. When you refund, you have annual payments of $825,000 but for only 16 more years. In other words, you have pushed all your savings into the future by shortening the length of your debt. Savings Up Front - a method where the savings are recognized early in the process. For example, you have annual payments of $825,000 for 18 years. When you refund, you have annual payments of $300 for the first three years then increase to $825,000 for the remaining 15 years. This method allows for the immediate generating of cash without any ups or downs in cash flows. I asked Dave Fetzer of Moroney & Beissner to run Analysis and Savings Reports on the Authorities debt and found that, based on current market conditions, budget dollar savings (amounts that can be spent towards the purchase of the water) would be $300,000 for the level annual savings method and a little over $1.2 million for the up front savings method. In addition to this amount, there should be another $200,000 to $400,000 of cash freed up by getting out from under the Texas Water Development Board's reserve requirements. Finally, the City of La Porte is in a position to pay directly to the Authority funds necessary to complete the purchase. Closing and Recommendation In closing, I believe we have reached a point where a workable contract has been received from Gulf Coast and recommend it be considered by the Authority. As to the funding of the purchase price, I would recommend that staff be directed to proceed with the following plan: 1. Utilize the existing funds that have been identified (left over bond funds, capital recovery fees and available working capital balance. 2. Utility interest earnings on the above funds and continue with the collection of the Capital Recovery Fee. 3. Proceed with the refunding of the Authority's existing debt, with consideration of the Up Front Savings method. 4. In the first quarter of 1999, obtain a commitment from the City for the balance of the purchase price or proceed to issue new debt to cover the amount.