lansdale bond refunding report

8/9/2019 Lansdale bond refunding report

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Market Trends

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

Bond Buyer 20 Bond Indexpast 6 years

Municipal Interest Rate Average for the period

5.41

4.86

5.06

4.65

3.83

4.17

3.60

3.27

3.793.82

5.15

4.45

3.94

4.86

4.44

4.80

5.85

6.01

5.13

5.11

4.52

4.15

4.54

3.61

3.95

Current: 3.36%5 Year:High: 6.01%Low: 3.27%

Average: 4.35%

4.08 4.00

3.61

4.48

4.914.63

5.03

4.744.83

4.51

4.09

3.87

3.65

3.29

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Market Trends

3.00

3.25

3.50

3.75

4.00

4.25

4.50

4.75

5.00

5.25

InterestRa

te

Bond Buyer 20 Bond Index

Municipal Interest Rate One Year average

Past 12 Months

Current:3.36%52 Week:High: 4.51%Low: 3.29%Avg: 4.12%

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Executive Summary

Current Market and Refunding Candidates

Boenning & Scattergood constantly monitors the tax-exempt interest rate markets and the Borough of Lansdalesdebt for opportunities to lower the Boroughs interest costs. Our firm has identified a refunding candidate whichmay potentially offer significant interest cost savings to the Borough.

The bond issue which presents this potential refunding opportunity is the currently outstanding General ObligationBonds, Series of 2010. The 2010 Series will be callable (or pre-payable) on October 1, 2015.

We have prepared two refunding options for the Borough to consider. The first option would be to currently refundthe entire Series of 2010 when it becomes currently callable, by scheduling a bond sale in June, and a closingsometime after July 1st (or less than 90 days from the call date of the Series of 2010).

The second option would be to advance refund a portion of the Series of 2010. Approximately 80% of the Series

of 2010 can be advance refunded in March, as per federal tax law. The remaining portion of the Series of 2010would be refunded in June when it could be defined as a current refunding similar to the option 1 analysis.

Estimated Potential Net Savings After Costs of Issuing the Bonds

In todays market, the Boroughs estimated potential debt service savings for option one is projected to be$814,000 in net present valued savings, after paying all costs of issuance (real cash savings).

The Boroughs estimated potential debt service savings for option two is projected to be $633,000 for step oneand approximately $79,000 for step two. The combined estimated savings for option two is projected to be

approximately $712,000 in net present valued savings, after paying all costs of issuance (real cash savings). The benefit of option 1 is higher total savings and the fact that the Borough would only be required to undertakeone refunding action.

The benefit of option two is the Boroughs ability to undertake the refunding as early as late March taking the riskof higher interest rates off the table. The estimated savings is $85,000 less than option one but the Borough willhave to wait until June to undertake the refunding on a current basis.

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Current Debt Service All Bond Issues

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Current Debt Service All Bond Issues

Loan of 1997 Loan of 1999 Series of 2010 Series of 2012

Series of

2014* Total

2014 85,632 12,562 1,501,639 261,890 - 1,861,723

2015 85,632 12,562 1,496,839 401,840 188,298 2,185,170

2016 85,632 12,562 1,501,689 400,390 371,495 2,371,7682017 12,562 1,500,689 488,940 371,395 2,373,586

2018 1,498,739 499,240 371,295 2,369,274

2019 1,499,794 499,240 371,195 2,370,229

2020 1,498,634 499,140 371,095 2,368,869

2021 1,497,859 498,940 370,995 2,367,794

2022 1,500,081 498,309 370,845 2,369,235

2023 1,501,331 497,571 370,695 2,369,598

2024 1,499,064 496,728 370,545 2,366,336

2025 1,498,814 500,288 370,395 2,369,496

2026 1,500,994 498,618 370,245 2,369,8562027 996,833 1,045,095 2,041,928

2028 996,833 1,044,695 2,041,528

2029 996,333 1,042,995 2,039,328

2030 999,073 1,039,595 2,038,668

2031 996,150 1,044,805 2,040,955

2032 994,600 1,048,240 2,042,840

2033 997,300 1,042,840 2,040,140

2034 999,100 1,041,490 2,040,590

2035 2,039,000 2,039,000

2036 2,043,600 2,043,600

Total $ 256,896 $ 50,248 $ 19,496,164 $ 14,017,353 $ 16,700,848 $ 50,521,508

* Net Debt service

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Option 2 step 1 Bond Sale in March

A portion (80%) of the 2010 Bonds are eligible to be advance refunded, per federal tax law. Option 2shows a partial bank-qualified advance refunding (under $10M of par) as of Mach 2015. If marketconditions permit, the remaining Bonds could be refunded at any point after July 1, 2015 (90 daysprior to the call date). Bank Qualified deals have two advantages: lower interest rates and shorteroptional redemption (5 years).

Date Net New D/S Old Net D/S Savings

10/01/2015 669,584.52 729,371.88 59,787.36

10/01/2016 874,480.00 937,843.76 63,363.76

10/01/2017 875,385.00 938,968.76 63,583.76

10/01/2018 867,885.00 926,868.76 58,983.76

10/01/2019 1,070,445.00 1,129,043.76 58,598.76

10/01/2020 1,062,995.00 1,123,603.76 60,608.76

10/01/2021 1,066,295.00 1,125,078.76 58,783.7610/01/2022 1,439,195.00 1,500,081.26 60,886.26

10/01/2023 1,438,050.00 1,501,331.26 63,281.26

10/01/2024 1,439,475.00 1,499,063.76 59,588.76

10/01/2025 1,438,600.00 1,498,813.76 60,213.76

10/01/2026 1,440,400.00 1,500,993.76 60,593.76

To tal $13,682,789.52 $14,411,063.24 $728,273.72

PV Analysis Summary (Net to Net)

Gross PV Debt Service Savings 632,794.17

Net PV Cashf low Savings @ 2.551%(AIC) 632,794.17Contingency or Rounding Amount 965.17

Net Present Value Benefit $633,759.34

Actual positive or (negative) arbitrage (100,684.65)

Net PV Benefit / $9,750,000 Refunded Principal 6.500%

Net PV Benefit / $9,755,000 Refunding Principal 6.497%

Sensitivity

Interval

Total $

Savings

Total %

Savings

-0.900% 1,327,833.71 13.619%

-0.800% 1,247,764.56 12.798%

-0.700% 1,168,399.77 11.984%

-0.600% 1,089,732.35 11.177%-0.500% 1,011,755.35 10.377%

-0.400% 934,461.92 9.584%

-0.300% 857,845.28 8.798%

-0.200% 781,898.72 8.019%

-0.100% 706,615.60 7.247%

- 633,759.24 6.500%

0.100% 564,218.71 5.787%

0.200% 495,317.96 5.080%

0.300% 427,050.62 4.380%

0.400% 359,410.44 3.686%

0.500% 292,391.19 2.999%

0.600% 225,986.73 2.318%0.700% 160,190.99 1.643%

0.800% 94,997.95 0.974%

0.900% 30,401.67 0.312%

1.000% (33,603.73) -0.345%

- -

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Option 2 step 2 Bond Sale on June 1st

If market condition between now and July 1, 2015, remain unchanged, a current refunding of theremaining 2010 Bonds would be possible with an estimated savings of $79,521. The secondrefunding will also be bank qualified and have a short 5 year optional redemption.

Date Net New D/S Old Net D/S Savings

10/01/2015 265,821.25 273,371.25 7,550.00

10/01/2016 307,137.50 314,842.50 7,705.00

10/01/2017 305,680.00 313,967.50 8,287.50

10/01/2018 308,030.00 316,767.50 8,737.50

10/01/2019 304,790.00 314,017.50 9,227.50

10/01/2020 305,740.00 315,857.50 10,117.50

10/01/2021 300,240.00 311,582.50 11,342.50

10/01/2022 309,740.00 316,997.50 7,257.50

10/01/2023 303,650.00 312,022.50 8,372.5010/01/2024 307,125.00 316,437.50 9,312.50

To tal $3,017,953.75 $3,105,863.75 $87,910.00

PV Analysis Summ ary (Net to Net)

Gross PV Debt Service Sav ings 78,641.20

Net PV Cashflow Savings @ 2.642%(AIC) 78,641.20

Contingency or Rounding A mount 879.99

Net Present Value Benefit $79,521.19

Net PV Benefit / $2,625,000 Refunded Principal 3.029%

Net PV Benefit / $2,755,000 Refunding Principal 2.886%

Sensitivity

Interval

Total $

Savings

Total %

Savings

-0.500% 142,283.25 5.420%

-0.450% 135,897.37 5.177%

-0.400% 129,533.14 4.935%

-0.350% 123,190.47 4.693%

-0.300% 116,869.28 4.452%

-0.250% 110,569.49 4.212%

-0.200% 104,290.99 3.973%-0.150% 98,033.72 3.735%

-0.100% 91,797.59 3.497%

-0.050% 85,582.50 3.260%

- 79,521.19 3.029%

0.050% 73,681.39 2.807%

0.100% 67,862.26 2.585%

0.150% 62,063.72 2.364%

0.200% 56,285.69 2.144%

0.250% 50,528.08 1.925%

0.300% 44,790.82 1.706%

0.350% 39,073.81 1.489%

0.400% 33,376.99 1.272%0.450% 27,700.27 1.055%

0.500% 22,043.56 0.840%

- $1,694,975.58 -

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lansdale bond refunding report

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