HomeMy WebLinkAboutNew Business #1 9-08-87TO: -- WILLIA~A. HUSTONv CITY MANAGER
FROM: RONAL~4~, DIRECTOR OF FINANCE
SUBJECT: WATER DEBT SERVICE FUND PROJECTED CASH FLOW
We've been asked to review the cash-balance in the Water Debt
Service Pund and to project the cash flow for the next six years.
Schedule "A" attached, projects the cash flow of the Debt Service
Pund through fiscal year 2003/04, the fiscal year of maturity for
the Tustin Water'Corporation Lease Revenue Bonds. The ending
cash balance as of June 30, 1988 is estimated to be $898,578.
The goal of this analysis was to determine the feasibility of
redeeming the Series 1978 TWW Bon~s that we are presently paying
9.5 percent interest. Schedule "B" illustrates the effect of
redeeming the 1978 Bonds during the fiscal 1987-88. Redeeming
these bonds at this time will not negatively impact the ability
of-the Debt Service Pund to meet the debt service needs of the
remaining bond obligations.
The cost of redemption is shown as $547,500. This assumes a full
years interest and the principal balance if paid at the end of
1987-88. The savings in interest cost to the Debt Service Pund
should be $237,500 based on this assumption. The quarterly
interest on these bonds is $11,875. Redemption at the next
quarterly interest due date, September 30, 1987, will save an
additional $35,000 in interest expense.
If the Council is desirous of redeeming the 1978 Series Bonds,
they should direct staff to do so effective September 30, 1987.
Council should also request a meeting of the Tustin Water
Corporation Board of Directors to meet and confirm the redemption
of these bonds.
RAN:is