Laserfiche WebLink
<br /> <br />March 20, 1991 <br />Mr. Robert T. Herrera <br />City Manager <br />City of La Porte <br />P.O. Box 1115 <br />La Porte, Texas 77572-1115 <br />• <br />.7iu~e 1865 J'c~ ~a.~. Z~°~ra~ <br />9000 ~ad~ .X~a.~~au~ <br />5~, J~ad 77056 <br />71.x/960-900 <br />Re: Proposed Advance Refunding for City of La Porte Bonds <br />Dear Bob: <br />As per our discussion of yesterday, following is an outline of <br />a refunding technique known as "advance refunding" as it could be <br />applied to some of the City's General Obligation and Water and <br />Sewer Revenue Bonds. <br />The City currently has outstanding three issues of General <br />Obligation Bonds and one series of Water and Sewer Revenue Bonds <br />with interest rates ranging from 8$ to 9.7$. These Bond issues are <br />all callable and have call dates ranging from August of this year <br />until March of 1995. <br />The proposed procedure would be for the City to sell Refunding <br />Bonds and take the proceeds therefrom and invest in U.S. Government <br />Securities to be placed in an escrow account. The U.S. Government <br />Securities would provide payments to exactly coincide with payments <br />on the above-mentioned series of General Obligation and Revenue <br />Bonds, the "Refunded Bonds", until their call dates, and then suf- <br />ficient funds from the government securities would mature to call <br />in and pay off the high-rate bonds. <br />This procedure of offsetting all the payments due on the <br />Refunded Bonds with U.S. Government Securities is called a <br />Defeasement. The Refunded Bonds would be defeased and the City <br />would legally no longer be responsible for any payments due <br />thereon. <br />_T'D.1d¢'(X,id~ed iro 1919 <br />