Issue Analysis Form

Issue Analysis Form

Date:

September 1, 2020

Item:

Potential Debt Refunding / "Refinancing"

Lead Department(s):

County Administration & Finance

Contact Person(s):

Percy C. Ashcraft & Betsy Drewry

Description and Current Status

Davenport & Company, the County's contracted financial advisor, reached out to staff in early August to relay the possibility of refunding (refinancing) several of the County's existing debt obligations to take advantage of lowered borrowing rates.

Davenport is assisting administration and staff in evaluating refunding / "refinancing" options.

Option 1 - Refunding through Virginia Resources Authority (VRA) fall 2020 borrowing pool

Option 2 ? Issuance of County Debt in public bond market

Staff discussions with Davenport remain ongoing about all possible refinancing opportunities. Davenport and staff will evaluate all options in terms of overall savings, refunding costs (including any annual VRA fees) and flexibility.

Davenport provided the attached analysis of the potential savings of a refunding with VRA Option 1 (See Attachment A). See also important note regarding closing and issuance costs on page 2. Interest rates may change between the date of the analysis and closing date and would impact the amount of total savings. Davenport assisted staff in completing an application for the Virginia Resources Authority (VRA) fall 2020 pool borrowing. A due diligence call with staff, Davenport and VRA was held on Wednesday August 26, 2020.

If a VRA refunding is the best option (option 1), staff will work with Davenport and Williams Mullen (bond counsel) to prepare the needed documents and resolutions to bring to the Board of Supervisors for consideration and possible approval on September 22, 2020. The draft resolution will provide the board with protection from participation with the fall 2020 VRA financing pool unless certain savings thresholds are met at closing (i.e. the ability to withdraw our application). A timeline is provided on page 3 of Attachment A.

If issuance of County Debt in the public bond market (option 2) is the best option, board actions and approvals would likely take place September through November, 2020.

Refunding our 2010 Taxable RZED (Build America Bonds / Recovery Zone Economic Development) bonds may necessitate holding a public hearing under either refunding option.

Davenport is working on a comparison of Options 1 and 2 which will be available to provide to the Board on September 1.

No action is requested from the Board on September 1.

Government Path

Does this require IDA action? Does this require BZA action? Does This require Planning Commission Action? Does this require Board of Supervisors action? Does this require a public hearing? If so, before what date?

Yes Yes Yes Yes Yes Yes

No No No No No No

Fiscal Impact Statement

If qualified existing debt obligations are refunded (refinanced), substantial savings could be realized based on lowered borrowing rates.

County Impact

The County can enjoy reduced debt service payments if existing debt is refunded / "refinanced" at lower interest rates.

Notes

ATTACHMENT A

Refunding Analysis

Prince George County, Virginia

September 1, 2020

Member NYSE|FINRA|SIPC

ATTACHMENT A

Debt Outstanding | Summary

A Dated/ Closing Date Tax-Supported Debt

B Description

1

11/1/2000

VPSA Bonds, Series 2000B

C Credit

GO

2

11/1/2005

3

3/15/2010

4

5/10/2012

5

4/10/2014

6

4/10/2014

7

12/12/2014

8

9/24/2015

9

9/24/2015

10

2/11/2016

11

4/1/2016

12

4/12/2017

VPSA Bonds, Series 2005D GO

VML/VACo RZED Bond, Series 2010A

GO

GO Refunding Note, Series 2012B

GO

GO Public Facilities Note, Series 2014A

GO

GO Public Facilities Note, Series 2014B

GO

GO Bond, Series 2014C

GO

GO and Refunding Bond, Series 2015A

GO

GO Bond, Series 2015B

GO

GO Refunding Bond, Series 2016A

GO

GO Refunding Bond, Series 2016B

GO

GO Note, Series 2017A

GO

D Final Maturity

7/15/2020 7/15/2025 2/15/2025 2/1/2024 2/1/2024 2/1/2029 8/1/2024 8/1/2020 8/1/2030 2/1/2031 4/1/2033 2/1/2032

E Rem. Term (In Years)(1)

F Tax Status

G Coupon

0.0

Tax-Exempt

5.10%

5.0

Tax-Exempt

4.6%-5.1% (Subsidy)

4.6

Taxable (Subsidy)

5.962%

3.6

Tax-Exempt

2.25%

3.6

Tax-Exempt

2.150%

8.6

Tax-Exempt

2.40%(2)

4.1

Tax-Exempt

2.010%

0.1

Tax-Exempt

1.50%

10.1

Tax-Exempt

2.430%

10.6

Tax-Exempt

2.32%

12.8

Tax-Exempt

2.000%

11.6

Tax-Exempt

2.30%

13

5/2/2018

GO Bond, Series 2018

GO

2/1/2033

12.6

Tax-Exempt

3.160%

14

4/4/2019

GO Bond, Series 2019

GO

2/1/2034

13.6

Tax-Exempt

15

12/5/2019

16

12/5/2019

Tax-Exempt GO Bond, Fall Series 2019

GO

Taxable GO Bond, Fall Series 2019

GO

8/1/2034 8/1/2026

14.1

Tax-Exempt

6.1

Taxable

Utility-Supported Debt

17

9/24/2015

GO and Refunding Bond, Series 2015A

GO

8/1/2021

1.1

Tax-Exempt

18

9/24/2015

GO Bond, Series 2015B

GO

8/1/2030

10.1

Tax-Exempt

19

12/5/2019

Tax-Exempt GO Bond, Fall Series 2019

GO

8/1/2034

14.1

Tax-Exempt

(1) Measured from 7/1/2020.

(2) A put option is schedule to take place on 2/1/2024. This analysis assumes the interest rate remains the same.

2.88% 2.110% 2.65%

1.50% 2.43% 2.11%

H Pot. Refi. Candidate

I Type

J Purpose

K Original Par

Amount

L Outstanding as of 6/30/2020

M Call Provisions

VPSA

Clements, Walton & Beazley

$15,284,493

$1,051,700

VPSA Discretion

VPSA

Schools

$7,760,053

$2,754,711

VPSA Discretion

VML/ VACo

$1,650,000

$635,000

Whole or part, any time, no penalty

Bank (Carter)

Refund 2003B and 2009A (General County Purposes)

$9,009,000

$2,911,000

Whole or part, any time, no penalty

Bank (PNC)

PG High Tennis Courts, Disputanta Fire Station, & Temple Field Lights

$943,000

$408,000

Whole or part, any time, no penalty

Bank (PNC)

New Carson Volunteer Fire Station

$2,257,000

$1,465,000

Whole or part, any time, no penalty

Bank (US Bank)

Courthouse HVAC upgrades

$1,218,000

$641,000

Whole or part, any time, 3% penalty

Bank (Carter)

Refund 2006C and finance vehicles for police use & school buses

$1,418,000

$292,000

Whole or part, any time, no penalty

Bank (Pinnacle)

School roof reno.,courthouse reno., fire & rescue prop. acq.

$3,951,000

$3,035,000

Whole, any time, no penalty. Part min. $250k

Bank (ANBT)

Refund a portion of 2008A Bonds

$4,457,000

$3,712,000

Whole or part, any time, no penalty

VPSA

Refund a portion of 2008A Bonds (Literary Loan)

$7,500,000

$6,715,000

Whole or part, any time, no penalty

Bank (Carter)

Public safety radio system, police vehicles, parks & rec, Rt. 10 Fire Station

$9,000,000

$8,752,000

Whole or part, any time, no penalty

Police vehicles, public safety radio,

Whole or part, after

Bank improvements to County buildings, water

2/1/28, no penalty.

(Raymond & sewer improvements, fuel canopy & $9,300,000

$8,232,000

Prepayable prior to 2/1/28

James)

dispenser, electoral equipment, CDCC

with written consent of

software upgrade

lender

Bank (Zions)

Police vehicles, utility improvements, security systems, assessor software, new

fire station, parks & rec

$9,450,000

$8,840,000

Whole or part, any time, no penalty

Bank (Zions)

Police vehicles, fire apparatus, wellness center

$4,142,000

$4,142,000

Whole or part, any time, no penalty

Bank (Zions)

Broadband

$1,017,000

$1,017,000

Whole or part, any time, no penalty

Total Tax-Supported Debt Outstanding $54,603,411

Bank (Carter)

Bank (Pinnacle)

Bank (Zions)

Wastewater

$856,000

Wastewater

$1,590,000

Stormwater

$2,136,000

Total Utility-Supported Debt Outstanding

$294,000 $1,221,000 $2,136,000 $3,651,000

Whole or part, any time, no penalty

Whole, any time, no penalty. Part min. $250k Whole or part, any time,

no penalty

September 1, 2020

Prince George County, Virginia

1

ATTACHMENT A

Preliminary Refunding Analysis | All Refundable Debt

Current Market as of 8/21/2020 ? VRA Fall Pool

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

2010A

2012B

2014A

2014B

2014C

2015A

2015B

2016A

2016B

2017A 2019 Spring 2019 Fall Tax- 2019 Fall

Key Assumptions

Bond

Bond

Bond

Bond

Bond

Bond

Bond

Bond

Bond

Bond

Bond

Exempt Bond Taxable Bond Aggregate

1

2 Bonds Refunded

3 Par Refunded

$ 635,000 $ 2,911,000 $ 408,000 $ 1,465,000 $ 518,000 $ 148,000 $ 3,914,000 $ 3,712,000 $ 6,715,000 $ 8,752,000 $ 8,840,000 $ 5,364,000 $ 883,000 $ 44,265,000

4 Coupon 5 Next Call

5.962% Any Time

2.250% Any Time

2.150% Any Time

2.400%(1) Any Time

2.010% Any Time

1.500% Any Time

2.430% Any Time

2.320% Any Time

2.000% Any Time

2.300% Any Time

2.880% Any Time

2.110% Any Time

2.650% 1.50% - 5.962%

Any Time

Any Time

6 Call Price

100%

100%

100%

100%

103%

100%

100%

100%

100%

100%

100%

100%

100%

Varies

7 Maturities Refunded 2/15/2021 to 2/1/2021 to 2/1/2021 to 2/1/2021 to 8/1/2021 to 8/1/2021 8/1/2021 to 2/1/2021 to 4/1/2021 to 2/1/2021 to 2/1/2021 to 8/1/2021 to 8/1/2021 to 2/1/2021 to

8

2/15/2025 2/1/2024 2/1/2024 2/1/2029 8/1/2024

8/1/2030 2/1/2031 4/1/2033 2/1/2032

2/1/2034

8/1/2034 8/1/2026

8/1/2034

9

10 Refunding Bonds

11 Final Maturity

11/1/2024 11/1/2023 11/1/2023 11/1/2028 11/1/2024 11/1/2021 11/1/2030 11/1/2030 11/1/2032 11/1/2031 11/1/2033 11/1/2034 11/1/2026

11/1/2034

12 True Interest Cost

0.60%

0.72%

0.67%

0.66%

0.60%

1.07%

0.76%

0.76%

1.01%

0.87%

1.14%

1.08%

1.17%

0.96%

13 All-In TIC

1.06%

1.41%

1.26%

0.89%

1.07%

2.34%

0.95%

0.95%

1.16%

1.04%

1.29%

1.33%

1.54%

1.15%

14 Tax Status 15 Equity Contribution(2) 16 Assumed Call Date

Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt

Tax-Exempt

$ 114,000 $ 805,000 $ 96,000 $ 127,000 $

-$

-$

- $ 250,000 $ 445,000 $ 531,000 $ 485,000 $

-$

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A 11/1/2030 11/1/2030 11/1/2030 11/1/2030

Taxable 4,000

N/A

Varies $ 2,857,000

N/A

17

18 Savings

19 Gross Savings

$ 30,931 $ 44,748 $ 10,223 $ 97,725 $ (8,606) $ (1,860) $ 306,423 $ 286,087 $ 410,660 $ 684,347 $ 1,011,066 $ 180,648 $ 27,021 $ 3,079,413

20 Net PV Savings

33,200

43,520

7,306

96,613

(8,155)

(1,662) 305,341

274,938

374,818

651,590

958,200

176,042

29,865

2,941,615

21 Net PV Savings %

5.23%

1.50%

1.79%

6.59%

-1.57%

-1.12%

7.80%

7.41%

5.58%

7.45%

10.84%

3.28%

3.38%

6.65%

22

23 Cash Flow Savings

24 2021

$ 5,960 $ 13,339 $

657 $ 12,359 $ (6,164) $ (2,255) $ (26,468) $ 27,621 $ 34,142 $ 58,264 $ 72,063 $ (49,600) $

4,355 $ 144,271

25 2022

6,281

9,034

5,087

12,642

(2,020)

394

33,776

26,271

33,834

60,427

73,122

18,650

5,508

283,006

26 2023

7,759

13,228

(216)

9,168

(1,551)

-

31,371

25,831

31,091

55,426

71,090

21,465

1,535

266,199

27 2024

4,494

9,147

4,695

10,983

124

-

31,516

25,800

29,044

55,467

69,850

22,025

2,624

265,769

28 2025

6,437

-

-

12,957

1,005

-

35,082

24,293

32,666

57,444

71,095

19,577

3,847

264,405

29 2026

-

-

-

9,220

-

-

31,199

27,242

31,984

55,463

73,174

(22,617)

5,204

210,871

30 2027

-

-

-

11,796

-

-

35,866

24,668

32,128

54,651

71,946

141

3,948

235,143

31 2028

-

-

-

9,660

-

-

34,071

27,725

28,225

56,008

71,509

23,232

-

250,430

32 2029

-

-

-

8,940

-

-

32,045

26,294

30,275

54,641

71,864

19,125

-

243,184

33 2030

-

-

-

-

-

-

31,789

25,622

33,150

58,524

74,011

21,329

-

244,425

34 2031

-

-

-

-

-

-

36,176

24,719

31,978

59,683

73,049

23,704

-

249,308

35 2032

-

-

-

-

-

-

-

-

31,888

58,349

73,077

21,380

-

184,693

36 2033

-

-

-

-

-

-

-

-

30,256

-

71,920

22,591

-

124,767

37 2034

-

-

-

-

-

-

-

-

-

-

73,296

19,287

-

92,584

38 2035

-

-

-

-

-

-

-

-

-

-

-

20,359

-

20,359

39 Total

$ 30,931 $ 44,748 $ 10,223 $ 97,725 $ (8,606) $ (1,860) $ 306,423 $ 286,087 $ 410,660 $ 684,347 $ 1,011,066 $ 180,648 $ 27,021 $ 3,079,413

(1) A put option is schedule to take place on 2/1/2024. This analysis assumes the interest rate remains the same.

(2) Equity Contributions are assumed to be made from existing budgeted debt service for FY 2021.

Notes:

- Savings net of estimated VRA and Local Costs of Issuance of $423,050 and

Underwriter's Discount of $259,575. Preliminary and subject to change.

- Interest rates as of 8/21/2020 are preliminary and subject to change.

- Assumes a closing date of 11/18/2020.

September 1, 2020

Prince George County, Virginia

2

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